Opinion ID: 1443950
Heading Depth: 2
Heading Rank: 1

Heading: Background of the American Legacy Foundation (ALF)

Text: We reiterate the background of this litigation as stated by the Vice Chancellor. [2] This litigation arises out of the historic 1998 tobacco settlement between the nation's largest tobacco companies and 46 of the states' attorneys general. In the settlement, the tobacco companies agreed to fund a foundation charged with creating programs to reduce youth tobacco product usage in the United States. As part of its mission, the foundation created a series of television and radio ads under the brand the truth. The settlement agreement imposes certain limits on the content of the foundation's activities, including a requirement that its advertising not constitute a personal attack on, or vilification of any person or company.    The defendant is Lorillard Tobacco Company, the oldest tobacco company in the United States and a Delaware corporation. The plaintiff is American Legacy Foundation (ALF), a Delaware non-profit corporation formed pursuant to the terms of the Master Settlement Agreement (the MSA), a 1998 agreement whereby the nation's largest tobacco companies settled lawsuits brought against them by the attorneys general of 46 states. The MSA requires that the tobacco signatories make collective Base Fund Payments of $25,000,000 per year for nine years. The MSA also requires the tobacco signatories to make collective payments in the amount of $250,000,000 in 1999 and $ 300,000,000 per year for the next four years for ALF's National Public Education Fund (NPEF). These funds have been used by ALF to produce its ad campaigns. ALF's mission, as originally stated in the MSA and later incorporated into ALF's bylaws, is to educate America's youth about the dangers of tobacco products and to reduce the usage of tobacco products by young people. To fulfill its mission, ALF launched an advertising campaign universally known as the truth campaign. This campaign involved various television and radio ads aimed at young people that portray the negative side of tobacco products. To make sure that its ads were effective in reaching young people [specifically those young people who are most likely to smoke, i.e., those who challenge authority], ALF purposefully made them edgier and more confrontational than regular television and radio ads. Many ads could be described as in your face and eye-catching. The funding provided to ALF pursuant to the MSA did not come without restrictions. A majority of ALF's funding was earmarked for the public's education ( i.e. advertising), and the content of that advertising is made subject to both requirements and prohibitions. The MSA required that the advertising concern only the addictiveness, health effects, and social costs related to the use of tobacco products. The MSA also prohibited the advertising from being a personal attack or a vilification of tobacco company employees or tobacco companies. Section VI of the MSA entitled Establishment of a National Foundation is at issue in this appeal. Subsection VI(h) establishes the prohibition that the advertising shall not be used for any personal attack on, or vilification of, any person (whether by name or business affiliation), company, or governmental agency, whether individually or collectively. The MSA does not define the terms personal attack or vilify.