Lorillard Tobacco Company v. American Legacy Found.
Facts
The MSA between major tobacco companies and 46 states required creation and funding of ALF to educate youth about the dangers of tobacco and restricted ALF advertising so that it '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.' Lorillard challenged several truth campaign ads, including 'Shredder,' 'Hypnosis,' 'Lie Detector,' and 'Dog Walker,' arguing that they attacked or vilified tobacco companies, executives, and in one ad Lorillard itself. ALF also had maintained a website email feature through which visitors sent hostile messages to tobacco company employees, but Lorillard quickly blocked the messages with a filter and ALF removed the feature. ALF was not a signatory to the MSA, but it was created pursuant to the MSA and accepted the funding and organizational structure the MSA provided.
Issue
Whether ALF's truth campaign advertisements violated the MSA's prohibition on 'personal attack' or 'vilification' of persons or companies, and whether Lorillard could sue ALF for alleged breaches of the MSA even though ALF was not a signatory. A subsidiary issue was whether the Court of Chancery abused its discretion by declining further relief regarding ALF's former email feature.
Rule
When contract terms are undefined and lack a special industry gloss, Delaware courts determine their plain meaning by using ordinary dictionary definitions and applying what a reasonable person in the parties' position would have understood ex ante. In this context, a 'personal attack' is a verbal assault made in an invidious, disparaging, belligerent, offensive, and fiercely or severely critical manner, and 'vilification' is an unfounded denouncement that is abusive, slanderous, or defamatory. A subsequently formed corporation is bound by a preincorporation agreement when the agreement expressly contemplates its adoption or the corporation adopts it expressly or implicitly by accepting its benefits with knowledge of its terms.
See the holding & full analysis
Create a free KwikCourt account to unlock the rest of this brief — and practice the case.
- The court's holding and reasoning
- Doctrine tests, pitfalls & exam hypotheticals
- 10 practice questions + 4 AI-graded essays on this case
Test yourself
If a dispute arises over the meaning of "personal attack" and "vilification," which interpretive approach should a Delaware court applying the majority rule most likely use?