Lorillard Tobacco is refusing to fund a US anti-smoking ad campaign, risking the wrath of state attorneys general.

The tobacco giant has decided to withhold a $28.4 million (€26.5m; £18.1m) payment to the American Legacy Foundation as it conducts a legal action against the body’s Truth campaign.

Lorillard is suing the ALF for violating the 1998 Master Settlement Agreement between the tobacco industry and attorneys general of 46 states. Under this pact, the ALF is forbidden from “vilifying” tobacco companies in its anti-smoking ads – but this is exactly what Lorillard claims the Truth campaign has done.

The tobacco firm says it will put the $28.4m – comprising $25.9m to fund Truth ads and $2.4m for other ALF activities – into a special account until a Delaware court rules on its lawsuit.

However, Vermont attorney general and ALF board member Bill Sorrell warned that failure to make the payment, due by March 31, will lead to swift action from state attorneys general. “I very much doubt that [the National Association of Attorneys General] will sit on its hands,” he cautioned.

Lorillard’s decision – which has not been followed by any other tobacco firm – caused outrage at the ALF. “They are seeking to hold the kids hostage,” blasted president/ceo Cheryl Healton, adding that it is not yet certain what the move will mean for the foundation’s advertising plans.

The ALF’s campaign is handled by Arnold Worldwide in Boston and Crispin Porter & Bogusky in Miami.

Data sourced from: AdAge.com; additional content by WARC staff