Philip Morris Cuts Ties to Simon Worldwide

Contest promotions and services firm Simon Worldwide Inc. said Thursday that Philip Morris Cos., which has accounted for 9% of the company’s revenue, ended their relationship, dealing the company the second crippling blow this week.

The news comes two days after McDonald’s Corp. ended its relationship with the company’s Los Angeles-based Simon Marketing Inc. unit, after the Justice Department charged a Simon employee with defrauding the fast-food giant in a series of prize games over the years. McDonald’s accounted for 65% of Simon’s revenue.

The company also said it has retained the law firm of O’Melveny & Myers to review the company’s businesses.

Simon Worldwide’s shares dipped 4 cents to close at 66 cents on Nasdaq. The shares have fallen 82% since the scandal broke earlier this week.

Separately Thursday, McDonald’s and Simon Marketing were sued in Los Angeles County Superior Court by consumers who allege fraud in the wake of charges that the promotional games were rigged. The lawsuit seeks class-action status on behalf of all California McDonald’s customers from January 1995 to Aug. 21, 2001.