U.S. Court Crimps Big Tobacco Suit
BAT Is Allowed to Claim Attorney Privilege Covers '90 Memo Prosecutors Seek
By KELLY RAYBURN
Staff Reporter of THE WALL STREET JOURNAL
November 3, 2004; Page A2
WASHINGTON -- Dealing a setback to the government in its $280 billion lawsuit against the tobacco industry, a federal appeals court made it more difficult for U.S. lawyers to use what could be a key piece of evidence.
At issue is a confidential memorandum by a London-based attorney, Andrew Foyle, who was advising British American Tobacco PLC, the world's second-largest publicly traded tobacco company. If admitted as evidence, the 1990 memo could support the government's allegation that tobacco companies destroyed evidence to conceal tobacco's deadly and addictive nature.
The ruling by the appeals court here allows BAT to claim attorney-client privilege, possibly preventing the memo from being used in the case.
The appeals court said that U.S. District Judge Gladys Kessler was wrong to dismiss the company's claims of privilege because of BAT's failure to designate the document as privileged when the government requested it.
The government said yesterday that it could seek to negate any claim of attorney-client privilege by invoking the "crime-fraud exception," which overrules such privilege in the case of fraud. BAT said that it was "delighted" with the decision, and that it "believes passionately" in its right to privilege.
In the trial, which began Sept. 21 and is expected to last as long as six months, the government alleges a 50-year campaign of fraud that it says permeated all aspects of industry conduct. It is being heard in district court here by Judge Kessler, who will decide the case without a jury. Named in the suit are: Altria Group Inc.'s Philip Morris; R.J. Reynolds Tobacco and Brown & Williamson, which merged to form Reynolds American Inc.; British American Tobacco; Vector Group Ltd.'s Liggett Group Inc.; and Loews Corp.'s Lorillard Tobacco Co.
In an attempt to prove a coordinated scheme of deception, Justice Department attorneys have called witnesses ranging from former federal officials to company insiders and professors of history and economics. On the stand yesterday was Neal Benowitz, a researcher and expert witness who is testifying on the U.S. claim that the companies fraudulently denied nicotine's addictiveness.
The government initially focused on tobacco's health effects and alleged collusion by the companies, but many of the recent witnesses testified on industry behavior regarding second-hand smoke.
Advocacy groups that support the case say the second-hand smoke issue will help prove allegations of continuing fraud. While the industry now admits smoking causes disease, is addictive and "there is no safe cigarette," its position on second-hand smoke is less clear. Philip Morris, for example, defers the debate to public-health officials, and won't independently confirm the danger of second-hand smoke. R.J. Reynolds maintains there are still legitimate scientific questions.
To industry opponents, this is a familiar tactic. "It's the basic same formula," said Edward Sweda, an attorney at the Tobacco Products Liability Project at the Northeastern University School of Law, "saying 'nothing has yet been proven,' 'we need more research,' 'the jury is still out' ... all the while the companies are maximizing their profits at the expense of people's health."
William Ohlemeyer, who oversees the litigation facing Altria and its operating companies, including Philip Morris, said government allegations about second-hand smoke would not prove fraud, but allowed that in a case that the industry says is "dated and stale," second-hand smoke is one issue in which there is still some disagreement on the two sides.
While both sides say they are satisfied how the case is going, it's nearly impossible to tell whether one side is scoring more points with Judge Kessler. In court, she asks pointed questions of witnesses, but rarely indicates her leaning on evidence or testimony. When she does admonish one side or another, it's usually to encourage them to keep the trial moving. |
