TWO EXCERPTS from this critical case in which Judge Lee Sarokin
suggested that the mountains of tobacco industry documents protected by the
attorney/client privilege be made public. The second of the two excerpts
deals with the issue of attorney/client privilege. Sarokin said these
documents could not be held under attorney/client privilege due to the crime
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
Civ. No. 84-678
Susan Haines, as Administrix ad Prosquendum and Executrix
of the Estate of Peter F. Rossi,
(HIS O P I N I O N)
LIGGETT GROUP, INC.,
a Delaware Corporation,
Sarokin, District Judge
[Excerpt #1: Introduction]
In light of the current controversy surrounding breast implants, one
wonders whenall industries will recognize their obligation to
voluntarily disclose risks from the use of their products. All too often in the
choice between the physical health of consumers and the financial well-being of
business, concealment is chosen over disclosure, sales over safety, and money
over morality. Who are these persons who knowingly and secretly decide to put
the buying public at risk solely for the purpose of making
profits and who believe that illness and death of consumers is an appropriate
cost of their own prosperity!
As the following facts disclose, despite rising pretenders, the tobacco
industry may be the king of concealment and disinformation.
In 1954, the tobacco industry promised to disseminate the
results of industry-sponsored, independent scientific research for the
purpose of answering the question: "Does cigarette smoking cause illness?"
Decades later, one searches in vain for a "Frank Statement to Cigarette
Smokers" from the tobacco industry which purports to answer that
Plaintiff alleges that defendants have perpetrated a public relations
fraud. Plaintiff has presented evidence from which a reasonable jury could
conclude that the tobacco industry in general, and defendants in particular,
were aware of the risks of smoking; were concerned about the publication of
those risks by others and the consequent impact upon cigarette sales; and
sought to discredit or neutralize the adverse information by proffering an
independent research organization, the Council for Tobacco Research (the
"CTR"), which purportedly would examine the risks of smoking and report its
finding to the public. The evidence presented by plaintiff supports a finding
that the industry research which might indict smoking as a cause of illness was
diverted to secret research projects and that the publicized efforts were
primarily directed at finding causes other than smoking for the illnesses being
attributed to it.
A jury might reasonably conclude that the industry's announcement of
proposed independent research into the dangers of smoking and its promise to
disclose its findings was nothing but a public relations ploy--a fraud--to
deflect the growing evidence against the industry, to encourage smokers to
continue and non-smokers to begin, and to reassure the public that adverse
information would be disclosed.
While the efforts which the CTR chose to advertise were well publicized,
plaintiff learned of a secret division of the CTR, the "special projects"
division. Under the auspices of the special projects program, defendants'
counsel and other tobacco industry attorneys collaborated in assessing,
monitoring, and directing the scope of research projects purportedly designed
to identify expert witnesses and to develop evidence supporting defendants'
positions in existing and anticipated litigation and Congressional hearings.
Defendants insist that their "special projects" efforts are entirely distinct
from and unrelated to the CTR's advertised "independent" research and thus,
"special projects" efforts are entirely distinct from CTR's advertised
"independent" research and thus, "special projects" documents are protected by
attorney-client privilege. However, plaintiff seeks discovery of the "special
projects" documents otherwise subject to the attorney-client privilege on the
ground that said documents come within the crime/fraud exception to the
Plaintiff has presented prima facie evidence that defendants'
"special projects" program was interrelated and intermingled with the CTR's
supposedly "independent" research. The facts presented support plaintiff's
overall theory of fraud based on the false claims regarding the independence of
CTR-sponsored research and on the likelihood that defendants mounted a public
relations campaign designed to discredit the links between smoking and disease
which defendants knew existed.
Furthermore, there is evidence supporting the conclusion that research
which might tend to prove smoking a cause of such illnesses was diverted into
special projects and intentionally shielded by the attorney-client privilege so
as to prevent its disclosure.
The court has conducted an in camera review of selected special
projects documents, and, as presented in the opinion below, the documents speak
for themselves in a voice filled with disdain for the consuming public and its
health. Despite the industry's promise to engage independent researchers to
explore the dangers of cigarette smoking and to publicize their findings, the
evidence clearly suggests that the research was not independent; that
potentially adverse results were shielded under the caption of "special
projects;" that the attorney-client privilege was intentionally employed to
guard against such unwanted disclosure; and that the promise of full disclosure
was never meant to be honored, and never was. Accordingly, the court concludes
that the crime/fraud exception applies and that plaintiff is entitled to
discovery of the withheld special projects documents.
[Excerpt #2 re: ATTORNEY/CLIENT PRIVILEGE]
But in addition to the evidence and factual inferences already proffered by
plaintiff, the most persuasive evidence prompting this court to apply the
crime/fraud exception and to reverse the Magistrate's order as clearly
erroneous comes from the disputed documents themselves. This court's own in
camera inspection to selected documents has revealed the most explicit
admissions that defendants used the special projects program to further the
alleged ongoing fraud and deception surrounding the advertised function and
operation of the CTR. Even more disturbing, the documents indicate that
defendants specifically abused the attorney-client privilege in their efforts
to effectuate their allegedly fraudulent scheme. The court recounts some of
the most damaging evidence below, recognizing the sensitive task of fulfilling
the court's duty to support and justify its holding while temporarily
preserving the confidentiality of otherwise privileged documents.
1. Document # RC-6033263 et seg.
The October 6,1966 minutes of a September 30, 1966 meeting, transmitted
via an October 11, 1966 letter from Shook, Hardy & Bacon, states:
Progress reports on special projects by Ad Hoc committee.
The special projects identified at SP-103 and SP-104 assign the CTR and
the TI the responsibility of investigating: 1) "specific refutation of
misleading statements regarding cigarette smoking commonly appearing in
anti-smoking propaganda;" and 2) "collection of predictions which have not
This statement supports plaintiff's hypothesis that "special projects" and
the CTR in general, as well as the Tobacco Institute, coordinated and
commingled their efforts in defendants' public relations campaign to create
doubt about links between smoking and disease. This is exactly the type of
evidence which defense counsel concedes could link "special projects"
activities to plaintiff's fraud claim, giving rise to the crime/fraud
exception. The above quote supports plaintiff's theory that the CTR was not an
independent research body but rather was (and is) defendants' agent, whose
research is guided by defendants' in coordination with defendants' litigation
and public relations efforts.
2. Documents # RC-6033468 et seg. and # 1005122 et seg.
Plaintiff's claim of CTR manipulation through the siphoning of relevant
projects is further supported by the notes of the September 10, 1981 Committee
of General Counsel, transmitted via a September 18, 1981 letter from Webster
& Sheffield, which states:
Stevens: "I need to know what the historical reasons were for the
difference between the criteria for lawyers' special projects and CTR special
Jacob: "When we started the CTR Special Projects, the idea was
that the scientific director of CTR would review a project. If he liked it,
it was a CTR special project. If he did not like it, then it became a
lawyer's special project."
Stevens: "He took offense re scientific embarrassment to us, but
not to CTR."
Jacob: "With Spielberger, we were afraid of discovery for FTC
and Aviado, we wanted to protect it under the lawyers. We did not want it out
in the open."
In this court's opinion, no evidence could be more damning. These minutes
explicitly acknowledge that the supposedly "independent" scientific director of
CTR channeled research into "special projects" for defendants' litigation
efforts. But even more disturbing is defendants' announced practice of using
the "special projects" division in order to shield damaging research results
from the public and the FTC. A document captioned "Notes from the
September 10, 1981 Meeting of Company Counsel and Ad Hoc Committee Members" is
even more explicit. Page one of the "Notes" states as follows:
E.J.: Difference between CTR and Special Four (lawyers'projects).
Director of CTR reviews special projects--if project was problem for CTR, use
Special Four. Also, if there are work-product claims, need the lawyers'
protection, e.g. motivational research that was done during the FTC
investigation was done through Special Four because of possibility that CTR
would be subpoenaed. e.g. Joe Janus' current study of cohort effect
(those born in 1890-1919) is a full CTR project--Special Four gave interim
It is admissions such as this which compels this court to find the
Magistrate's Order below clearly erroneous. Such clear and intentional abuse
of the attorney-client and work-product privileges cannot be tolerated and
certainly cannot withstand plaintiff's crime/fraud contentions in this
the criminal probe .
will there be a deal? .
a look at the depositions .
big tobacco - what's at stake .
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