I. LANDING A SHARK
Interrogating David Schechter from across a conference table, Jerrob Duffy asked the American lawyer, “When did you go to Canada?”
“I don’t know,” replied Schechter unhelpfully.
“Was that in 1991 or 1992?”
“I don’t know.”
“What was the purpose of your trip to Canada?” Duffy pressed on.
“It was a discussion on documents,” allowed Schechter.
“And that discussion centred on what documents could or could not be discovered in litigation brought against BAT Group companies, didn’t it?”
“Objection!” interjected one of Schechter’s lawyers. And for the next few minutes, Duffy was back to feinting and jabbing, trying to get an answer to his question.
The lawyers were sparring in a boardroom in the US Attorney’s offices in downtown Louisville, Kentucky. It was a languid summer morning in August of 2002, and the Ohio River just outside flowed languidly onward. On one side of the table sat Duffy, a determined thirty-one-year-old Princeton-educated lawyer who works for the US Department of Justice. Duffy was the sharpshooter among a posse of twenty government lawyers investigating the tobacco industry for a $280 billion US Racketeer Influenced and Corrupt Organizations Act (RICO) suit. The suit alleged that Big Tobacco operated a massive fraud for almost five decades.
Facing Duffy was a deflated man. At the age of sixty-three, with a long, chiselled face, deep-set eyes and wiry build, David Schechter was no longer in control of his fate. For twenty-six years, he had toiled as an attorney for a subsidiary of British American Tobacco (BAT), the world’s second-largest tobacco multinational. In Schechter’s glory days, he earned US $400,000 a year, jetted around the world first-class on BAT business and lived in a sizable spread in a fashionable Louisville neighbourhood. More importantly, he was a trusted member of an elite circle of powerful lawyers who pretty much ran the tobacco industry. In other words, Schechter knew all the industry’s well-kept dirty secrets.
Yet since retiring from the industry eight years earlier, his fortunes had spiralled into ruin. Not long after leaving the employ of Big Tobacco, Schechter had been ingloriously arrested and convicted for wiretapping one of his own employees at an investment company he briefly ran. His wealth had slipped away, and he was now under psychiatric care and popping three kinds of prescription pills to keep the black dogs of depression at bay. As if that weren’t bad enough, Schechter was also being investigated by Kentucky’s bar association.
Still, to Duffy—who had flown all the way from Washington, DC, to take this deposition—Schechter was a big prize. Duffy was hoping Schechter would spill about his involvement in a massive operation that destroyed sensitive documents lying in the files of BAT’s subsidiaries—including at Imperial Tobacco Ltd., Canada’s largest tobacco company. These documents are believed to have exposed the full extent of the tobacco companies’ knowledge of how cigarettes are addictive and hazardous to health.
“Why did [Imperial’s lawyers] send to you or send to anyone correspondence stating that they had destroyed documents?” Duffy asked Schechter.
“It blows my mind,” said a seemingly mystified Schechter. “I don’t know.”
Duffy presented Schechter with internal BAT letters showing that he had visited and held discussions with Imperial Tobacco’s lawyers about getting rid of important documents. Duffy suggested an explanation. “Could one purpose be to limit or avoid discovery in smoking and health litigation?”
Schechter thought about this for a moment before answering. “Could one purpose of destroying the documents be to protect the Canadian company in Canadian litigation?” he responded rhetorically. “Is that your question?”
“Yes, sir,” answered Duffy.
“Yes,” Schechter admitted, before adding a few moments later: “The other purpose would have been to keep them out of the hands of the Canadian government, which is more likely.”
Although Jerrob Duffy’s job was to see whether the tobacco industry had committed fraud, his deposition of David Schechter illuminates one of the most controversial and overlooked stories of the “Tobacco Wars:” the role of the industry’s lawyers. As American litigation began to peel away Big Tobacco’s veil of secrecy in the 1990s, forcing the release of more than forty million pages of internal corporate documents, the scope of these attorneys’ power finally came into view. “The lawyers just didn’t help them a little bit, they basically kept the industry alive by keeping the fraud alive,” declares John F. Banzhaf, a law professor at George Washington University in Washington, DC, and a long-time nemesis of the tobacco industry.
The fraud to which Banzhaf refers—the one that lay at the heart of the US government’s RICO suit—is that the tobacco industry recognized over fifty years ago that it was selling a highly addictive and cancer-causing product. Yet it lied about this knowledge and muddied the waters by claiming the evidence was “inconclusive.” The reason was simple: to fend off product-liability lawsuits that would have driven the tobacco companies out of business. “This was the only threat—because they knew they could not pay for the harm they did,” explains Richard Daynard, an associate dean at Northeastern University’s law school in Boston and president of the Tobacco Control Resource Center. “It’s a back-of-the-envelope calculation that takes two seconds.”
Lawyers frequently get bad reps for representing unseemly clients, yet the tobacco lawyers appear to be guilty of far more. In fact, District Judge Gladys Kessler wrote in her decision on the RICO suit last summer that “at every stage, lawyers played an absolutely central role in the creation and perpetuation of the enterprise [i.e., the industry’s plan to deceive the public] and the implementation of its fraudulent schemes.”
Indeed, the lawyers devised and coordinated both national and international strategies, told scientists what research to do and vetted scientific papers and reports as well as public-relations materials to ensure the industry was protected. They ran disinformation operations against anti-smoking campaigns. They identified “friendly” scientific witnesses, subsidized them with grants, paid them enormous fees and often hid the relationship between those witnesses and the industry. And then they carried out document-destruction policies, says Kessler, while taking shelter “behind baseless assertions of the attorney-client privilege.”
All of which may affect the current crop of lawsuits against the industry inching through Canada’s courts, which includes five class actions, a handful of individual product-liability suits, a federal government case over smuggling, another one on document destruction, and British Columbia’s effort to recoup Medicare costs. As Cliff Douglas, a lawyer and tobacco-control activist based in Ann Arbor, Michigan, observes, “Certainly no activity of any lawyer has ever been more destructive to humanity than the conduct of these lawyers working with the tobacco industry.”
Douglas no longer sounds hyperbolic when you consider the appalling damage that cigarettes wreak. Health Canada estimates smoking is directly responsible for the premature deaths of 45,000 Canadians every year, costing $15 billion in combined health and economic losses. In the US, the number is an estimated 440,000 dead, while the World Health Organization puts the global figure at a staggering five million.
Furthermore, the industry lawyers are not your run-of-the-mill, bottom-feeding ambulance chasers. Indeed, Big Tobacco retains the most expensive legal talent money can buy: these lawyers charge up to $700 an hour. They work in the well-heeled corporate law firms whose spacious offices dominate the office towers that clutter our skylines. In America, tobacco companies spend us $100 million each year on outside legal counsel alone.
Ultimately, the story of the tobacco-industry lawyers is international in scope. After all, Canada’s three tobacco companies—Imperial Tobacco, JTI-Macdonald and Rothmans, Benson & Hedges—are all subsidiaries or sister firms of global tobacco conglomerates. So while the Canadian companies grow their own tobacco and develop and market their own brands, they’ve always marched in lockstep with their parent corporations on the critical issues of whether cigarettes cause disease or are addictive. As Rob Cunningham, a lawyer with the Canadian Cancer Society, remarks, “You have to look at the parent companies to have a good understanding of the behaviour of Canadian tobacco companies, because they are subsidiaries of foreign companies and do what they are told.”
II. CENTRAL PARK PLAZA HOTEL, 1953
Why did lawyers come to dominate the tobacco industry? For the answer, we need to look back to a fateful meeting held one cold winter morning in 1953 at the elegant Plaza Hotel on Central Park in midtown Manhattan. Gathered together was an anxious group of CEOs from four of the biggest American tobacco companies. The meeting had been called because of a growing cascade of independent studies linking smoking to lung cancer—information that was affecting sales. “In 1953, they found out two things: smoking was lethal and it was addictive,” says G. Robert Blakey, a professor at Notre Dame Law School in Indiana and the man who drafted the RICO Act for the US Congress. “They had a choice right then. We either do something about it, admit what we know, or we lie—say it’s not true and try to bluff their way through. And they basically decided to bluff their way through.”
At the time, 50 percent of all adults in Canada and America were smokers, inhaling more than 450 billion cigarettes annually. Given their immense profits, it’s no surprise that instead of coming clean, the executives chose to sculpt a PR strategy that cast scorn on any studies linking smoking to disease. The minutes of that 1953 meeting show that the executives decided to set up a research committee and publicly announce that the committee would investigate whether smoking was indeed hazardous to human health. In reality, this marked the beginning of the industry’s conscious plan to spread doubt about the hazards of cigarettes—a campaign soon to be overseen by the lawyers.
Initially, the industry actually tried to prove that the independent studies were wrong. But much to its horror, when the tests were replicated, the results came back exactly the same. For example, a study carried out by the American tobacco company Liggett & Myers in 1955 showed that tobacco tar caused tumours in mice. The research company that conducted this study for Liggett found six years later that “there are biologically active materials present in cigarette tobacco. These are a) cancer-causing b) cancer-promoting c) poisonous d) stimulating, pleasurable and flavourful.”
Every bit of research the industry has ever commissioned on this question has produced the same results. Neil Collishaw, a former tobacco-control official at Health Canada who now works for Physicians for a Smoke-Free Canada, has unearthed studies conducted by Imperial Tobacco in the 1970s and 1980s examining the mutagenicity of cigarette smoke—an indicator of whether a substance is likely to cause cancer. “There were no instances of them ever testing tobacco smoke and it not showing mutagenicity,” he remarks.
Meanwhile, the industry’s scientists were discovering alarming things about nicotine. In 1963, Addison Yeaman, a lawyer for the American tobacco company Brown & Williamson (the US subsidiary of BAT), wrote a famous memo that stated, “Nicotine is addictive. We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms.” A Philip Morris researcher, William Dunn, was even more blunt in a 1972 paper characterizing cigarettes as a “nicotine delivery system” and advised “the cigarette should be conceived not as a product but as a package. The product is nicotine….Think of the cigarette pack as a storage container for a day’s supply of nicotine….Think of the cigarette as a dispenser for a unit dose of nicotine.” Research conducted by Philip Morris in the early 1980s in a secret lab discovered that nicotine has a similar impact on some areas of the brain as cocaine. Despite having had the ability to remove nicotine from tobacco for forty years, the companies instead ensure each cigarette contains enough nicotine to keep smokers hooked.
Naturally, this internal research was kept hush-hush at the behest of the industry’s lawyers. After all, as a 1980 Tobacco Institute memo said, the lawyers believed “that the entire matter of addiction is the most potent weapon a prosecuting attorney can have in a lung cancer/cigarette case. We can’t defend continued smoking as ‘free choice’ if a person was ‘addicted.’”
These days the Canadian industry doesn’t deny cigarettes are both addictive and bad for you, instead arguing that everybody knows this to be true and therefore anyone who takes up smoking consciously accepts the risks. But this argument is diminished by two realities. One, the modern-day cigarette is a scientifically engineered wonder designed specifically to addict you to nicotine. And two, few people begin smoking as adults; 90 percent of lifetime smokers acquire the habit before age nineteen.
Which leads to this paradox: in order to stay in business, tobacco companies must convince impressionable children and teenagers to smoke. Jeffrey Wigand, the famous tobacco whistleblower and subject of the movie The Insider, recalls that when he joined Brown & Williamson in 1989, the company was designing a snuff product specifically to get youth addicted. Thomas Sandefur, the company’s CEO, allegedly told Wigand, “We need to hook ’em young and hook ’em for life.”
Which is what the tobacco companies try to do. Over the years, the companies have scripted advertising campaigns that appeal to young people’s sensibility of rebellion and individualism: the Marlboro Man, Joe Camel, ads that depict young people smoking while enjoying outdoor athletics. Some of the most extensive research on selling to children was carried out here in Canada, by Imperial Tobacco. In the 1970s and 1980s, the company funded studies to figure out why teenagers take up smoking and to determine whether adding flavours to cigarettes would make them more appealing.
Most people forget it’s against the law for children and teens to buy cigarettes. So while the industry argues it sells a legal product, Blakey asserts this to be a “fiction. You sell it to a child—that’s illegal….And their scheme was to sell it to children. The fraud requires kids to buy in order to be addicted adults. It’s a circle. It’s a fraud perpetrated by each member of the industry and, to a major degree, orchestrated by the lawyers in running the research.”
III. DAVID R. HARDY & THE SECRET SIX
Given that the tobacco companies are selling a highly hazardous and addictive product, one that conjures up a swarm of legal nightmares, it’s no wonder the industry’s lawyers have accrued enormous power. That legal dominance can be seen as early as 1958, with the founding of the Tobacco Institute. Designed to act as a propaganda arm of the tobacco companies, issuing distorted science-based studies and PR that cast doubt on the dangers of smoking, it was run by industry lawyers. And the Tobacco Institute, in turn, was run by the Committee of Counsel. Also known as the “Secret Six” or the “Committee of Six,” this higher body was made up of top lawyers from each of the American companies, and met frequently to manage their burgeoning legal headaches.
This committee had immense clout. Its influence was described in 1964 by visitors from Britain’s Tobacco Research Council. They described it as “extremely powerful; it determines the high policy of the industry on all smoking and health matters—research and public relations matters, for example, as well as legal matters—and it reports directly to the presidents.”
Keeping control of research was one of the committee’s most vital functions. “The research was oriented away from finding out what was in cigarettes that were causing [health] problems, to diverting attention to other potential causes of disease,” says Jon Ferguson, a lawyer who worked on an antitrust suit against the industry for Washington State. By 1978, Curtis H. Judge, president of the American tobacco company Lorillard, was complaining in one handwritten note that “we have again ‘abdicated’ the scientific research directional management of the industry to the ‘lawyers’ with virtually no involvement on the part of scientific or business management side of the business. Lorillard’s management is opposed to the total industry future being in the hands of the Committee of Counsel.”
The Committee of Counsel also presided over so-called special projects: attempts to garner public credibility by commissioning outside scientists to carry out studies, giving the appearance that the industry was truly interested in learning about the health effects of cigarettes. For example, a scientist at Harvard University, Dr. Gary Huber, was persuaded in 1972 to let the tobacco industry fund his research into the question of whether smoking causes emphysema. An internal memo written by American Tobacco lawyer Arnold Henson shows that this “Harvard Project” was supported because of “a) our obligation to spend money on research b) the value of Huber to the industry and c) the PR value of the Harvard name.” In 1980, when Huber’s results started “getting too close to some things,” the lawyers cut off the scientist’s funding.
The lawyer who acted as Huber’s “keeper” was David R. Hardy, a man who dominated the industry’s legal landscape from the 1950s to the 1970s. Brash, charismatic and monumentally egotistical, Hardy built his Kansas City law firm—Shook, Hardy & Bacon—into a powerhouse operation devoted to servicing the industry. The New York Times once said this firm invited comparisons to the Mafia-controlled practice portrayed in John Grisham’s novel The Firm.
Hardy, a Marlboro smoker, was Big Tobacco’s chief warrior: for nearly twenty years, he never lost a case, due to his genius at discrediting cigarette claimants. He also managed the recruitment and briefing of experts who testified before Congress and in Canada’s Parliament, found informants who provided intelligence on unfriendly scientists and was a virtuoso at the art of disinformation. Even as he was dying of heart disease in 1976, Hardy boasted he’d bought the tobacco industry an extra twenty or thirty years. “Hardy mastered the campaign to deny outright the health effects of smoking,” says Cliff Douglas, a tobacco-control activist. “I think he is properly credited with the successful effort of the industry spending decades confusing the public.”
To this day, Shook, Hardy & Bacon is the legal shop of choice for the industry, one which Canadian tobacco lawyers confer with regularly. But it is by no means the only law firm the industry employs. All told, the industry has enlisted as many as two hundred firms. The most prominent of the American batch include Covington & Burling, Jones Day Reavis & Pogue, Chadbourne & Parke, and Jacob, Medinger & Finnegan.
While most of these lawyers simply defend the industry in court against product-liability lawsuits, others have taken on a much more activist role, establishing PR campaigns to discredit the industry’s multiplying army of foes. This role is best exemplified in the battle over environmental tobacco smoke (ETS), otherwise known as second-hand smoke.
IV. SECOND-HAND SMOKE
Big Tobacco’s enemies realized years ago that having smoking banned from public spaces made the practice socially unacceptable and therefore pressured people to quit. Studies have shown that cigarette consumption drops by up to 30 percent in workplaces that have gone smoke-free. This reality scares the wits out of the tobacco industry. In 1978, the Tobacco Institute was warned by a PR company that the ETS issue was “the most dangerous development to the viability of the tobacco industry that has yet occurred.”
So the lawyers took on the job of quelling this threat. In 1984, the Committee of Counsel established an ETS Advisory Group, and one of the people they put in charge was John Rupp, a senior partner at the Washington, DC-based law firm Covington & Burling. Educated at Harvard and Yale, Rupp was a member of the Committee of Counsel during the 1980s and 1990s and is today a partner of his firm’s London office.
Rupp’s plan had a number of elements. He helped establish front groups, such as the Center for Indoor Air Research, that disseminated information claiming second-hand smoke was benign. He recruited teams of sympathetic scientists (whom the industry labelled “whitecoats”) across the globe to “keep the controversy alive.” Their purpose was to argue that any studies showing ETS to be a health hazard were inconclusive or poorly conducted. By hiring these consultants, the industry was able “to take names that were untainted in the public eye and get them to do the industry’s dirty work for them,” explains law professor and university dean Richard Daynard.
Rupp also ran symposiums in order to give ETS critics a veneer of credibility. For example, in 1989 he helped organize an invitation-only symposium at McGill University, a task for which his law firm was paid US $700,000. The gathering was funded by the Tobacco Institute and Philip Morris. Rupp hand-selected the attending scientists and organized the format to ensure the conference’s conclusions were in line with the industry’s position on ETS. The conference’s co-chair was Donald Ecobichon, a professor and toxicologist at McGill who was one of the ETS consultants recruited by Rupp’s program. After the conference, Ecobichon submitted a paper to the US Environmental Protection Agency (EPA) arguing against the regulation of second-hand smoke. The symposium was also designed to neutralize a pending Canadian report that found ETS caused adverse health effects.
The ETS campaign extended into Canada in other ways. In 1987, Rothmans, Benson & Hedges suggested that the Canadian Tobacco Manufacturers Council—the main lobby group for the industry—run ETS seminars and have Rupp do a presentation. Indeed, the Canadian industry soon set up its own taskforce to combat the ETS scare.
One of the recruits to this cause was John C. Luik, a disgraced former philosophy professor. Luik, who lives in Niagara-on-the Lake, Ontario, studied at Oxford University as a Rhodes Scholar and later joined the staff at Nazarene College in Winnipeg. But he was fired in the mid-1980s when it was discovered he’d lied about having completed his PhD. After returning to Oxford to finish his doctorate in 1987, he got a second chance at Brock University. But Luik’s career there ended after he was caught padding his CV with non-existent articles, visiting professorships and books.
When the EPA published a study in 1993 saying that second-hand smoke kills 3,000 Americans a year, Luik was hired by the tobacco industry to write a rebuttal—one the industry closely vetted. “Pandora’s Box,” the general-interest article that appeared in Bostonia, a magazine for Boston University’s alumni, condemned the EPA study as “corrupt science.”
Luik was also trotted out for media interviews on ETS and smoking. A tweedy, stocky, grey-bearded man, he wowed hosts with his reasonable demeanour and professorial appearance. In one interview, he said cigarettes are not addictive and even suggested that smoking seems to prevent people from developing Alzheimer’s and Parkinson’s disease. He wrote opinion pieces for newspapers arguing against bans on second-hand smoke, testified on Parliament Hill against ETS science, and has written op-ed articles for the National Post attacking critics of second-hand smoke and light cigarettes.
Luik, who has collaborated with Rupp, also teamed up with Canadian lawyers. In just one example, in 1994 the industry hired him to assemble and edit Do Advertising Bans Really Work?—a book that criticized the Canadian government’s law curtailing tobacco advertising. One of the contributors to the volume was Colin Irving, then a lawyer with the Montreal firm of McMaster Meighen, who worked for RJR-Macdonald. Currently a partner at his own boutique firm of Irving, Mitchell & Associates in Montreal, Irving is the dean of tobacco-industry lawyers in Canada. Tall, patrician and arrogant, he is well respected for his courtroom acumen.
Luik and Irving worked together on one other PR campaign. When the federal government considered forcing the industry to use plain cigarette packages in 1994–95, the tobacco companies swiftly mobilized. To coordinate their attack, the Plain Pack Working Group was established in the UK, with lawyers from Lovell White Durrant (a British firm) and Shook, Hardy & Bacon among its members. Luik and Irving were both paid to complete a book on the subject; Luik received $155,000. When it was published in 1998, the industry ordered hundreds of copies, sending some of them to libraries across Canada.
V. TAKING BAT TO COURT
Before she became deathly ill and crippled by pain, Rolah Ann McCabe could jog a dozen kilometres in a little over an hour. A tough Australian woman who grew up in hardscrabble circumstances and raised four children, McCabe was a smoker, having become hooked at age twelve. So it was not entirely surprising when, in her late forties, she was diagnosed with lung cancer. But when she made the bold move of suing BAT’s Australian subsidiary—whose product she had been smoking most of her life—she had no inkling her case would expose a global operation by BAT and its lawyers to destroy evidence of what it knew about the dangers of cigarettes.
Since as early as the 1950s, the industry’s lawyers have tried to limit what was put on paper. When potentially compromising documentation was unavoidable, they have moved controversial documents offshore, or altered and destroyed them. But a more systematic and wholesale shredding of sensitive documents began in earnest twenty years ago, as the companies grew frightened about what could come to light during litigation. Indeed, Big Tobacco was fearful some of these documents would deliver a knockout blow if ever shown to a jury.
This shredding is one of the most contentious of the lawyers’ acts. After all, with the exception of embezzlement, there is no greater misdemeanour among lawyers than knowingly destroying evidence likely to be used by your opponent in court.
Commencing in the 1980s, many of the tobacco companies began to institute policies of “document retention”—an Orwellian term that means, in fact, document destruction. Most large companies and governments have such policies, simply because it costs so much to warehouse great quantities of paper for years.
BAT began implementing this policy in the mid-1980s, as a new wave of litigation hit the industry. The UK-based multinational was particularly alarmed about lawsuits aimed at its American subsidiary, Brown & Williamson (B&W), once it learned from its lawyers that any documents found anywhere within its far-flung empire could be used against the company in any jurisdiction. In other words, files from Imperial Tobacco in Canada could be used against Brown & Williamson in the States.
BAT’s global document-destruction program came to light only after Rolah Ann McCabe took BAT to court in Australia. in 2001. Her lawyer, Peter Gordon, was a high-profile, tough, brilliant bulldog of a barrister based in Melbourne. And soon Gordon was requisitioning any documents pertaining to BAT’s knowledge of the health impact of its cigarettes.
“The tobacco-company lawyers began to be artful about what they would and would not say and kept delaying discovery,” recalls Gordon. “We said we either want the documents or an explanation of where they were.” It began to dawn on him that the documents might no longer exist.
In a clever gambit, Gordon made a motion to the court asking for all correspondence among the tobacco lawyers about this policy. Soon he was leafing through internal letters among the BAT lawyers that detailed their efforts to get rid of sensitive material.
As the McCabe pretrial hearings showed, starting in the mid-1980s, BAT’s lawyers had gone through the Australian subsidiary’s files and carefully gotten rid of any damaging material. One of BAT’s senior lawyers, Nick Cannar, had been dispatched from Britain to Australia to assist in the process. English barrister Andrew Foyle of Lovell White Durrant supplied the tobacco giant with further legal opinions and wrote a now-famous memo: “It should be assumed that [BAT] documents (what is in them and what has happened to them) will be a matter of great interest to a plaintiff’s lawyer in a product-liability action.”
And the man who was sent to oversee this all-important task? None other than David Schechter. Long before he would be interrogated by government attorney Jerrob Duffy in Louisville, Schechter was helping to implement BAT’s document-retention policy throughout its subsidiaries. President of and counsel for one of BAT’s holding companies, and a member of the Committee of Counsel, Schechter was a loyal foot soldier of BAT who was responsible for the entire process.
As the case proceeded, it became clear that Schechter and his colleagues—as well as lawyers from an Australian firm called Clayton Utz—had scrubbed the files clean. What Justice Geoffrey Eames learned in his courtroom clearly outraged him. In the spring of 2002, he handed down a stunning verdict, awarding Rolah Ann McCabe AUS $710,000. He did so, Eames wrote, because “the process of discovery was subverted by the defendant and its solicitor Clayton Utz, with the deliberate intention of denying a fair trial to the plaintiff and the strategy to achieve the outcome was successful.”
McCabe was jubilant. “I believed them when they said there was no proof smoking was dangerous,” she told the media afterwards. Her victory, however, would prove bittersweet. She died in the fall of 2002 at age fifty-one, not long before an appeals court overturned the Eames decision. Later, the Australian High Court refused to hear the case. Today, an incensed Peter Gordon says that whenever a tobacco company purges documents, “it becomes a question of [how] to prove it. It’s easy for them to say there is no evidence.”
VI. BUT ALAS, THE CUPBOARD WAS BARE
Many of the lawyers who cleansed the files in Australia appear to have done the same at Imperial Tobacco in Canada. Internal company correspondence found in the tobacco-document depositories in Guildford, England and Minneapolis, Minnesota, and obtained by Maisonneuve, reveals a story of how, under pressure from BAT, sensitive documents sitting in Imperial’s cabinets were destroyed or shipped overseas.
For example, after the federal government passed Bill C-51, a law banning tobacco ads, the tobacco industry went to court to have this law quashed. The government responded in 1988 by demanding from Imperial Tobacco an extensive list of documents pertaining to marketing. This seems to have frightened BAT. A year later, Nick Cannar, the lawyer who had visited BAT’s Australian subsidiary, wrote to Imperial’s chief lawyer, Roger Ackman, requesting that some BAT documents be returned to England. What those documents were about, and how sensitive they may have been, remains unknown, but memos from Ackman to Cannar suggest that Imperial was hiding research and development documents from the federal government. Soon, lawyer John Meltzer of Lovell White Durrant was flying to Montreal to meet with Imperial Tobacco executives. “The purpose of this meeting,” wrote Ackman in a fax, “is to identify as closely as possible, the documents to be transmitted to [the UK].” Two months later, Cannar sent Imperial a draft “document retention” policy, which Cannar wanted him to adopt as soon as possible.
But trouble was brewing: Imperial’s scientists were reluctant to hand over all the studies that the British lawyers wanted. By August of 1990, Cannar was complaining that Imperial’s head of research, Pat Dunn, was resisting efforts to have documents shredded in Canada. “The problem is largely Pat Dunn and Roger Ackman’s inability to control him,” fumed Cannar.
Nevertheless, on August 2, 1990, Cannar wrote that he hoped Dunn would be brought into line after meeting with Ackman and the chairman of Imperial, Jean-Louis Mercier. “The documents will be destroyed in Canada including the BATCo documents,” wrote Cannar confidently. In the same letter, he recommends that if any pressure needs to be applied, it should be on Mercier to support “the advice of his own lawyer who has a better appreciation of the legal problems than his Head of Research”—an indication of where the real power within BAT and Imperial lay.
The importance of purging Imperial’s files was reinforced by the arrival of David Schechter, BAT’s top man on document eradication. In the fall of 1991, Schechter met with Ackman, outside counsel Simon Potter and BAT solicitor Stuart Chalfen to discuss Imperial’s document-retention policy. During his 2002 deposition in the US government’s RICO suit, Schechter admitted to Jerrob Duffy that this meeting was held to discuss concerns about what documents would come to light in Canadian litigation.
It seems a decision was reached to destroy sensitive documents. In Judge Gladys Kessler’s ruling last year on the US government’s RICO suit, she describes what happened next: “In the summer of 1992, Simon Potter … sent a letter to Stuart Chalfen, Solicitor of BAT Industries, David Schechter, General Counsel of BATUS, which was B&W’s immediate holding company; and John Meltzer, a lawyer at BAT’s outside counsel Lovell, White, Durrant. The letter indicates that unless he received instructions to the contrary, Imperial Tobacco Ltd. planned to destroy sixty documents, including scientific studies. The letter includes a list of documents to be destroyed, including one document with the notation ‘not destroyed because never received by Imperial.’”
Kessler goes on: “In an August 7, 1992 letter to Chalfen, Schechter, and Meltzer, Simon Potter confirmed that ‘the documents mentioned in my letter of July 30 have indeed been destroyed.’ David Schechter believed that Imperial Tobacco destroyed scientific documents in part to protect B&W in litigation …. In 1992, Graham Read, Head of Research and Development at BATCo, reported to Peter Clarke, BATCo’s Solicitor, on “Imperial’s access to R&D reports.” Read stated that ‘[w]hether a requested report is faxed or couriered [from BATCo to Imperial], we attach an accompanying form seeking confirmation that it has been destroyed after use.’”
The documents Potter had shredded included studies on mouse-skin painting experiments (to test cancer), reports dealing with the properties of nicotine and the toxicity of reconstituted tobacco, and tables comparing the toxicity of various brands.
Called to the bar in 1975, Simon Potter is one of the most prominent and successful corporate lawyers in Canada and, more importantly, a long-standing member of a globe-trotting group of international tobacco attorneys. Now a partner at McCarthy Tétrault, Canada’s largest corporate law firm, Potter has been Imperial Tobacco’s top outside counsel for many years. He has an impressive resumé (practising international trade law, including on the softwood-lumber dispute; advising the federal government at the World Trade Organization) and was president of the Canadian Bar Association from 2002 to 2003. He also contributed to Do Advertising Bans Really Work?, John Luik’s book criticizing the federal government for curtailing tobacco advertising. Bilingual, articulate and debonair, Potter was once president of the Liberal riding association of Westmount–Ville-Marie in Montreal–the riding of former Intergovernmental Affairs Minister Lucienne Robillard.
In an interview, Potter declared emphatically it was “utterly wrong” that Imperial’s document-retention policy was designed to prevent sensitive documents from being obtained by plaintiffs. He said the policy was put into effect simply to make space in Imperial’s files. He said his 1992 letters to BAT regarding the sixty documents destroyed was a formality to inform the parent company “in case they were the only copies remaining.” He said originals of the documents still exist. “I myself am unaware of any attempt to destroy any documents or to make any documents unavailable to any litigation,” said Potter.
It’s true that nearly all the documents cited in Potter’s letter were found years later in England in BAT’s files. But that was in 1998, six years after Potter destroyed them, when litigation in the US forced the company to make its internal documents in Britain and America publicly available. If this litigation had not occurred, plaintiffs’ lawyers say these documents would probably never have come to light during discovery in Canada. Moreover, there is no mention in the available Potter letters of his concern about whether BAT had originals of the documents on file. In fact, an analysis of the sixty destroyed documents, written by BAT’s British tobacco lawyers, grades them on legal sensitivity—hardly a standard space-clearing measure—and refers to the “potential impact on litigation of the research reports held in Canada.”
How extensive was Imperial’s vacuuming of its files? What impact will this have on litigation against the company in Canada? Will lawyers for plaintiffs discover, as Peter Gordon did in Australia, cupboards picked clean of incriminating evidence, thus undermining the chance for a fair trial? Nobody knows. Plaintiffs’ lawyers are surprisingly tight-lipped about this possibility. Only Montreal lawyer Bruce Johnston, involved in two class-action lawsuits against the industry, cautiously admits the obvious: “I am concerned that if there are things missing, we won’t know about it.”
VII. THE LONG TAIL
North America’s tobacco industry is no longer the titan it once was. Smokers today constitute only about 20 percent of Canada’s adult population. Lawsuits, government regulation and anti-smoking ordinances continue to eat away at the industry’s influence.
In 1998, in a master settlement in the US Big Tobacco agreed to hand over US $246 billion and to disband the Tobacco Institute, the Committee of Counsel and many other PR efforts. The industry was also obliged that year to surrender millions of pages of internal documents. In September 2005, tobacco companies suffered another setback when the Supreme Court of Canada opened the door for provinces to sue the industry to recoup Medicare costs for treating smoking-related diseases.
But while the industry itself may feel besieged, it’s certain that its well-paid lawyers will never be disciplined for the part they have played, and continue to play, in the industry’s activities. By way of example, lead shredder-in-counsel David Schechter saw his licence pulled by the Kentucky Bar Association in 2003 for a two-year period; but this punishment came not for his work for the tobacco industry but because he used illegal wiretapping equipment in a personal matter. His US $5.5 million combined severance and pension monies from BAT was unaffected.
Big Tobacco is extraordinarily resilient. In Canada, litigation has been extremely limited: not one cent in damages has yet been paid out by the industry. The US government’s RICO case uncovered an astonishing wealth of damning information but was emasculated by a combination of court decisions and Bush-administration meddling. Indeed, when Judge Kessler issued her decision last August, she found that the industry was indeed guilty of fraud and racketeering but ordered it to pay only the Justice Department’s costs—an estimated US $135 million. A pittance, in other words.
In the end, the lawyers will saunter into the sunset of their retirements possessing substantial bank accounts. “They made off with money and they got paid for articulating this criminal conspiracy all of these years, they have never been indicted and never been sued, and never had a bar complaint filed against them,” says Robert Blakey, the law professor from Notre Dame University who drafted the RICO Act for the US Congress. “What does that teach you? It makes you cynical.”