Reports that Matter

United States v. Philip Morris USA Inc.: Amended Final Opinion

Tobacco Institute Committees

Section 20 of 129

Tobacco Institute Committees

  1. The Tobacco Institute was run by a variety of committees, comprised of representatives and agents from Defendants Philip Morris, Lorillard, Liggett, Reynolds, and B&W, and employees from Defendant Tobacco Institute. The most influential and powerful of these were the Tobacco Institute Committee of Counsel, the Tobacco Institute Executive Committee, and the Tobacco Institute Communications Committee.
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a. Committee of Counsel and Outside Counsel 173. The Tobacco Institute Committee of Counsel was comprised of the general counsels

of the sponsoring companies of the Tobacco Institute -- Philip Morris, Reynolds, Lorillard, Liggett, and B&W -- as well as counsel for American. 85686131-6131 (US 87589) (Lorillard); 1005147807- 7807 (US 36119) (Philip Morris); 03654362-4362 (US 29296) (Reynolds); 517004087-4090 (US 20874) (B&W); LG2014927-4931 (US 86090) (Liggett); 681725305-5307 (US 21019) (American); Stevens WD, 2:18-22, 5:1-11, 5:12-23; Juchatz TT, 11/18/04, 06545:11-06546:2; Kornegay PD, Small v. Lorillard, 11/18/97, 34:11-18. Representatives from Philip Morris Companies also were members of the Committee of Counsel, and some Committee of Counsel meetings were held at Philip Morris Companies headquarters in New York. Northrip WD, 8:14-8:5; 2023033745-3745 (US 87590); 2023033795-3795 (US 87591). Members of the Committee of Counsel also included attorneys from the outside law firms of Covington & Burling, Jacob Medinger & Finnegan, and Shook, Hardy & Bacon. WAX0011075-1127 at 1088-1093 (US 64758); Hoel PD, United States v. Philip Morris, 6/27/02, 71:17-22; 521043046-3050 (US 20891); 680038350-8352 (US 20980); Stevens WD, 5:1-11; Stevens TT, 01278:10-01280:1.

  1. The purpose of the Committee of Counsel meetings was to discuss legal issues related to the tobacco industry and to provide legal advice on any matter that member companies would bring before it. Northrip WD, 8:11-13.

  2. The importance of the Committee of Counsel was described in an October 1964 trip report written by visitors from Britain's Tobacco Research Council:

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The leadership in the U.S. smoking and health situation therefore lies with the powerful Policy Committee of senior lawyers advising the industry, and their policy, very understandably, in effect, is "don't take any chances." It is a situation that does not encourage constructive or bold approaches to smoking and health problems, and it also means that the Policy Committee of lawyers exercises close control over all aspects of the problems.

1003119099-9135 (US 20152).

  1. The primary function of the Committee of Counsel within the Enterprise was described in a document prepared by Ernest Pepples, General Counsel for B&W:

[T]he primary function of this Committee of Counsel has been to circle the wagons, to coordinate not only the defense of active cases, but also to coordinate the advice which the General Counsels give to ongoing operations of their companies pertaining to products liability risks.

517004087-4090 (US 20874).

  1. The Committee of Counsel met frequently over the years and the agenda of its meetings covered a wide range of topics that were of concern to the Defendants. Typical items discussed included various smoking and health related issues including addiction, industry witness development (especially in the area of ETS), Special Projects, Special Accounts, CTR's Literature Retrieval Division, review of the Tobacco Institute's ads, institutional research, and smoking and health litigation generally. Stevens WD, 6:10-12, 6:13-21; Northrip WD, 8:11-13; 680239427-9429 (US 30835); 03654134-4134 (US 29291); 85686132-6132 (US 87592); 85686235-6236 (US 87593); 85685497-5497 (US 32030); 03654220-4220 (US 29293); 03654179-4180 (US 87594); 503762768- 2768 (US 86093); 03654341-4342 (US 29295); 03654327-4328 (US 29294); 85685745-5745 (US

LG2005471-5473 (US 88096); 03654160-4160 (US 86097); 03746187-6190 (US 86098);

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LG2008241-8242 (US 21206); 03638986-8987 (US 86815); 03746184-6185 (US 20600); 2024671248-1255 (US 21584); 1005121522-1526 (US 23046); LDOJ2607427-7434 (US 86099); BWX0004268-4274 (US 36225); 03601453-1453 (US 86102); 01333625-3625 (US 26468); 03654139-4147 (US 86103); XBW0011405-1416 (US 86104); BWX0004264-4267 (US 36224); 680542504-2505 (US 86105); TIFL0407411-7411 (US 22044); TIFL0407410-7410 (US 22041); 681000290-0293 (US 21015).

  1. Even when Liggett decided to cease participation in the Tobacco Institute as a Class A member, it continued to participate in the Committee of Counsel. In a September 21, 1993 letter from Liggett's in-house counsel Josiah Murray to the Tobacco Institute's President and Counsel, Liggett sought to reduce its payments to the Tobacco Institute, but at the same time sought Tobacco Institute approval to continue participating in the Tobacco Institute's Committee of Counsel, and to have continued access to Tobacco Institute information and data, including reports and memoranda from Covington & Burling to the Committee of Counsel. In seeking these materials, Murray assured the letter's recipients that Liggett would continue to conform its conduct in accordance with the Enterprise's strategies, writing:

It is not the intent of Liggett to conduct its business in a manner adverse to the interest of the industry as a whole with respect to those legal and political issues as to which, by applicable law, the several competitor companies have a right to act in concert and in collaboration one with another, and attaining this objective is enhanced, of course by [Liggett] being adequately informed.

LWDOJ00023390-00023392 (US 25910).

  1. The role of outside counsel, as opposed to the in-house general counsels, including Shook, Hardy & Bacon, Jacob, Medinger & Finnegan and Covington & Burling, was to assist the
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Committee of Counsel. 03638986-8987 (US 86815); Rupp WD, 38:21-39:19; Northrip WD, 6:12- 16; 6:22-6-1:25; Dawson WD, 15:15-21. As has already been mentioned, and will be further elaborated on infra, two of those law firms, in particular Covington & Burling, became the guiding strategists for the Enterprise and were deeply involved in implementation of those strategies once adopted.

  1. Covington & Burling was counsel for the Tobacco Institute and was also described as counsel for the "industry." 682150942-0942 (US 86491); Rupp WD, 38:21-39:19. An attorney from Covington & Burling attended every meeting of the Committee of Counsel. Covington & Burling attorneys first reviewed agenda proposals for the Committee of Counsel meetings before they were sent to member companies. Blixt PD, United States v. Philip Morris, 10/31/02, 159:20- 161:13, 169:13-170:1. Covington & Burling also cleared press releases issued by the Tobacco Institute. Merryman PD, Minnesota v. Philip Morris, 7/16/97, 414:21-415:2, 416:10-22.

  2. Shook, Hardy & Bacon was counsel for Defendants Philip Morris, Philip Morris Companies, Lorillard, Reynolds, and B&W, and benefitted from a close association with Defendant Tobacco Institute. 521043046-3050 (US 20891); TIMN0245637-5638 (US 62723); 2015007199- 7207 (US 20311); Northrip TT, 9/30/04, 01334:19-01335:5; Kornegay PD, Cipollone v. Liggett, 8/17/84, 177:23-178:3, 179:5-21, 185:20-186:3. In fact, Robert Northrip, following his attendance at a Committee of Counsel Meeting, would normally bill either three or four tobacco companies (including Phillip Morris, Lorillard, B&W and possibly Reynolds) for his time. Northrip TT, 9/30/04, 01346:12- 22; Northrip WD, 5:17-5-1:11.

  3. In addition to John Rupp of Covington & Burling serving as counsel for the Tobacco Institute and the "industry," Shook, Hardy & Bacon was also given a wide range of responsibilities for the Enterprise. In a May 18, 1982 memorandum, William Shinn of the firm described its activities relating to the Tobacco Institute and noted that it examined "most material emanating from the Tobacco Institute which has potential smoking and health overtones." This memorandum was addressed to Robert Sachs, Assistant General Counsel for B&W, and Arthur Stevens, Senior Vice President and General Counsel for Lorillard, and copied to Thomas Ahrensfeld, Senior Vice President and General Counsel for Philip Morris; Alexander Holtzman, Assistant General Counsel for Philip Morris; Ernest Pepples, General Counsel for B&W; and Samuel Witt, General Counsel for Reynolds. Since the firm's review involved a great deal of give and take, it sometimes "prepar[ed] the final version" of the product. Shook, Hardy & Bacon also assisted the Tobacco Institute in setting strategy, preparing witnesses on smoking and health issues, briefings, reviewing press releases, advertisements, and other public statements, and orchestrating follow-up activities. Shinn remarked: "While we are asked occasionally to do something that we believe T.I. should do itself, we have always reserved the right to decline unless directed by the Committee of Counsel." 521043046-3050 (US 20891).

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  1. Shook, Hardy & Bacon's role was further explained in a June 28, 1988 memorandum from Donald Hoel of Shook, Hardy & Bacon to Todd Sollis, Associate General Counsel for Philip Morris Management Corporation. Hoel explained that

[b]ecause SHB represents several of those [cigarette] manufacturers and enjoys a close association with the TI, the firm is able to move freely among industry members, facilitating cooperation and open communication. In this way, SHB helps eliminate potential difficulties within the tobacco industry that could reduce PM's ability to address effectively smoking and health issues and impair its defense of lawsuits.

2015007199-7207 (US 20311); Northrip TT, 9/30/04, 01334:19-01335:5.

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  1. Jacob, Medinger & Finnegan was yet another law firm which played a major advisory role as counsel for Reynolds, B&W, and CTR. Edwin Jacob attended and gave presentations at Committee of Counsel meetings; he was also involved in the administration of CTR Special Projects (discussed further at Section III(E)(2), infra). 680038350-8352 (US 20980); 1005121522-1526 (US 23046).

b. Tobacco Institute Executive Committee 185. The Tobacco Institute Executive Committee had the "final voice on TI matters" and

Tobacco Institute statements. It included two representatives from each of the cigarette manufacturer member companies of the Tobacco Institute and had a rotating chairmanship. Chilcote PD, Richardson v. Philip Morris, 9/21/98, 92:21-97:2; Kornegay PD, Small v. Lorillard, 11/18/97, 25:13-29:1. The Executive Committee also set Tobacco Institute policy and determined resource allocation within the organization. Dawson WD, 10:13-11:2.

  1. The Tobacco Institute Executive Committee met frequently to keep abreast of issues of common concern within the Enterprise. In addition to having final approval authority on all Tobacco Institute matters, the Executive Committee often discussed issues of joint industry research on smoking and health, research funded through CTR, and funding of Tobacco Institute advertising. Dawson WD, 11:3-6; Northrip WD, 8:11-13; Chilcote PD, Broin, 11/19/93, 34:5-35:5; 03677101- 7103 (US 29313); TIMN0013425-3428 (US 88258); TIMN0013471-3476 (US 88259); TIMN0013429-3431 (US 88261); TIMN0013432-3435 (US 88262); TIMN0013460-3464 (US 88264); TIMN0013471-3476 (US 88265); TIMN0013508-3513 (US 88266); TIMN0013514-3517 (US 88267); TIMN0013518-3251 (US 88268); TIMN0013526-13530 (US 88269); TIMN0013554- 3557 (US 88270); TIMN13450-3454 (US 88276); TIMN0013441-3445 (US 88289); TIMN00134553456 (US 88291); TIMN0013477-3484 (US 88293); TIMN0013485-3489 (US 88294);
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88297); TIMN0013550-3553 (US 88298); TIMN0013558-3563 (US 88299); TIMN0013583-3589 (US 88300); TIMN0013628-3632 (US 88301); TIMN0013651-3655 (US 88302); TIMN0013656- 3659 (US 88303); TIMN0014418-4425 (US 88304); TIMN0017720-7722 (US 88305); TIMN0017725-7729 (US 88306); TIMN0017731-7736 (US 88307); TIMN0018436-8439 (US 88308); TIMN0018451-8455 (US 88309); TIMN0018462-8466 (US 88310); TIMN0018590-8593 (US 88311); TIMN0019234-9239 (US 88312); LG0237151-7159 at 7154 (US 21194).

  1. For example, the Tobacco Institute Executive Committee met on January 12, 1964, to discuss the implications of the 1964 Surgeon General's Report on Smoking and Health. The Executive Committee agreed that it was "considered to be of prime importance that the industry maintain a united front and that if one or more companies were to conduct themselves as a matter of self interest, particularly in advertising, obvious vulnerability would be the result." LG2008203- 8210 (US 22682).

  2. A 1974 Tobacco Institute report titled "Defending Tobacco" stated that the Tobacco Institute Board of Governors' adoption, in January 1971, of the Guidelines for Authority and Responsibility of the Tobacco Institute, had greatly improved the Tobacco Institute's overall efficiency. The report established authority and responsibility of the Tobacco Institute's staff and committees, placed more authority in its President, and required more frequent meetings of the Executive Committee to create and review Tobacco Institute policies, programs and objectives. The Guidelines eliminated much undue delay occasioned in the past in obtaining approval and authority from the Tobacco Institute Executive Committee or its Board members for Tobacco Institute action and improved the overall efficiency of the Enterprise. TIMN217628-7639 (US 21263).

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c. Tobacco Institute Communications Committee 189. The Tobacco Institute Communications Committee reviewed and approved Tobacco

Institute advertisements, media plans, and public relations campaigns carried out by the Tobacco Institute on behalf of the Enterprise. Chilcote PD, Richardson v. Philip Morris, 9/21/98, 263:5-14.

  1. Each Tobacco Institute member company designated its public relations people to attend meetings of the Communication Committee and to inform their respective companies about the activities of the Committee. Dawson WD, 17:9-23; Dawson TT, 1/12/05, 9899:20-9900:10; Duffin PD, Barnes v. American Tobacco, 10/6/97, 118:4-119:3, 119:7-121:2. Membership of the Communications Committee consisted of representatives of Reynolds, B&W, Phillip Morris, Lorillard, Liggett, and American, as well as outside lawyers from Shook, Hardy & Bacon and Covington & Burling, Tobacco Institute public relations staff and CTR public relations counsel Leonard Zahn. Dawson TT, 1/12/05, 9899:20-9900:10; Zahn PD, Richardson v. Philip Morris, 12/1/98, 52:9-55:3; Zahn PD, Cipollone, 12/17/86, 274:2-8; 275:5-21; 794003131-3132 (US 86107); TIMN0081843-1864 (US 86108); 03678709-8711 (US 88313); 680241704-1705 (US 54034); ZN21992-1995 (US 21375); 690014846-4848 (US 86111); TIMN0124674-4674 (US 88323); TIMN0124717-4718 (US 86113); 680570007-0008 (US 86114); 87716615-6618 (US 86117); TI16470337-0338 (US 62449); TI09911543-1580 (US 62251); TI09911581-1615 (US 62252); TI09911885-1920 (US 62255); TI09912151-2191 (US (62256); TIMN345630-5665 (US 77092);
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  1. Members of the Communications Committee considered CTR a public relations benefit for the Enterprise. According to minutes from the September 17, 1971 Communications Committee meeting, William Kloepfer, Vice President of the Tobacco Institute, briefed the committee on the status of industry-financed research, including research funded by CTR. Kloepfer called this research, "the best basis for affirmative public relations." Leonard Zahn, public relations counsel to CTR from 1955 until 1993, was even a member of the Tobacco Institute Communications Committee and attended committee meetings at the behest of Kloepfer of the Tobacco Institute. TIMN0003978-3980 (US 87595); Zahn PD, Cipollone, 12/16/86, 129:13-15, 18, 21-23; 130:1-3, 12- 19, 130:22-131:2; Zahn PD, Richardson, 12/1/98, 52:9-55:3; Zahn PD, Cipollone, 12/17/86, 274:2-8, 275:5-21.

  2. A 1974 Tobacco Institute report titled "Defending Tobacco" stated that, prior to 1967, much of the communication between member companies was through the Tobacco Institute Committee of Counsel, or by informational memoranda. According to this report, one change that greatly facilitated the internal information flow within the Enterprise was the creation in 1969 of the Communications Committee, which was made up of representatives of each major company and of the Tobacco Institute's legal counsel and who met frequently to advise on the Tobacco Institute's public relations strategy. TIMN217628-7639 (US 21263).

  3. Through these Tobacco Institute committees, the Defendants, through their executives, employees, agents, and attorneys, controlled the Tobacco Institute and set its policy, including approving and authorizing the multitude of statements made by the Tobacco Institute about smoking and health. While this structure changed somewhat over time, Defendants always maintained control over the Tobacco Institute's activities and committees.

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