WASHINGTON (AP) — Tobacco industry lawyers asked an
appeals court yesterday to keep a potentially damaging memo out of
the federal government’s ongoing racketeering trial against
cigarette makers.

Beth Dykstra
Daniel Donahue, senior vice president and deputy general counsel for RJ Reynolds, talks to reporters outside a federal court in Washington last week. (AP PHOTO)

Justice Department lawyers have been seeking the 1990 memo for
two years, believing it could strengthen their argument that
tobacco companies committed fraud by lying about the dangers of
smoking and hiding that information from the public.

The memo by London-based lawyer Andrew Foyle advises an
Australian subsidiary of British American Tobacco Co., PLC., on
whether the company should keep or destroy internal paperwork in
light of increasing litigation.

William Schultz, a former Justice Department lawyer who headed
the tobacco case during the Clinton administration, said the memo
is key to the government’s racketeering case.

“I think in the context of a fraud case, evidence of
intentional document destruction could be very relevant because the
whole notion of fraud is that you are deceiving the public,”
Schultz said. “Document destruction on a systematic basis
could be a central activity in the scheme of fraud.”

British American Tobacco owns Brown & Williamson Tobacco
Corp., which recently was acquired by R.J. Reynolds. The
conglomerate is the second-largest U.S. tobacco company.

The trial is expected to last six months. The fight over the
memo is proceeding as the lower court hears other evidence. The
trial will continue even if the appeals judges rule the memo cannot
come in.

In the lower court trial, which began last week, the government
is seeking $280 billion in earnings cigarette makers allegedly
earned through fraud.

Government lawyers haven’t seen the sealed Foyle memo but
know what it concerns because an Australian appeals court decision
two years ago quoted the memo.

Bruce Sheffler, representing British American Tobacco, told the
three-judge panel of the U.S. Circuit Court of Appeals for the
District of Columbia that District Court Judge Gladys Kessler erred
when she ordered the memo released.

Sheffler said the document is irrelevant to the case against
U.S. cigarette makers because it deals with a foreign market.

U.S. Circuit Court Judge David Tatel said Sheffler was
describing the objection in overly broad terms compared with past
arguments the company has made.

Kessler ruled in June that the company waived its right to keep
the memo under wraps.

She said the company’s argument that it shouldn’t
have to produce the memo because it addresses foreign activity,
rather than the U.S. cigarette market, was invalid because the memo
discusses U.S. litigation.

Government lawyer Sharon Eubanks reminded the appeals court that
the lower court several times ordered that the documents be handed
over and Kessler accused the tobacco company of
“inexcusable” misconduct.

“There have been four times now that the District Court
has ordered the production of this document,” Eubanks
said.

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