Testimony from Former Tobacco Insider Sealed and Removed From Web Because It Quotes Sensitive Internal Memo

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>>> As part of the Justice Department's historic lawsuit against the tobacco industry (US v. Philip Morris, et al.), a Justice attorney examined Frederick Gulson under oath in Australia. Gulson used to be legal counsel for Australian tobacco company W.D. & H.O. Wills, a subsidiary of BATCo [British American Tobacco (Investments) Limited]. In the testimony, the Justice attorney repeatedly quotes an Australian court decision that contains extracts of the "Foyle memorandum," an extremely sensitive internal document concerning Wills' policy of destroying potentially damaging documents so that they cannot be uncovered during court cases.

Attorneys for the industry argue that the Foyle memorandum can't be introduced - directly or indirectly, in whole or in part - into the proceedings, so they asked Judge Gladys Kessler to seal Gulson's testimony. Kessler has complied, at least temporarily, by sealing the testimony until all the legal questions can be answered, at which point the testimony may be unsealed or may stay sealed permanently. [Read the order].

Gulson's testimony was also removed from the Justice Dept's website, but not before The Memory Hole grabbed a copy. It's posted at the link at the top of this page. It's worth reading not just for the Foyle quotes but because the whole thing is so damning.

(It should be noted that Gulson testified a second time - in DC court on 17 February 2005. This was after the seal had been granted, which means that this second testimony was sealed from the moment it occurred and never appeared on the Web.)

"Wills' current document retention policy was introduced on the 30th
December 1985 at a time when the tobacco companies in Australia
anticipated the possibility of product liability litigation, although no
case had actually been brought against any company. Clayton Utz had
previously been instructed to take steps to prepare the Industry, and
Wills in particular, for litigation. One of their first actions was to
review the document retention policy of the Company, hence the new
policy."

"The wording of the policy (coupled with timing of its introduction)
might lead to the inference that the real purpose of the policy was to
destroy sensitive smoking and health documents."

"Aspects of the implementation of the policy might support that
inference, for example the immediate destruction of the unpublished
enclosures to the SRG letters."

"The retention of the BATCO reports might encourage a plaintiff to
seek discovery of BATCO's documents, either by asserting that Wills
has control over documents in the possession of BATCO, or by using
the Hague Convention. The research reports might enable a plaintiff to
frame a Hague Convention request for documents with the requisite
degree of specificity and/or to identify the BATCO employee from
whom oral testimony is required."

"Wills access to the BATCO computer gives them the de facto right to
details of results of BATCO's research. The summaries of the reports
which are on the database are sufficiently informative to be of real
interest to a plaintiff's lawyer."

"It should be assumed that Wills' 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. How Wills responds to questions
about its documents will require careful thought, especially because of
the implications which the answers may have for the BAT group as a
whole. It would be sensible, therefore, to assess the nature and extent
of any problems which the current document retention policy may pose
and to take appropriate remedial action now, rather than wait for the
litigation to begin. Generally, what is needed is a strategy for handling
the documents issue in litigation."

"1. To what extent is there a risk that the destruction of
documents in accordance with the 1985 retention policy
will cause the Court to apply the adverse inference
principle, taking into account:

(a) the wording of the policy,
(b) the circumstances prevailing at the time it was
introduced (e.g. whether product liability actions had
been threatened against Wills or the industry generally),
(c) the extent to which Wills will need to claim privilege for
documents produced in 1985 and later, on the grounds
that the documents were produced in contemplation of
anticipated proceedings."

"3. Should changes be made to the way in which the policy is
currently being applied, for example, in relation to the SRG
documents?"

"4. What should be done about the copies of the BATCO research
reports held by Wills? In this connection:

(a) Would the continued retention of these reports
compromise Wills' position via a vis the destruction of its
other documents?
This question should be answered on the basis of the
information given in this memorandum on the content of the
reports. If more information is needed it can be supplied by
LWD. It would be undesirable for Clayton Utz to seek
information from Wills about the reports.
(b) Is there any reason why Wills should not now destroy its
copies of most of the reports, if the motive for doing so
were that the information in the reports is not relevant to
Wills' Current "research mission"?
(c) Would the termination, or the restriction, of Wills's access to
the reports database on the BATCO computer cause any
problems?
(d) Does the Caudwell threat affect the position?"

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