Judge grants stay in new tobacco document dispute
March 23, 1998
Web posted at: 9:05 p.m. EST (0205 GMT)
ST. PAUL, Minnesota (CNN) -- A Minnesota judge Monday granted a five-day stay to a British tobacco company and two of its subsidiaries in another battle over confidential industry documents.
Ramsey County District Judge Kenneth Fitzpatrick granted the stay two days after he had ordered B.A.T. Industries PLC and subsidiaries British-American Tobacco Co. Ltd. and BAT (U.K. & Export) Ltd. to turn over more than 2,000 internal documents.
The documents involve two former employees who Fitzpatrick said the companies failed to make available to the state and Blue Cross and Blue Shield of Minnesota in their $1.77 billion suit against the tobacco industry.
As punishment for failing to depose the men, Fitzpatrick revoked the attorney-client privilege that shielded company documents that concerned them. The stay allows the companies to keep the documents while the state Court of Appeals weighs whether to overturn his ruling.
All the tobacco companies involved in the trial are awaiting another high court ruling on whether they have to turn over more than 39,000 disputed industry documents that have been called the "crown jewels" in Minnesota's case against the industry.
The two men who were supposed to be deposed in January, former BATCo researchers, no longer work for the company, according to company counsel David Bernick. He said the company had tried to convince them to testify, but they would not.
"The law does not require we do the impossible," he said.
Fitzpatrick said the inability to get the researchers to testify had hurt the state's case. The state is expected to rest its case Tuesday.
BAT Industries is the holding company that owns Brown & Williamson Tobacco Co., maker of Kool cigarettes.
Witness: Agreement prevented safer cigarettes
On Monday, Brandeis antitrust expert Adam Jaffe finished his fourth day of testimony. He said that had there been unfettered competition, the industry would have spent far more on research and development, and would likely have found a safer cigarette.
"You have a market that's been arrested in its development," Jaffe said, noting the industry paid far less for research and development than other industries as a percentage of profits.
As a result of a "gentleman's agreement" among tobacco companies not to compete on the basis of smoking and health, "safer" cigarettes have not been developed, he said.
Jaffe acknowledged he didn't know what form the new products would have taken. But he said R.J. Reynolds' ill-fated Premier -- killed when consumers complained about its taste and smell -- might have been successfully marketed had consumers known about its supposed health advantages over traditional cigarettes. Premiers heated but did not burn tobacco, resulting in fewer carcinogens in the smoke.
"Any new product takes a while to get the kinks out," Jaffe said.
Philip Morris attorney Peter Bleakley said the industry had indeed competed, introducing low-tar and ultra low-tar brands. Jaffe responded that the brands had not been proven to be safer than other cigarettes.
On Monday afternoon, Paul Much, a Chicago-based financial analyst, began to testify about the profitability of the tobacco industry. Much is expected to finish Tuesday, at which point the state plans to rest "provisionally," pending the release of the 39,000 disputed documents.
The Minnesota Supreme Court is expected to rule this week on whether the documents should remain confidential or be turned over to state lawyers.