140 F.R.D. 681 (D.N.J. 1992), Civ. A. 84-678 (HLS), Haines v. Liggett Group, Inc.

Docket Nº:Civ. A. 84-678 (HLS).
Citation:140 F.R.D. 681
Opinion Judge:SAROKIN, District Judge.
Party Name:Susan HAINES, as Administatrix ad Prosquendum and Executrix of the Estate of Peter F. Rossi, Plaintiff, v. LIGGETT GROUP, INC., a Delaware Corporation, et al., Defendants.
Attorney:Cynthia A. Walters, Budd Larner Gross Rosenbaum Greenberg & Sade, P.C., Short Hills, N.J., for plaintiff Susan Haines. Alan S. Naar, Greenbaum, Rowe, Smith, Ravin & Davis, Woodbridge, N.J., for Liggett Group, Inc. Alan E. Kraus, Riker, Danzig, Scherer, Hyland & Perretti, Morristown, N.J., for R.J...
Case Date:February 06, 1992
Court:United States District Courts, 3th Circuit, District of New Jersey

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140 F.R.D. 681 (D.N.J. 1992)

Susan HAINES, as Administatrix ad Prosquendum and Executrix of the Estate of Peter F. Rossi, Plaintiff,


LIGGETT GROUP, INC., a Delaware Corporation, et al., Defendants.

Civ. A. No. 84-678 (HLS).

United States District Court, D. New Jersey.

February 6, 1992

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Plaintiff in wrongful death action against tobacco industry sought to compel disclosure of special projects documents of Council on Tobacco Research under crime/fraud exception to attorney-client privilege. The District Court, Hedges, United States Magistrate Judge, and Special Master Pisano upheld industry's assertion of privilege with respect to 1500 documents on ground that crime/fraud exception to attorney-client privilege did not apply. Plaintiff appealed. The District Court, Sarokin, J., held that: (1) plaintiff's fraud theory was viable; (2) evidence of fair inference arising from purpose and role of special projects division undercut industry's public representations concerning independence of Council on Tobacco Research and led court to conclude that in camera inspection of disputed documents was likely to yield evidence of crime/fraud exception's applicability; (3) quantum of proof necessary to defeat attorney-client privilege was general, prima facie standard; (4) magistrate's ruling was not contrary to law on basis of citation to United States Supreme Court Zolin opinion; and (5) plaintiff was entitled to discovery of withheld special projects documents under crime/fraud exception to attorney-client privilege.

Magistrate judge's order reversed.

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Cynthia A. Walters, Budd Larner Gross Rosenbaum Greenberg & Sade, P.C., Short Hills, N.J., for plaintiff Susan Haines.

Alan S. Naar, Greenbaum, Rowe, Smith, Ravin & Davis, Woodbridge, N.J., for Liggett Group, Inc.

Alan E. Kraus, Riker, Danzig, Scherer, Hyland & Perretti, Morristown, N.J., for R.J. Reynolds.

William S. Tucker, Stryker, Tams & Dill, Newark, N.J., for Lorillard, Inc.

Michael J. Vassalotti, Brown & Connery, Westmont, N.J., for Phillip Morris, Inc.

Russell L. Hewit, Dughi & Hewit, Cranford, N.J., for The Tobacco Institute.


SAROKIN, District Judge.


In light of the current controversy surrounding breast implants, one wonders when all industries will recognize their obligation to voluntarily disclose risks from the use of their products. All too often in the choice between the physical health of consumers and the financial well-being of business, concealment is chosen over disclosure, sales over safety, and money over morality. Who are these persons who knowingly and secretly decide to put the buying public at risk solely for the purpose of making profits and who believe that illness and death of consumers is an appropriate cost of their own prosperity!

As the following facts disclose, despite some rising pretenders, the tobacco industry may be the king of concealment and disinformation.

In 1954, the tobacco industry promised to disseminate the results of industry-sponsored, independent scientific research for the purpose of answering the question: " Does cigarette smoking cause illness?" Decades later, one searches in vain for a " Frank Statement to Cigarette Smokers" from the tobacco industry which purports to answer that question.

Plaintiff alleges that defendants have perpetrated a public relations fraud. Plaintiff has presented evidence from which a reasonable jury could conclude that the tobacco industry in general, and defendants in particular, were aware of the risks of smoking; were concerned about the publication of those risks by others and the consequent impact upon cigarette sales; and sought to discredit or neutralize the adverse information by proffering an independent research organization, the Council for Tobacco Research (the " CTR" ), which purportedly would examine the risks of smoking and report its finding to the public. The evidence presented by plaintiff supports a finding that the industry research which might indict smoking as a cause of illness was diverted to secret research projects and that the publicized efforts

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were primarily directed at finding causes other than smoking for the illnesses being attributed to it.

A jury might reasonably conclude that the industry's announcement of proposed independent research into the dangers of smoking and its promise to disclose its findings was nothing but a public relations ploy-a fraud-to deflect the growing evidence against the industry, to encourage smokers to continue and non-smokers to begin, and to reassure the public that adverse information would be disclosed.

While the efforts which the CTR chose to advertise were well publicized, plaintiff learned of a secret division of the CTR, the " special projects" division. Under the auspices of the special projects program, defendants' counsel and other tobacco industry attorneys collaborated in assessing, monitoring, and directing the scope of research projects purportedly designed to identify expert witnesses and to develop evidence supporting defendants' positions in existing and anticipated litigation and Congressional hearings. Defendants insist that their " special projects" efforts are entirely distinct from and unrelated to the CTR's advertised " independent" research and thus, " special projects" documents are protected by the attorney-client privilege. However, plaintiff seeks discovery of the " special projects" documents otherwise subject to the attorney-client privilege on the ground that said documents come within the crime/fraud exception to the privilege.

Plaintiff has presented prima facie evidence that defendants' " special projects" program was interrelated and intermingled with the CTR's supposedly " independent" research. The facts presented support plaintiff's overall theory of fraud based on the false claims regarding the independence of CTR-sponsored research and on the likelihood that defendants mounted a public relations campaign designed to discredit the links between smoking and disease which defendants knew existed. Furthermore, there is evidence supporting the conclusion that research which might tend to prove smoking a cause of such illnesses was diverted into special projects and intentionally shielded by the attorney-client privilege so as to prevent its disclosure.

The court has conducted an in camera review of selected special projects documents, and, as presented in the opinion below, the documents speak for themselves in a voice filled with disdain for the consuming public and its health. Despite the industry's promise to engage independent researchers to explore the dangers of cigarette smoking and to publicize their findings, the evidence clearly suggests that the research was not independent; that potentially adverse results were shielded under the caption of " special projects; " that the attorney-client privilege was intentionally employed to guard against such unwanted disclosure; and that the promise of full disclosure was never meant to be honored, and never was. Accordingly, the court concludes that the crime/fraud exception applies and that plaintiff is entitled to discovery of the withheld special projects documents.

Procedural History

Before the court is plaintiff's appeal from Magistrate Judge Hedges' May 22, 1991 Letter-Order holding that certain documents requested by plaintiff of defendants are not subject to discovery under the crime/fraud exception to the attorney-client privilege.

Also before the court is Special Master Pisano's Report and Recommendation upholding defendants' assertion of privilege with respect to the same 1500 documents subject to the Magistrate Judge's crime/fraud ruling.1

The documents in question pertain to the " Special Projects" program of the Tobacco Institute Research Council ("TIRC"), later called the Council for Tobacco Research (" CTR" ). Plaintiff's counsel has previously had discovery of CTR documents in Cipollone v. Liggett, Civ. No. 83-2864(HLS). As this court recognized in its Opinion denying the Cipollone defendants' motion for a directed

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verdict, 683 F.Supp. 1487, 1490-93 (D.N.J.1988), the CTR-sponsored research projects were generally unrelated to the core health issues implicated by cigarette smoking. However, during the course of that trial, plaintiff's counsel learned that the CTR had a separate " special projects" program about which defendants had not provided full discovery.2 The " special projects" division of the CTR did sponsor research directly relevant to the hazards of smoking.

Plaintiff's counsel also learned that the " special projects" division was specifically designed to sponsor epidemiological studies which could be of use to cigarette manufacturers in their defense of various current and future suits against them based on the hazards of cigarette smoking. Plaintiff's counsel indicated during the Cipollone trial that those withheld documents might be subject to discovery on the basis of the crime/fraud exception to the attorney-client and work-product privileges, but this issue was neither pressed nor resolved during the course of the Cipollone trial.

Now in the Haines case, plaintiff seeks to discover those " special projects" documents which have to this point been withheld pursuant to the attorney-client and work-product privileges. Plaintiff has already obtained discovery of various " special project" research proposals, correspondence between researchers, and " special project" reports and studies, but as to other documents, plaintiff has only been provided with a " privilege log" prepared by defense counsel. Defendants represent that the withheld documents relate to...

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