Products Liability Concerns

Under products liability law, the manufacturer of a product, as well as other entities in "the stream of commerce" linking the manufacturer to the consumer, may be held liable for injuries sustained by the consumer as a result of some defect in the product caused by negligent manufacture or design. Under the doctrine of strict products liability, the manufacturer may be held liable even in the absence of negligence, as long as the product was defective and the defect caused the injury. The tobacco manufacturers were not concerned with products liability until the link between smoking and disease could be established, but when that link was finally forged, products liability litigation threatened the very existence of the industry.

Prior to the products liability litigation that began in the 1990s, there had been two waves of litigation against the tobacco industry (9). The first wave began in the mid-1950s, after the evidence of a relationship between smoking and lung cancer was published, and it lasted for about a decade. The second wave began in the mid-1980s, when public concern over health and the environment had reached a new peak and products liability law regarding toxic substances had taken on a new significance.

Many of the cases in the first wave were abandoned by the plaintiffs, who simply ran out of money after being worn down by the tobacco industry's use of procedural tactics to cause endless delays and obstacles. Of the cases that did proceed to trial, most were decided in favor of the defendant tobacco companies on grounds that they could not foresee any risks associated with the use of their product. In one major case, however, following rulings by an appellate court that favored the plaintiff and forced a new trial, the defendant won at the second trial by convincing the jury that the plaintiff had assumed the risk of contracting lung cancer.

In the second wave, the industry continued its successful procedural tactics. One of those tactics was to resist all discovery of tobacco industry documents and then to obtain confidentiality orders on materials finally produced, so as to prevent the information from being shared with other plaintiffs. The second wave of cases failed to produce a clearcut victory for a plaintiff. They foundered on a variety of legal theories, including preemption of state tort law by the federal Cigarette Labeling and Advertising Act of 1965, which required warning labels to be placed on all cigarette packages, and the lack of proof that cigarette smoking was the cause of the plaintiff's disease. But playing the most important

role was the defense of freedom of choice or assumption of risk. Even when juries determined that the tobacco companies were at fault to some degree, they found that the plaintiffs were aware of the risks associated with smoking and nonetheless continued the activity over a long period of time. And those findings have persisted despite attempts to portray tobacco as addictive. One further legal theory proved to be damaging to the plaintiffs. This was the proposition that "good" tobacco—that is, tobacco that has not been in some way adulterated by the manufacturer—is not defective, and therefore cannot give rise to liability based on the production of a defective product. In fact, legislation in a number of states, most notably California, has created a defense in products liability litigation that prevents recovery where the product involved, such as tobacco, is inherently unsafe.

In any event, the assumption of risk defense, which was so important to the industry during the second wave of litigation, may eventually be overcome. For example, a plaintiff may be able to prove that the industry fraudulently withheld crucial information about the health dangers of smoking from the public, so that smokers, in fact, could have believed that the risks of smoking were still unproven or, at least, could not have known the degree of those risks. A key component of such proof would be that the industry fraudulently withheld its knowledge of the addictive nature of tobacco, thereby preventing people from realizing the difficulty they might have in stopping to smoke once they started.

Involvement Of Lawyers In Scientific Research

On May 29 and 30, 1984, attorneys from B&W and BAT held a conference on US products liability litigation. This conference took place less than a year after the famous Cippolone case was filed [Cippolone v Liggett Group, Inc., 593 F. Supp. 1146 (D.N.J. 1984)]. That case, which would wind its way through the courts for several years, is the only products liability case in which the tobacco industry has ever been held liable for damages caused by tobacco (an award to the husband of the plaintiff, who had died during the litigation), although even that award was subsequently overturned on appeal. The conference is summarized in a June 12, 1984, memo to the file by J. K. Wells, B&W's corporate counsel. Wells first discusses the attribution problem (see below) and then "Project Rio, Project Ship and other biological testing programs." Project Rio, a version of the safe cigarette project in the early 1980s, was extremely sensitive:

Within the limited time available, we were able to hold significant discussions about implications for U.S. products liability litigation only regarding Project Rio. BAT Legal acknowledged the needs for lawyer involvement in the project and for possible restructuring, but there was not enough time to plot a course of action. Alec [Morini, of BAT] said that he had not been aware of Project Rio until about two weeks prior to the meeting when he heard it mentioned briefly in a description of Southampton work. {1830.01, p. 2}

Wells then summarizes the status of the discussions, and it becomes clear that there are differences between the two companies on the degree to which the lawyers should be involved in scientific work:

[I]t is fair to say that BAT Legal are informed about the danger of the admissibility of BAT statements on smoking and health in U.S. products liability litigation. BAT Legal will offer counsel to BAT activities which pertain to smoking and health but no specific steps and no specific projects (other than Project Rio) were identified. Alec is concerned about the BAT senior management position [yet to be formulated] on the involvement of BAT Legal in R&D programs. {1830.01, p. 2}

After noting the success of the discussions, Wells proposes some follow-up activities:

[W]e should arrange a meeting in London with BAT Legal ... to delineate more specific counsel to the BAT, including proposals for the structure and organization of BAT programs and statements which would hold to the minimum feasible level their potential impact upon U.S. products liability litigation. Topics would include proposals for organizing programs already on the table and general procedural guides for lawyer counseling of ongoing and future programs. For example, if Project Rio must continue, restructuring probably will be required to control the risk of generating adverse evidence admissible in U.S. lawsuits. ... Direct lawyer involvement is needed in all BAT activities pertaining to smoking and health from conception through every step of the activity .

The problem posed by BAT scientists and frequently used consultants who believe cause is proven is difficult. A sound recommendation must be based upon consideration of several factors, including the basis upon which senior management relies in concluding that the opinion of the scientist is incorrect; the overall reliance of senior management on opinions of the scientist; the responsibilities assigned to the scientist; and the company's duty to encourage scientific inquiry [emphasis added]. {1830.01, p. 2}

Wells also expresses concern as to whether BAT senior management will go along with the lawyers' recommendations with respect to their involvement in R&D programs. He ends with a reference to the question of whether BAT or BATUS (the US-based holding company of BAT, owner of B&W and other major assets) could be held as a party in a US

products liability lawsuit based on consumption of B&W products by the plaintiff {1830.01}

In effect, this document tells us that the B&W attorneys saw the need for themselves and the BAT attorneys to become totally involved in the research process in order to prevent potentially damaging research information from becoming known. The problem was that the attorneys in England, where products liability law was not as well developed as it was in the United States, were reluctant to become so intimately involved in scientific work. The B&W attorneys also recognized that at least some BAT scientists and consultants were convinced that the cause-and-effect relationship between smoking and disease had been proven. This was all the more reason to keep BAT scientific information away from the United States. However, in a July 8, 1985, memo to David A. Schechter, general counsel at BATUS, Sidney S. Rosdeitcher, an attorney at Paul, Weis, Rifkind, Wharton & Garrison in Washington, DC, concludes that documents in the possession of BAT Industries or BATCo would be discoverable by a plaintiff in a US lawsuit. Specifically, Rosdeitcher states:

You should not assume that discovery would be prevented by British law or a British government blocking order.

Neither Brown & Williamson nor B.A.T. could solicit the issuance of a blocking order without risking sanctions by the U.S. courts.

Even if the British government issued a blocking order, a U.S. court would require Brown & Williamson to make a good-faith, affirmative effort to convince the U.K. government to waive the blocking order.

If the U.S. court did not believe that such an effort had been made, or if it believed that Brown & Williamson or B.A.T. had solicited the blocking order, it could impose severe sanctions against Brown & Williamson, such as adverse factual findings (i.e., finding facts favorable to the plaintiff on matters in dispute), fines, and a default judgment.

You should act on the assumption that discovery of the documents would be available.

In the Appleton case, B.A.T. did not resist document demands from the FTC; B.A.T. negotiated certain modifications in the scope of those demands, and then agreed to produce documents located in the U.K. {1836.02}

"Careless" Statements By Company Scientists

As discussed in chapter 4, during the 1960s and early 1970s the tobacco industry believed it could create a "safe" cigarette, and it directed much of its research toward that goal. The scientists who conducted this research naturally had many discussions about the existing or suspected health dangers of cigarettes and how they might be eliminated. These

discussions, in turn, were troublesome to industry lawyers, since statements by those scientists, if discovered by a plaintiff's attorney, might be used against the industry in products liability lawsuits.

Toward the end of the first wave of litigation, one of the tobacco industry's principal outside counsel, David R. Hardy (of Shook, Hardy, Ottman, Mitchell, and Bacon), wrote a lengthy letter to DeBaun Bryant, general counsel at B&W, giving his observations and opinion about BAT's possible involvement in US smoking and health litigation. (The same subject arose fifteen years later; see the discussion above on lawyers' involvement in scientific research.) In this letter, written on August 20, 1970, and marked "CONFIDENTIAL, FOR LEGAL COUNSEL ONLY ," Hardy notes that "BAT may well be involved in future cases either as a defendant or through deposition of its employees or discovery of its records in cases where Brown and Williamson (B&W) is a defendant" {1840.01, p. 1}. But the real emphasis of the letter is on the "effect of statements made by employees of either BAT or B&W."

It would, no doubt, be virtually impossible to determine to what extent statements have been made which would be damaging to defendant's position in a smoking and health case, but I have seen sufficient documentation from you to conclude that the dangers I describe in this letter have a very real foundation . For example, the minutes of a conference at Kronberg, Germany, held from June 2 to June 6, 1969[{1169.01}] and attended by research personnel of both BAT and B&W, reflect statements such as the following:

Hardy then refers to an interesting example of industry doublespeak. Despite the industry's relentless efforts through its public relations apparatus to make the public believe there is no medical proof of the dangers of smoking, Hardy notes the following "admission," undoubtedly crafted by an attorney, made at a BAT research conference:

At the St. Ives Conference, May 8 to 12, 1970, an opening statement was made which included an acknowledgment that tobacco manufacturers are not competent to give authoritative medical opinions and stating that "causation" is still an open question. {1840.01, p. 2}

Hardy complains:

In the minutes of this Conference, however, we note a number of statements or expressions which could be most damaging notwithstanding the disclaimer in the opening statement. For example: (i) reference is made on page 6 to the fact that research "will continue in the search for a safer product"; (ii) on page 14 a product is characterized as "attractive" because less biologically active; (iii) on page 15 the phrase "biologically attractive" is used; and (iv) on page 18 reference is made to a "healthy cigarette". {1840.01, pp. 2–3}

Hardy explains why the types of statements quoted from the two conferences are worrisome:

It is our opinion that statements such as the above constitute a real threat to the continued success in the defense of smoking and health litigation. Of course, we would make every effort to "explain" such statements if we were confronted with them during a trial, but I seriously doubt that the average juror would follow or accept the subtle distinctions and explanations we would be forced to urge [emphasis added]. {1840.01, p. 3}

Such statements, Hardy point out, if admitted into court, could tip the scales in the battle to convince a jury as to where the balance of the scientific evidence lies:

As you know, with the testimony of independent and well-informed doctors and scientists, it has been repeatedly demonstrated in court to the satisfaction of impartial jurors that cigarette smoking has not been scientifically proved to cause disease. This is certainly one very good reason that the industry has attained a one hundred percent record of victories in its health litigation. Jurors are, however, aware that a substantial segment of the medical and scientific community has accepted smoking as a cause of disease notwithstanding the deficiencies in the proof. This group includes many well-intentioned but inadequately informed doctors and scientists who operate on a philosophy that if smoking may be hazardous to health no further inquiry is necessary. In other words, they are willing to settle for suspicion in lieu of proof in condemning cigarettes. We have been able to show this to be the case when such suspicion has been claimed by our known enemies to be established fact. Obviously our problem becomes entirely different and far more serious when agents and employees of the defendant cigarette company or its parent become the spokesmen against us.

Fundamental to my concern is the advantage which would accrue to a plaintiff able to offer damaging statements or admissions by persons

employed by or whose work was done in whole or in part on behalf of the company defending the action. A plaintiff would be greatly benefited by evidence which tended to establish actual knowledge on the part of the defendant that smoking is generally dangerous to health, that certain ingredients are dangerous and should be removed, or that smoking causes a particular disease . This would not only be evidence that would substantially prove a case against the defendant company for compensatory damages, but could be considered as evidence of willfulness or recklessness sufficient to support a claim for punitive damages. The psychological effect on judge and jury would undoubtedly be devastating to the defendant. To be more specific:

Hardy concludes his letter with the following:

In conclusion, I would like to emphasize that, in our opinion, the effect of testimony by employees or documentary evidence from the files of either BAT or B&W which seems to acknowledge or tacitly admit that cigarettes cause cancer or other disease would likely be fatal to the defense of either or both companies in a smoking and health case . I am afraid that any attempted explanation to a jury that such statements were made only in the context of a "working hypothesis" for the further development of our products would fall on deaf ears. Clearly, the admission of such evidence would cause a plaintiff's case to attain a posture of strength and danger never before approached in cigarette litigation. It could even be the basis for an assessment of punitive damages if it were deemed to indicate a reckless disregard for the health of the smoker. Certainly such evidence would make B&W the most vulnerable cigarette manufacturer in the United States to smoking and health suits.

We, of course, know that the position of BAT, as well as B&W, is that disease causation by smoking is still very much an open question. Cigarettes have

not been proved to cause any human disease. Thus, any statement by responsible and informed employees subject to a contrary interpretation could only result from carelessness. Therefore, employees in both companies should be informed of the possible consequences of careless statements on this subject [emphasis added]. {1840.01, p. 7}

Hardy obviously chose his words carefully. Even in such a confidential letter to a fellow attorney, he maintains the fiction that a statement by a corporate scientist subject to an interpretation that smoking causes disease could only occur through "carelessness."

In a letter written on November 5, 1970, Bryant passes along Hardy's concerns to E. G. Langford, an attorney at BAT:

As you know, we have for some time been concerned over the possibility that the BAT might in the future be involved in smoking and health litigation in the USA. This involvement might be through the deposition of BAT employees or the discovery of BAT records in cases in which B&W is a defendant. We asked Dave Hardy to prepare an opinion for us on this subject, which he has done and I am enclosing a copy for your consideration. {1840.03, p. 1}

Langford acknowledges receipt of the letter in return correspondence on November 11, 1970, and makes some suggestions:

I think the problem centers mainly on the R&D and to a lesser extent P.R. Departments and I know that both Departments are conscious of it, particularly since Pat Kelly's visit here last May. Nevertheless, in the light of Dave Hardy's Opinion the matter ought to be looked at again. It happens that Tony McCormick will be visiting you later this month, following a R&D Conference in Canada, and since he is responsible for both of the Departments I have mentioned above, I suggest that you discuss the matter with him. If you have any specific proposals to make we will certainly co-operate in every way we can. {1840.04, p. 1}

(For an example of how B&W's corporate counsel rewrote a scientific paper in 1984 to avoid having certain scientific statements linked to the company, see chapter 9, "The Blackman Paper: Rewriting Scientific Documents.")

Establishing Limits For Sharing Of Information

Among the many concerns of the attorneys at B&W was the extent to which information should be exchanged, both within and outside the associated companies. The documents indicate that this concern was a long-standing one, preceding the second wave of litigation by many years. A November 27, 1968, letter from Addison Yeaman, B&W vice

president and general counsel, to G. C. Hargrove at BAT—marked "Private and Confidential"—states:

Ed Finch [president of B&W] told me of his talk with you and in particular we discussed Tony McCormick's [a senior executive in the Research and Development Establishment at BAT] memorandum of 27th June to B. G. Pearson which had to do with exchange of pertinent information in the area of smoking and health. The approach is an interesting one and I should like to give it further thought and discuss its implementation with my opposite numbers [in a letter of December 11, 1968, Finch explains that this is a reference to the lawyers of the other tobacco companies in the U.S. who are members of the Tobacco Research Council {1809.03}] before trying to set up anything definitive. You will, of course, hear further from me on this. {1809.01}

The documents never specify the "information" to which they refer. A response from Hargrove to Yeaman, dated December 4, 1968, and marked "Private and Confidential," states:

You will by now have received the documents with reference numbers F.1193 and F.1224 which I left with Ed Finch. Having consulted Mr. Dobson, I confirm that the information in these documents can be made known in confidence to the rest of your Group in the U.S. Industry, if you so wish. We would not, however, wish the source of this information to be disclosed—although admittedly it would not be very difficult for others in your Group to guess this. {1809.02}

The Finch letter, which was written to R. P. Dobson at BAT, discusses the difficulties in exchanging information between individual BAT companies, and the problems that might arise from such exchanges.

I am in complete agreement with your statement that the subject of the exchange of information [on smoking and health] between individual companies within B.A.T. is full of difficulty . As you know, I have been and still am concerned about the problems that might arise as a result of individual companies corresponding with each other on this matter. ... From this information, it seems to me you would know best how the information should be used and whether or not it should be transmitted to other companies. In addition, I also agree with your thought that there should be personal visits between the major companies to discuss the health matters whenever possible [emphasis added]. {1809.03}

Also of concern to B&W was the extent to which BAT might be sharing information with British government officials. A memo dated October 20, 1971, from Dr. I. W. Hughes, director of R&D at B&W, to his superior, J. W. Burgard, and to the general counsel, Addison Yeaman, is on the subject of smoking and health research at Imperial Tobacco Group

(ITG) in the United Kingdom {1121.01}. Dr. Hughes had just read a report about this research (possibly document {1120.01}). Although, he notes, much of the report is concerned with the technical program,

there are a number of points mentioned which give an impression of the way I.T.G. may be planning its policy in terms of the Smoking and Health area.

It is not clear what the Dawkins, Medicines, and Cohen Committees are, but in context they may be committees of the Royal College of Physicians or of another independent group interested in the toxicity of tobacco.

Dr. Hughes evidently wanted to draw the attention of senior management to these moves by ITG so that Mr. Finch might discuss them with a Mr. Carter, who was to be visiting soon. Dr. Hughes also suggests that Finch should not let it be known that B&W received information on ITG's plans through BAT:

During Mr. Carter's visit to Mr. Finch, it might be useful to Mr. Finch to obtain from Mr. Carter an overview of the policy in the health area. If this is considered worthwhile, it might be preferable not to mention that we receive through BAT broad reports of the I.T.G./Huntingdon situation. {1121.01}

Attribution Of Statements By Subsidiaries

When the health dangers of smoking became a serious issue, one of the problems facing BAT was the possible attribution to its tobacco companies of statements made or decisions taken by its other subsidiaries. This problem was the topic of several memos between corporate attorneys. In one memo, titled "Legal Considerations on Smoking and Health Policy" {1828.01}, which was unsigned and undated but apparently written by an attorney, the author summarizes the policy of BAT Industries Group in relation to smoking and health issues. The author then warns that BAT's nontobacco companies must be made aware of the group's stance, because the spread of "no-fault" liability may result in the future attribution to the group's tobacco companies of statements made or

decisions taken by other subsidiaries. The following excerpts demonstrate the industry's classic three-pronged stance with regard to the health dangers of smoking: (1) a genuine scientific controversy exists; (2) individuals have a right to choose whether or not to smoke; and (3) further research is needed:

For this reason [the spread of no-fault liability] it is essential that statements about cigarette smoking or the smoking and health issue generally must be factually and scientifically correct. The issue is controversial and there is no case for either condemning or encouraging smoking. It may be responsible for the alleged smoking related diseases or it may not. No conclusive scientific evidence has been advanced and the statistical association does not amount to proof of cause and effect. Thus a genuine scientific controversy exists.

The Group's position is that causation has not been proved and that we do not ourselves make health claims for tobacco products. Consequently the Group cannot participate in any campaigns stressing the benefits of a moderate level of cigarette consumption, of cigarettes with low tar and/or nicotine deliveries or any other positive aspects of smoking except those concerned with the dissemination of objective information and the right of individuals to choose whether or not they smoke . However, the Group encourages constructive dialogue with the authorities, the dissemination of information about the smoking and health controversy and research and new product development.

Non-tobacco companies in the Group must particularly beware of any commercial activities or conduct which could be construed as discrimination against tobacco manufacturers (whether or not involving companies within the Group), since this could adversely affect the position of Brown & Williamson in current US product liability litigation in the US. If in doubt, companies should not hesitate to consult their inhouse consel, or BAT Industries Legal Department, who have up-to-date information on the legal situation affecting the tobacco companies [emphasis added]. {1828.01}

The recommendation against participating in the promotion of health claims for low-tar cigarettes is in sharp contrast to the industry's active promotion of such cigarettes during the "tar derby" of the late 1950s (discussed in chapter 2). However, the principal point being made here is that the companies in the BAT group were not to engage in any dialogue concerning the health aspects of smoking and were to adhere strictly to the three-pronged position on that issue, as outlined above.

The seriousness with which this policy was taken can be seen by what happened to one unfortunate employee at US Tobacco, manufacturer of moist tobacco products, who made an inappropriate statement regarding the health benefits of smokeless tobacco. This episode is recounted in a 1977 confidential memo from Ernest Pepples, B&W vice president for law, to J. E. Edens; C. I. McCarty, the company's chairman and chief

operating officer; and R. A. Pittman, the senior vice president for public relations:

US Tobacco's General Counsel, Jim Chapin, sent me the attached article from the New York Post for March 16. It reports a most unfortunate interview with an over-enthusiastic employee of US Tobacco who is quoted as saying about so-called smokeless tobacco:

[F]rom what we understand, it presents the least possible danger of all. It's when you light tobacco that you start doing damage.

Chapin says the statements quoted were unauthorized and do not represent his company's views. He has asked me to extend US Tobacco's apology to each of the cigarette companies and advised me that the individual quoted in the article is no longer employed at US Tobacco. Chapin says US Tobacco has instituted smoking and health seminars throughout the company. {1500.01}

On May 29 and 30, 1984, attorneys from both B&W and BAT held a conference on US products liability litigation. (For further discussion of this conference, see above section on involvement of lawyers in scientific research.) This conference is summarized in a June 12, 1984, memo to file by J. K. Wells, B&W's corporate counsel. The conference placed particular emphasis on the problem of the attribution to the tobacco companies of statements and actions by affiliated companies:

Trial counsel described evidence rulings in United States courts pertinent to the admissibility of statements (used herein to include written and oral statements and actions whether internal or published) of an affiliate of B&W. A prudent lawyer in a U.S. products liability action must assume that any damaging statement will be admitted into the evidence and will be discussed by the plaintiff. It is likely that statements by a tobacco affiliate of B&W would be admitted and smoking and health research done in-house or by contract by any company owned by the BAT certainly would be admissible. Statements by a non-tobacco affiliate would be admissible where control or close functional relationship, either on a general line of business or a specific project basis, was shown. {1830.01, p. 1}

A February 4, 1985, letter from R. G. Baker, a senior scientist at BAT's Southampton laboratory, to D. A. Schechter, an attorney at BATUS, Inc., in Louisville, labeled as an "Attorney Work Product," discusses the need to set up guidelines for affiliated companies outside the United States to follow when making public statements. The letter suggests six questions to be considered:

Included with the letter is a two-page legal analysis of the attribution issue put together by Baker. An introduction to this analysis states: "A substantial discussion took place about the risks of statements and positions of affiliates of Brown & Williamson being attributed to it. The intention is, so far as possible, to conduct matters so that no connection can be shown" {1829.02, p. 1}.

Strategy Of No Settlements

By the mid-1980s there was no doubt among tobacco industry executives about the seriousness of the products liability issue. A July 22, 1985, restricted briefing document titled "B&W's Public Issues Environment" outlines the potential importance of products liability actions against Brown and Williamson and the principal strategy to be followed: no settlement payments are to be made.

B&W will continue the strategy of intensive litigation of each case with the objective of exploiting each case's favorable factors and a policy of no payments to plaintiffs in settlement of cases. In the event manufacturers experience losses in the smoking and health cases, the selection of contingency strategy would depend upon the scope of the losses. During the planning period the most attractive strategy probably will be to continue intensive litigation of the cases with no settlement payments and the acceptance of losses as charges against income. The current insurance coverage of $1,000,000 would quickly be absorbed and the adoption now of internal financial structures to fund losses could be a negative influence on juries. Such structures should be re-evaluated if losses occur. A possible contingent strategy of settlement also should be reassessed on an opportunistic basis. Pressure will develop in the Congress for superfund legislation [pursuant to which corporations that produce hazardous substances are taxed, and the resulting fund is used to pay for the costs associated with the release of hazardous substances] applicable to smoking and health lawsuits if large scale plaintiff victories occur; such a fund would be financed by contributions from cigarette manufacturers amounting to a large percentage of profits. {2228.02, pp. 1–2}

The strategy of refusing to settle with any plaintiff was one that the industry had devised when the first products liability actions were filed in

the mid-1950s, and the industry has religiously observed it to this day. The tobacco companies decided that they would defend every suit, regardless of cost, and would do so regardless of how many appeals were taken. As part of this strategy, the industry also decided that it would spend whatever it must to exhaust the plaintiff's resources in each case. Thus, the litigation in this area became a war of attrition in which the richest party, rather than the one with the best legal case, would win (9).

Maintaining Legal Distance Between B&W And Bat

The briefing paper discussed above also notes the importance of maintaining some legal distance between Brown and Williamson and BAT, to protect the larger organization from involvement in a US lawsuit:

The BAT group must preserve the independent corporate status of B&W. A smoking and health plaintiff could bring B&W's parent or parents into a case if the parent exercised such control over B&W as would support a plaintiff's argument that B&W was not an independent business entity. B&W's net assets should not be reduced below a level commensurate with B&W's operations as an independent entity. Similarly any substantial reduction or dilution of pension plan assets, or dividend up or pledge of assets, would invite a court to pierce the B&W corporate entity and hold BATUS or even BAT responsible for B&W's liabilities. Also, BATUS' or BAT's detailed direction of B&W's marketing plans could lead a court to the same result [emphasis added]. {2228.02, p. 2}

While there was concern that BAT might be dragged into US lawsuits because of its ties to B&W, the attorneys at B&W worried that the company might receive scientific information from BAT that would be useful to a plaintiff in litigation, and as described earlier in this chapter, they tried to devise methods for preventing the discovery of such information by a plaintiff. One might say that these two closely linked corporations were giving new meaning to the expression "hands across the sea."