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:
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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}.