Tobacco On Trial

We had a kind of star-turn yesterday in the charismatic Dr. Wigand, and here today we have another: as a witness, David Schechter is the closest thing we’ve had yet to Keith Richards. In his Written Direct Testimony, Mr. Schechter described himself as “sort of a favorite of BAT,” and you can see, in the remnants on display here, the possibility that his smart, fierce and unique demeanor may have seemed endearing, once, in a corporate culture.

And even today, as decrepit as he looks, there’s still a faint rock-n-roll saunter to his step as his thin frame approaches the stand, and a Bob Dylan look and demeanor to his responses. Rumpled would be the word for his ensemble and physiognomy. His shirt is open at the neck, no tie. The top half of his hair is a grey bird’s nest almost fully engulfing the thick-framed glasses perched up there, while the lower half of his hair is fashionably close-cropped. Usually downcast, his eyes at times would flash out with startling clarity from under his dark brows. With his low, ravaged voice (a simple “No” sounded as if his voice were being dragged over railroad ties) and thick New York accent, he sounded like a depressed Dustin Hoffman.

As Mr. Schechter began his string of desultory “I can’t recall”s and long pauses, more than one observer must have asked: Whatever happened to this guy? He was not just a “favorite,” he was general counsel for Brown & Williamson / BATUS (1978-90), then president and general counsel of BATUS (1990-92)–and he’d risen there from his position as a tax attorney in 1967.

And yet here he is today, moving slowly, morose, angry and pained, with a 4 o’clock shadow at 10 AM–in sum, looking and sounding as if he were recovering from a particularly rough night out. Obviously, something deeper is going on here.

The courtroom was pin-drop quiet as we all strained to hear his answers. The Defense may have had particular reason to remain still, as if afraid any untoward movement may set off this ticking time-bomb.

There was so much difficulty with Mr. Schechter either not remembering things, or not being able to read a document because of legibility problems, that Judge Kessler finally suggested, in answer to a Defense “asked-and-answered” objection, that it might obviate all these issues “if there were a statement on record that Mr. Schechter has no reason to dispute any statement in the entire document.”

DOJ lawyer Patrick Klein took the hint, and, abandoning his specific line-by-line questioning, asked, “Do you have any reason to dispute or doubt the accuracy of any statement in the memo?” Mr. Schechter said no.

ABSTRACTION AND MEANINGLESSNESS

At one point, as we feared might happen, testimony indeed veered off into the surreal.

In the Written Direct Testimony, Mr. Schechter had been asked about a 1984 meeting in which a topic of discussion was how to keep BATCo’s sensitive smoking and health documents out of US litigation by making sure they don’t get into B&W files.

From Mr. Schechter’s Written Direct:

Q. Section c), entitled “Parties” reads “To the extent that the close functional relationship is presumed if one company routinely receives quantities of regular operating, or scientific information which would otherwise be confidential, BATCO is probably already established in an inextricably close functional relationship with BWT [B&W] which would be confirmed, on discovery, by the disclosure of BATCO’s scientific position papers and the pooling of research work,” correct?
A. Yes.

. . .

Q. The second paragraph of this section c) reads “The real risk of attribution is if documents show that someone other than B&W had the final decision. For this reason documents likely to be sent to BWT must be subject to legal review before originated,” correct?
A. Yes.
Q. What does legal review mean?
A. A review by lawyers.
Q. In practice, how did this review work?
A. [PROJECTED ANSWER:] Scientists had to send documents to attorneys for review before those documents were put out in final form and sent to Brown & Williamson.
[MR. SCHECHTER’S CORRECTED ANSWER: ]I don’t know.
Q. Those at the May 1984 meeting agreed that documents to be sent to Brown & Williamson must be subject to legal review before being sent, correct?
A. [PROJECTED ANSWER:] Yes.
[MR. SCHECHTER’S CORRECTED ANSWER: ] Again, I have no recollection of the May 1984 meeting

Mr. Klein asked Mr. Schechter if it was his understanding that documents likely to be sent to B&W were to be cleared by lawyers. Mr. Schechter answered, No.

Mr. Klein repeated the Written Direct section above:

Q. What does legal review mean?
A. A review by lawyers.

Mr. Klein then tried again:

MR. KLEIN: Isn’t it your understanding that documents likely to be sent to B&W were to be cleared by lawyers?

MR. SCHECHTER: No

MR. KLEIN: Were you involved in the process of having documents cleared before being sent to B&W?

MR. SCHECHTER: No

Mr. Schecter’s answers seemed so at odds with the Written Direct, Judge Kessler finally came in:

JUDGE KESSLER (to Mr. Schechter): What is your actual understanding of “legal review?”

MR. SCHECHTER: I was just answering the question in the abstract. It wasn’t from any personal knowledge. It’s a meaningless question and a meaningless answer.

Mr. Schechter said it was not in his personal knowledge what “legal review” meant.

Judge Kessler appeared uncharacteristically tolerant of Mr. Schechter, but a few moments later she called a bench conference, which took place while Mr. Schechter read over a document. (As he had put it to Mr. Klein, “Would you like to give me a minute to, uh, breeze through it?”)

Shortly after the conference, Mr. Klein asked Mr. Schechter if it was fair to say that his memory of these events had faded over the years. Mr. Schechter said yes. A short time later Mr. Klein cut short the whole line of questioning by asking a blanket, “Do you dispute the accuracy of any other documents in the Written Direct Testimony?” Mr. Schechter said he didn’t.

BAT’s David L. Wallace (Chadbourne & Parke) said he had no questions for Mr. Schechter. Judge Kessler said, “That always takes me aback.” No other attorney, including Mr. Schechter’s personal lawyer, Defense-procured John Cotelli, had questions.

Thus, Mr. Schechter’s court testimony ended early, about 10 am, and the rest of the day, until 11:15 or so, was spent clearing up the entry of disputed exhibits.

This means that, barring Defense objections to particular exhibits, Mr. Schechter’s damaging Written Direct Testimony remains intact. It’s possible that J. Kendrick Wells, who was mentioned in some of the documents and who was in house counsel for B&W in the mid-80s, may repair some of the damage himself. He is scheduled to testify Wednesday, after Dr. Eriksen.

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BUSINESS NOTE:

Besides B&W, BATUS, a subsidiary of BAT Industries, in 1984 held a number of properties, including Sak’s Fifth Avenue, Gimbel’s, Breuner’s, Farmers Insurance, Marshall Fields, Ivey’s, Frederick & Nelson, Germaine Monteil Cosmetics, Kohl’s and Appleton Papers.

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THE WRITTEN DIRECT TESTIMONY

Mr. Schechter’s Written Direct concerned 4 areas:

1. BAT’s treatment of potentially damaging smoking and health documents in the mid-80s. BAT was concerned that if a foreign company with a “close functional relationship” with B&W (ie, BATCo itself and/or other BAT Industries companies) could be introduced in US litigation. Documents were shown that indicated heavy lawyer involvement in vetting BATCo smoking-and-health documents sent to the US.

2. Mr. Schechter’s trip to Australia in the early 90s to handle the Gallagher and Harrison cases. Questions arose concerning whether BAT Industries subsidiary WD & HO Wills could destroy documents once litigation was over.

3. Mr. Schechter’s development (1991) of the BATCo records management program.

4. Mr. Schechter’s knowledge of document destruction at Canada’s Imperial Tobacco Limited.

A prototypical answer from Mr. Schechter:

I don’t remember the meeting nor do I remember what happened in or what was said at the meeting. I do vaguely recollect being asked to be in that meeting and it went above my head. As for the capacity in which I attended the meeting, I’m sure that Messrs. Baker and Morini thought I was there in my capacity as general counsel of BATUS.

A sample document quote from the Written Direct:

Direct lawyer involvement is needed in all BAT activities pertaining to smoking and health from conception through every step of the activity

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SELECTIONS FROM THE WRITTEN DIRECT TESTIMONY OF DAVID SCHECHTER:

[Note: Italicized sections are Mr. Schechter’s corrected answers. The plain text preceding the italics are the discarded DOJ proposed answers.]

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Q. . . . I am showing you U.S. Exhibit 52,687, which bears Bates No. 521015673 through 421015675, and is a File Note from J.K. Wells dated June 12, 1984 referencing a “Conference with BAT Legal on U.S. Products Liability Litigation,” correct?
A. Yes, but the correct ending bates number is 521015675.
Q. Mr. Wells was in house counsel for Brown & Williamson in 1984, correct?
A. Yes. He later became assistant general counsel for product liability.
Q. The first paragraph of this document reads “On May 29, and 30, 1984, we held meetings which included Messrs. Pepples, Sachs and Wells, Bill Shinn and Bob Northrip (”Trial Counsel”); Richard Baker, Alec Morini and Anne Johnson (”BAT Legal”); and Mr. Schechter,” correct?
A. Yes.
Q. Do you recall attending this meeting?
A. Yes. I attended in my capacity as general counsel of BATUS. I don’t remember the meeting nor do I remember what happened in or what was said at the meeting. I do vaguely recollect being asked to be in that meeting and it went above my head. As for the capacity in which I attended the meeting, I’m sure that Messrs. Baker and Morini thought I was there in my capacity as general counsel of BATUS.
Q. Turning to the second paragraph on the second page of this document, it reads “To summarize the status of the discussions, it 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,” correct?
A. Yes.
Q. In fact, BAT Legal was informed about the danger of the admissibility of BAT statements on smoking and health in United States product liability litigation, correct?
A Yes. It is very possible that at some point in the past, I understood precisely what this statement meant, but I have no recollection of it now. And I know that that meeting went right over my head, and I attended it because I was asked to attend it, and I didn’t do anything on product liability after that until 1985.

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Q. Under the heading “GR&DC” the document reads “At the meeting with Reardon we also discussed at length the question of GR&DC research itself and also the resulting research reports. In terms of US law suits GR&DC research reports come into a different category from statements made by associated companies in that research material could be ‘discovered’ in the law suits and used directly in evidence against B&W. This is because B&W has contributed to the costs of GR&DC and research programs or projects have been considered at CAC meetings and by research directors of CAC companies including of course, Brown & Williamson.”
A. Yes.
Q. What that means is that the various research that is conducted by Southampton could one day potentially be discovered in a smoking and health lawsuit against Brown & Williamson, right?
A. Yes, that’s what it says.

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Q. I now show you U.S. Exhibit 67,858, which bears Bates No. 402184157 through 402184192 and is a Records Management Programme Training Seminar manual for a training seminar in Geneva, Switzerland starting June 30, 1991, correct?
A. Yes.
Q. This was a records management seminar you put on, correct?
A. Yes.
Q. Turning your attention now to Bates page 402184174, which is entitled “Records creation.” Do you see this page?
A. Yes.
Q. Under the heading “Records creation” are five bullet points: “Think before you write; Does it really need to be in writing to get job done?; Would a face-to-face conversation or phone call be more effective; Oral communication is best if subject is sensitive; Mental copy rule.” Do you see that?
A. Yes.
Q. This is the same mental copy rule that we discussed earlier, correct - to assume that everything you wrote was going to wind up on the front page of the newspaper or in court, correct?
A. Yes.

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Q. . . . I show you U.S. Exhibit 20,377 bearing Bates No. 202313423 through 202313425 which is a letter from Simon Potter at Ogilvy Renault in Canada addressed to Mr. Chalfen, Mr. Meltzer, and yourself dated June 5, 1992, correct?
Q. Was one purpose of destroying documents in the hands of the Canadian company be to limit or avoid discovery in smoking and health litigation?
A. Yes. Keeping the documents out of the hands of Canadian litigants is one possibility.
Q. What would be a purpose of destruction of certain documents, such as listed here, other than to avoid or limit discovery in smoking and health litigation?
A. Well, the other purpose would have been to keep them out of the hands of the Canadian government, which is more likely.

This entry was posted on Tuesday, February 1st, 2005 at 3:13 pm and is filed under Notes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.