FOYLED AGAIN–the McCabe Decision Redux
February 10, 2005 10:31 pm by Gene BorioThe upcoming Frederick Gulson testimony about BAT’s “Document Retention Policy” promises to make quite a splash, at least Down Under. While Mr. Gulson’s testimony–which the Defense is trying to have pulled down from the DOJ’s website–does quote from the infamous “Foyle Memorandum”–it only quotes portions which were already quoted by Victoria Supreme Court Justice Geoffrey Eames in his damning McCabe decision.
On March 22, 2002, Justice Eames found that BAT, by destroying at least 30,000 documents, had deprived the plaintiff of a fair trial. Justice Eames entered a default judgement for McCabe, concluding:
“In my opinion, the process of discovery in this case was subverted by the defendant and its solicitor Clayton Utz, with the deliberate intention of denying a fair trial to the plaintiff, and the strategy to achieve that outcome was successful. It is not a strategy which the court should countenance, and it is not an outcome which, in the circumstances of this case, can now be cured so as to permit the trial to proceed on the question of liability. In my opinion, the only appropriate order is that the defence should be struck out and judgment be entered for the plaintiff, with damages to be assessed. “
–http://www.tobacco.org/resources/documents/020322mccabe.html
On Dec. 12, 2002, Justice Eames’ decision was reversed by the Supreme Appeal Court of Victoria. The judges said BAT’s destruction of the McCabe discovery documents when it appeared the case was defunct was legal, and that Justice Eames’ view that the lawyers had devised a policy to systematically destroy documents was not justified.
The Appeal Court ruled:
“There was no evidence to justify the finding that Clayton Utz devised a strategy for the destruction of documents. . . The solicitors did no more than review the policy and give advice as to its legal consequences. . . [The advice was] “not only legally correct, but was entirely appropriate.”
It should also be noted that the Australian courts took into evidence documents concerning Mr. Gulson, whose various requests for clarification of BAT’s “Document Retention Policy” seemed to have sparked a flurry of activity as well as opened a particularly nasty can of worms. . .
From the Eames Decision:
THE 1990-1992 REVIEW OF THE DOCUMENT RETENTION POLICY
22 By 1990 the adequacy of the Document Retention Policy was being questioned by Wills. In a letter dated 23 March 1990 sent from F.T. Gulson, legal counsel and secretary of Wills, to Brian Wilson of Clayton Utz, Gulson said that it was opportune to review and amend the policy. He said that BATCO (i.e. the UK parent corporation) was conducting a similar review as to its own Document Retention Policy. Stating that he did so “in recognition of our close and direct association with BATCO”, Gulson enclosed a memorandum written by Andrew Foyle, a solicitor with Lovell White Durrant, U.K. solicitors, acting for BATCO, whom Gulson said had been retained to advise generally on product liability litigation “and, in particular, in relation to the current Document Retention Policy”. Gulson noted that Nick Cannar, legal counsel of BATCO, would soon be visiting Australia with respect to the policy review, and Gulson sought Wilson’s advice as to specific questions which Foyle had raised in his memorandum.
23 Counsel for the plaintiff place great emphasis on the terms of the Foyle memorandum, and it requires careful consideration. I will highlight some passages from it. In the first place, Foyle was not in doubt as to the origins of the new policy.
He wrote:
“Wills’ current document retention policy was introduced on the 30th December 1985 at a time when the tobacco companies in Australia anticipated the possibility of product liability litigation, although no case had actually been brought against any company. Clayton Utz had previously been instructed to take steps to prepare the Industry, and Wills in particular, for litigation. One of their first actions was to review the document retention policy of the Company, hence the new policy.”
24 Foyle said that what was required from Clayton Utz was “a strategy for handling the documents issue in litigation”, and he also posed a series of questions on which specific advice was required.
25 Foyle noted the American and Australian experience of the “enormous man hours” which discovery obligations caused any company involved in litigation. As I will later discuss, he made it clear that destruction of sensitive documents had already been taking place. Foyle wrote:
“Details of how the policy was implemented by the Research Department are given in the note of AWF’s meeting (ie Foyle’s) with Graham McGregor and Tas Wilson on 17 November 1989. The note also describes the type of research undertaken by Wills, the documents which they have received from BATCO and the information which their employees have about the BATCO research. A copy of that note is attached”.
26 Foyle expressed the concern of BATCO that because Wills had had access to sensitive BATCO research documents, through a computer link to England, that might lead to the discovery of the BATCO documents in any Australian proceedings, and also documents of other Group companies. He expressed particular concern about “summaries of the Janus reports”. No documents meeting that description have been produced in discovery in these proceedings. I do not know what they were or whether they would fall into any of the categories of discovery which I ordered.
27 Foyle identified a range of problems which he said the current policy posed. Among the problems were the following (the reference to “SRG” is to Wills’ Scientific Research Group):
“(a) The wording of policy (coupled with timing of its introduction) might lead to the inference that the real purpose of the policy was to destroy sensitive smoking and health documents.
(b) Aspects of the implementation of the policy might support that inference, for example the immediate destruction of the unpublished enclosures to the SRG letters.
(c.) The retention of a set of the BATCO research reports means that a plaintiff will have access to much sensitive BATCO research.
The information in the reports is enough to prompt searching questions about the underlying research policy and also questions about what follow up action was taken by BATCO in the light of the research results.
(d) The retention of the BATCO reports might encourage a plaintiff to seek discovery of BATCO’s documents, either by asserting that Wills has control over documents in the possession of BATCO, or by using the Hague Convention. The research reports might enable a plaintiff to frame a Hague Convention request for documents with the requisite degree of specificity and/or to identify the BATCO employee from whom oral testimony is required.
(e) Wills access to the BATCO computer gives them the de facto right to details of results of BATCO’s research. The summaries of the reports which are on the database are sufficiently informative to be of real interest to a plaintiff’s lawyer.
(f) The knowledge that Wills’ senior scientists have of BATCO research could rule them out as a witness at any trial in Australia.”
28 Before setting out the detailed questions on which Clayton Utz’ advice was required, Foyle made the following observations:
“1. It is understood that the destruction of documents n ow or in the past by Wills contravenes no law or rule in Australia and that, in that sense, Wills can do what it likes with its documents.
Presumably, if a court disapproved strongly of the destruction of the documents, then it might draw adverse inferences from that fact.
2. It should be assumed that Wills’ documents (what is in them and what has happened to them) will be a matter of great interest to a plaintiff’s lawyer in a product liability action. How Wills responds to questions about its documents will require careful thought, especially because of the implications which the answers may have for the BAT group as a whole. It would be sensible, therefore, to assess the nature and extent of any problems which the current document retention policy may pose and to take appropriate remedial action now, rather than wait for the litigation to begin. Generally, what is needed is a strategy for handling the documents issue in litigation.”
29 He asked:
“1. To what extent is there a risk that the destruction of documents in accordance with the 1985 retention policy will cause the Court to apply the adverse inference principle, taking into account:
(a) the wording of the policy,
(b) the circumstances prevailing at the time it was introduced (e.g. whether product liability actions had been threatened against Wills or the industry generally),
(c) the extent to which Wills will need to claim privilege for documents produced in 1985 and later, on the grounds that the documents were produced in contemplation of anticipated proceedings.”
30 Foyle sought advice about the adverse inferences or other consequences or sanctions which might flow from Wills destroying documents under the 1985 policy. He expressed particular anxiety that the Document Retention Policy itself, and Clayton Utz’ advice as to “whether certain types of documents should be retained or destroyed”, might also be discovered. I will address that anxiety in a later section of these reasons.
31 As to the special concern about BATCO research, Foyle wrote:
“(d) Might BATCO’s documents be more at risk? For example might the Court order Wills to retrieve from BATCO copies of the BATCO documents destroyed by Wills.”
32 Foyle then asked:
“3. Should changes be made to the way in which the policy is currently being applied, for example, in relation to the SRG documents?
4. What should be done about the copies of the BATCO research reports held by Wills? In this connection:
(a) Would the continued retention of these reports compromise Wills’ position via a vis the destruction of its other documents?
This question should be answered on the basis of the information given in this memorandum on the content of the reports. If more information is needed it can be supplied by LWD. It would be undesirable for Clayton Utz to seek information from Wills about the reports.
(b) Is there any reason why Wills should not now destroy its copies of most of the reports, if the motive for doing so were that the information in the reports is not relevant to Wills’ Current “research mission”?
(c.) Would the termination, or the restriction, of Wills’s access to the reports database on the BATCO computer cause any problems?
(d) Does the Caudwell threat affect the position?
5. Would implementation of the proposed new retention policy hinder or help Wills’ position on the documents issue?”
33 The reference to “LWD” no doubt meant the firm Lovell White Durrant. I will discuss “the Caudwell threat” later.
34 Although he did not respond to every specific question posed by Foyle, Mr Wilson of Clayton Utz did suggest a strategy. The evidence before me demonstrates that the strategy then devised has been followed, with modifications and additions, since 1990, and was being followed at the time of the hearings before me.
35 As may be seen, Foyle identified problems with the existing Document Retention Policy and sought advice as to a strategy which might be put in place with respect to sensitive documents. As Eggleton acknowledged in his evidence, sensitive documents were those which might assist a plaintiff’s case or harm the defendants’ case.
36 The “note” referred to in Foyle’s memorandum (see par [25] above), has not been produced. It is obviously a document which would be of particular interest to the plaintiff, and would bear on the question whether the Affidavit of Documents adequately dealt with the question of documents which had been destroyed.
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From the DOJ Witness List:
Gulson, Frederic
US Fact Witness
Mr. Gulson was Senior Counsel for WD, HO Wills (now BATAS) from 1989 to 1990. During Gulson’s employment with Wills, Wills was preparing for expected product liability litigation. In order to keep documents out of litigation, BATCo directed Wills and Gulson to destroy, claim privilege over, or send offshore smoking and health documents that it believed could harm Wills, BATCo, Brown, Williamson and other BAT Group companies if discovered in litigation.