Defendants’ Motion to Stay Judgement–Selected Declarations
September 8, 2006 2:38 am by Gene BorioTexts follow of:
DECLARATION OF DAVID R. BERAN, August 31, 2006
DECLARATION OF R MICHAEL LEONARD, August 31, 2006
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DECLARATION OF DAVID R. BERAN, August 31, 2006
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
PHILIP MORRIS USA INC.
f/k/a PHILIP MORRIS INCORPORATED,
et al.,
Defendants.
DECLARATION OF DAVID R. BERAN
I, David R. Beran, declare as follows:
1. I am the Executive Vice President of Finance, Planning and Information of Philip Morris USA Inc. (f/k/a Philip Morris Incorporated) (hereinafter’ PM USA” or “the Company”). I have been employed by PM USA since 1976 and have been a member of the Company’ s senior management team since February 1998.
2. In my current job, I am responsible for overseeing several departments at PM USA, including our Business Planning and Development Department. This Department is responsible for (1) compiling the Company’s Three Year Plan, which is prepared each year based upon information provided by the Company’s various functional areas; (2) strategic planning, which involves review and analysis of PM USA’s market performance, its financial situation, and its future business plans; and (3) exploring new business opportunities. I am also responsible for overseeing our Market Information and Consumer Research Department, which Civil Action No. 99-CV’-2496 (GK)
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gathers and analyzes marketplace information and adult smoker research for the purposes of supporting the business. In addition, I oversee our Finance Department, as well as our Information Services Department.
3. In light of these current responsibilities and my experience with the Company, I am knowledgeable about the competitive business environment in which PM USA operates, as well as PM USA’s marketplace activities. I am one of the individuals responsible for assuring implementation of and compliance with this Court’s August 17, 2006, Final Judgment and Remedial Order (the “Order”). The opinions and facts set forth herein are based on my personal knowledge and experience.
4. It is my understanding that the Court’s Order prohibits PM USA from making affirmative statements communicated to the public:
• misrepresenting the adverse health effects of smoking and exposure to environmental tobacco smoke;
• maintaining that neither smoking nor nicotine is addictive;
• denying that it manipulates cigarette design and composition to ensure optimum nicotine delivery;
• denying that it markets cigarettes to youth; and
• stating that there are health benefits to smoking “low tar,” “light,” “ultra light,” “mild,” and “natural” cigarettes.
5. The Court’s Order also requires PM USA to make certain corrective statements (the substance of which has not yet been determined) in specified major media markets, on package onserts, and through signs in retail stores; to assure the disclosure and publication of certain documents in depositories and on websites; and to cease the use of certain brand descriptors in connection with its cigarette products.
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6. Implementation of the Order would cause PM USA to expend significant sums of money and would negatively impact PM USA’s market share.
I. Prohibition On Brand Descriptors
7. The Order prohibits PM USA from “conveying any express or implied health message or health descriptor for any cigarette brand either in the brand name or on any packaging, advertising or other promotional, informational or other material” by January 2007. Order at 3. The prohibited descriptors include words such as “low tar,” “light,” “ultra light,” “mild,” and “natural.” This requirement imposes a major change in the way PM USA markets its cigarettes that will be costly to implement and will likely result in some loss of PM USA’s market share.
8. PM USA currently utilizes terms that fall within the category of prohibited descriptors, including “Lights” and “Ultra Lights.” These descriptors are used to describe cigarette brands that compete in a well-established market segment. Some of these descriptors have been in use for approximately 35 years. In addition, non-permanent advertising for these products, as with all of PM USA’s cigarette products, lists the tar and nicotine yields as measured by the Federal Trade Commission’s (”FTC”) prescribed machine test method, pursuant to an agreement with, and adopted by, the FTC (the “FTC Agreement’).
9. Although PM USA has not yet completely catalogued all of the steps that it would need to take to eliminate these descriptors, I know that we would have to take at least the following steps to ensure that, as of January 2007, PM USA does not manufacture any products using the prohibited descriptors:
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• Redesign packs, cartons, cases, and all other packaging used on all of the brands that use the prohibited descriptors; Redesign all advertising used in connection with such brands in a manner that complies with the FTC Agreement;
• Remove existing printing cylinders, which are used to print brand names and imagery on packs and cartons, from the vendors’ printing machines, and engrave and install redesigned printing cylinders at our printing vendors;
• Arrange for our employees or contractors to visit over 200,000 retail stores with which we have merchandising contracts to remove PM USA point of sale signage that carries a prohibited descriptor.
10.Let me go through some of these steps in greater detail. For each of PM USA’s brands that currently use prohibited descriptors, PM USA would have to design and implement changes in both packaging and advertising. To protect our market position and still comply with the Court’s Order, we believe that we will need to implement these changes in a two-stage process - one stage would entail longer term packaging changes that seek, as best we can, to preserve our brand equity; the other stage would involve short-term, interim, designs that would be created quickly for the sole purpose of complying with the Court’s timetable.
11.For any consumer product, packaging is an important component of a brand’s value to the consumer - and thus an important element of competition among consumer goods companies. For example, packaging helps adult smokers to distinguish between different brands and between the different line extensions offered within a single brand family. Adult smokers expect the packaging to be attractive and to convey accurately the type of product within the packaging. Indeed, our experience has shown that any packaging design change will evoke a reaction from adult smokers. Some adult smokers believe that when the packaging has changed, the product has changed. And if the packaging is not appealing to adult smokers, some may
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consider an alternate purchase. Therefore, the appearance of the packaging is critical in effectively competing for market share among manufacturers that participate in this industry. PM USA has invested significant resources in designing its packaging for all of its brands and in developing and protecting its trademarks and trade dress associated with the packaging.
12. Like most consumer goods companies, PM USA ordinarily invests significant resources into the design of its brand packaging. Thus, PM USA generally conducts significant consumer research before deciding on new designs to ensure that the packages are attractive to adult smokers. But such research would be impossible to conduct and analyze under the Court’s current deadline. Therefore, while we will begin to do such research so we can eventually attempt as best we can to retain our brand equity, in an effort to comply with the Court’s January 2007 deadline, PM USA would create an interim design that would simply remove the prohibited descriptors from the packages.
13. Once the new packaging has been designed and approved, printing vendors for PM USA will have to replace the cylinders in their printing equipment to produce packages and cartons with the new designs. Replacement cylinders would have to be developed and installed.
For the interim design, we would likely have to replace more than 1,500 cylinders. For the longterm design, we would likely have to replace more than 3,500 cylinders. In addition, the printing vendors will have to engrave and replace the plates for printing the cases.
14. The process of creating and replacing cylinders normally takes months. I believe that the vendors whom we currently use have the capacity to engrave a total of 150 cylinders per week. We will be exploring whether those vendors can increase this amount and also whether
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other vendors may be available. We will also see if our vendors are able to reduce their lead and production time to permit the Company to meet the Court’s Order.
15. We know from past practice, however, that the vendors whom we currently use are constrained by limits on their engraving (a manual process done by highly skilled workers), as well as by production resources.
16.Optimistic estimates place the total cost of complying with the Court ’s ban on certain descriptors at nearly $ 15 million in connection with the interim design and an additional $20 million in connection with the longer term design. Added to this would be the cost of having vendors and/or our sales force examine the retail stores that we regularly visit for the presence of PM USA signage that includes any brand descriptor, and remove or replace such signage where present.
17. On top of these costs, the ban on these descriptors may negatively impact PM USA’s market share. These Court-ordered changes to PM USA’s packaging, and the consumer confusion and erosion of brand equity that may ensue, may, in and of itself, contribute to the loss of PM USA’s share of this market segment. This impact may be ongoing, funthermore, because the Court’s Order will hamper PM USA’s ability to compete with non-defendant companies that will continue to participate in this market segment, and which are not subject to the Courtordered restrictions. Some of these prohibited descriptors have been used for approximately thirty-five years. They describe cigarettes that compete in a well-established market segment. In this market segment, all or most participating companies utilize similar terms to describe their product. In that way, adult smokers are able to identify similar brands and compare them. The Court’s Order, however, is directed solely at PM USA and the other manufacturing defendants
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and, thus, will not impact brands manufactured by companies that are not defendants in this lawsuit. There are currently over 200 cigarette brands, comprising over 1200 packings, that use prohibited descriptors, and which are manufactured and marketed by over 100 manufacturers that are not defendants in this lawsuit. I believe that this would create a competitive advantage for the non-defendant manufacturers, who would be allowed to continue using the prohibited descriptors on their brands.
18. Even though such descriptors are just one aspect of many that consumers utilize to choose brands, if adult smokers are provided brand descriptors for some cigarettes, but not for PM USA’s cigarettes, they will be hampered in their ability to compare those other brands to PM USA’s similar brands. For example, many smokers who prefer the taste of certain brands of cigarettes identify their preferred taste by the name “light.” Similarly, without the “light” descriptor, these adult smokers may have a difficult time differentiating the cigarettes they prefer from other PM USA cigarettes at the point of purchase. The resulting confusion could drive many adult smokers who are used to identifying the brands they like by descriptors to switch from the defendants’ renamed brands, including PM USA brands like “Marlboro Lights,” to brands offered by the non -defendant manufacturers who remain permitted to use such descriptors. This could result in a significant loss in market share to PM USA without any likely drop in the number of cigarette smokers who choose cigarettes brands in this market segment.
19. For each point in market share that PM USA loses, the Company loses approximately $155 million in annual income. PM USA’s lost market share could not easily be regained, and the associated loss of income could not be recovered, even if PM USA ultimately were permitted to retain the descriptors. Nor could PM USA recover from the potential damage
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to brand equity and image that would result from consumer confusion and, possibly, dissatisfaction with new packaging.
II. Affirmative “Corrective Statements”
20. The Court’s Order requires PM USA to make affirmative “corrective statements,” the precise content of which is yet to be determined. Order at 4. The categories about which PM USA will be required to make corrective statements are: “(a) the adverse health effects of smoking; (b) the addictiveness of smoking and nicotine; (c) the lack of any significant health benefit from smoking `low tar,’ `light,’ `ultra light,’ `mild,’ and `natural,’ cigarettes; (d) Defendants’ manipulation of cigarette design and composition to ensure optimum nicotine delivery; and (e) the adverse health effects of exposure to secondhand smoke (also known as environmental tobacco smoke, or ETS).” Order at 4.
21. The Court has required the parties to submit proposed communications within 60 days of the date of the Order. Presumably at some point soon after that, the Court will enter an order setting forth the precise communications required. The first Defendant’s obligation to run corrective statements in newspapers begins on Friday, December 1, 2006. Order at 7.
Defendants’ obligation to air television advertisements carrying the corrective statements, add packaging onserts with the corrective statements, and include the corrective statements on Countertop and Header Displays would begin no later than February 2007. Order at 5-7 & 9.
22. PM USA is not opposed to communicating about the health effects of its products - indeed, we currently do so via pack warnings, pack onserts, websites, television commercials, and a variety of other means. While the content of the corrective statements has not been determined, it is clear that at least some of these statements will be ones with which PM
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USA disagrees - for example, that PM USA engaged or engages in “manipulation of cigarette design and composition to ensure optimum nicotine delivery.”
23. Moreover, the program of implementing these corrective communications via onserts, newspaper advertisements, and television spots would be costly.
24. First, the Court’s Order requires that, during twoweeks in February, two weeks in June, and two weeks in October, PM USA must ship to our customers only packages with onserts containing the Court’s corrective communications.
25. Once theCourt determines the content of the communications, PM USA would therefore have to take the following steps immediately:
• Development of the new onsert designs by an outside vendor;
• Engraving and installation of redesigned printing cylinders to implement the new onserts;
• Production of the onserts by the vendors and shipment of materials to PM USA;
• Placement of the onserts by PM USA on packages according to the Court’s directives;
• Production of packages containing the onserts; and
• Shipment to PM USA’s direct customers with directions to cause the packages with the onserts to be put into the retail market.
26. We estimate, based on our prior use of onserts, that the cost for running the onserts through 2008 would exceed $30 million.
27. But even then, we are not confident we can comply with the Court’s time frame. PM USA has conducted onsert programs before, typically for one week’s worth of volume at a
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time. It has typically taken approximately thirty weeks from the development of the onsert design before the new packages have been ready to be shipped to direct customers.
28. The onsert program that the Court’s Order requires is far more extensive than any program PM USA has implemented in the past. PM USA is currently exploring various avenues to expedite the process so that it can ship to its direct customers only packages containing the onserts for the first two weeks in February 2007, as the Court’s Order requires. Expediting the process in this manner, even assuming it is feasible to do so, will greatly reduce or eliminate PM USA’s ability to utilize quality control mechanisms, thereby increasing the risk that flawed packages will reach retail. Expediting the process will also increase the costs substantially, though we do not have a current estimate of how much.
29.. In addition to onserts, the Court has required the corrective communications to be disseminated through newspaper and television advertising. We estimate that the cost of running newspaper advertisements as the Court directs would exceed $2.1 million.
30. Television spots create additional costs. PM USA would need to create, produce, and purchase spots. The estimated production cost, again based on past experience and preliminary vendor proposals, would be approximately $200,000. Based on current advertising rates, the total cost of purchasing the time would exceed $2.9 million.
31. The Court’s Order also requires PM USA to publish these Court-ordered corrective statements in retail stores that are parties to merchandising agreements with PM USA.
This “Retail Leaders” program (the “Program’) enables PM USA to achieve visibility at retail for its brands and brand imagery, and to do so in a way that we believe promotes responsible
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merchandising practices at retail. Today, nearly 200,000 retail stores throughout the United States are parties to Retail Leaders contracts with PM USA.
32. The Court’ s Order requires PM USA to include the publication of Court-ordered messages as a required element of the contract PM USA offers to retailers. This mandated change to PM USA’s retail merchandising program, and the compelled communications that go along with it, will require costly mobilization of PM USA’ s employees and its outside vendors to assure that these Court-ordered messages are posted in the required locations by February 2007.
This effort will force a significant part of PM USA’s employee and vendor base to be diverted from their normal, business activities for a significant period of time, causing yet ;further injury to the business.
33. Toimplement these changes, PM USA would first have to change, unilaterally, its contracts with these 200,000 retail stores. It would do this by announcing amendments to its contracts so as to impose a requirement on Program participants that they allow the Courtordered signage to be placed on their countertops and on headers in fixtures located in their stores. This Court-ordered modification to the PM USA merchandising program would reduce the Program’s economic value to the retailer and to PM USA. Among other things, the Program would essentially be offered on the condition that retailers agree to post large Court-ordered signage in headers and on countertops - which is likely to include messages that PM USA believes to be untrue and with which retailers too may disagree (for example, that PM USA “manipulates” cigarette design to achieve “optimum” nicotine delivery). The end result will likely be a reduction in the number of retail stores that participate in the Program.
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34. From a purely logistical standpoint, this aspect of the Court’s Order will be costly to the Company. PM USA would likely have to implement these retail changes through two stages. The first stage would be a rushed effort between the time we learn the content of the Court-ordered messages (late October at the earliest) and the February 2007 deadline. Then, as a follow-up phase, PM USA would likely have to undertake further efforts in the months following February 2007 to assure quality implementation of signage that meets the Court’s criteria and assures effective brand communications for the portions of its headers that the Court’s Order permits PM USA to continue to use.
35. in any case, once PMUSA learns the content of the Court-ordered messages in late October, PM USA will then have to design, review, and produce hundreds of thousands of point-of-sale pieces - countertop signs as well as fixture headers designed to fit into a variety of fixture and header configurations. PM USA would then distribute this point-of-sale material to its third-party vendors and to its sales organization consisting of approximately 2,000 employees.
These vendors and employees would then be instructed to visit the nearly 200,000 stores with whom PM USA has contracts in the period of time between the production of the materials and the February 2007 deadline, all while other defendants are doing the same, and at a time when the PM USA workforce would be otherwise occupied conducting regular business activities. For each store, the following would have to be accomplished:
• Remove and discard existing fixture header signs that are impacted by the changes mandated by the Order — at a loss of millions of dollars in previously incurred development, production, and distribution costs; Replace the discarded fixture header signs with signs that comply with the Court’s Order;
• Place Court-ordered signs on all retail countertops;
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• Examine each store for the presence of PM USA signage that includes any prohibited brand descriptor, and remove or replace such signage where present; and • Because cigarette fixtures typically have labels on the spring-load mechanisms holding individual packs that utilize pack graphics, the store visit would include an examination of these spring-load mechanisms with instructions to remove or replace any such labels.
All of this would have to be accomplished with the cooperation and consent of the retailer.
36. The financial impact toPM USA ofthis effort is difficult to calculate, but at this point it appears that it may be as high as $100 million.
37. This does not include any estimate of the financial harm caused by the disruption to the PM USA sales organization, the diminution of value of the PM USA retail program, or the injury to our business relationships with retailers. Indeed, there would be intangible harms associated with these processes. Moreover, key sales and marketing employees would be diverted from their normal activities as they conduct store-by-store visits, thereby hindering PM USA’s ability to remain competitive. The programs would certainly create injury to our business relationships with retailers. All of these factors may result in conditions that would likely erode PM USA’s market share.
III. Disclosure Requirements
38. PM USA maintains its litigation documents depository in Minnesota and its litigation documents website in conformance with provisions of the Minnesota Settlement Agreement, the Master Settlement Agreement, and orders entered by the Minnesota trial court.
These resources are routinely used by litigants and the public, generally without complaint. The Court’s Order imposes obligations that go beyond what is required pursuant to the settlement of
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the Attorneys General cases. Meeting these obligations will require far more time than the Court has given us, along with a significant expenditure of time and money.
39. For example, PM USA is required to provide full bibliographic information for all documents withheld on the ground of privilege or trade secret, including titles and a summary of the basis for the privilege or confidentiality assertion. While PM USA provides certain information on its privilege log, which is publicly available, PM USA is not required to prepare similar bibliographic information for its trade secret documents. Instead, those documents are provided to litigants through the discovery process pursuant to negotiated protective orders. The scope of information compelled by the Order requires PM USA to review hundreds of thousands of privilege and trade secret documents; and for the trade secret documents, this information is unnecessary for litigants to obtain the documents. These requirements will result in great expense, which the defendants would not be able to recover in the event of a reversal of the Court’s Order.
40. The Order further requires the posting of depositions and letters of request testimony from all prior cases. Many of these documents (for example, depositions) are also routinely provided to litigants through the discovery process pursuant to negotiated protective orders. These materials are not currently on the Internet Document W ebsites and would have to be coded with bibliographic data, reviewed for privilege and trade secrets, and, if need be,
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redacted. This review would also result in great expense, which the defendants would not be able to recover in the event of a reversal of this Court’s Order.
I declare under penalty of perury that the foregoing is true and correct.
Executed on this 31 st day of August, 2006, in Park County, Montana.
[signed] David R. Berans
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DECLARATION OF R MICHAEL LEONARD, August 31, 2006
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
V.
PHILIP MORRIS INCORPORATED, et al.,
Defendants.
Civil Action No. 99-CV-2496 (GK)
DECLARATION OF R MICHAEL LEONARD
1. I am an attorney admitted to practice in the State of Alabama and the State of North Carolina courts. I am a member in the Womble Carlyle Sandridge & Rice (”Womble Carlyle”) law firm. I make this declaration based upon personal knowledge except where I indicate that I am relying upon information provided to me at my request by Womble Carlyle employees.
2. R.J. Reynolds Tobacco Company (”RJRT”) retained Womble Carlyle as one of its national coordinating counsel in smoking and health actions in 1985 and, since that time, Womble Carlyle has represented and advised RJRT in that capacity. I have participated in Womble Carlyle’ s representation of RJRT since 1986. In the time period since August 1, 2004, I and others who work for Womble Carlyle have become familiar with the collections of documents produced in litigation by Brown & Williamson Tobacco Corporation (”B&W”) and American Tobacco Company (”ATCO”) which collections are now held and maintained by RJRT.
3. I have also reviewed the Court’s Final Judgment and Remedial Order, dated August 17, 2006 (”the Order” or “Court’s Order”). Paragraphs 8 and 10 of the Court’s Order provide that the Defendants shall maintain certain bibliographic information on their Internet Document Websites that pertains to the individual documents accessed on those websites. Paragraph 10 c. of the Order lists 28 bibliographic fields which “[e]ach Internet Document Website shall provide, and be searchable by…”. As to the majority of those fields, RJRT can
WCSR 3421743v1
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utilize fields or information which already exists on the three separate internet website collections for: (1) documents of RJRT (the “RJRT Collection”); (2) B&W generated prior to July 30, 2004 when RJRT acquired the United States cigarette business of (the “B&W Collection”); and (3) ATCO generated prior to the acquisition of ATCO by B&W in 1995 (the “ATCO Collection”). All three collections are accessible through www.rjrtdocs.com but are separately maintained.
4. To populate other bibliographic fields required by Judge Kessler’s Order, RJRT would have to undertake large reviews and coding efforts that would require major expenditures of time, effort, and funds. RJRT would be required, as set forth in more detail below, to review millions of pages of documents to identify some of the information required by the Court’s Order.
5. As to the RJRT Collection, RJRT would have to undertake substantial efforts to populate the following bibliographic fields: (a) Person Attending (item 6 in paragraph 10 c. of the Order); (b) Person Noted (item 7); (c) Organization Attending (item 16); (d) Organization Noted (item 17); and (e) Primary Brand (item 21). As to each of those five bibliographic fields, RJRT did not collect the kind of information called for by those fields when RJRT reviewed either (1) the 11,958,000 pages of documents in the RJRT Collection portion of the website or (2) the 7,966,000 pages of confidential and privileged documents that would otherwise be on the public web site and which the Court’s Order requires to be indexed utilizing the bibliographic fields referenced above. Due the nature of the information called for by each of those five bibliographic fields, there is no automated way of collecting all the information that would be needed to completely “populate” those fields. Each field is discussed below.
(a) Persons Or Organizations Attending (Paragraph 10 c. Items 6 and 16
RJRT collected information concerning persons or organizations mentioned in documents. The “mentioned name” field which exists for the RJRT Collection references all persons mentioned in a document including persons who are mentioned as attending a meeting and persons whose names were mentioned in marginal notes. However, without a manual review of all or a substantial portion of the documents, it is impossible to “separate” out the information concerning persons or organizations attending a meeting or persons mentioned in marginal
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notes. If RJRT limits such a manual re-review to minutes, agenda, speeches, notes, or documents with “meet” or “meeting” in the title, the manual review would involve approximately 796,000 pages of documents. Based on my experience, the information concerning “persons attending” is somewhat subjective. For example, there could be no way of looking at a “meeting notice” document and determining from that document whether all persons who received the notice in fact attended the meeting. Therefore, the fact that those persons’ names are captured in a “recipient” field or mentioned name field suffices for purposes of determining which documents involve a particular person, and information on “persons attending” would be duplicative of information in other fields and of limited additional value in searching.
(b) Persons Or Organizations Noted In Marginal Notes (Paragraph 10 c. Items 7 and 17)
To separate and capture the names of persons or organizations mentioned in marginal notes would require a review of the entire 9,347,000 pages that (1) are on the RJRT website, (2) would be on the website if not confidential or privileged, and (3) are coded as containing marginal notes. As mentioned above, the RJRT Collection can already be searched for persons and organizations mentioned in a document, which includes persons and organizations mentioned in marginal notes. Therefore, separately capturing the names of persons and organizations mentioned in marginal notes would be duplicative of information already captured in the “mentioned name” field and is of little, if any, additional value in searching.
(c) Primary Brand (Paragraph 10 c. Item 21)
RJRT collected information concerning brands mentioned in documents. That information is available in the Mentioned Brand field on the RJRT Collection. RJRT did not utilize a Primary Brand field and did not routinely (for each document) capture information concerning the “primary” brand that was the focus of the discussion in a document. RJRT can “populate” a new Primary Brand field for approximately 6,675,000 pages of documents (that are either on the website or would be if not privileged or confidential) without performing a manual review. The process involved in “populating that field” for those documents would not be
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automatic and would require some review to assure that the information populated in a Primary Brand field was accurate. We estimate the cost of that process at $50,000. As to the other 367,000 documents (4,727,000 pages) that mention RJRT brands (and that are in the RJRT Collection on the website or that would be in the RJRT Collection if not privileged or confidential), it would take a manual review of those documents to make the subjective “Primary” brand call.
6. The total estimated burden of populating the RJRT Collection (and the required index of confidential and privileged documents which would otherwise be in the RJRT Collection) with the bibliographic fields discussed above (Person/Organization Attending, Person/Organization Noted in marginal notes and Primary Brand) is as follows (the person and organization fields would be separately populated). When overlap between the three sets of documents involved is eliminated, the total number of pages that require manual review is 12,100,000. Based on my years of experience in this area, it would take 10 reviewers 242 weeks to perform this work at an estimated cost of $2,100,000 . It would take 50 reviewers 48 weeks at a review cost of $2,100,000 plus an additional estimated $75,000 in administrative and overhead costs that would be required to hire personnel and provide space, computers, and supervision.
7. It is not possible for RJRT to populate the Physical Attachment field required by Paragraph 10 c., Item 18 of the Order. RJRT collected information concerning attachments and that information is located in the Attachment field in the RJRT Collection. Some of the information in that field reflects physical attachments as “defined” by paper clips, rubber bands and the like in original files. However, it is not possible to separate “out” attachments which were physical from documents that were coded as attachments because they were, for example, “exhibits” A, B and C to a document but not physically attached thereto. Also, not all information concerning physical attachments was captured. Some of the information captured in RJRT’s Attachment field was captured when documents were collected nearly 20 years ago. While the Attachment field accurately captures attachments that existed among the documents at the time of the collection and review, the original documents were returned to company files following review, and, in many cases, continued to be used in the business of the company by company employees. Reviewers thus cannot revisit those files and determine in which cases the
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“attachments” reflected in the Attachment field at the time of the collection and review were “physical” and in which cases the attachments reflected in that field were not “physical”.
8. As to the B&W Collection, RJRT would have to undertake substantial efforts to populate the following bibliographic fields: (a) Person Attending (item 6 in paragraph 10 c. of the Order); (b) Person Noted (item 7); (c) Organization Attending (item 16); (d) Organization Noted (item 17); and (e) Primary Brand (item 21). As to each of those five bibliographic fields, B&W did not collect the kind of information called for by those fields when B&W reviewed either (1) the 6,028,000 pages of documents in the B&W Collection portion of the website or (2) the 859,000 pages of confidential and privileged documents that would otherwise be on the public website and which The Court’s Order requires to be indexed utilizing the bibliographic fields referenced above. Due the nature of the information called for by each of those five bibliographic fields, there is no automated way of collecting all the information that would be needed to completely “populate” those fields. Each field is discussed below.
(a) Persons Or Organizations Attending (Paragraph 10 c Items 6 and 16)
B&W collected information concerning persons and organizations mentioned in documents. The “Names Mentioned” field which exists for the B&W Collection references all persons mentioned in a document including persons who are mentioned as attending a meeting and persons whose names were mentioned in marginal notes. However, without a manual review of the documents, it is impossible to “separate” out the information concerning persons or organizations attending a meeting or persons mentioned in marginal notes. If RJRT limits such a manual review to minutes, agenda, speeches, notes, or documents with “meet” or “meeting” in the title, the manual review would involve approximately 544,000 pages of documents. Based on my experience, the information concerning “persons attending” is somewhat subjective. For example, there could be no way of looking at a “meeting notice” document and determining from that document whether all persons who received the notice attended the meeting. Therefore, the fact that those persons’ names are captured in a “recipient” field or a “mentioned name” field suffices for purposes of determining which documents involve a
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particular person, and information on “persons attending” is primarily duplicative of information in other fields and of limited additional value in searching.
(b) Persons Or Organizations Noted In Marginal Notes (Paragraph 10 c. Items 7 and 17)
To separate and capture the names of persons or organizations mentioned in marginal notes would require a review of the entire 1,417,000 pages that (1) are in the B&W Collection, (2) would be on the B&W website if not confidential or privileged, and (3) are coded as containing marginal notes. As mentioned above, the B&W Collection can already be searched for all persons mentioned in a document, which includes persons mentioned in marginal notes. Therefore, separately capturing the names of persons mentioned in marginal notes is duplicative of information already captured in the “Names Mentioned” field and is of little, if any, additional value in searching.
(c) Primary Brand (Paragraph 10 c. Item 21
B&W collected information concerning brands mentioned in documents. That information is available in the Brands field on the B&W Collection. B&W did not utilize a Primary Brand field and did not routinely (for each document) capture information concerning the “primary” brand that was the focus of the discussion in a document. B&W can “populate” a Primary Brand Field for approximately 1,648,000 pages of documents (that are either on the website or would be if not privileged or confidential) without performing a manual review. The process involved in “populating that field” for those documents would by no means be automatic and would require some review to assure that the information populated in a Primary Brand field was accurate. We estimate the cost of that process at $20,000. As to the other 62,000 documents (807,000 pages) that mention B&W’s brands (and that are in the B&W Collection on the website or that would be in the B&W Collection if not privileged or confidential), it would take a manual review of those documents to make the subjective “Primary” brand call.
9. The total estimated burden of populating the B&W Collection (and the required index of confidential and privileged documents which would otherwise be in the B&W Collection) with the bibliographic fields discussed above (Person/Organization Attending,
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Person/Organization Noted in marginal notes and Primary Brand) is as follows (the person and organization fields would be separately populated). When overlap between the three sets of documents involved is eliminated, the total number of pages that require manual review is 2,232,000. Based on my years of experience in this area, it would take 10 reviewers 45 weeks to perform this work at an estimated cost of $390,000
10. It is not possible for RJRT to populate the B&W Collection with the “Physical Attachment” field required by Paragraph 10 c., Item 18 of the Order. B&W collected information concerning attachments and that information is located in the Attachment Group field in the B&W Collection. Some of the information in that field reflects physical attachments as “defined” by paper clips, rubber bands and the like in original files. However, it is not possible to separate “out” attachments which were physical from documents that were coded as attachments because they were, for example, “exhibits” A, B and C to a document but not physically attached thereto. Some of the information captured in B&W “Attachment Group Field” on the B&W Collection was captured when documents were collected several years ago. While the Attachment Group field accurately captures attachments that existed among the documents at the time of the collection and review, the original documents were returned to company files following review. Therefore, at this point, it would be impossible to revisit those files and determine in which cases the “attachments” reflected in the Attachment Group field at the time of the collection and review were “physical” and in which cases the attachments reflected in that field were not “physical”.
11. As to the ATCO Collection, RJRT would have to undertake substantial efforts to populate the following bibliographic fields: (a) Person Attending (item 6 in paragraph 10 c. of the Order); (b) Person Noted (item 7); (c) Organization Attending (item 16); (d) Organization Noted (item 17); (e) Primary Brand (item 21) and (f) File Name (item 19). As to each of those six bibliographic fields, the kind of information called for by those fields was not collected when ATCO reviewed either (1) the 2,707,000 pages of documents in the ATCO Collection portion of the website or (2) the 109,000 pages of confidential and privileged documents that would otherwise be on the public website and which the Court’s Order requires to be indexed utilizing the bibliographic fields referenced above. Due the nature of the information called for by each of
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those six bibliographic fields, there is no automated way of collecting all the information that would be needed to completely “populate” those fields. Each field is discussed below.
(a) Persons Or Organizations Attending (Paragraph 10 c. Items 6 and 16)
ATCO collected information concerning persons and organizations mentioned in documents. The “Names Mentioned” field which exists for the ATCO Collection references all persons mentioned in a document including persons who are mentioned as attending a meeting and persons whose names were mentioned in marginal notes. However, without a manual review of the documents, it is impossible to “separate” out the information concerning persons or organizations attending a meeting or persons mentioned in marginal notes. If RJRT limits such a manual review to minutes, agenda, speeches, notes, or documents with “meet” or “meeting” in the title, the manual review would involve approximately 143,000 pages of documents. Based on my experience, the information concerning “persons attending” is somewhat subjective. For example, there could be no way of looking at a “meeting notice” document and determining from that document whether all persons who received the notice attended the meeting. Therefore, the fact that those persons’ names are captured in a “recipient” field or mentioned name field suffices for purposes of determining which documents involve a particular person, and information on “persons attending” is primarily duplicative of information in other fields and of limited additional value in searching. (b) Persons Or Organizations Noted In Marginal Notes (Paragraph 10 c. Items 7 and
To separate and capture the names of persons or organizations mentioned in marginal notes would require a review of the entire 1,363,000 pages that (1) are in the ATCO Collection, (2) would be in the Collection if not confidential or privileged, and (3) are coded as containing marginal notes. As mentioned above, the ATCO Collection can already be searched for all persons mentioned in a document, which includes persons mentioned in marginal notes. Therefore, separately capturing the names of persons mentioned in marginal notes is duplicative of information already captured in the “mentioned name” field and is of little, if any, additional value in searching.
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(c) Primary Brand (Paragraph 10 c. Item 21)
ATCO collected information concerning brands mentioned in documents. That information is available in the Brands field on the ATCO Collection. ATCO did not utilize a Primary Brand field and did not routinely (for each document) capture information concerning the “primary” brand that was the focus of the discussion in a document. RJRT can “populate” a Primary Brand Field for approximately 1,335,000 pages of documents (that are either on the website or would be if not privileged or confidential) without a manual review. The process involved in “populating” that field for those documents would by no means be automatic and would require some review to assure that the information populated in a Primary Brand field was accurate. We estimate the cost of that process at $20,000. As to the other 45,000 documents (239,000 pages) that mention ATCO’s brands (and that are in the ATCO Collection on the website or that would be in the ATCO Collection if not privileged or confidential), it would take a manual review of those documents to make the subjective “Primary” brand call.
12. The total estimated burden of populating the ATCO Collection (and the required index of confidential and privileged documents which would otherwise be in the ATCO Collection) with the bibliographic fields discussed above (Person/Organization Attending, Person/Organization Noted in marginal notes and Primary Brand) is as follows (the person and organization fields would be separately populated). When the overlap between the three sets of documents involved is eliminated, the total number of pages that require manual review is 1,562,000. Based on my years of experience in this area, it would take 10 reviewers 32 weeks to perform this work at an estimated cost of $277,000.
13. There is currently a “File” field in the ATCO Collection, but that field contains no information. It is possible to populate the File Name field required by the Court’s Order as to most of the 2,816,000 pages of documents which are documents in the ATCO Collection (or would be in the collection if not privileged or confidential) by utilizing information concerning “file folders” that were copied into the ATCO Collection and bates numbers of documents in proximity to those “file folders”. That process would by no means be automatic and would require some review. We estimate the cost of that process at $50,000.
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14. It is not possible for RJRT to populate the ATCO Collection with the Physical Attachment field required by Paragraph 10 C., Item 18 of the Order. ATCO collected information concerning attachments and that information is located in the Attachment Group field in the ATCO Collection. Some of the information in that field reflects physical attachments as “defined” by paper clips, rubber bands and the like in original files. However, it is not possible to separate “out” attachments which were physical from documents that were coded as attachments because they were, for example, “exhibits” A, B and C to a document but not physically attached thereto. Also, not all information concerning physical attachments was captured. The information captured in the “Attachment Group” field in the ATCO Collection was captured when documents were collected over a decade ago. While the Attachment Group field in the ATCO Collection accurately captures attachments that existed among the documents at the time of the collection and review, the original documents were returned to company files following review. Therefore, at this point, it would be impossible to revisit those files and determine in which cases the “attachments” reflected in the Attachment Group field at the time of the collection and review were “physical” and in which cases the attachments reflected in that field were not “physical”.
15. Paragraph 10 c. of the Court’s Order requires the following four “name” fields: “organization author” (item 12 in paragraph 10 C.); “organization recipient” (item 13); “organization copied” (item 14); and “organization mentioned” (item 15). The RJRT Collection, the B&W Collection and the ATCO Collection each contain such “organization name” information but the information is contained in “combined” name fields. For example, the “author” field in all three collections gives both the name of an individual author; as an example, “Joe Smith” and the name of the organization for which Joe Smith worked (if that information appears on the face of the document). If the only author information is an organization, for example, McCann Erikson, and no individual author is available, McCann Erikson is all that will appear in the author field. While the value of doing so is de minimis, RJRT can comply with the Court’s Order by “pulling” the organization names out of the “combined” name fields in all three collections and placing it into the “organization” name fields set out as items 12, 13, 14 and 15 in paragraph 10 c. in the Court’s Order. To do so will require manual review of information from each of the “combined” name fields involved: author, addressee, copyee and names mentioned.
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Because each of the RJRT, B&W and ATCO Collections is involved (in addition to confidential and privileged documents which would otherwise be in those collections) RJRT will have to reorganize existing and readily available name information for 29,627,000 pages of documents. We estimate that such work will take 25 weeks for 5 reviewers to perform and cost $105,000.
16. Paragraph 15 of the Court’s Order requires that RJRT, within a year, complete a review of all documents that have not been placed in the RJRT Collection, B&W Collection or ATCO Collection because the documents are trade secret. Paragraph 10 (d) of the Court’s Order requires that the publicly available document website contain a “confidential document index” which is searchable by the 28 fields set out in Paragraph 10 c. Language in the Court’s Opinion requires that, in addition to those 28 fields, the “confidential document index” contain a description of why the document is confidential. Paragraph 13 of the Order requires that “[w]herever less than the entirety of a document is subject to a claim of privilege or trade secret”, the document shall be produced in redacted form. To comply with the confidentiality “review” requirement, the requirements for redaction of documents for which less than the entirety is confidential and the requirement for a “confidentiality description” for each document on the “confidentiality document index”, RJRT would have to review the following sets of documents: 5,667,000 pages that would have been placed in the RJRT Collection if they were not confidential; 859,000 pages that would have been placed in the B&W Collection if they were not confidential; and 109,000 pages that would have been placed in the ATCO Collection if not confidential. The total of those three sets is 6,635,000 pages. Based on my years of experience in this area, this review would take a team of 10 attorneys and 4 paralegals 78 months at a cost of $4,450,000 for the attorney work and $1,170,000 for the paralegal work for a total of $5,620,000.
17. I estimate the total cost of the work discussed above would exceed $8,600,000. That cost does not include technical costs associated with reorganizing, posting and maintaining
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data which can be reorganized without review by lawyers, paralegals or others. That cost does include the costs set out in paragraphs 6, 9, 12, 15 and 16 of this Declaration.
On this day of ___31st__ day of ____August __2006 and in accordance with U.S.C. § 1746, I hereby declare under penalty of perjury that the foregoing is true and correct.
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