A federal judge yesterday ordered the British American Tobacco Co. to turn over a long-sought document that allegedly served as a corporate blueprint for destroying damaging tobacco company records under the guise of document preservation.
British American has fought for two years to keep the memo private, raising interest in its contents. U.S. District Judge Gladys Kessler ruled yesterday that the Australian company could no longer claim the document was protected because the company had engaged in "inexcusable conduct" by initially concealing the memo's existence.
The document, known as the "Foyle Memorandum," is considered a potentially important piece of evidence in the federal government's effort to force five tobacco companies to pay $280 billion in damages on charges of racketeering and corruption. The Justice Department is preparing for a September trial in which it accuses the tobacco companies of conspiring to conceal the dangers of smoking from the public and destroying documents that show they knew tobacco could sicken and kill smokers.
In her decision, Kessler noted that she was taking the unusual step of imposing a "serious sanction" against British American (BATCo) by waiving the attorney-client privileges the company later claimed in not releasing the memo.
"BATCo's actions in the course of its dogged fight against release of the Foyle Memorandum constitute inexcusable conduct," she wrote. "It was only by pure accident . . . that the government even learned of the existence of the Foyle Memorandum."
Attorneys for British American did not respond to requests for comment yesterday. Representatives for tobacco firms Philip Morris, R.J. Reynolds and Brown & Williamson declined to comment on the development.
The Foyle Memorandum was written in 1990 by Andrew Foyle, an English law partner representing both British American and its wholly owned Australian subsidiary, W.D. & H.O. Wills. Foyle was advising the Wills subsidiary on how to route potentially sensitive documents to company lawyers in light of increasing lawsuits against tobacco companies in the United States and Australia.
The Justice Department learned of the memo when it was quoted in a March 2002 Australian appeals court decision involving a smoker's suit. Efforts to obtain a copy were rebuffed. Special master Richard Levie recommended to Kessler in an April 15 report that British American be forced to turn over the memo, and argued the document proved the company had engaged in fraud. British American has said its document policy was not fraudulent.
British American appealed to the U.S. Court of Appeals twice and risked paying thousands of dollars in daily fines to avoid turning over the memo.
"The very fact that BATCo has fought literally from one end of the earth to the other to keep it secret demonstrates its importance," said Matt Myers, president of the Campaign for Tobacco-Free Kids. "What is it they are trying to hide?"