Naked on the Stand?

Corporate Counsel has reported on the testimony of a retired Imperial Tobacco General Counsel in the class actions relating to addiction and lung disease being heard in Montreal court. The Corporate Counsel article can be read here or can be read below.  At issue is his part in decisions taken in the early 1990s to destroy company documents on the risks of smoking.  Susan Hackett (former General Counsel for the Association of Corporate Counsel) and I were interviewed on corporate governance principles surrounding records management and the legal ethics relating to document destruction while litigation is in course or reasonably expected.  I certainly agree that back in the 1990s records management as an area of corporate governance was not as mature as it is today but the ethical principles remain unchanged.

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Corporate Counsel

Ex-Imperial Tobacco GC Questioned Over Destroying Health Documents

By Sue Reisinger

April 6, 2012

Over the course of three long days, Roger Ackman, Imperial Tobacco's general counsel from 1972 to 1999, sat in the hot seat where no GC ever wants to be—as a trial witness being grilled by a plaintiffs lawyer over destroying company documents.

Ackman was dragged into a suit against the tobacco industry in Superior Court in Montreal—against his protests and despite failed legal attempts to avoid it. But because the GC actually took part in decisions in the early 1990s to destroy company research reports on the risks of smoking, the Canadian court ruled he had to testify.

Ackman has insisted that neither he nor his former company did anything wrong in destroying the files or in selling tobacco, which is a legal product. If anyone is to blame, the company said, it would be the Canadian government for not regulating the sale of the product (and in fact the government has been added as a third party in the case).

As for the shredded documents, Ackman’s company has said they were only copies, and the original reports remain available at the parent company’s offices.

Plaintiffs lawyers nevertheless tried to paint the document destruction as a nefarious act, and on day three they directly questioned Ackman’s ethics. In response, Ackman testified that he wasn’t aware of any ethical rule prohibiting lawyers from helping to destroy company documents.

But in general, there is. George Bass, general counsel at Wawanesa Mutual Insurance Company in Winnipeg, Canada, said his country has guidelines saying if one is in the process of litigation, or expects to be, it is unethical to destroy documents that would be relevant.

“There’s been a lot done in corporate governance in recent years around records management,” Bass explained. “Certainly it is acceptable for corporations to dispose of documents when done in a systematic way” under a document retention policy.

When exactly Imperial instituted its document retention policy has been at issue in the trial. 

Susan Hackett, CEO of the consulting firm Legal Executive Leadership, agreed with Bass. “A red flag goes up if you have a litigation hold, and if the destruction is outside the norm of the company’s retention policy,” Hackett said.

But Hackett noted that Ackman’s conduct took place some 20 years ago. “And it’s not fair to hold him to today’s standards,” primarily instituted after the Enron Corp. scandal of 2001, she said.

Still, Ackman’s combative testimony has made him the center of north-of-the-border media attention during the $27 billion class action trial against the cigarette industry. It is the largest class action in Canada’s history.

The trial involves two separate class actions, both filed 13 years ago; one concerns addiction, and the other lung disease. The defendants are the Canadian operations of the world’s largest tobacco companies: Rothmans, Benson & Hedges Inc. (wholly owned by Philip Morris International); Imperial Tobacco Canada (wholly owned by British American Tobacco plc); and JTI-Macdonald Corp (wholly owned by Japan Tobacco Inc.).

A tobacco litigation blog called Eye on the Trials has closely followed the 13 days of the trial so far, and Ackman’s testimony in particular.

All three days of his testimony focused on the issue of document destruction. There was no testimony on Thursday while the court dealt with procedural matters.

Plaintiffs lawyer Gordon Kugler, a senior partner at Kugler Kandestin in Montreal, first called Ackman to testify on Monday. The blog colorfully painted the scene: “Finally, Mr. Ackman, 73, took the stand, his hair neatly combed, his suit reminiscent of Dustin Hoffman's in Death of a Salesman.”

When a defense attorney objected to a Kugler question, Justice Brian Riordan dismissed the objection, calling Ackman part of the “spirit and brain” of the company. At one point the judge also reminded Ackman that “witnesses were there to answer questions, not to ask them,” the blog states.

On Tuesday, Ackman again played lawyer and objected to the judge about certain questions he was being asked about the studies, saying he wasn’t a scientist. The defense team quickly echoed his concerns.

As part of his testimony, Ackman said he hired Montreal lawyer Simon Potter “to help him” with his handling of the research documents. Potter, of the law firm McCarthy Tétrault, is slated to testify in the trial, even though he is also the defense attorney for Rothmans, Benson & Hedges in the case.

Ackman testified that the parent company pressured Imperial to destroy the research documents, though he couldn’t recall why, according to the blog. He also couldn’t recall why lawyers instead of researchers decided which documents to destroy.

The documents have been subpoenaed in this case, and some have been posted to the plaintiffs’ website.