ALM Properties, Inc.
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GC on the Hot Seat
It was the largest class action in Cana da's history, and there was a general counsel, sitting where no GC ever wants to be. Over the course of three long days in early April, Roger Ackman, Imperial Tobacco Canada's general counsel from 1972 to 1999, sat in the hot seat in Superior Court in Montrealgrilled by a plaintiffs lawyer for destroying company documents.
Plaintiffs attorneys have said that about 100 documents were shredded in the early nineties, and they questioned Ackman about five of them in court. All were scientific reports dealing with harmful effects of smoking, such as skin tumors in mice, or emphysema in people deficient in a certain enzyme.
Plaintiffs attorney Gordon Kugler, a name partner in the Montreal boutique law firm Kugler Kandestin, repeatedly pressed Ackman about whether Imperial should have shared the information in the studies with the public, according to a tobacco litigation blog called Eye on the Trials. Ackman dodged the questions with "I don't know" and "I have no opinion." Kugler asked Ackman whether he personally felt it was acceptable to sell a product that harmed consumers, as long as it was legal. Ackman replied, according to the blog, "It was their choice to smoke, the government didn't ban the product." When Kugler pressed again, Ackman shot back: "I chose not to smoke!" in a voice loud enough to send feedback from the courtroom speakers back through his microphone. "I don't have to give a reason. I chose not to smoke. Neither of my children smoke," he said.
Ackman was a reluctant witness. He was dragged into a suit against the tobacco industry over 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 the reports, the Canadian court ruled that 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 offices of Imperial's parent company, British American Tobacco in the United Kingdom. Plaintiffs lawyers nevertheless tried to paint their destruction as a nefarious act, and on Ackman's final day on the stand they directly questioned his ethics. In response, Ackman testified that he wasn't aware of any ethical rule prohibiting lawyers from helping to destroy company documents.
But there are rules that cover at least some circumstances. George Bass, general counsel at Wawanesa Mutual Insurance Company in Winnipeg, says that his country has guidelines that say if a person or company 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 explains. "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. Evidence that was introduced indicates that Imperial began discussing a document retention policy in late 1989 or January 1990. Twice in February 1990, BAT, the parent company, sent lawyers to Imperial's headquarters to discuss documents and their retention. In June of that year, records show, Ackman phoned a BAT lawyer and suggested implementing a retention policy, according to an exhibit. As discussions about a policy continued into the fall of 1991, one memo among the exhibits shows that a BAT lawyer wanted research documents returned to BAT, or "perhaps we will be able to reach some agreement under which the documents in question are destroyed rather than having to arrange for them to be physically returned."
Susan Hackett, CEO of the consulting firm Legal Executive Leadership, agrees with Bass that companies can destroy documents pursuant to a retention policy. "But 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 says. Hackett notes, however, 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 adds.
Still, Ackman's combative testimony made him the center of north-of-the-border media attention. The trial and its $27 billion claim 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; and JTI-Macdonald Corp. (wholly owned by Japan Tobacco Inc.).
When Kugler first called Ackman to testify on April 2, the blog colorfully painted the scene. "The hallway outside the downtown Montreal courtroom was so filled with cameras that it was difficult to make it through on the first morning of week three of the trial," the blog reported. "More seats in the public gallery were filled than usual, some by journalists with pen and notebook in hand. They came for the testimony of Roger Ackman. . . . 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," according to the blog.
The next day Ackman again played lawyer and objected to the judge about certain questions concerning the studies, saying that he wasn't a scientist. The defense team quickly echoed his concerns. 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.
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, was slated to testify in the trial, even though he was also the defense attorney for Rothmans, Benson & Hedges in the case. Asked about his role, Potter responded: "It will be unwise for me to comment on this before I have actually testified, if that is to happen."