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When President George W. Bush entered office two years ago, many people expected the federal government’s suit against the tobacco industry to follow Bill Clinton’s staff out the door. And for a time that seemed likely. But last month, the Justice Department took an unusually aggressive tack in the litigation that suggests that the government is serious about pursuing the case. The DOJ’s tobacco litigation team filed a motion in federal court claiming that industry lawyers violated the D.C. Rules of Professional Conduct when they agreed to pay more than $7,000 in legal fees incurred by a former Philip Morris Inc. consultant deposed last June. The violation, says the DOJ, occurred because the witness was not told until after he testified that his legal fees would be covered. Lawyers for the tobacco industry say the claim is “irresponsible and baseless.” The government’s motion does not identify a specific lawyer or firm; rather, it refers to “joint defendants.” About 100 lawyers from 25 different law firms are on record in United States v. Philip Morris Inc., et al. Documents filed in U.S. District Court for the District of Columbia show, however, that the dispute arose from a deposition taken by lawyers from Jones, Day, Reavis & Pogue; Arnold & Porter; Kirkland & Ellis; and St. Louis’ Thomas Coburn. U.S. District Judge Gladys Kessler, who has presided over the mammoth case since it was filed in 1999, has yet to decide the merits of the allegation. Legal ethics experts, meanwhile, say the accusation is unusual because companies routinely pay the legal bills of current and former employees who are called to testify. Just two years ago, the Bush administration nearly blocked the case from moving forward by taking away resources and publicly announcing that it planned to enter into settlement talks because a DOJ assessment viewed the case as weak. The Justice Department’s recent move gives those who have been following the tobacco case a different impression about the intentions of the government — or at least of the career lawyers handling the litigation. “It’s a sign that they are still out there fighting and litigating,” says one former DOJ official, who asked not to be named. Anti-smoking advocate John Banzhaf III says that, obviously, there are people within Main Justice who believe in the suit. “My only worry is if the Justice Department seems to be making progress someone from above might pull the plug,” says Banzhaf, a professor at George Washington University School of Law and the executive director of Action on Smoking and Health. The suit, filed against eight tobacco companies — including Philip Morris, Brown & Williamson, R.J. Reynolds, and Lorillard — is in the midst of discovery, with a special master handling many of the evidentiary disputes. Motions for summary judgment are due by October 2003, and the case has a September 2004 trial date. Kessler threw out a large portion of the case two years ago, leaving just two racketeering charges intact. Late last week, Philip Morris lawyers dumped about 151,000 pages of documents on the government — six months after they were due. The DOJ team complained to Kessler at a Jan. 17 hearing that top Philip Morris officials deleted thousands of e-mail messages they should have kept — some of which couldn’t be retrieved because the corporation purges its entire e-mail system every three weeks. In late 2001, the government’s case received a boost when Attorney General John Ashcroft asked other federal agencies to pitch in, specifically by helping to produce documents. The DOJ tobacco team — headed by career Justice lawyer Sharon Eubanks — now has 34 lawyers was promised more than $20 million to litigate the case this year, but those funds have been held up in the budget process. Eubanks referred calls to Main Justice’s public affairs office. The DOJ motion asks Kessler to find the defense team in violation of the D.C. Rules of Professional Conduct and to order defense counsel to turn over records showing payment arrangements for other deposition witnesses. The motion, as the government points out, turns on the timing of defense counsel’s decision to pay. Some legal ethics experts question the DOJ’s approach, noting that whether the payment was agreed to before or after the witness gave testimony is normally not an issue. “Some [lawyers] would say that if you pay ahead of time, that’s an inducement,” says one ethics lawyer who asked not to be named. Sherman Cohn, an ethics professor at Georgetown University Law Center, says he has never heard of another case in which one of the parties challenged the timing of the payment to a fact witness. Still, he says, this motion will likely turn on whether the evidence shows that the payment of legal fees was contingent on the witness giving testimony that was favorable to the defense. “It is a pure factual question — whether from these facts one can reasonably infer that this was held out as a carrot of inducement,” Cohn says. “Otherwise, the government has no argument,” he adds. The ethical dispute stems from the defendants’ deposition of T.C. Tso, an 85-year-old scientist who studied tobacco for the U.S. Department of Agriculture and later was a paid consultant for Philip Morris. The government claims that the defense team violated Rule 3.4(b) of the D.C. Rules of Professional Conduct, which states that a lawyer shall not “falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law.” According to the government’s motion, the defendants notified DOJ lawyers last April that they intended to depose Tso as a “non-expert witness.” At that time, the DOJ lawyers were asked whether they wanted to represent Tso, given the scientist’s lengthy career with the federal government. Team director Eubanks declined, noting that Tso’s work for Philip Morris created a conflict. Later that month, Tso was contacted by Jones, Day partner James Young, who represents R.J. Reynolds. Tso, who was hesitant to be interviewed because of his age and health, hired D.C. lawyer Whitney Ellerman, a partner at Janis, Schuelke & Wechsler. Tso asked Eubanks whether the government would pay his legal fees. Eubanks told him it was unlikely, but that he could file a request, according to defense counsel’s response. Tso was deposed in June at the D.C. office of Jones, Day. Eubanks and another DOJ lawyer were present, as were Ellerman, Young, and other lawyers representing tobacco companies. During questioning, Eubanks asked Tso whether the defendants were paying for his legal fees. Tso said he requested payment, but that the defendants had yet to respond. Defense counsel then asked whether the government would be opposed to having the defendants pick up Tso’s legal tab. Eubanks said it was a question of ethics. At issue, according to the government’s motion, was that a request for payment of legal fees was made by Tso and his lawyers prior to his deposition. The defense team, however, did not say whether they would pick up the tab until after Tso testified. Therefore, according to the government, there was an “inducement” for Tso to make sure his testimony benefited the defendants. Defense counsel, meanwhile, maintained that the D.C. rule did not prevent them from paying the legal bill as long as the fees were “reasonable.” Several months later, the issue over whether Tso’s legal bills would be paid was still being debated by the government and lawyers for the tobacco companies. A November billing statement from Ellerman said he was owed $7,616.83 for handling the Tso deposition. It is unclear from the public record whether Ellerman was paid for his work or whether Tso’s testimony was favorable to the tobacco companies. Ellerman declines comment. At a hearing before Special Master Richard Levie, Eubanks surprised the retired Superior Court judge when she raised the issue. “[T]his kind of checkbook lawyering, [where] determinations are not made up front and in advance, and it’s only after the testimony is given that parties are then free to work out a deal then that indeed under the case law, can be considered an inducement to testify in a certain way,” Eubanks said, according to a transcript. In response, Levie warned, “[G]iven the nature of the potential allegation, that I would just urge the government to be really, really positive that . . . this is the type of issue you really want to go forward on, because I think every judge . . . treats these kind[s] of issues very, very sensitively, because they’re ethical allegations against another member of the bar. And judges as a general rule don’t like to deal with these.” Young did not return calls seeking comment. But in an affidavit submitted Jan. 14, he says he agreed to cover the costs of having a car pick up Tso from his Bowie, Md., home and bring him to the District for the deposition. Young says that Janis, Schuelke & Wechsler’s Ellerman and Lawrence Wechsler asked prior to the deposition whether Tso would be paid a consulting fee and whether the scientist would have his attorney fees paid by the defendants. Young claims to have told Tso’s lawyers that he didn’t think the defendants could pay Tso a fee, and that any request for a reimbursement of legal fees should be made in writing. In a Jan. 15 affidavit — filed as part of the defense team’s response — Ellerman says there was no contingency agreement between defense counsel, himself, and his client: “[A]t no point in time, prior to the deposition or otherwise, did the Joint Defendants to my knowledge offer an inducement of any kind to Dr. Tso in connection with his deposition testimony.”

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