COMMONWEALTH OF MASSACHUSETTS

MIDDLESEX SS. SUPERIOR COURT

CIVIL ACTION

NO. 95-7378

***************************************

COMMONWEALTH OF MASSACHUSETTS, *

Plaintiff *

*

vs. *

*

PHILIP MORRIS INCORPORATED, R.J. *

REYNOLDS TOBACCO COMPANY, BROWN & *

WILLIAMSON TOBACCO CORPORATION, *

B.A.T. INDUSTRIES P.L.C., LORILLARD *

TOBACCO COMPANY, NEW ENGLAND *

WHOLESALE TOBACCO CO., INC., *

ALBERT H. NOTINI & SONS, INC., THE *

COUNCIL FOR TOBACCO RESEARCH-U.S.A., *

INC., and THE TOBACCO INSTITUTE, INC. *

Defendants *

***************************************

BEFORE: SOSMAN, J.

Friday

July 24, 1998

Cambridge, Massachusetts

Patricia Bellusci

Official Court Reporter

APPEARANCES:

GEORGE K. WEBER, Assistant Attorney General, for the

Commonwealth

JAMES E. McGUIRE and JEFFREY WOOLF, Special Assistant

Attorneys General for the Commonwealth

THOMAS GRIFFIN, MARSHALL SIMONDS and CERISE LIM-EPSTEIN,

ESQS., for Philip Morris

WILLIAM T. PLESEC, DONALD WOOD and DENNIS MURPHY, ESQS.

for R.J. Reynolds

HARRY ZIRLIN, ESQ., for Council for Tobacco Research

Friday

July 24, 1998

Cambridge, Massachusetts

(10:10 a.m.)

THE CLERK: Your Honor, this is Superior

Court case number 95-7378, Commonwealth of

Massachusetts versus Philip Morris, Incorporated,

et. als. It's here for a status conference.

Will counsel introduce yourselves,

please.

MR. GRIFFIN: Good morning, your Honor.

Thomas Griffin, counsel for Philip Morris and

liaison counsel for the defendants.

MS. LIM-EPSTEIN: Good morning, your

Honor. Cerise Lim-Epstein, counsel for Philip

Morris.

MR. SIMONDS: Good morning, your Honor.

Marshall Simonds, counsel for Philip Morris.

MR. McGUIRE: Good morning, your Honor.

Jim McGuire, Special Assistant for the

Commonwealth of Massachusetts.

MR. WOOLF: Good morning, your Honor.

Jeffrey Woolf, Special Assistant Attorney General

for the Commonwealth.

MR. WEBER: George Weber, Assistant

Attorney General. Good morning.

THE COURT: Before we get into the

interview memorandum, privilege arguments, which

I think are the main topic on for today, I was

just handed a status report on the master trial

exhibit list. It looks like you're making good

progress. I appreciate the effort that you're

making to organize this.

I don't know if there's anything in

particular you wanted to go over with me about it

other than to update me on how you're doing?

MR. McGUIRE: Your Honor, Jim McGuire.

Nothing in particular. The status report gives

the current summary that the parties will meet

and confer next week to continue the discussion.

We did have one joint question we would

put to the Court. We know that we are going to

be delivering hard copy of the trial exhibit list

to the Court in form or forms as you dictate from

time to time. The question that we have for the

Court is, do you have any interest in having

delivered to you an electronic database that

would permit the Court to search and sort trial

exhibits on the basis of rulings, issues,

parties, or any other basis?

THE COURT: That's a good question. It

certainly could be useful, and obviously you're

having to prepare it in that form, it might make

sense for me to have it.

MR. McGUIRE: And the follow-up question

would then be, administratively, is there

somebody that we, the parties, could, on a joint

basis, talk to in terms of what hardware,

software, the Court has to ensure that we can

deliver something to you that's as user friendly

as we can make it and compatible with your

system?

THE COURT: Let me give that some

thought as to who would be the best person.

Any other concerns of the parties? I

just have two small items that I've noticed going

through it for myself to report back?

MR. McGUIRE: That's it.

THE COURT: On the question of suggested

fields, I note that the only -- the only specific

categories that deal with privilege claims where

sort of the tracking of my rulings, or the

grounds of my rulings are going to be reflected,

is crime-fraud. And in my own mind I questioned,

would there not be a reason for tracking -- since

this is a very comprehensive chart -- some of the

alternative grounds on which I might be ruling on

privilege claims, i.e., that in my view the

document was not predominately legal advice, or

waiver, or in other words, some of the items --

you know, obviously there's a particular

importance in tracking crime-fraud with some

specificity because of the stages it has to go

through and to make sure that all the stages are

completed. But I was wondering whether we should

not also be tracking rulings that have been made

on other grounds?

Some already have been made and others

may be made, or in some instances, there may be

multiple bases for my rulings and those should

also be reflected for everyone's purposes for

appeals and the like. That would be my initial

reaction to this, is simply, why don't we track

the other theories that are being advanced by the

Commonwealth as to why something isn't

privileged?

MR. McGUIRE: The parties agree. We did

not want to overwhelm the Court with a much

longer list of fields, but if you look at the

exhibit, under number 6, it says "privilege

claim, type," and if you look on number 8, it

says, "ruling on privilege claim."

We have in mind, at least, that we would

pop in additional fields and then you would be

able to see on any document if a privilege was

asserted, whether it was asserted, what the basis

of it was, and what the particular ruling would

be.

THE COURT: Correct. But if someone

asserts, for example, attorney-client privilege,

that can be overcome by waiver, by my sense that

it's not legal advice, or by going through the

different stages of crime-fraud.

I had thought 8 was simply representing

the bottom line, yes or no, for whatever reason

I've decided it is privileged or it isn't still

privileged, but not tracking the alternative

grounds.

Yes?

MS. EPSTEIN: Your Honor, I think that

we have a subcommittee that is going to actually

do the design of the fields, and I think that the

Court's point is well-taken, and I have no doubt

that we can accommodate that, right, Jim?

MR. McGUIRE: That's correct.

THE COURT: I mean, I'm just adding that

as my one, off-the-cuff reaction that I have,

having seen it. But I appreciate the update, and

obviously, keep me updated on its design, and of

course, its timing and numbers, as those are very

important for my planning purposes.

Anything else we need to deal with today

before getting to the merits of the privilege

claims here?

MR. GRIFFIN: Agenda item number 2, we

could either save it or deal with it now, your

Honor.

THE COURT: We may have some

miscommunication here. I don't seem to have

literally an agenda for today.

MR. GRIFFIN: It was delivered

yesterday. May I present a copy of the agenda?

[Document handed to Court.]

THE COURT: Yes, number 2. Let's deal

with number 2 now because I expect that will be

short.

I, quite frankly, was surprised to get

further briefing on the CTR issue. I mean, I

don't mind getting things. Yes?

MR. ZIRLIN: Good morning, your Honor.

My name is Harry Zirlin. I'm an associate at

Debevoise & Plimpton. We represent CTR.

We received their supplemental brief,

and we just want to know in the proceedings

where we are now, you know, whether you need

further briefing from CTR? If not, that's fine.

But --

THE COURT: I don't think I do. As I

think I indicated the last time, based on what I

have heard, I am not going to be making some

sweeping, across-the-board ruling that everything

that has anything to do with CTR is crime-fraud,

or even that all of CTR itself is a crime or a

fraud and that I should be thinking about it in

those terms.

I still think everything having to do

with CTR needs a document-by-document analysis:

was the communication in furtherance of some use

of CTR that would be criminal or fraudulent. And

I have the parties very divergent positions about

what they say CTR was and was not, or what it was

and wasn't doing, as the background for that

analysis.

As I say, I don't think I require

further briefing on it, and I was surprised to

receive the further materials I did from the

Commonwealth. I was not expecting them. So --

MR. ZIRLIN: I guess the concern that we

have though, is that, frankly, that you would

give -- I'm not saying that we need a formal

ruling that their last submission be stricken,

but I mean, there are some things in there that

are sort of new, you know, that we could address

if we felt that there was some danger that you're

going to be looking at that supplemental brief

and ascribing any weight to it whatsoever. I

mean, that's sort of where we are.

Well, as I say, because it was not

expected and not something I was about to rule on

in any way, I quite frankly skimmed it in only a

very superficial way, and I had not focused on

what specific items in there were perhaps new to

me. As I say, I haven't done so yet.

If there are -- perhaps we should leave

it this way, if there are items in there that you

think are genuinely new, you know, not proffered

by the Commonwealth in either of its prior

written submissions, or the time we spent on it

on the day we devoted to the subject,

and you want to point those out to me as these

are additional items and here's your response,

you certainly may do so if you wish to guard

against that concern. But I'm -- as I say, other

than that, I'm just proceeding with what I've

been given as the parties' general, you know,

background on how they view the CTR issue, and

that's in mind for future reference whenever I'm

called upon to look at a crime-fraud issue about

a specific document.

MR. ZIRLIN: Where we were prior is that

we were supposed to have -- is that we thought we

were going to have a response due August 3rd to

that supplemental. Can I go back to the partners

that I work for and tell them what you said, and

then if we do feel that we need to supplement,

and hopefully it would be brief, have until like

August 18th to --

THE COURT: Oh, easily. Again, because

at this juncture, I do not anticipate doing that

individual document-by-document review. So we

have, you know -- until we're working from the

exhibit list. So that pushes the time frame for

that response back, you know, considerably.

There's no need to give that particular brief

any --

MR. ZIRLIN: Priority.

THE COURT: -- any priority earlier than

then.

MR. ZIRLIN: Okay. Thank you, your

Honor.

THE COURT: All right.

MR. GRIFFIN: Your Honor, I have one

more item in the category of miscellaneous, if

that's approximately where we are, that I'd just

raise now. It's my issue and I hadn't thought

about it, it really relates to a point of

clarification about scheduling for upcoming

events that relates to what the defendants are

doing and when they're going to do it.

My question is occasioned by my review

yesterday of the recent Supreme Judicial Court

decision in Vassallo v. Baxter, which is an

important product liability decision, and

triggered in my mind a question for your Honor. That decision emphasized the importance

of evidentiary hearings in Daubert or Lanigan-type proceedings where there are challenges to

the reliability and integrity of scientific

evidence proffered by experts.

In that regard, it had always been my

view that there would likely be a Daubert-type

attack on the damages model aggregating damages

and perhaps with causation elements,

conceptually. My preliminary view of the new

model doesn't shake my confidence in the fact

that there would be a like attack that we ought

to plan for, Daubert-like, vis a vis the new

model or the current model as most recently

identified by the Commonwealth. And the question

I had, in light of our discussion last week,

having been triggered by reading that decision,

was, the approach I had always had in mind is

that Daubert-type attack would be in the nature

of a Motion to Exclude or a Motion In Limine. And

I had targeted that for when the CMO so provides

for dealing with motions in limine.

It had not been my view that that

particular issue, vis a vis the model, was a

summary judgment issue. It is not a challenge on

the law. It is a challenge on the facts about the

integrity of the expert evidence proffered. And I

just wanted to make sure your Honor understood

that because when we talked last week about

making sure that summary judgment on September

15th included challenges on the law relating to

the model, to the extent that they were

identified and could be dealt with, we will deal

with those set of issues, whatever they are.

But the issue about the Daubert, it

seems to me, at least planning-wise, at least in

our mind, in the defendant's mind, is an issue

for the motion in limine stage, and I just wanted

to make sure that that was correct and your Honor

agreed with that concept and approach?

THE COURT: I see no flaw in that

analysis in terms of how it should be handled and

what category it comes in. That sounds fine. As I

say, obviously I am concerned, particularly if we

are going to be needing evidentiary hearings on

it, that there's enough advance warning in terms

of scheduling and time and logistics for that.

But that -- but conceptually --

MR. GRIFFIN: December, that's easier

than if it was September.

THE COURT: That's fine. I have no

problem with that.

MR. GRIFFIN: Okay. Thank you.

THE COURT: All right.

MR. GRIFFIN: I think we're at agenda

item number one, your Honor, if your Honor wants

to proceed.

MR. PLESEC: Good morning, your Honor.

William T. Plesec, counsel for R.J. Reynolds

Tobacco Company in this matter.

MR. WOOLF: Your Honor, Jeffrey Woolf,

representing the Commonwealth on this issue.

THE COURT: All right. I've read the

various materials submitted by the parties, and

it seems to me the first item to address is the

theories of attorney-client privilege, as I

certainly agree with RJR, if it is attorney-client privilege, we don't get to substantial

need and those other issues. So I want to,

obviously, go through that analysis first.

And before even leaping into the details

of that, my preliminary question is, it was in

RJR's memo for the first time that I saw a

suggestion that I should be applying the law of

something other than Massachusetts to these

privilege arguments. That's the first I've heard

that suggested, I think, in this case. And I was

somewhat mystified by it.

Are we applying the law of something

other than Massachusetts to this issue, Mr.

Plesec?

MR. PLESEC: Your Honor --

THE COURT: Or was that footnote thrown

in for make-weight?

MR. PLESEC: No, actually that point was

made in earlier briefing.

THE COURT: All right. I missed it. I'm

sorry.

MR. PLESEC: Massachusetts does apply

the choice of laws concept, and analyzes it on

interest involved. And typically in a situation

as we have before the Court today, where you're

dealing with a foreign corporation that has its

principal place of business in North Carolina,

where the employees who were engaged in the

interviews were resident in North Carolina for

the most part, then the choice of law concepts

would defer to the law of the State of North

Carolina as opposed to--

THE COURT: Let me ask you, where did

the interviews physically take place?

MR. PLESEC: Primarily in North

Carolina.

THE COURT: Primarily in North Carolina.

And conducted by lawyers who were from your firm,

which is predominately not in North Carolina?

MR. PLESEC: Lawyers from the Jones, Day

firm, which is not domiciled in North Carolina;

however the Womble, Carlyle firm is. And Womble,

Carlyle lawyers did participate in those

interviews.

THE COURT: All right. If that's what I

should be doing, as I say, the brief that I got

from you made various assertions, again simply in

its footnote, about what North Carolina law was

on the subject, and I suspect it's some

typographical error or something, then had no

citation for all of this, nor did I see any North

Carolina case other than the Mason Day

Excavating, which does not cover the specific

points at issue in this motion.

So if I'm supposed to be applying North

Carolina law, at the moment I am in utter

ignorance of what North Carolina law is on the

subject.

Let me hear the Commonwealth's position

on choice of law?

MR. WOOLF: The Commonwealth's position,

your Honor, is that this case is pending in

Massachusetts; that the -- we're talking about an

evidentiary issue, and so, the evidentiary law in

Massachusetts is what should govern.

Further weight to that is when one looks

at Mason, it says -- as a federal court, it

looked to the state. In this instance the state

has not really settled this issue itself, just as

Massachusetts has not, and so, in those instances

it looks to the federal common law. So it is not

as though we have in New -- excuse me, in North

Carolina, a definitive position on this. It's

also unsettled, and that's why the Mason Court

says, well, they'll go back and look at federal

law to the extent to which it is not inconsistent

with state law. So they don't have a resolution

on this either.

I think that plus the fact that we're

dealing with evidentiary issues in Massachusetts

would lead us to apply Massachusetts law, and of

course, since we have no opportunity to file a

reply brief, so I didn't brief that issue, if

you're going to do that, I would ask for leave to

explore the issue further.

THE COURT: Well, I'm looking at your

footnote 7 in your brief. I take it, at least

from your description, although without citation

in this footnote, that North Carolina has

rejected the control group test in some fashion

or other is what you're saying?

MR. PLESEC: Basically, your Honor,

North Carolina, in adopting uniform rules of

evidence, rejected Rule 501, which deals with the

control group test. And in rejecting Rule 501,

what it essentially means, for purposes of

analysis for North Carolina law, is that North

Carolina has looked to -- is going to look to

federal law for guidance. And we're dealing with

the substantive law here on evidence.

We're dealing with a North Carolina

corporation. We're dealing with North Carolina

employees who are interviewed. We're dealing with

counsel, in part who were from North Carolina,

and so, under choice of law concepts, the correct

analysis for whether or not interviews conducted

by counsel for purposes of rendering legal advice

to the corporation, even if those interviews are

of employees, should be governed by the law of

North Carolina which has rejected the control

group test, and under normal concepts, we would

interpret what North Carolina's intent is, is to

follow Upjohn.

THE COURT: Let me further ask, I assume

the answer to this is going to be no, because

otherwise you would have put it very expressly in

your brief, but I gather North Carolina has not

said anything explicit on the subject of former

employees, is that correct?

MR. PLESEC: We could not find anything

explicit on that point, your Honor.

THE COURT: Okay. So just as

Massachusetts has nothing explicit on it, at

least not from the S.J.C. or the Appeals Court,

North Carolina has nothing explicit on it either?

MR. PLESEC: As far as we know, that's

correct.

THE COURT: All right. Let's deal first

with people who were at least then current

employees at the time these interviews took place

before we move on to the former employee part of

the problem.

As I read RJR's argument, what they're

saying is, at least, that whether it's North

Carolina or whether it's Massachusetts, that with

very few exceptions Upjohn is the trend and

there's no reason for me to predict or assume

that Massachusetts should not fall in line with

that trend, and that at least as to the current

employees, follow Upjohn.

Let me hear from the Commonwealth.

What's the problem with that trend argument?

MR. WOOLF: Well, the trend argument, I

think, your Honor, is undercut by the fact that

effective January 1 of this year, the S.J.C. has

adopted the -- if I get these right -- the new

ABA model rules. We had previously been a code

state, and now we are a rule state.

And under the provision of Rule 4.2,

comment 4, we are essentially a control group

state and we reject therefore the concept that

attorney-client privilege applies to

communications between a lawyer and anyone other

than someone within the control group. And I

think that absent a decision from the S.J.C., its

adoption of the ABA rules and comment 4 to Rule

4.2, one would say that we do not accept the

control group test.

And, of course, there are federal court

decisions both ways. There's a magistrate

decision saying that -- predicting that

Massachusetts would adopt it. There's also a

Superior Court decision which, for some reason,

is directly contrary to the Massachusetts Bar

Association Ethics Rule on whether or not, for

example, employees who are witnesses to an

accident -- going back to the Chadbourne case in

1962, and I know there are earlier cases besides

that, but Chadbourne is very interesting for its

ruling.

It takes various hypothetical situations

and says, well, you've got these current

employees; why would these communications be

privileged? If you have employees riding in a

company vehicle, and the driver's involved in an

accident, if they were not company employees,

interviews of them would be work product and

would be discoverable pursuant to Rule 26(b)(3).

The fact that they fortuitously happen

to be employees of the corporation does not then

clothe them with new status that they would not

otherwise have. And Magistrate Judge Collings

noted that. I realize that Leonen, Marshall is

contrary to that, but the MBA, in a post-Upjohn

ruling or ethical opinion 82.7, talks about just

that example, and says in that context, there is

no attorney-client privilege. You can talk to

those people directly. And of course, a number of

these cases derive rather from the narrow issue

of attorney-client communications and interview

memoranda, but can you go talk to current

employees of the company. And the argument is,

no. We are a control group state. We can -- you

can go talk to these people. And if you can go

talk to them because we are a control group

state, then arguably, the same applies --

THE COURT: What's inherently

inconsistent though with saying that someone was,

you know, outside of the control group, but a

witness, that the other side can go talk to them

without violating some ethical rule, but if that

employee-witness talks to his own company's own

lawyer, that that specific communication will

nevertheless be privileged? At the moment I

don't see those as necessarily inconsistent.

MR. WOOLF: I think the reasoning behind

the position that many states and courts have

taken that those are not -- attorney-client

communications fall into several arguments.

First of all, that employee has not gone

to the lawyer for the purpose of obtaining legal

advice. And this is where we get into the control

group argument. They happen to be interviewed.

They happen to possess factual knowledge, but

they are not there to seek legal advice. And we

have to go back to, among other cases, Fleet

National Bank vs. Tonneson. Because the attorney-client privilege can and often does seriously

impede the search for truth in a particular case,

courts are reluctant to extend it and that is why

they have said control group, this instance, that

instance, where they will not impose an attorney-client privilege exemption to these materials, or

conversely, limit the scope of the interview.

THE COURT: Let me stop you. The concern

I have is, what RJR is arguing is that these

arguments about why Upjohn shouldn't be followed

have been presented around the country, and so

far, most jurisdictions are rejecting these

arguments and going with the analysis in Upjohn.

Does -- is there anything other than

this new Rule 4.2 and its use of a control group

test for purposes of who can contact witnesses

without violating some ethical rule, is there

anything other than that to indicate that

Massachusetts would not fall in with that trend,

even if it's, you say, a bad trend?

MR. WOOLF: Well, I'm not sure it's

necessarily the trend. I know that it's federal

common law. It was limited by the Supreme Court

to IRS subpoenas. Judge -- Chief Justice Burger,

in his concurrence, limited it even further in

certain circumstances. But I don't think it is as

clear a trend as the defendants would paint.

I have to apologize, I notice that there

was an error in our brief. We said Oregon. It's

actually New Hampshire that has rejected it, and

that is the case of Klonoski v. Mahlab, 953 F.

Supp., 425, and I can give your Honor a copy.

It's 953 F. Supp, 425, Klonoski vs. Mahlab, K-l-o-n-o-s-k-i, which says -- and it's just this

kind of a situation where there was a medical

malpractice case. Actually defense lawyers from

Massachusetts went up to New Hampshire,

interviewed the people at the hospital who were

hospital employees, and the Court ordered the

production of the interview notes with the

employees of the hospital, saying, control group.

That's the way we go. And this is a 1996 case.

So there are cases in Illinois, there's

no question, and we quote it at length, and I

think the defendants conceded, that Illinois is

also one that has explicitly rejected Upjohn, and

I believe that California has maintained its

position as I cite it in the plaintiff's

memorandum, that line of cases from Chadbourne.

So I don't think it's as clear a trend

as the defendants would portray. It is clear that

it's federal common law. Federal common law does

not bind the states, and the S.J.C. has been

quite explicit in saying that they are not bound

by federal decisions. Even the U.S. Supreme

Court, when it wasn't until Kourouvacilis that we

rejected the Catreet testing, the summary

judgment standard. It wasn't until Commonwealth

vs. Lanigan that we decided to follow Daubert to

a specific extent.

So I don't think the fact that the U.S.

Supreme Court has spoken in Upjohn and the fact

that certain federal circuits have followed it

with federal common law in any way binds

Massachusetts or any other state, and other

states have been clear to say they are not bound

by Upjohn.

So I think the preliminary question is,

in terms of following a trend, I don't think it

is a trend, and I don't think that there is any

indication we would follow it given our adoption

of the model rules and the fact that former Chief

Justice Liacos' book continues to cite the

proposed federal rule of evidence, which refers

to the control group test.

So I'm not sure that one could say that

we're following a trend, if there is a trend, and

that we should be following it. I think the

extent to which Marshall v. Levine says

otherwise, I think that someone overlooked MBA

Ethical Opinion 82.7 because it specifically said

in that instance it doesn't apply, and Marshall

was directly contrary to that. But, what can I

say? It's a Superior Court decision, and

different Superior Court justices are of

different minds on issues, particularly

developing issues of law.

I think that there are other things to

be said, and one of them, it's interesting

because the Mason case on which the defendants

rely, cites in turn in a number of places, Leonen

vs. Johns-Manville, which is a case we cited. And

the import of Leonen has to do with the fact that

attorney-client privilege doesn't apply to work

that could be done by a non-lawyer.

And then we get into the fact that the

courts, in narrowly prescribing the limits of

attorney-client privilege, chip away at things

that would otherwise, but for these arguments,

say it's not an attorney-client privilege.

One is, was it something that could have

been done by a non-lawyer, which is the holding

in Leonen, which we cite, and which Mason cites.

And here, where we're talking about: Tell me how

you set up your library, when Dr. Colby was

interviewed. "I spent two years going to New

York buying books and I set up a library." Now,

is this something that requires a lawyer to

deduce? This is obtaining historical information.

This is something that if RJR had written its

history wouldn't be in these interview memoranda,

and I don't think in that context -- and we went

to great lengths to summarize for the Court the

nature of what was contained in these interview

memoranda. They are in Tab 2 of our appendix to

our brief. These are not attorney-client

communications for the purpose of obtaining legal

advice, and they are not things that needed to be

done by a lawyer, and the courts have said,

clearly, in those two context --

THE COURT: But I see no reason, I must

say, to disbelieve the affidavits coming from

Jones, Day, explaining that they were stepping in

to help RJR with a massive amount of pending

litigation, and they were getting information for

purposes of helping to prepare a defense.

MR. WOOLF: I agree, your Honor, but the

difference is, in Upjohn there was a current

crime that was going on. They were bribing

foreign governments, and the IRS stuck its nose

in, and they said, What's going on? Tell us

what's going on?

As your Honor observed, this is in 1985

-- going back to 1985, saying, tell us what

happened 15 or 20 years earlier. It's not for

the purpose of gaining information for specific

legal advice, and that is one of the

prescriptions for an attorney-client

communication. Not all communications between a

lawyer and a client are privileged and --

THE COURT: Right. But the criminal

defense lawyer who sits down with his client and

says, Tell me what happened? And his client

says, You know, I did rape her. That's historical

information. It's in the sense it's past. He's in

custody. It's not ongoing. But surely, surely,

obviously, we treat that as attorney-client

privilege.

MR. WOOLF: Right. But that's for that

crime. Just as Upjohn was for that crime. It is

not historical information: Tell us the history

of the company.

THE COURT: This is for these ongoing

lawsuits that allege misconduct and wrongdoing of

various kinds out of these past historical

events.

MR. WOOLF: But is anyone saying that

there's wrongdoing in Dr. Colby spending two

years to build a library? No, they're not. And I

think the facts that are extracted from the

interview memoranda as they are quoted at length

in the Fact Team Memorandum, so-called, indicate

that this is not something about, you know, did

you do the crime? Did you bribe the foreign

officials? Did you in fact rape the victim?

That's not what this information is about, and

therefore, one should distinguish between

historical information as your Honor observed,

asking somebody in 1985, what happened in 1971,

is different, and that's the point we are trying

to make.

So we would suggest that there's a

distinction that applies to, you know, just sort

of general background, you know, go read the

history of the corporation, as opposed to, tell

me the background events history because maybe it

happened yesterday or it happened last year, but

that's not what we're talking about. And so,

history, when it's, did you bribe the foreign

official last week or last month, in Upjohn, is

different from, in 1985, tell me what happened in

the sixties or seventies.

THE COURT: I must say, I do not find

that line of analysis persuasive, and what I

wanted to do is take this piece by piece and

focus on this trend argument, and Upjohn itself.

Let me hear RJR's argument on the

subject of why should I conclude that Upjohn is

Massachusetts law, if it's Massachusetts law and

not North Carolina law?

MR. PLESEC: First of all, your Honor, I

think that in terms of the trend, we believe the

case law demonstrate that there is trend in favor

of the Upjohn case. As you look at the

jurisdictions around the country, and if you were

to do an analysis, you would see that the vast

majority of the Courts are rejecting the control

group test in favor of the Upjohn formulation.

Massachusetts has not reached that

point, but the case law in Massachusetts has

cited favorably to Upjohn. That has been

demonstrated in the cases cited in our briefs.

The willingness of the courts of Massachusetts to

follow federal law when --

THE COURT: I must say, I obviously took

a look at those with interest. The S.J.C.

opinion, I think, cites Upjohn for the

proposition that the attorney-client privilege is

important. I mean, that -- you know, it doesn't

in any sense endorse a specific analysis in

Upjohn. It just -- at that point it was obviously

the most prominent, the most recent, and from the

highest level court, endorsement of the general

proposition that this is a very important

privilege.

I find it hard to view that as any

signal that the actionable issue raised by Upjohn

is going to be followed in precisely the same way

by the S.J.C.

MR. PLESEC: But the Court, your Honor -- I agree, it didn't specifically say we are

adopting Upjohn and we are going to follow --

reject the control group test and so forth. But

the indication is that it has quoted Upjohn

favorably.

The implication from that is, that based

on past history of the Commonwealth of

Massachusetts, when analyzing issues of this

nature, where the Courts of Massachusetts have

not spoken to the issue, they have looked to, and

shown a willingness to look to, the federal law.

And I don't think it's a real stretch or a real

reach to suggest that the courts of

Massachusetts, when analyzing a situation like

this, would indeed follow the Upjohn test, or the

Upjohn formulation.

Your Honor, I think as a practical

matter, it makes sense to reject control group in

favor of the Upjohn formulation.

As the court in Upjohn clearly stated

that the attorney-client privilege is the oldest

privilege, and it's purpose is to encourage full

and frank communications with a lawyer so that

the client can get proper legal advice.

Now, the only way that a corporation can

indeed get proper legal advice is for the client,

through its employees who have the relevant

information, have those employees convey that

information to the lawyer. The lawyer then in

turn can provide, based on that information, the

legal advice that is required by the situation.

I think that if you were to limit the

rendering of legal advice simply to discussions

and -- excuse me, apply attorney-client privilege

principles simply to discussions involving the

control group in a corporation and their counsel,

the control group would not necessarily have the

pertinent information that is needed by the

lawyer in order to provide the legal advice that

is requested. A control group may not have the

day-to-day activities, responsibilities,

etcetera, that deal with the issues for which the

corporation is seeking legal advice.

And so, in order for the client to get

legal advice that is meaningful, it is going to

have to have those with the pertinent relevant

information convey that information to the

counsel, who in turn can sift through the

information, do as the court in Upjohn suggested,

analyze the relevant from the irrelevant, decide

which is important, and then provide the legal

advice.

So I think that if the principles

articulated in Upjohn and its progeny since are

to be given any kind of respect, and we suggest

that they should, if attorney-client principles

are to really mean what the courts have said they

mean, then the control group test should be

rejected in favor of the Upjohn formulation.

And we do believe that the Commonwealth

of Massachusetts will, in the final analysis,

follow that formulation.

THE COURT: If I could also just ask you

briefly. I haven't tied them up from the various

cases you cite. Do we have a comprehensive list

of actual state court decisions, i.e., literally

state court decisions that have decided to accept

Upjohn as opposed to federal courts where you've

got to sort through, was it a federal case,

federal common law; are they simply predicting

that, you know, Mississippi or wherever is going

to adopt it. I mean, how many actual states,

state courts have already decided to accept or

reject Upjohn, and how many states is it still an

open question?

MR. WOOLF: I don't have a definitive

answer, your Honor, but I believe that only a

handful of states have addressed Upjohn per se.

THE COURT: One way or the other?

MR. WOOLF: One way or the other.

Oregon has not actually addressed Upjohn

per se, but they did broaden Rule 501, so that,

you know, is sort of an answer that's equivalent

to the Massachusetts one, which is, Upjohn has

not been addressed but unlike Massachusetts, they

have broadened the rule.

I know New Hampshire and Illinois have

specifically stated their position. They go with

control group. I believe there's another state

that may have addressed that --

THE COURT: I mean, even the New

Hampshire case you cite to me is itself a federal

case.

MR. WOOLF: It is.

THE COURT: I'm answerable to the S.J.C.

I want to know what the functional equivalent of

the S.J.C. around the country are doing when

asked as part of their state law as opposed to

all these federal courts speculating about what

the state's going to do.

MR. PLESEC: Your Honor, I don't have a

definitive answer for your question either, but

we would be prepared to submit additional

briefing on that. I can tell you that we did a

preliminary --

THE COURT: I don't think it's a brief.

It's just a table or a listing --

MR. PLESEC: A tabulation --

THE COURT: -- of the citations

themselves that are truly, as I say, state court

decisions, not a federal court that's applying

federal common law, or a federal court that is

predicting that a particular state will follow

Upjohn, because that I think goes in a very

different category in terms of how -- how much of

a trend there is among the states themselves. It

would be useful to me.

MR. PLESEC: We will submit that, your

Honor.

THE COURT: Just a list. And, you know,

coming from either side, rather than trying to

glean that from your briefs where it didn't pop

out of the page at me.

Any further arguments about why I should

or shouldn't follow Upjohn beyond this argument

about a trend that either side wishes to add,

beyond what's in your briefs and what you've

already told me, before we move on?

MR. PLESEC: Well, your Honor, if I

might just respond to a couple of the points that

Mr. Woolf made earlier. He basically said that

the employees who were being interviewed by the

Jones-Day and Womble-Carlyle lawyers were not

seeking legal advice per se, personally. They

were there at the direction of the client, the

corporation, to provide the lawyers with relevant

facts so that the client corporation could get

legal advice.

If the employees are not going to convey

that information to the lawyers, then the

corporation can't get the legal advice it needs

in order to defend itself in litigation or get

the proper assistance from counsel with respect

to other issues.

And so, the employees themselves don't

personally have to be getting legal advice. They

are simply providing information, and Upjohn

makes clear that legal advice runs both ways. The

legal advice provided by the lawyer as well as

the information provided by the client. And in

the corporate situation, the client can only

provide legal advice through the voices of its

employees, and that's what was done here in this

case, and was done in the Upjohn case.

With respect to the argument that the

interviews could have been conducted by non-lawyers, I don't know how a non-lawyer can gather

information for the purpose of providing legal

advice to a client. It's the lawyer who has to

gather the information, sift through the relevant

and irrelevant as the court in Upjohn said. As a

matter of fact, Upjohn teaches us that the first

step in the resolution of any legal problem is

ascertaining the factual background and sifting

through the facts. The court goes on to quote

that the ABA Code of Professional Responsibility,

that it is for the lawyer in the exercise of his

independent professional judgment to separate the

relevant and important from the irrelevant and

unimportant. It's the lawyer that has to do that,

not some non-lawyer.

I just don't believe that the argument

that is set forth by the Commonwealth in that

respect has any merit at all.

The Commonwealth argued that in Upjohn,

the court was dealing with a current crime. In

our situation, they claim that we are looking

back historically into the fifties for factual

information. The fact of the matter is, that in

the cases that are pending around this country,

including this case here, allegations have been

made going all the way back to the--

THE COURT: I understand your position

on that, as I think I've already agreed. On that

point, at least, I'm satisfied and I would agree

with you.

Anything further on the control group?

MR. WOOLF: Yes, your Honor. The concern

that the courts have expressed and your Honor

included is that one can create what's called an

overly broad zone of silence. By having the

lawyers go out and do things, it automatically

sweeps it under an attorney-client privilege, and

as your Honor observed, why have insurance

adjusters go out and do things that non-lawyers -- that lawyers can do. Instead, have the lawyers

do it and it will become privileged, it will be

attorney-client privilege, and that is one of the

reasons that the courts have rejected the broad

scope that Upjohn envisions because they're

concerned, and of course the Appeals Court, that

the U.S. Supreme Court reversed, went on at

length about this whole concept of the zone of

silence and the fact that there's this danger

that because a corporation can only speak through

employees, if you start casting your net too

widely, you wind up privileging a lot of things

that in the normal course of events but for a

corporation would not be privileged. And that is

one of the concerns that a number of the courts

have had and express pre-Upjohn about why it is

limited to a control group; why we don't do this.

Because of the danger of just this kind of thing,

of having people go out and gather historical

facts, things that insurance adjusters and

investigators -- private investigators do, day in

and day out, and say, oh, the lawyer did it. It's

privileged. And not just privileged because of

the work product. Attorney-client privileged, and

therefore, a much higher degree of protection.

And so, when we talk about, well, the

lawyers did it, the lawyers had to think about

what to ask the witnesses, insurance adjusters

and private investigators do that all the time.

It's not something that of necessity

requires, you know, great legal skill, admission

to the bar, or whatever, particularly as these

interview memoranda as quoted in the RJR Fact

Team Memo, and to a lesser extent the Doomsday

Memo or the Cap Memo, as it's called, show, this

is not something that required a law degree. This

is not sifting through facts. This is Dr. Colby:

Where did you go to buy your books? And how long

did it take you to build a library? You know,

who did the summaries of the articles? These are

not things that require a lawyer's mental

impressions, acumen, skill as trial counsel, to

sort out.

This is exactly the kind of stuff that

the courts were concerned about being protected

unnecessarily and unduly by a zone of silence

concept that the defendants are urging right now.

And with regard to the other aspects of

this, because it's fact-gathering, and because it

is really historical, it is not directed toward

the litigation, it's different. Because how can

someone say with a straight face to this Court,

that asking Dr. Colby where he went to buy his

books, and how long it took to establish a

library, is germane to any of the claims about

youth targeting, or nicotine manipulation, or any

of the other kinds of things that are going on in

this and any other State A.G. case, or even the

individual smoker cases from years ago. They're

not.

And to cast this net so broadly is

exactly the danger that the courts had warned

about and why states have rejected the Upjohn

test.

MR. PLESEC: Your Honor, if I just might

respond?

MR. WOOLF: Just one quick -- I assume

this is all addressed solely to current

employees?

THE COURT: Current employees, yes.

We'll move on to former employees shortly.

Yes. Go ahead, Mr. Plesec.

MR. PLESEC: Your Honor, we are not

suggesting that the factual information within

the knowledge of the employees is itself

privileged.

THE COURT: I understand.

MR. PLESEC: It's the communication of

that information to the lawyers, the

communication is privileged. And I believe that

Upjohn has addressed that when it stated, and I

quote, "Application of the attorney-client

privilege to communications such as those

involved here, however, puts the adversary in no

worse position than if the communications had

never taken place. The privilege only protects

disclosure of communications, that is, the

communication between the client and the

attorney. It does not protect disclosure of the

underlying facts by those who communicated with

the attorney."

We're not suggesting that the facts are

privileged. We're suggesting that the

communication from the attorneys or with the

attorneys by the employees and reflected in the

interview memoranda are privileged.

Now, again, with respect to counsel's

comments about Dr. Colby and the library, Upjohn

certainly addressed that point too, which is a

point I made earlier. It's the duty of the

lawyers to go out and gather the facts, sift

through the relevant and irrelevant. The fact of

the matter is, many of the things that he's

talking about found their way into the Corporate

Activities Report, and the R&D Fact Memo, we

thought were salient facts that we ought to write

down.

THE COURT: Again, the Commonwealth's

argument along these lines does strike me as

novel. The attorney-client privilege, if it

applies, it protects it whether it's

incriminating, or innocuous, relevant,

irrelevant. So is it, you know -- does it satisfy

the various categories, and it's not on the list

of what it takes to be attorney-client privileged

that it be incriminating. It can be innocent and

still be -- or favorable to the defendant and

still privileged. So I don't think that's the

issue.

This part of the argument, it seems to

me, it simply comes down to, do I follow Upjohn

or not. That I think is what this piece of it

hinges on.

So I'll await your updates on state

decisions and take that issue under advisement.

Let's move on to the former employee

problem. Now, I think you put the numbers here.

Remind me, how many of the witnesses that we're

dealing with here are -- come into the category

of people who were former employees at the time

of these interviews? What are we talking about?

MR. PLESEC: Your Honor, I apologize. I

thought we were going to have a list with us

today, but unfortunately, we didn't bring that

with us. I don't have the exact number.

I believe that at the time the

interviews were conducted in 1985, most of the

people, the major fraction of the people were

indeed currently employed.

THE COURT: Okay. Setting aside for the

moment who these people were that were former

employees in such details as, you know, how long

ago they'd left or any of those semantic things,

let's deal, first, fundamentally with the

problem.

I must say, I must say that I do find

the concurring opinion that sweeps former

employees into this concept baffling. I find it

hard to understand how someone who is no longer

an employee is a client of the corporation's

lawyer. That sort of, with all due respect to

Justice Burger, defies my imagination.

They may be a witness. They may have

need for their own legal counsel quite badly,

particularly if that employee is one of the

people who is alleged to have done something

wrong. It seems to be one of the things

underlying Magistrate Judge Alexander's decision,

quite frankly, is this interview of the employee

who was alleged to have done the actual wrongful

act, who had left her employment a few days after

the alleged wrongful act.

But I find it hard to understand how

corporate counsel is in any sense the lawyer for

someone who's no longer with that corporation. I

am very troubled by the idea that former

employees are clients, or should be viewed as

clients of the corporation's lawyer. And I don't

get the impression from reading either side's

briefs that that aspect of the concurrence in

Upjohn has reached some kind of widespread

acceptance, or certainly not widespread

acceptance by states.

Let me hear from RJR on that.

MR. PLESEC: Well, your Honor, again,

the principle here is a corporation going to an

attorney trying to get legal advice with respect

to a legal issue. If the corporation, which is

the client, is going to get proper legal advice,

it has to have the persons who were employed at

the -- by the corporation at the time of the

events in question provide that information to

the attorney.

If one of those persons happens to be

now a former employee, that should make no

difference. If at the time --

THE COURT: Suppose one of those persons

with the most critical information has never been

an employee? The attorney's need for the

information is overwhelming, but we never say

that somebody becomes a client of that lawyer

simply because the lawyer needs that person's

information. We wouldn't apply this theory of,

well, if the attorney needs it, we'd better call

it attorney-client privilege so that the attorney

can get it. We call it work product if we need

to, and we often do. But it's the attorney-client

label being put on this simply because, well,

attorneys need this information so we'd better

call this attorney-client to make sure that the

attorney's able to get it, strikes me as very

flawed logic.

MR. PLESEC: Your Honor, if I understand

the hypothetical posited by the Court, the person

who was never employed by the corporation, even

though that person may have important

information, would never be viewed as a person

who is a client of the corporation, or excuse me,

an employee of the corporation and therefore the

client conveying information to the lawyer. I

agree with you that that scenario, under that

scenario, the person would be a third-party

witness who had pertinent information. The lawyer

interviews that person, and the memoranda created

by the lawyer would be opinion work product.

But that's not what we're dealing with.

We're dealing with a person who was employed by a

corporation, who was involved in the activities

or events that are now the subject of legal

proceedings, but since that time has left the

corporation. That person is the, for all intents

and purposes, the client who is going to be

conveying the information to the --

THE COURT: The former employee may have

interests that are now incredibly adverse to the

former employer who would never view the

corporation's lawyer as even friendly perhaps,

let alone as his lawyer that he should be

confiding in, that we need to protect the

confidentiality of it. That person can refuse to

talk to the lawyer, short of subpoena. That

person can go get his own lawyer and, you know,

why should we view him as a client, or within the

definition, or the people who will be deemed to

make up the corporate client simply because the

attorney has use for his information?

Once he's left - once he's left, his

employer can't force him to talk to the attorney

as opposed to, you know, current employees can be

told, we want you to go tell our lawyer

everything you know about X, Y, and Z. A former

employee, they can call him up. They can ask him

to cooperate. He can cooperate. Cooperate in

part. Tell them to get lost. Do whatever he

wants. I have a hard time saying that he's a

client just because he happened to be there at

some important point in time, but isn't there at

the time of the interview, and therefore, no

longer - no longer within the corporate family.

I would be, quite frankly, troubled, at

the idea that that employee would now be told,

well, because what you told us was attorney-client privilege, even though you didn't view

yourself as your (sic) client, you may not tell

anybody else what we discussed. I mean, that's

one of the ramifications of calling this

attorney-client privilege is that former

employees can be, you know, can be told that they

themselves may not divulge things to others

because of this attorney-client privilege

communication.

I'm very troubled by this, obviously.

Let me just hear you out. But I --

MR. PLESEC: Your Honor, under the

hypothetical that you posited, again, let's

assume that the person who was involved in these

activities is employed on day one, and on day

one, is interviewed by the lawyer at the

direction of the corporation to provide relevant

information.

The lawyer takes that information and

provides legal advice. That's a current employee.

Let's say that the same scenario, but on day two,

that person has left the company and is now

interviewed by the lawyer. There should be no

difference in the way the information is treated.

If the ex-employee is willing to provide

information to the lawyer for purposes of that

lawyer providing legal advice to the corporate

client about activities within the scope of that

person's employment while with the corporation,

then that information ought to enjoy the

privilege status that the information would enjoy

had that been provided the day earlier while that

person was still an employee.

Formalistic line drawing on when the

attorney-client privilege will begin or end, I

think --

THE COURT: I can't resist. I can't help

myself. Let me ask you this. Here's one of the

many problems I have.

If you say that's attorney-client

privilege, that means that the lawyer for that

corporation -- say this person's a very important

witness, very important witness. The corporate

lawyer for that corporation that he used to work

for can go talk to him, interview him. That

lawyer can tell him all kinds of things about the

lawyer's own views of the case, strategy,

etcetera, etcetera. All right? And you would

say, it's attorney-client privilege. And yet the

client is still the corporation. So unless the

corporation says this former employee can

disclose that to someone else, then

theoretically, at least, the former employee is

now not supposed to disclose that even if he

wants to, to anybody else. You would so argue, I

assume.

Now, he's an equally important witness

to the other side. The other side's lawyer goes

to talk to him and interviews him. The witness

himself is now free, at least, and nobody could

stop him from divulging what the other side's

lawyer told him. He could tell it back to the

corporation. He could tell it to the Boston

Globe.

By applying this, I must say, you are

taking a very important witness and effectively

saying what that witness can then himself go

around and share with people, even if that

witness didn't view this company's lawyer as his

lawyer at all. He can disclose to one side's but

you'd bottle him up as to the other side's.

Why shouldn't he just be treated as a

third-party witness, because he's no longer

there, work product comes in to protect both

sides equally, as need be, and as appropriate,

and yet, the witness himself - the witness

himself is free to disclose to others what he

wishes or doesn't wish to, about what he has said

to the lawyers, what the lawyers have told him.

Everybody's on the same footing with regard to

former employees.

MR. PLESEC: Your Honor, I think that we

have to draw a distinction between what the

former employee is going to be allowed to

disclose.

Again, the former employee, just like

the current employee, can disclose the facts to

the opposing counsel, that's not privileged. The

facts are not privileged. But the communication

with the corporation's lawyer is privileged if

the information is provided to that lawyer for

purposes of providing legal advice to the

company.

THE COURT: But obviously this

communication with the other side's lawyer is

not?

MR. PLESEC: That's correct.

THE COURT: All right. But you're trying

to bottle up - you're trying to bottle up what he

told the company's lawyer simply because of his

status as a prior employee. And the question of

bottling that up, or not bottling that up, isn't

in his control. It isn't in the witness's

decision: I want to disclose this or I want to

treat it as confidential. It's his former

employer's - it's his former employer's right to

waive or not waive that privilege. And the

witness himself, you would say, can't even do it.

Does the witness appreciate all the

ramifications of what he's getting into when he

talks to the former employer's lawyer? Does the

witness himself view this as confidential? Not

necessarily.

MR. PLESEC: Well, I think in the normal

circumstances, the witness would --

THE COURT: A current employee I would

tend to agree with you. It's perhaps one of the

reasons why Upjohn does make sense. Current

employees could well view, you know, what I'm

about to tell the company's lawyer is

confidential and that's part of encouraging them

to provide the information and be truthful and

all of that. But when former employees view what

they told their former employer's lawyer as

confidential?

MR. PLESEC: Your Honor, I think that

while the case law at the state court level has

not fully developed on this point, there are a

number of cases that have articulated the

principle that was announced by Chief Justice

Burger in his concurring opinion in Upjohn, where

Chief Justice Burger said that the general rule

is that a communication is privileged, at least,

when as here, an employee or former employee

speaks at the direction of management.

THE COURT: I realize Justice Burger

said that. I am trying to understand why. The

majority, obviously, very carefully skirted the

issue, and very deliberately did not reach it.

They viewed it as posing a complicated

and more difficult question, which I think it

certainly does. It has ramifications that I find

troublesome. I think it gets -- I must say, it

gets into very -- I mean, one of the cases cited

here, I think it was Judge Sarris's decision, do

pose that peculiar problem of the other side's

lawyer goes to talk to one of these former

employees, which they clearly are allowed

ethically to do, and then find themselves in

trouble because that employee, that former

employee is not appreciating that this was

attorney-client privilege, went and perhaps said

something that was attorney-client privileged,

and the other side's lawyer finds themselves

dragged onto the carpet for having, you know,

supposedly interfered with the attorney-client

privilege.

If the witness doesn't view it as

privileged, the witness might or might not,

depending upon the circumstances, why should I be

imposing -- in essence, imposing privileges that

the witness-employee, slash, client, you know,

client in quotes, doesn't even -- doesn't view as

confidential; doesn't view himself as a client?

MR. PLESEC: Your Honor, the distinction

between an ordinary third-party witness and a

former employee, I think is demonstrated by the

fact that a former employees's conduct with the

corporation may be imputed to the corporation,

and indeed, may be the very conduct that is the

subject of legal proceedings as opposed to a

third-party witness who is just making

observations about particular facts that he or

she happened to observe.

And so, if the corporation is to get

proper legal advice, then the communications of

the former employee about the activities that are

the subject of legal proceedings, the

communication of that information to the lawyer

representing the corporation has to enjoy the

attorney-client privilege protections that are

suggested by Chief Justice Burger in the Upjohn

decision.

THE COURT: That seems to be simply

going back to the argument though that if it's

important - if it's important, we have to clothe

-- if the information that he has to divulge is

important, we have to clothe it with attorney-client privilege to protect it. And, as I say, we

don't run around calling things attorney-client

privilege simply because the substantive

information that the person has to relay is

important or even vital. Sometimes the most

crucial information comes from third parties, and

we protect that as work product.

MR. PLESEC: But, again, your Honor, the

information is available to the adversary. The

adversary is permitted to either interview or

depose or whatever to gather the information that

the adversary deems is appropriate. And that ex-employee, just like a third-party witness, is

free to disclose what he or she knows about the

facts relevant to the proceedings.

The difference is that the communication

that that person has with counsel for the

corporation is a communication that should enjoy

the attorney-client privilege just as a

communication from an employee should.

THE COURT: What do you make of the

situation where the former employee is actually

hostile, antagonistic, has adverse interests to

his former employer, and is willing, you know, in

a begrudging way, to talk a little bit with the

company's lawyer, but not real excited about it.

Suppose the employee's even gone and

gotten his own lawyer? Again, perhaps we're

dealing with a former employee who himself has

some personal exposure arising out of the

incident, and he's gone and gotten his own lawyer

in whom he's confiding, but we'll nevertheless

say, Justice Burger says he's a former employee

and this is privileged, even though he's in fact

in some sense an adversary, in some sense has

divergent interests. We're going to call this

privileged?

MR. PLESEC: Well, your Honor, I think

in that scenario that you just described there

may not well be an attorney-client privilege

communication because the ex-employee is hostile,

has indicated that he or she does not want to

regard the communication as confidential, and has

indeed expressly said that he or she will not

regard it as such. I find under that fact pattern

that it would be very difficult to assert

attorney-client privilege for the communications

between the attorney and that ex-employee. But

that's not the scenario --

THE COURT: How do we make that

assessment? How can we make that assessment

short of a lot of very complicated pulling apart

of exactly, well, you know, what did he say to

whom, including such things as, you know, in

camera reviews of what he told his former

employer's lawyer. It seems to me that it gets

awfully convoluted to figure out how -- where

you're going to draw that line and how you're

going to enforce it and figure it out on

something that, if it's attorney-client, it has

this, you know, inviolate absolute protection.

It strikes me as fraught with problems.

Again, to the extent, since you're putting

together this table of state decisions on Upjohn,

I would again appreciate anything on that that

shows states picking up on and adopting Judge

Burger's concurrence on this subject.

I can appreciate, and again I think it

was perhaps in Magistrate Judge Alexander's mind

in dealing with the -- I forget the name of the

case, but when I read it, it involved a

defamatory letter drafted, or allegedly

defamatory letter drafted by that employee two

days before she left. The suit's filed

immediately. She's asked about it by her former

employer at a time when clearly that former

employee has her own exposure, has her own

potential liability for it. The statute of

limitations had obviously not run. There might

have been a lot of good policy reasons under

those circumstances to read into that that she

would have thought that the company's lawyer was

very much on her side; was the functional

equivalent of her lawyer, and some understandable

reluctance to let the other side get their hands

on what she had told the lawyer on those peculiar

circumstances with that very tight time frame

where she herself had exposure.

In that sense I'm not sure that I

disagree with the bottom line of what Magistrate

Judge Alexander did, but I'm not sure that the

Judge Burger analysis is the right one as to why

you should reach that bottom line in that kind

of, you know, unusual case.

Is there anything the Commonwealth wants

to add?

MR. WOOLF: Your Honor, I agree that

this is the slippery slopes to start saying --

you know, extending to ex-employees, you know, on

the basis of the critical nature of the

information, one can then go to independent

contractors, non-party witnesses, and one

descends down the slippery slopes from there.

I was going to ask, however, if Mr.

Plesec would be kind enough to furnish the Court

and the Commonwealth with a definitive list of

current and former employees. We only were able

to provide your Honor with what we knew at the

time, and as your Honor saw from the exhibit,

there were a number where we did not know the

person's status. So for the Court's edification

and the Commonwealth's, if they could provide the

list that they intended but failed to bring

today, giving us a scorecard on all of the

witnesses.

THE COURT: Just what their status was

as of the date of interview.

MR. PLESEC: Yes, we can do that.

THE COURT: Just so we know what this

category, who they are and how big it is, and

whatnot. I'll think about it, and await your

lists, but it seems to me, assuming that I do

follow Upjohn as to the current employees, I'm

leaning heavily towards not adopting Judge

Burger's approach with regard to the former

employees, and those at least we'd then need to

talk about on work product and other analyses for

which we might -- we'll need some other

information anyhow.

Let's move on to the alternative work

product analysis which may be needed as a fall-back for some, perhaps all of these, depending

upon how I rule on Upjohn.

Let me hear first from RJR on the work

product analysis. I think I would have no

dispute with the fundamental proposition that

these interviews are, at least in the first

instance, some form of - some form of work

product, but do you have any recommendation as to

how I, sort out whether they are, you know, core

opinion work product as opposed to plain work

product, short of in-camera review of the actual,

be they notes, memoranda, transcript, I'm not

sure what form the different items take?

It does seem to me that there's some --

you know, if what you have at one end of the

spectrum is basically the transcript, I'd have a

hard time viewing that as opinion work product.

If at the other end what you have is the

attorney's own thoughts about what this witness

said, what this witness adds to the case, how

this witness might be helpful, harmful, how

credible the witness is, how reliable he appears,

it can contain things that would obviously, in my

view, be absolutely core opinion work product,

and that we have a spectrum in there and I would

have to decide, if I reach work product analysis,

where along that spectrum a particular interview

fell.

I'll hear you on that, Mr. Plesec.

MR. PLESEC: Your Honor, I think as I've

mentioned in prior discussions of this topic,

last month and again as articulated in our

briefs, Reynolds' position on this topic is that

the entire memorandum is opinion work product.

What the memoranda reflect, as the

affidavits submitted to the Court verify, are the

mental impressions and judgments, opinions and

analysis of the lawyers on a variety of topics.

The memoranda reflect interviews

conducted by the lawyers. The lawyers prepared

for those interview memoranda by selecting

documents and deciding which questions to put to

which interviewee.

The lawyers decided which of the

responses should be recorded in the interview

memoranda. All of that, the process itself,

reflects the mental impressions, the opinions and

judgments of the counsel who were conducting the

interviews. And so, the actual drafting and

writing of the memo is a reflection of opinion --

excuse me, core opinion work product. And so,

there is no way to really redact out any of the

facts --

THE COURT: How can I tell that without

seeing them? You know, if an attorney goes out

to a witness and says, Tell me what you know

about the accident of August 5th? That's the only

question the attorney asks, Tell me what you

know? And then the attorney just takes down what

the witness says. I would have a hard time

viewing that as opinion work product. That's the

attorney as scribe, as I mentioned earlier,

that's one end of the extreme. Or perhaps even

the more extreme would be the tape recorder

that's going and that's literally just the tape

recording of the transcript of the witness's own

version.

Then you have gradations along, you

know, all the way down to something that is

indeed absolutely just the attorney writing up a

memo, you know, I interviewed so-and-so. He

clearly knows a lot about this. I think he's very

reliable. He'll help us corroborate so-and-so.

Need to follow-up on his suggestion that I look

at such-and-such. I mean, it could be just full

of nothing but attorney impressions, analysis,

reactions to the witness. Or it may contain some

of both where it could be redacted, or be so

intertwined that it couldn't. I mean, how do I

assess that without seeing them?

MR. PLESEC: Your Honor, I think that

it's pretty clear from, at least in my judgment,

from reading Hickman vs. Taylor, and the Upjohn

decision, that the courts -- the Supreme Court of

the United States has already decided that when a

lawyer interviews even a witness -- let's take it

outside the context of employees of a client --

even a witness, then the oral statements made by

that witness to the lawyer and recorded by the

lawyer are not regarded as ordinary fact work

product.

If the lawyer, in your hypothetical,

decided that the only question that he or she

wanted to put to the witness was, what do you

know about this, that's a reflection of the

mental processes of that lawyer as to what is the

key issue for this particular witness.

And the recording of the response in the

way that the lawyer records it, is the mental

impression of the lawyer as to what is important

in the information being provided by that

witness. The entire document, therefore, under

Hickman and under Upjohn, would be protected as

opinion work product.

THE COURT: If a lawyer goes out and

says, tell me what you know about this accident,

and flips the tape recorder on, are you telling

me that tape is opinion work product?

MR. PLESEC: Your Honor, if the entire

interview boiled down to one question and one

answer, I believe that's correct.

THE COURT: That's opinion -- the tape

is opinion work product?

MR. PLESEC: Well, the tape reflects the

mental processes of the lawyer as to what

question to put to this particular witness. The

other side is free to go interview that witness.

The other side can ask whatever questions they

want of that witness, and whatever information

they get is likewise opinion work product if they

record it in some fashion.

But the mental impressions, the

judgments of a particular lawyer as to what

question to put to a witness --

THE COURT: Suppose we excise from the

tape the question, what do you know about the

accident of August 12th, we redact that, and we

just get Mrs. So-and-so who starts off, I was

standing at the corner of Elm Street and Main

Street. The light turned red. I saw the truck. He

was going about thirty miles -- this is her voice

- her voice, giving her narrative of what she

saw, that's opinion work product?

MR. PLESEC: Your Honor, if that was the

record of the interview memoranda, I believe it

would be under the case law.

THE COURT: What kind of work product is

there that isn't opinion work product in your

view? Can you give me an example of something

that isn't, that's work product but not opinion

work product?

MR. PLESEC: Again, your Honor, as I

suggested to the Court last time, I think an

example of fact work product would be to go to

take a statement from a witness, where the

witness provides information and then signs a

statement. That's the witness's statement.

The witness is now unavailable, either

because he or she is dead or for some other

reason, and the other side does not have an

opportunity to gather that person's information,

under that scenario, I do think the opposition or

the adverse party may be able to convince a court

that they should have access to that statement.

But if the person was interviewed by a

lawyer, and then becomes unavailable, and the

interview memorandum is opinion work product, I

think that the opposition has to demonstrate more

than substantial hardship, substantial need or

undue hardship in order to get any information

from the other side.

Indeed, as Rule 26 here in the

Commonwealth of Massachusetts states, that in

ordering discovery of factual material, when the

opposition demonstrates substantial need and

undue hardship, the court shall protect against

disclosure of mental impressions, conclusions,

and opinions, and legal theories.

And under that scenario, what it means

is that opinion work product shall be protected

and should not be disclosed to the opposition.

In the example of a factual statement

signed by a witness, that is the witness's

statement. It's not the lawyer's statement.

That's not the opinion of the lawyer or the

mental processes of the lawyer. It's the

statement of the witness.

THE COURT: In the tape recording

example that I just gave you, you told me that

was opinion work product because of the

introductory single question by the lawyer.

I must say, you seem to be taking a very

extreme position; that's why I'm bothered by it.

MR. PLESEC: Your Honor, I don't think

it's really that extreme. The other side is

always entitled to the facts. Nobody is

questioning that.

What the other side is not entitled to

are the mental impressions and the opinions and

the work product of the opposition. And where the

interview memoranda, or the documents reflect the

mental impressions, judgments, analysis of the

opposition, then the adverse party is not

entitled to get that work product even under a

substantial need or undue hardship standard.

THE COURT: Well, I come back to my

original position. I must say, I think the way I

do that - I think the way I protect against that,

if need be, if substantial need is shown and we

have to deal with these things, is that I take a

look at them and see, are they indeed so imbued

with the attorney's mental impressionws that not

even a redaction could protect against disclosure

of that, or are there some pieces that are

segregable that are just the witness's own

information, not being analyzed, commented on,

filtered though, you know, the lawyer's

impressions.

But let me hear from the Commonwealth on

this, as to how you think I should approach it in

terms of the logistics?

MR. WOOLF: I think it is necessary to

view the statements in camera. I think that -- I

hate to draw the analogy between pornography and

opinion work product, but it is something one can

recognize when one sees it. I think there is a

difference between Mr. Smith saw this and, I

believe that Mr. Smith is credible when he said

he saw this.

I think it's clear. I think Mr. Plesec

is confusing, when he distinguishes between your

Honor's two hypotheticals, he's confusing

substantial need with the definition of plain

work product versus core opinion work product, to

say that the statement is work product if the

witness is alive and -- core work product if the

witness is alive, and plain work product if he's

dead, gets to substantial need not whether it's

opinion core work product versus plain factual

work product. I think that's where R.J. Reynolds

confuses the two.

If one reports, as it appears from our

extract of the witness interviews, which is Tab

2, reports factual information, that is plain

work product. The witness said this. The witness

saw that. The witness did this. That is plain

work product because it is something, one would

argue -- I mean, I suppose one could argue it's

not work product. But assuming, arguendo, it's

work product, it's plain work product. It is

simply a recitation of facts obtained from the

witness.

And given the substantial factual nature

of these statements as extracted from the Fact

Team Memo and the -- what Mr. Motley called the

Doomsday Memo, RJR calls it Corporate Activity

Project Memo, CAP Memo, from looking at what they

say in these memos, quoting these interviews, it

appears there are substantial factual information

in them.

True, they may say, I believe the

witness. He said this and I believe he's

credible. One deletes the second sentence, which

is the comment on the credibility of the witness.

I am bemused by RJR's position, because

on the firsthand, they say, we didn't know -- or

Jones, Day didn't know anything about RJR. They

came in and they said, just tell us. We don't

know anything. And then these witnesses go forth

and talk the way one goes to a motor vehicle

accident witness and says, what did you see?

Now they're saying, well, we had these

mental impressions. We determined what to ask.

Well, I have trouble reconciling the two

positions between we didn't know anything, and

people just spewed forth and we wrote it down,

and now saying, oh, but we had these mental

impressions. We guided these interviews. We know

what we were doing, and they weren't just

information gathering because we didn't know

anything.

First they undermine -- they attack

their own Fact Team Memo saying, this is

unreliable. The lawyers didn't know what they

were doing. They made lots of mistakes. Your

Honor says to them, well, then, why not go to the

source material?

Then they say, well, the source material

is privileged because we had these mental

impressions. We were directing the scope and

nature of the interviews. I do find it

inconsistent for RJR to take these two positions.

But as Mr. Plesec notes, and your Honor,

of course, knows, mental impressions,

conclusions, such as, I believe the witness is

credible, legal theories, this will help us

support our argument that X or defense of Y,

those are redactable. And those, I would

suggest, are what is meant by the mental

impressions, the core opinion work product.

That is substantially different from the

extensive historical factual recitation that is

contained in these interview memoranda, as quoted

extensively in the two RJR -- well, quoted

extensively in the Fact Team Memo, and to a

lesser extent, in the Doomsday or CAP Memo. It's

fact. And the only way to do this is to go

through it and read it. And I don't see any other

way.

I mean, to say it's privileged, or core

work product at the get-go, and there's no way to

sort everything out, I think is disingenuous, and

the disingenuousness of it is belied by what we

already have, which is, extensive quotations from

them. So I think your Honor does have to look at

them.

And as I understand from RJR, there's

only 46 of them, and they run somewhere between 5

and 15 pages. In terms of scope, it's not as --

it's not even as long as the Corporate Activity

Project Memo itself.

THE COURT: Anything further, Mr.

Plesec, before we move on to your argument on the

subject of substantial need?

MR. PLESEC: Yes, your Honor.

I think that Mr. Woolf is confusing

simply a recitation of facts in a piece of paper

versus a judgment rendered by lawyers as to which

facts to put down on a piece of paper: which are

important; which do they think are going to be

needed for purposes of providing legal advice;

which are important for purposes of defending

litigation, these types of things.

The fact that a memorandum contains

factual information contained by the interviewee

does not mean that it is not intertwined with the

lawyer's mental processes and judgments and

opinions as to what is important and what is

irrelevant and so forth.

The lawyers are doing what the Supreme

Court has said they should be doing, gathering

information, determining what is relevant and

what is irrelevant, recording what they believe

might be relevant, rejecting that which they

don't deem is worthy of recording. And so, the

entire process of recording information in a

memorandum is a demonstration of the exercise of

judgment and the mental processes of a lawyer.

Going back to the example that the Court

gave earlier about the tape recording, perhaps

the words of the witness in that scenario are

more akin to the witness writing a statement and

signing it than the interview memorandum here.

But if the actual questions put to the witness on

interview are recorded on that tape recording, I

still believe that that demonstrates the mental

processes of the lawyer, indicating the areas of

inquiry that he or she believes ought be pursued.

So the questions that would be put even in a tape

recording are important mental processes that are

deserving of protection.

Now, maybe if you go back to your

example and you say, let's redact out all the

questions, and all you have is the voice of the

witness recording the facts, then maybe that's

more akin to the witness statement that I

suggested earlier, but it's hard to suggest that

even in a tape recording situation, where you

have the mental processes reflected of what the

lawyers thought were important to put to the

witness, that those things do not rise to the

level of opinion work product.

I was going to make a point about

substantial need, but I believe the Court was

going to ask the Court to demonstrate its -- ask

the Commonwealth to demonstrate its views on

that.

THE COURT: In terms of substantial

need, we're, I think, operating a little bit in

the dark at the moment because we don't have the

definitive list and status of who these people

are. Is the person dead? Is the person

unavailable? Or is the person available and been

deposed? When deposed, did the person claim, I

have no idea what you're talking about; I don't

even remember any of this stuff. Or did the

person give a lot of information?

To what extent, if any, which, again,

I'd have to deal with it on in-camera review, do

the underlying memos contain any facts that

haven't already been put forth in the CAP Memo,

or the R&D Memo. I mean -- the Fact Team Memo. I

do get the names confused, or the memos confused.

But anyway, it seems to me there are a lot of

issues on substantial need that are a little bit

difficult to address short of, you know, a

witness-by-witness breakdown of where things

stand.

So it's a little bit hard to ask the

Commonwealth, show us your substantial need,

until we have that list to work from. And

obviously, particularly, if I side with RJR as to

Upjohn, but with the Commonwealth as to former

employees, we need to know what that list is just

to tackle this piece of it.

Maybe what I should do though, is ask

RJR what things would, if any, would you yourself

recognize as substantial need? I assume if the

witness were dead, would that satisfy you? I

mean, where do you say that line should be drawn,

and then when I get the chart we'll see where it

is.

MR. PLESEC: The substantial need

standard has to be satisfied by the person who is

seeking access to the information. It's the

Commonwealth's burden to demonstrate that they

have the substantial need to get access to the

information. That's not a position that I'm ready

to articulate today because I don't know what

their argument is.

They have simply said that they need the

stuff without really setting forth the reasons

why they believe there is a substantial need to

get access to these interview memoranda, assuming

that they were only work product.

THE COURT: Well, let me ask the

Commonwealth, how much information do you have as

of now to address the substantial need issue on a

witness-by-witness basis, or even by certain

identifiable categories?

MR. WOOLF: It was our understanding

that your Honor was going to address the

attorney-client privilege issue, and the people

at Ness, Motley who are most knowledgeable in the

substantial need issue were not available to

come.

I can tell you, for example, that

Lorraine Pollice, who was not an employee but

that was one of the people who was interviewed,

was asked about a log in her deposition. That is

referenced in an interview memorandum.

In her deposition, as I understand it,

she did not remember it. So clearly there's

substantial need when a witness has a failure of

memory. Or is dead. Or testifies at variance to a

prior statement. Those are things that I briefed

generally in the initial memorandum. But as to

the specifics, your Honor, I'm not in a position

to discuss that.

THE COURT: Okay. Let's do this. Let me

make my decisions, which I will get to you

shortly, on attorney-client privilege, and that

will define what categories, if any, need to be

addressed as work product, substantial need, and

then, you know, before the parties have to

undertake the logistics of the kind of -- because

I think it does have to be done on a witness-by-witness basis. I'm not going to across the board

say, well, just because this was a long time ago,

every single one of these has automatically a

substantial need. I think it does have to be

done on a witness-by-witness basis. So let me

hold off on that.

The last item that I did want to address

is Pollice, and then there was the other

statement where I have seen those in camera, the

two Pollice statements and the one from the other

witness.

Before we even talk about joint defense,

let me say from my -- simply from my own review,

the other witness which in your redacted versions

you describe as a consultant retained for

litigation, from having seen it, it clearly does

appear to me to be a consultant retained for

litigation, not in fact even a fact witness, but

an expert consultant clearly being questioned

about matters concerning an upcoming trial. I am

satisfied that that is opinion work product. It's

not something that would need to be produced in

any event. So that one does not need to be

addressed further.

So that would leave only the two memos

pertaining to Miss Pollice as someone who was

never an RJR employee, and yet, was interviewed,

is that correct?

MR. PLESEC: That's correct.

THE COURT: So we've narrowed it down.

So she's the only one.

Let me hear you -- I know you've

addressed these issues before, but now that I've

narrowed it down to specifically her and joint

defense, is there anything further you want to

say about why her interview is protected as joint

defense?

MR. PLESEC: Yes, your Honor. Just to

recap what we have already submitted, at the time

that Marilyn Forbes was at CTR doing her work,

CTR and Reynolds, as well as other tobacco

companies, were codefendants in a number of

pieces of litigation around the country, and I

think the affidavit of Mr. Ronald Bianchi will

demonstrate the number of cases involved at that

period of time.

When Miss Forbes was doing her work at

CTR, she identified a couple of issues that she

thought should be addressed with respect to

defending Reynolds and CTR in that litigation.

She identified the issues as the

memoranda demonstrate. She talked to Miss

Pollice, who had information about those issues.

She gathered that information for purposes of

analyzing the facts pertinent to the issues. She

made some judgments about certain of the problems

that she had identified and the issues.

The fact that Miss Pollice was not an

employee of Reynolds at the time is of no moment

in the context of a joint defense, common

interest situation. And in this particular

situation, Miss Pollice was working for CTR, who

was not only a codefendant with Reynolds in much

of the litigation, but indeed, Reynolds was a

founding member of the Tobacco Industry Research

Committee, which later became the CTR. And so,

there was an additional layer of relationship

here.

Beyond that, I think the case law is

clear that when parties are in a joint defense or

common interest situation, the attorney for, in

this case, CTR, does not have to be present while

the attorney for one of the other defendants or

parties with a common interest is gathering

information for purposes of litigation or matters

of common interest.

As Miss Forbes' affidavit clearly points

out, she believed that she was collecting

information that is covered by the attorney-client privilege as well as by opinion work

product. And so, we would strongly urge that the

Court find that each of the memoranda that have

been submitted in camera are not only opinion

work product, but are indeed attorney-client

privilege material also.

THE COURT: Let me ask you this, without

revealing what the item is, I must say, looking

at the statement, there is one point where Miss

Pollice declines to answer something that Miss

Forbes asks her, saying that she wants to go over

it with CTR's own lawyers first. I mean, a

curious situation that in the view of the witness

herself, she was not going to confide everything

in Miss Forbes. It's a curious wrinkle, it seems

to me, in joint defense, her own recognition that

in her own mind there was something different

between CTR's own lawyers and the lawyers who you

say were part of this joint defense.

What, if anything, do you make of that?

Again, I'm not asking and I'm not intending to

divulge what the point was.

MR. PLESEC: Well, your Honor, I think

what we really see is a woman who is not tutored

in the legal profession; not knowing the ins and

outs of the legal process. CTR at the time was

changing counsel. Old counsel was leaving;

Debevoise and Plimpton was just coming on board,

and I think it was an exercise in caution on her

part that she wanted to talk to the CTR lawyers

before she continued on on that issue.

THE COURT: All right. Again, the

Commonwealth has talked to me some about joint

defense, but is there anything more you want to

add today as that is germane now to this one

witness?

MR. WOOLF: Again, your Honor, I'll have

to beg the Court's permission to supplement this

for two reasons. First of all, because I think

that the issue of substantial need is a factually

-- in part, factually driven, and I'm just not

familiar enough with Miss Pollice.

But I do want to raise one point. Your

Honor may recall that when we had the hearing on

the case management order and the defendants

wanted some broad language on joint defense, and

the more they argued the more your Honor became

curious as to what was motivating a joint defense

claim. And the fact is, there was no joint

defense agreement, or anything, you know, up

until a couple of years ago. Certainly not ten or

fifteen years ago when Miss Pollice was

interviewed.

And, so, it begs the legal question,

given that there was no recognition in

Massachusetts, then or now, of joint defense. And

I certainly don't know what the law was in that

state at the time about joint defense, whether it

was even recognized because it's a relatively new

concept in litigation, whether one can, after the

fact, assert a joint defense privilege when the

concept wasn't in existence at the time.

But I think that that was something that

we would request an opportunity to explore

briefly with the Court.

THE COURT: Let me recommend this. One

of the things that you raise, Mr. Plesec, with

regard to the Pollice -- the two Pollice

statements, was indeed the assertion that

essentially everything in them was already in

the, you know, the comprehensive memo itself,

that it had been picked up verbatim. And it may

be just the logistics. You indicate somewhere

that you had put in the attachments, that you had

highlighted those parts from the Forbes' Memo

that had been, you know, verbatim.

MR. PLESEC: Yes.

THE COURT: It may just be logistics. I

can't seem to find the version that has that

highlighting that makes that easier for me. In

other words, if I agree with you on that, that

it's all there anyway, then clearly there's no

substantial need. They've already got it, and I

don't need to worry about joint defense and

whether it applied to Miss Pollice back in the

mid-eighties.

MR. PLESEC: Your Honor, we'll submit

another copy.

THE COURT: There seemed to be a version

-- there was a version under seal sent to the

clerk, and a version under seal sent to me, and

it may have been that just one of them has that

highlighting and not the one that got to me.

I don't want extra versions of things

that are under seal floating around any more than

necessary, but are you sure that you highlighted

one of them?

MR. PLESEC: Mr. Wood advises me that

only one was filed under seal, and it was

highlighted.

THE COURT: And made it to me. And you

think -- I didn't see it highlighted.

MR. WOOD: That's correct. It went to

you only, your Honor.

THE COURT: It went to me only. Then I

do need --

MR. PLESEC: Your Honor, let us

undertake to give you a new copy.

THE COURT: I don't need all the

attachments, just the guts of it with the

highlighting that lets me take a look at that

issue.

If if agree with you on that issue, then

I don't even need to address any of these other

points.

MR. ZIRLIN: Your Honor, excuse me. On

the matter of the two Pollice memos, there is one

other slight wrinkle. I know we're piling

wrinkles on top of wrinkles.

Within the Pollice -- within the two

Marilyn Forbes' memos themselves, putting aside

the conversations with Miss Pollice, there are

items in those two memos that are clearly

attorney-client privilege in that they reflect

the advice that CTR's counsel gave to CTR. And

should -- I have copies of each memo that we've

marked the redactions on, that if for some reason

it turns out that they do have a substantial need

and you rule that they are entitled to it, we'd

like you to see these now with the redactions.

I mean, you don't have to look at them

right now.

THE COURT: So CTR's own proposed

redactions?

MR. ZIRLIN: Exactly. And we're doing

this now so that if it turns out, you know, a few

weeks from now, somebody will say, why didn't you

say something.

[Documents handed to Court.]

THE COURT: I'll take them now.

In terms of where we go from here, what

I will need to do is at least communicate to you,

hopefully as soon as I can, after I get your

tables of the state law, at least a bottom line

of what my ruling is going to be on Upjohn and

former employees and things so we know what

additional work does or doesn't need to be done.

And in the interest of time, I may indeed

communicate that to you in a very -- my bottom-line fashion without necessarily a full memo

explaining my reasons at the same time.

When can I expect to see these lists of

citations of states that have followed Upjohn,

not followed Upjohn, what kind of time frame do

people need to update that for me?

MR. PLESEC: I believe we should be able

to get the Court a list of the states that are

following Upjohn in about a week.

MR. WOOLF: Yeah, next Friday.

THE COURT: Okay. And as soon as I get

those, I'll take a look at it, and as I say, at

least communicate the bottom line of my decision.

If I decide that some or all of these people --

the interviews with these people is not protected

by attorney-client, we then obviously do need to

move on to the nitty-gritty of substantial need

with regard to those people.

It's hard to map that out now, too,

because you don't know how many people that might

or might not involve. It might involve none. It

might involve all. It might involve half.

MR. WOOLF: I assume Mr. Plesec will

deliver on Friday, also, the list of current

versus former employees.

THE COURT: Yes, the current versus

former employees' list so we can get that. All

right.

Yes?

MR. PLESEC: May I, with the Court's

indulgence, move it from a week from today to the

following Monday, ten days from now, on our

submissions? I'm going to be on vacation next

week.

THE COURT: You are entitled to a

vacation for sure. If that's what you need,

that's fine.

MR. PLESEC: Thank you.

THE COURT: I'll wait until I have both

of those, but as I say, expect at least a short

ruling shortly after that. And then perhaps by at

least the time of the next status conference,

we'll know where we stand on, and map out,

getting any substantial need questions addressed.

All right, anything else that we can do

today, or that need to be addressed today before

we simply schedule our next session?

Our next session, when, and any previews

of agenda items just so I know how much time to

schedule? Any sense?

MR. GRIFFIN: I can speak to when. I

don't think I have any particular views about a

preview that I can predict, your Honor, but in

terms of talking with defense counsel, subject of

course to your own availability, and you're

entitled to a vacation, should that be on the

horizon, the thought was that Thursday, August

27th would be a convenient date; less convenient

for some will be Thursday, August 20th. That's

only from the defense side. I don't have a sense

of the availability of counsel for the

Commonwealth.

MR. WOOLF: If I could just have a

moment, your Honor?

[Conference between counsel.]

MR. WOOLF: Either one, your Honor.

MR. WEBER: I prefer the 20th, your

Honor, because we believe there should be an

earlier report date on the issues related to the

trial exhibits, experts, depositions, things like

that. We think we ought to keep the parties

moving, so we prefer the 20th.

THE COURT: Either is fine with me.

MR. WEBER: Or, alternatively, your

Honor, if we could ask the Court for an earlier

report date on the -- particularly the issue of

the trial exhibits. And we don't -- we wouldn't

mind a status conference on the 27th, but we'd

like to get that particular issue moving and

before the Court and not wait until the 20th or

the 27th.

MR. GRIFFIN: May I suggest we fashion

some sort of a status report on those two issues

that we can do on the 20th, and then we can

discuss with the Court anything about those, or

other agenda items, between the 20th and the

27th.

MR. WEBER: Your Honor, I think that's

way way too long. We'd like to actually start

beginning exchanging trial exhibits before the

20th of August. We've proposed that to the

defendants, and if they don't agree to that, we'd

like to get before the Court and get that moving.

MR. GRIFFIN: Your Honor, may I suggest,

instead of struggling with this now, we're going

to meet next week, or as soon as possible, to

continue the business both about the exhibits and

also to discuss expert witness discovery matters.

Let's get those meetings under our belt, and

report to your Honor then about the status of

them and determine whether we need to see you

sooner or later, and then we'll just adjust as we

need to, depending on what we need to, and when

you are available to see us, if you need to see

us.

THE COURT: I'm available to see you

either, or if need be, both days. My vacation

will be long over by then, so I'm set.

I don't want to have status conferences

prematurely when people say they are not ready to

discuss things. By the same token, time is

becoming very much of the essence, and I do not

want to unnecessarily put off a status conference

that could accomplish something productive and

keep us on track.

MR. WEBER: Your Honor, may I suggest

that perhaps we can resolve these issues next

week and then we can get back to you as to

whether we're continuing to maintain that the

20th is necessary.

THE COURT: Let's do that. I'm available,

as I say, on either or both days. So communicate

to me enough in advance and we'll set it, and see

you.

I repeat, I particularly, here where

people are not giving me much -- there's not a

preview of an agenda, I really need the agenda

enough in advance to have my own thoughts

together to make productive use, whether it's the

20th or 27th, so I do need the agenda enough in

advance.

Whether it's either the 20th or the

27th, one thing I do owe you, and I very much

apologize for the delay, is my actual decision on

the waiver argument about the thirty-nine

thousand, thirty-seven thousand. I thought I

would have that completely done long before now.

I am just now finishing it. That will be to you

shortly, and it will certainly be to you in

advance of that so everybody knows.

MR. GRIFFIN: Your Honor, in terms of

housekeeping, I was going to send a letter on

behalf of the defendants, sometime probably next

week, just reminding your Honor of our request

about the entry of orders on the Motions to

Dismiss, and the motion regarding Medicaid

recipient discovery, which I don't believe have

issued as yet. And I think they were --

THE COURT: I thought I had taken care

of that. You had raise that before.

MR. GRIFFIN: We submitted a proposed

form. Mr. Parsigian did it back the end of May.

As far as I know, your Honor, those have not been

entered. I'll be happy --

THE COURT: And nothing got entered on

the docket itself either, you say?

MR. GRIFFIN: Not that I have seen.

THE COURT: All right. Anything else?

Okay. Then I'll await to hear from you.

[Court adjourns 12:09 p.m.]

C E R T I F I C A T E

I, Patricia Bellusci, do hereby certify that the

foregoing transcript, pages 3 through 101, is a

complete, accurate and true record of my voice

recorded tapes taken in the aforementioned matter to

the best of my skill and ability.

_______________________

Patricia Bellusci

Official Court Reporter

The foregoing certification does not apply to any

reproduction of the same by any means unless under the

direct control and/or direction of the certifying

reporter.

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