Chapter 21, Part 2

By Frank Tursi, Susan E. White and Steve McQuilkin
JOURNAL REPORTERS
© 1999 Winston-Salem Journal

Rumors had been circulating for weeks in the fall of 1985 about what was going on in the offices of the 10th floor of the Integon insurance building in downtown Winston-Salem. The offices were off-limits to everyone except a group of men and women who were seen riding an elevator up to the floor each day. Once there, the employees had to have an access code to get in.

Employees were told that they would lose their jobs if they talked about their work with anyone, including family. Integon spokesmen refused to discuss the covert operations and were told not to acknowledge that the offices even existed. (Calder Womble footnote) (William Womble footnote; Wombles were interviewed for details on Reynolds secret legal review.)

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

Reynolds lawyers knew that people would eventually ask questions, but satisfying the public's obsession for gossip was not worth jeopardizing the company's legal interests. There was one goal: to ensure that RJR could account for, explain and defend every report, memo and article floating around every department at the company. The paper trail extended back to the 1950s; hundreds of thousands of pages of documents had to be read and catalogued.

This daunting task was handed over to 100 young lawyers and paralegals that Womble, Carlyle, Sandridge & Rice, RJR's local law firm, temporarily hired for the job. Of course, the flurry of hirings only instigated more gossip. Some joked that anyone with a law degree caught strolling by the Wachovia building -- Womble Carlyle's headquarters -- would be sucked in.

In reality, the secretive project was more demanding than anyone could have imagined.

''We were going through all the documents to be able to prove things that would come out during the (court) cases,'' said Calder Womble, a Womble Carlyle partner. ''But the only way that you could do it was to go through all of it; you couldn't just cherry-pick them. It was a massive undertaking. I don't think it's finished yet. There's still some people involved who are just keeping track of the records now.''

The internal-records audit began in the spring of 1985 when RJR decided to replace its national trial counsel, Jacob Medinger of New York, with Jones, Day, Reavis & Pogue of Cleveland. Jacob Medinger had been handling RJR's lawsuits for years, but until the 1980s the company just hadn't faced that many legal problems. Now with two trials ahead, inside lawyers agreed that RJR needed a powerhouse firm defending it. Jones, Day employed hundreds of lawyers in locations worldwide.

Reynolds wasn't the only company reinforcing its defense team. Nationwide, 70 law firms, including some of the country's most prominent, had been put on the tobacco industry's payroll. (Wall Street Journal footnote; information on other tobaco companies hiring prestigious law firms.)

Reynolds was committed to spending the money necessary to ensure that it didn't lose in court, and Jones, Day definitely came with a higher price tag. In the early 1980s, RJR was spending more than $1 million a year on outside legal costs. By 1985, the company was spending at least that much every month.

It is uncertain whether the massive legal review at RJR affected any of that cost or whether other companies conducted similar internal investigations.

It is not uncommon for law firms to thoroughly investigate clients so that they can best represent them in court. Shook, Hardy & Bacon, which has defended Philip Morris and other cigarette-makers for years, maintains a massive archive of industry documents at its offices in Kansas City, Mo. (Hilts footnote; information on document archive maintained by Shook, Hardy & Bacon.)

When Reynolds hired Jones, Day, the firm's lawyers insisted on knowing everything about the company and its employees.

''The first thing they did was study all the documents and all the departments and all the files and talk to everybody endlessly,'' said a former Reynolds lawyer.

The lawyers documented all their interviews and research into various reports, including a 100-page historical summary that outlined the influence that RJR lawyers had wielded over the company's research-and-development activities from the 1950s to the '80s.

Jones, Day lawyers also produced a confidential 400-page report that bluntly detailed the industry's legal strategy, including witnesses and evidence that could produce problems in court. The lawyers did not intend for anyone outside the law firm to read the reports. Little did they know that the embarrassing disclosures would become public some 15 years later and provide the kind of fodder that plaintiffs' lawyers needed to harm the industry.

The Wall of Flesh

Judge Bruce W. Dodds shook his head as he glanced out over the Santa Barbara, Calif. courtroom in November 1985.

''How many of you are there?'' Dodds asked the group of lawyers gathered around the defense and plaintiff's tables.

In all, there were more than 20 people, including seven lawyers, five public-relations representatives, legal secretaries, an errand boy, three men who appeared to be psychological consultants assisting in jury selection, a woman who took notes for them, and three other people whose roles were not immediately known. The majority appeared to work for RJR.

''I don't think I want to be here today,'' Dodds said with a sigh before disappearing into the judge's chambers.

Over the years, this pack of lawyers would become all too familiar to judges and juries as the number of lawsuits against the tobacco companies increased. In legal circles, the tobacco lawyers became known as the ''The Wall of Flesh.''

To Melvin Belli, the plaintiff's attorney in the case, Reynolds' legal team was made up of ''forensic taxicab men who keep the meter running.'' He even boasted at one point that although he had spent $150,000 to prepare his case, RJR had spent closer to $4 million. (Legal Times footnote; Belli's comments on Reynolds' legal spending.)

Fearing that Belli's goading might convince the jury that the defense had an unfair advantage, Reynolds got the judge to issue a pretrial order forbidding Belli from commenting on the number of defense counsel.

But the case was already drawing plenty of media attention, primarily because it had been 15 years since the last smoking lawsuit had gone to trial. With so many cases pending, many were just waiting to see whether the industry could withstand the financial pressure. It didn't help that for the first time in history the companies were losing smokers.

Sales had peaked in 1981, when Americans smoked 638 billion cigarettes. By 1985, consumption was off 7 percent. And if RJR lost in California, there would be hundreds, if not thousands, of other lawsuits to follow. Just the threat of litigation dogged the company's stock. A significant verdict against the tobacco companies could force them to raise cigarette prices to recoup some of their losses. But then they risked losing more smokers. The stakes were just too high.

Scorching the Earth

John Galbraith was hardly the perfect plaintiff. And the defense team was determined to show just how bad he was. (Dallas Morning News footnote; courtroom details from John Galbraith vs. R.J. Reynolds Tobacco Co.)

To Reynolds, Galbraith was a ''walking health disaster.'' As a young man, he had tuberculosis. Later, he was hospitalized for a host of stomach, heart and lung ailments. The defense team also pointed out that Galbraith was believed to have been an alcoholic. He was a junk-food junkie, and he downed 20 cups of coffee a day. With that kind of background, no one could prove that smoking alone caused his cancer, RJR's lawyers argued.

Also, the defense pointed out that Galbraith's death certificate listed lung cancer as a contributing factor, not the cause of death. RJR's lawyers insisted that Galbraith simply disregarded his health and smoked because he enjoyed it. ''The. . . evidence shows John Galbraith smoked because he liked to smoke,'' said Thomas Workman, one of RJR's lawyers. ''So what's wrong with this man taking his oxygen mask off once and smoking a cigarette?'' (Winston-Salem Journal footnote; Thomas Workman quote on Galbraith's decision to smoke.)

The tobacco companies typically led scorched-earth investigations into a plaintiff's personal background. In this cradle-to-grave investigation, a plaintiff's marriages, jobs, histories, personal hygiene, eating habits and church-going practices were scrutinized. Investigators tracked down ex-spouses, childhood buddies, teachers and classmates. Once the witnesses were found, tobacco lawyers often deposed them for days. (Wall Street Journal footnote; details on the tobacco industry's scorched-earth defense.)

In one case in California, industry lawyers grilled the plaintiff on her adopted son's suicide. They also asked how she felt when she found out that her daughter-in-law was several weeks pregnant when she married the plaintiff's son. The plaintiff was shocked. She hadn't known.

Belli and his co-counsel, Paul Monzione, had to prepare Galbraith's family for the worst.

''He'd (Belli) say these bastards are going to try and intimidate us, and they'll go after everybody,'' Monzione recalled. ''We'd tell our clients, `Look, they're going to go into your personal history; they're going to want to discourage you and make it so embarrassing. They're going to probe into your life. They're going to want some of the most intimate details of your sex life. They're going to want to know your medical history and everything else. You're going to feel so violated.' ''

Before the trial, the defense attorneys found Galbraith's ex-wife in a trailer park in a remote desert in Arizona. For nearly a half-day, six defense lawyers sat inside the tiny living room questioning the former Mrs. Galbraith -- now old enough to be a grandmother -- about the man she married and divorced about 50 years earlier.

''It was the most absurd, ridiculous thing other than the money that had been generated for these firms,'' Monzione said.

The lawyers' questions ranged from the mundane to the ludicrous: ''Did Galbraith have any hobbies? What did he like to read? Did he ever eat peanut butter? Did he keep bug sprays in the house? How did he cook his bacon? Did he work in the garden?''

''They had all these things that supposedly could explain why someone would develop cancer. . . . They went into every aspect of his life,'' Monzione said. ''They went all the way back to the time he was an infant. . . focusing on everything, including the type of clothes that he wore. It was really a preposterous thing.''

But it also worked. On Dec. 23, 1985, after five weeks of trial, a jury voted 9 to 3 in favor of RJR because it was not convinced that Galbraith was addicted to cigarettes or that smoking killed him. (Los Angeles Times footnote; information on Galbraith and Roysdon trials.)

Less than two weeks earlier, a federal judge in Knoxville, Tenn., threw out Floyd Roysdon's $55 million lawsuit because he said the plaintiff did not prove that cigarettes were more dangerous than the average person believed them to be.

Again, the tobacco industry had shown that its defense could be just as successful in this second wave of litigation as it had been years earlier.

''People said we're in a new era, a new ballgame, and somehow, things have changed,'' said John Strauch, an RJR lawyer with Jones, Day. ''But we said personal responsibility is still the issue.''

• Coming Friday: Defeat and Intrigue