Susan Haines as Administrix ad Prosquendum and Executrix of the Estate of Peter Rossi
v The Liggett Group, Inc., et al

US District Court for the the District of New Jersey
The Honorable H. Lee Sarokin presiding

Filed 1984


  • 1984 – February 22: Complaint filed
  • 1984 – June 20: Amended Complaint filed adding the Tobacco Institute as defendant. Injury alleged-lung cancer. Actual damages in excess of $10,000; punitive damages unspecified.
  • 1985 – July 17: District Judge affirms in part and reverses in part protective order entered by Magistrate regarding disclosure of information obtained from discovery.
  • 1985 – July 24: Order stayed
  • 1985 – August 6: Appeal of July 17, 1985 order and motion for mandamus to District Judge filed with the Third Circuit
  • 1985 – September 26: Oral argument
  • 1992 – February 6: Ruling

¶ The Court finds that “there is sufficient prima facie evidence of fraud in connection with the public assurances made by defendants to declare that the crime/fraud exception shall apply.”

¶ The Court finds that “there is prima facie evidence that defendants were engaged in an ongoing fraud, and that defendants obtained attorney assistants in furtherance of that fraud through the use of the special projects division.”

Excerpts from the opinion of  Hon. H. Lee Sarokin Opinion on crime fraud and attorney-client privilege:


“In light of the current controversy surrounding breast implants, one wonders when all industries will recognize their obligation to voluntarily disclose risks from the use of their products. All too often in the choice between the physical health of consumers and the financial well-being of business, concealment is chosen over disclosure, sales over safety, and money over morality. Who are these persons who knowingly and secretly decide to put the buying public at risk solely for the purpose of making profits and who believe that illness and death of consumers is an appropriate cost of their own prosperity! As the following facts disclose, despite rising pretenders, the tobacco industry may be the king of concealment and disinformation.”

“In 1954, the tobacco industry promised to disseminate the results of industry-sponsored, independent scientific research for the purpose of answering the question: “Does cigarette smoking cause illness?” Decades later, one searches in vain for a “Frank Statement to Cigarette Smokers” from the tobacco industry which purports to answer that question.”

“Plaintiff alleges that defendants have perpetrated a public relations fraud. Plaintiff has presented evidence from which a reasonable jury could conclude that the tobacco industry in general, and defendants in particular, were aware of the risks of smoking; were concerned about the publication of those risks by others and the consequent impact upon cigarette sales; and sought to discredit or neutralize the adverse information by proffering an independent research organization, the Council for Tobacco Research (the “C.T.R.”), which purportedly would examine the risks of smoking and report its finding to the public. The evidence presented by plaintiff supports a finding that the industry research which might indict smoking as a cause of illness was diverted to secret research projects and that the publicized efforts were primarily directed at finding causes other than smoking for the illnesses being attributed to it.”

“A jury might reasonably conclude that the industry’s announcement of proposed independent research into the dangers of smoking and its promise to disclose its findings was nothing but a public relations ploy – fraud – to deflect the growing evidence against the industry, to encourage smokers to continue and non-smokers to begin, and to reassure the public that adverse information would be disclosed.”

“ While the efforts which the C.T.R. chose to advertise were well publicized, plaintiff learned of a secret division of the C.T.R., the “special projects” division. Under the auspices of the special projects program, defendants’ counsel and other tobacco industry attorneys collaborated in assessing, monitoring, and directing the scope of research projects purportedly designed to identify expert witnesses and to develop evidence supporting defendants’ positions in existing and anticipated litigation and Congressional hearings. Defendants insist that their “special projects” efforts are entirely distinct from and unrelated to the C.T.R.’s advertised “independent” research and thus, “special projects” efforts are entirely distinct from C.T.R.’s advertised “independent” research and thus, “special projects” documents are protected by attorney-client privilege. However, plaintiff seeks discovery of the “special projects” documents otherwise subject to the attorney-client privilege on the ground that said documents come within the crime/fraud exception to the privilege.”

“Plaintiff has presented prima facie evidence that defendants’ “special projects” program was interrelated and intermingled with the C.T.R.’s supposedly “independent” research. The facts presented support plaintiff’s overall theory of fraud based on the false claims regarding the independence of C.T.R. sponsored research and on the likelihood that defendants mounted a public relations campaign designed to discredit the links between smoking and disease which defendants knew existed.”

“Furthermore, there is evidence supporting the conclusion that research which might tend to prove smoking a cause of such illnesses was diverted into special projects and intentionally shielded by the attorney-client privilege so as to prevent its disclosure.”

“The court has conducted an in camera review of selected special projects documents, and, as presented in the opinion below, the documents speak for themselves in a voice filled with disdain for the consuming public and its health. Despite the industry’s promise to engage independent researchers to explore the dangers of cigarette smoking and to publicize their findings, the evidence clearly suggests that the research was not independent; that potentially adverse results were shielded under the caption of “special projects;” that the attorney-client privilege was intentionally employed to guard against such unwanted disclosure; and that the promise of full disclosure was never meant to be honored, and never was. Accordingly, the court concludes that the crime/fraud exception applies and that plaintiff is entitled to discovery of the withheld special projects documents.”


“But in addition to the evidence and factual inferences already proffered by plaintiff, the most persuasive evidence prompting this court to apply the crime/fraud exception and to reverse the Magistrate’s order as clearly erroneous comes from the disputed documents themselves. This court’s own in camera inspection to selected documents has revealed the most explicit admissions that defendants used the special projects program to further the alleged ongoing fraud and deception surrounding the advertised function and operation of the C.T.R. Even more disturbing, the documents indicate that defendants specifically abused the attorney-client privilege in their efforts to effectuate their allegedly fraudulent scheme. The court recounts some of the most damaging evidence below, recognizing the sensitive task of fulfilling the court’s duty to support and justify its holding while temporarily preserving the confidentiality of otherwise privileged documents.”

1. Document # RC-6033263 et seg. – Inventory of C.T.R. Special Projects

“The October 6, 1966 minutes of a September 30, 1966 meeting, transmitted via an October 11, 1966 letter from Shook, Hardy & Bacon, states: Progress reports on special projects by Ad Hoc committee. The special projects identified at SP-103 and SP-104 assign the C.T.R. and the Tobacco Institute the responsibility of investigating: 1) “specific refutation of misleading statements regarding cigarette smoking commonly appearing in anti-smoking propaganda;” and 2) “collection of predictions which have not come true.'”

“This statement supports plaintiff’s hypothesis that “special projects” and the C.T.R. in general, as well as the Tobacco Institute, coordinated and commingled their efforts in defendants’ public relations campaign to create doubt about links between smoking and disease.”

“This is exactly the type of evidence which defense counsel concedes could link “special projects” activities to plaintiff’s fraud claim, giving rise to the crime/fraud exception. The above quote supports plaintiff’s theory that the C.T.R. was not an independent research body but rather was (and is) defendants’ agent, whose research is guided by defendants’ in coordination with defendants’ litigation and public relations efforts.”

2. Documents # RC-6033470

“Plaintiff’s claim of C.T.R. manipulation through the siphoning of relevant projects is further supported by the notes of the September 10, 1981 Committee of General Counsel.

General and Ad Hoc Counsel meeting September 10, 1981

“– Stevens: “I need to know what the historical reasons were for the difference between the criteria for lawyers’ special projects and C.T.R. special projects.”…

– Jacob: “When we started the C.T.R. Special Projects, the idea was that the scientific director of C.T.R. would review a project. If he liked it, it was a C.T.R. special project. If he did not like it, then it became a lawyer’s special project.”

– Stevens: “He took offense re scientific embarrassment to us, but not to C.T.R.”

– Jacob: “With Spielberger, we were afraid of discovery for FTC and Aviado, we wanted to protect it under the lawyers. We did not want it out in the open.”

“In this court’s opinion, no evidence could be more damning. These minutes explicitly acknowledge that the supposedly “independent” scientific director of C.T.R. channeled research into “special projects” for defendants’ litigation efforts. But even more disturbing is defendants’ announced practice of using the “special projects” division in order to shield damaging research results from the public and the F.T.C. “

”A document captioned “Notes from the September 10, 1981 Meeting of Company Counsel and Ad Hoc Committee Members” is even more explicit.

Meeting Notes September 10, 1981

From Page one of the “Notes”:

– Edwin J. Jacob [lawyer]:

“Difference between C.T.R. and Special Four (lawyers’ projects). Director of C.T.R. reviews special projects – if project was problem for C.T.R., use Special Four. Also, if there are work-product claims, need the lawyers’ protection. … e.g. motivational research that was done during the F.T.C. investigation was done through Special Four because of possibility that C.T.R. would be subpoenaed. e.g. Joe Janus’ current study of cohort effect (those born in 1890-1919) is a full C.T.R. project – Special Four gave interim support.”

“Admissions such as these compel this court to find the Magistrate’s Order below clearly erroneous. Such clear and intentional abuse of the attorney-client and work-product privileges cannot be tolerated and certainly cannot withstand plaintiff’s crime/fraud contentions in this case.”

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