Wednesday, 18 April 2012

Day 18 : Anthony Kalhok not yet finished, but Jean-Louis Mercier begins

Former Imperial Tobacco vice president of marketing, Anthony Kalhok, was again on the stand when the Montreal tobacco trials resumed this Wednesday morning. Although the plaintiff's lawyers had finished their examination of Mr. Kalhok the afternoon before, there was still the matter of using his help to establish documents they wished to put into evidence.


The process of document introduction that consumed the first half of the morning was at the same time protracted and hurried -- a flurry of activity as those in front of the bar pulled up the records in question from their electronic databases, followed by irregular pauses as Mr. Kalhok looked at the papers, followed by another flurry as the documents were recorded and attention turned to a new set.

After Mr. Johnston put a few final questions about the relationship between BAT and Imperial Tobacco (to be told that the BAT family of companies was like the "old British commonwealth'), it was the turn of the defendants to ask questions.

This is the first witness for whom the Government of Canada lawyers had indicated that they might have questions. Deborah Glendinning raised concerns about the order of questioning between the defendants in the main action (the tobacco companies) and the defendants in the action in warranty (the federal government), and about the scope of questions given to the federal government.  Judge Riordan allowed that the issue was academic until the point at which the federal government had questions, and signalled that the Ms. Glendinning's colleague, Craig Lockwood, should begin his questions to Mr. Kalhok.

Imperial Tobacco questions its former vice president

In a steady rhythm, Mr. Lockwood asked Mr. Kalhok questions about Imperial Tobacco's advertising practices before turning to the relationship between Imperial Tobacco and the federal government.

Mr. Kalhok described the relationship between them as "cooperative", and then gave an example in a  communication between them regarding the use of the term 'light' on Player's light cigarettes even though the brand had tar levels higher than traditional light brands, like Matinée. "I invited Dr. Morrison to come down to Montreal, which he did," Mr. Kalhok said, and that the work of the company was explained to the Deputy Minister. "Once he heard all this, he said 'Go ahead - I have no problem.'"

At this point Maurice Regnier (who represents the Attorney General of Canada) rose to object to the question as being hearsay. The judge allowed the question. When Mr. Lockwood returned to the subject and asked how the relationship between Imperial Tobacco and the government of Canada compared with that between other companies, Mr. Regnier objected again.

Justice Riordan directly asked Mr. Kalhok whether he had been present in any direct meetings with other governments. Hearing that he had not, the judge ended that line of questions.

Mr. Lockwood turned to the question of Imperial's smoking and health policy and health claims that might have been implied (or inferred). "Did Imperial ever tell the public that light and mild was safer?" he asked.  "In those terms no," said Mr. Kalhok.

"Did the government?"

"Certainly in the brochure that came out from the health protection branch under Dr. Morrison's guidance – that pamphlet was very clear in terms of their objective – If you haven’t started, don’t. If you are a smoker, quit.  If you can't quit, smoke less. If you can't smoke fewer cigarettes, then smoke lighter cigarettes. There was a brochure.  I am absolutely certain of it."

Mr. Lockwood also asked about the numbers on the side of the pages.  They were put there, Mr. Kalhok said because "the government definitely wanted us to put them on the packages." He explained, as he had earlier in the trial, his view that smokers who wanted to reduce the amount of tar would not switch unless it was to a cigarette that was not too different than the one they were used to smoking.

Mr. Lockwood returned to some points that had been raised in earlier days.  He asked: - whether there was a difference between consumer awareness and consumer beliefs ("no");  -whether the Kwechansky study ever made its way to inform an advertising campaign ("no); -whether there was anything in Project 16 (Exhibit 142, 142a, 142b) that was contradictory to the voluntary code ("no"); - whether Imperial ever marketed to youth ("not at all"); - whether Imperial Tobacco did anything to counter the effect of package warnings ("no").

Rothmans, Benson and Hedges wades in.

Simon Potter, who once worked for Imperial Tobacco but now works for Rothmans, Benson and Hedges, began by establishing that neither questioner nor questionee could remember previously meeting.

Anthony Kalhok answered Mr. Potter's questions to say that the purpose of ITL's marketing was to steal market share, that they did not design ads for youth, and that they did not want to discourage smokers from quitting. He said he had never come to the opinion that their ads were turning non smokers into smokers. During the period he was at Imperial Tobacco, the total incidence of smoking was going "down, down, down." Market research, like Project 16, was the opposite of advertising, he contended. It is "gathering information from customers. Advertising is giving information to smokers." The vast majority of research projects - 80% to 90% never make it through to influence advertising, he testified.

On behalf of JTI-Macdonald, Mr. Pratte declined to ask any questions.

More documents on Imperial's relationship to government to come

Following the testimony about Dr. Morrison's communications with Imperial Tobacco, Maurice Regnier explained that the government of Canada would have some questions to ask, but that it would require some time to gather together the documents related to the events Mr. Kalhok had described only a few minutes before. After some discussion, Justice Riordan said the witness "had been more than cooperative" and that "he could call the shots" on which day he would return. It is not yet clear when that will be. 

Bienvenue, M. le Président.

When the session resumed after lunch, a new witness was sworn in: Mr. Jean-Louis Mercier, former president of Imperial Tobacco from 1979 to 1993.

Mr. Mercier is a tall man, verging on gaunt with a rich baritone voice and a slow manner of speech.

He is the first witness to speak in French. Although this is a suit filed on behalf of Quebec smokers against an industry predominantly based in Quebec, in a province where the official language of work is French, the proceedings have mostly taken place in English. Witnesses are allowed to testify in the language of their choice, but to date only Mr. Mercier has opted for French.

In response to the typical introductory questions, he gave a brief history of his career. He said he began by selling vegetables during World War II before, at the age of 14, showing films in parish halls. He came to Imperial Tobacco after brief stints in firms where he felt he had few prospects. He referred to chance opportunities when he was asked to trace his progress through ITLs ranks to the office of president -- a subisidary that closed, a boss who got sick, another who was promoted. His education did not include high school graduation (he "had his grade 9"), but did include receiving a certificate in industrial management at McGill after night studies in other areas as well..

There were a few smiles when he described his role at ITL as "president of managing profit planning" (président de gestion de planification des profits). He explained that when he arrived, Imperial Tobacco had not been profitable in comparison with the quantity of cigarettes they sold. He oversaw a plan to improve productivity at all levels.

Under this plan, the company improved its market share. "We had a 40% market share, then raised it to about 60%". His answers to how they did so were similar to Mr. Kalhok's. They made "high quality products that met consumers needs." They did not have influence on the decision to start smoking, but only on the brand smoked.

He allowed that the company had reservations, based on lawyers' views about being involved in certain health research or activity. (As soon as he mentioned the word 'lawyers', Suzanne Cote on behalf of Imperial Tobacco stood up to protest against moving into the area of privileged communication. Justice Riordan informed the witness that he was not obliged to reply to questions about advice from lawyers, although he could if he wanted to.)

Mr. Mercier expanded on his story about lawyers' advice.  He explained that the company had responded to the 1972 Surgeon General's identification of some harmful constituents in tobacco smoke by considering research into how to eliminate those products or to reduce them. "That was when the famous dictum from the lawyers came that if we tried to get rid of the toxic ingredients it would be considered an admission that our products were toxic, even if it wasn't us who called them toxic, but was the U.S.Surgeon General". [Beware - translation on the fly].

Although that project was dropped, he explained, research continued with the analysis of smoke with an eye to what could be done to reduce them. Mr. Trudel pushed for details, and Mr. Mercier drew a line between the research that Imperial had done on eliminating toxins and research on the toxic properties of the substances. "We tried to reduce them. We never tried to find out if they were toxic."

Mr. Trudel asked about the relationship between BAT and Imperial Tobacco. Mr. Mercier insisted at every occasion that Imperial Tobacco was not controlled by BAT. ITL was not a branch operation like other companies like others. "They saw us as an investment." There were no directives from BAT on how manage files, or how to answer criticisms on health issues. Nor, he said, were there any such directives within Imperial.

"Everyone decided for themselves.  My position was that for certain groups of people there was a form of risk to smoke tobacco. For other groups, there wasn't ... The issue is that you can't tell in advance who is at risk and who isn't.  That is the big dilemma."  He said that within ITL there were no talks about informing smokers of health effects because there were warnings on the packages, and even warnings on advertisements.

Before long, Mr. Trudel moved to the issues of document destruction, referred the witness to previous exhibits that had been presented to Mr. Ackman, and introduced new exhibits on the same theme.  Mr. Mercier was not certain that it was his decision to change the document retention policy that was referred to in a letter from Mr. Ackman to Mr. Canner (Exhibit 91). He suggested it might have been a favour done for BAT, ("if you are nice to them, sometimes they are nice back").

He was asked about the genesis of the document retenton policy change -- and whether it had anything to do with litigation risks that might have became apparent as a result of the production of documents during the trial of the Tobacco Products Control Act. He thought not, but was given a copy of Exhibit 70 and asked to review it for further questions on document destruction tomorrow.

While Mr. Mercier was asked to leave the court room, the Judge considered the request of Mr. Trudel that this witness, like Mr. Descoteaux and Mr. Ackman, should be considered to be favourable to the industry's position. He ruled that the witness was skating around key questions, and that he would permit the plaintiffs to ask suggestive questions.

Mr. Trudel then turned to Mr. Mercier's role in the Canadian Tobacco Manufacturers Council, and the role of the CTMC in determining policies on smoking and health. Mr. Mercier was chair of the CTMC, a task he described as thankless.  "No one wanted the job."  It was difficult to manage the relationships between the four company heads (this was before the merger of Rothmans with Benson and Hedges), he explained.  He said they hired a staff president because doing so made negotiations between the companies easier, and he spoke glowingly of Jacques Lariviere who held the post of spokesperson during some of that time).

It wasn't the CTMC that decided to challenge C-51, Mr. Mercier explained, but the decisions of indivdiual companies, especially ITL.  They were concerned about the way the advertising ban affected their ability to market trademarks.  "No one goes to a corner store and says 'give me a package of cigarettes,'" he said. "They all say 'give me a package of Peter Jackson,'" or another brand.

Mr. Trudel referred the witness to communications guidance that the CTMC had prepared regarding health effects (Exhibit not yet available), but Mr. Mercier doubted that he had read it. The discussion returned to Imperial's views of health effects and whether the company or the witness had agreed with the health warnings proposed by the new legislation. "Smoking reduces life expectancy,” “Smoking is the major cause of lung disease,” "Smoking is a major cause of heart disease," "Smoking during pregnancy can harm the baby.”

Mr. Mercier returns to testify tomorrow, Thursday, April 19.  Although the trial will not sit on Friday, a related proceeding will take place in the Quebec Court of Appeal, as the federal government seeks leave to appeal Justice Riordan's February ruling to reject their motion to be dismissed from the case.

Stay tuned for a review in the coming days of the document hits of this week.