Thursday, 19 December 2013

Day 196: The third witness on the kiln-conversion match

Today was the last day of hearings in the Montreal tobacco trials before the three-week Christmas break. You will forgive me for arriving at the courtroom hoping that the day would end at noon, so that I could get a jump on the holiday. (And a little more forgiveness, I hope, for the late posting of my report on the day.**)

As it turns out, it was a most interesting day - and one that flew by all too quickly.

A last minute addition

The witness was Mr. Robert Robitaille - a now-retired engineer who worked at Imperial Tobacco from 1978 to 2011. During his career with the company, he rose through management positions on the production side of the business. It was he who was in charge of production in south-west Ontario at the time that the growers were being told by the three tobacco manufacturers to change the way they cured tobacco.

The story of this "kiln conversion" and the way it was intended to reduce the quantities of tobacco specific nitrosamines (TSNAs) has already been told by witnesses from the other two defendant companies: Mr. Gentry (JTI-Macdonald) and by Mr. Chapman (PMI/Rothmans, Benson and Hedges). Imperial Tobacco, however, had not included this chapter in the story line of its defence.

It is not clear to me whether Mr. Robitaille's testimony was intended to replace that of his colleague, Jim Sinclair, who has been on and off the list all year. It could have been that Imperial Tobacco wanted to make sure that the judge understood that they too had "done the right thing" when presented with an opportunity to reduce the levels of one toxin in tobacco. 

A third possibility is that it was felt that an additional witness was necessary to fill in the cracks in the story that Justice Riordan had identified at the end of Mr. Chapman's testimony.  "If you knew that the new type of tobacco was safer, why didn't you start using right away, why did you wait the two years?" the judge had asked at the end of the day.

If Ms. Roberts had been able to stop Mr. Robitaille's testimony after the answer to that one question had been given, she might have felt that the last hearing day of the year was better than some. But with this witnesses' surprisingly candid answers under cross-examination -- and some killer documents he had been forced to bring with him to the trial -- it was the plaintiffs team that left the court grinning from ear to ear.

Why the delay? It was too big a task to be done any quicker

It took very little more than an hour for Imperial Tobacco's counsel, Ms. Nancy Roberts, to get Mr. Robitaille to put on record the reasons that the it took a few years after the kiln conversion process began (in 2001) for all of its cigarettes to be made with the lower-TSNA tobacco.

To begin with, the logistics were challenging. There were 1,300 farmers involved, and 13,000 kilns to convert. "It's not like buying a 13,000 Ford Escapes off the lot," Mr. Robitaille explained. The technology was new, and there were only a few suppliers of the equipment. There were particularities to each farm, and many bugs in that had to be worked out. "It was a massive undertaking". 

The power to make key decisions was not held by the companies. Ontario law gave the Ontario Flue Cured Tobacco Marketing Board authority over the sale of tobacco, meaning that any process involving farmers had to be determined collectively.

The industry-government membership
of the Tobacco Advisory Committee
These discussions were coordinated by the Tobacco Advisory Committee (TAC). It was this body that had the legal mandate to "discuss volume and also any other topics related to growing of tobacco in Ontario." 

Surprising to me was the high level of government representation in this process. The TAC "was chaired by the assistant deputy minister of agriculture from Ontario," and was composed of "representatives from the marketing board, representatives from ITL, JTI, RBH, the export dealers association of Ontario plus Agriculture Canada representatives."

Mr. Robitaille explained that another major challenge to the kiln conversion was the cost - over $80 million. The TAC originally proposed that the cost be shared evenly by all of the four sectors represented on the committee: 25% paid by the Ontario government, 25% paid by the federal government, 25% by the leaf purchasers (cigarette manufacturers and exporters) and 25% by the farmers.

A stand-off over picking up the tab.

Despite a prolonged lobbying effort, however, the federal government declined the invitation to participate. "The federal government never gave any money," said Mr. Robitaille. "The provincial government gave $20 million, the companies gave $20 million and the growers ended up with the rest."

Bob Speller, former MP
for Haldimand-Norfolk
Ms. Roberts asked Mr. Robitaille to elaborate on the efforts spent by the TAC and its members to get the federal government to kick-in its share. The local member of parliament, Bob Speller, championed the cause (Exhibit 21057), and letters and representations were made by all of the TAC stakeholders.

The sticking point within the federal government seemed to be Health Canada. Alan Rock was the health minister at that time, but it was Deputy Minister, David Dodge, who gave federal funding the kiss of death when he sidestepped the pressure from the TAC to say that the kiln conversion would be a good health move. (Exhibit 20031, 20032, 21058). 

Imperial Tobacco's view that federal funds should be provided was a factor in the company delaying announcing its own contribution. "At the beginning, we held up our commitment by saying we wanted the governments to be at the table, since they were the main stakeholder in the tobacco business - we wanted them to pay their fair share. So we held back until the Ontario Government committed twenty million dollars."

It was only when planting season was on the horizon that a "Heads of Agreement" was reached in April 2001 between the TAC and the growers that involved commitments for kiln conversions. (Exhibit 21059). At that point it was known that the 2001 target to change over all of the kilns would not be met, and that only 25% of their crop would be treated by the new curing process. By the following year, all kilns had been converted.

Mr. Roberts asked Mr. Robitaille to explain why the companies did not use the other options that might be available to them, such as refusing to buy any tobacco that was not cured in the new barns, or by importing the tobacco they used.

Her witness explained that the (government-mandated) auction system was anonymized in ways that would not let the manufacturers know which tobacco came from which farms. So they could not be selective about which tobacco they bought.

The reason that they could not buy their tobacco from outside Canada, he said, was because that would not be acceptable to government, as it would be the death-knell for the sector.  "You just could not say 'we are going to buy zero this year and come back the following year' because there would be nothing to come back to."

And as for the decision to keep the newer reduced-toxin tobacco on the shelf while the older tobaccos were used up, Mr. Robitaille said this was in consideration of giving smokers a better tasting cigarette. He said tobacco was subject to "a sweat" in which it was warehoused for one full season. "You do aging with wine, well, the same principle applies to this agricultural product. When you do age the tobacco, it does change the sensory characteristics of it."

More documents? Yes! (But not if it means delays)

"Those are my questions." Little more than an hour had passed since Ms. Roberts began her questions before she sat down.

The three documents that she had introduced as exhibits all dated from after 2001 - which is later than the cut-off date for the "production" of documents that were shared among the parties at an earlier stage in the trial.

This triggered the plaintiffs to demand that the companies hand over more recent documents that were related to the kiln conversation program. The proof can't be restricted to the documents that the defendants choose, Justice Riordan was reminded by plaintiff lawyer, Philippe Trudel.

The judge agreed. He seemed to take the defendants by surprise when he ordered that, having raised this issue, they provide all of the relevant documents to the plaintiffs.

More production! And so late in the trial?! Nancy Roberts said it couldn't be done in the time frame Justice Riordan had offered. She threatened to go launch an appeal. Her sabre rattling seemed to have been effective at dampening Mr. Trudel's enthusiasm for new documents: The day ended with his suggestion that the request would be withdrawn in return for two documents, one each from JTI-Macdonald and Imperial.

The damning dozen

Mr. Trudel may have felt he had all the documents he needed to counter the view that the kiln conversion program was an example of Imperial Tobacco acting in the interests of its customers.

This was because he had (unusually) exercised his right to ask the witness to bring with him relevant documents that he had in his possession (subpoena duces tecum). Happily for the plaintiffs, Mr. Robitaille had plenty of interesting documents in his possession, as he had asked for material to be sent to him to help him review in preparation for his testimony. From these documents, Mr. Trudel selected a dozen to introduce as exhibits.

Safer sources

Memos written by Mr. Robitaille's staff showed that Imperial Tobacco knew that Canadian tobacco was higher in TSNAs than material imported from Brazil, Zimbabwe and India. (Tobacco in those countries was cured in kilns which were indirectly heated by wood fires, a practice that had been abandoned in North America.) (Exhibit 1666, 1667). 

So why not buy lower TSNA tobacco from those other countries?  Mr. Robitaille admitted it would have been possible -- and even cheaper. "we would have saved a lot of money – but by doing that we would have bankrupted an area of southwestern Ontario. ... it was not right to do that."  

Earlier he had said that "the right thing to do" was to reduce the TSNAs from tobacco if it could be done.  Mr. Trudel pressed him to reconcile these two opposing objectives:  - protecting Canadian farm jobs or reducing smokers' exposure to TSNAs?  Mr. Robitaille suggested that the choice was not one the company was free to make. "No government in those days would have let those farming communities go down the drain."

Trying to manipulate government

Imperial Tobacco's ambition in 2001 went beyond changing the way that tobacco was cured, and the kiln conversion program was a mechanism it hoped to use as leverage towards other goals.

The company saw that getting the federal government to endorse the change would help protect it litigation. "Government responsibility to a legal product could be inherited. An opportunity for the Manufacturers exists to spread product liability." (Exhibit 1668) And there were other "spin offs" they could work towardssuch as re-engaging Agriculture Canada as a research partner. (Exhibit 1669).

Putting the squeeze on Health Canada
Exhibit 1670.1
Notes from the TAC suggest that it was the company that designed the approach to the federal government, which was aimed at boxing Health Canada into having to say yes. (Exhibits 1670, 1670.1)

Trying to manipulate the growers

Imperial Tobacco also saw the kiln conversion program as a way to get rid of the marketing board and to introduce direct contracts between manufacturer and farmers. (Exhibit 1668, 1673).

The company's approach to the farmers was today described by Mr. Robitaille as "a hard line." The notes he wrote after meeting the farmers in February 2001 describe a frightened and angry grower community, who felt "they have been used like a pawn in a chess game between government and companies."  

Even then - and with only weeks to growing season -- Imperial Tobacco stood firm against the pressure to make its own financial commitment to the conversion program. Mr. Robitaille had noted that "We reinforced our position of : No financing for TSNA, Contract long-term solution." (Exhibit 1673)

When Mr. Trudel asked him "Why didn't you offer the money as soon as possible?" Mr. Robitaille gave a bottom-line response. "If we had done so, the Ontario government would not have given any money." 

Lots of choice on the plant

The last of Mr. Robitaille's documents presented by Mr. Trudel was an addendum to the "Head Agreement" that Ms. Roberts had shown earlier in the day. (Exhibit 21059, 21059.1). The addendum gave the small print on the negotiated contract between tobacco buyers and sellers for the 2001 crop year.

Exhibit 21059.1
Among the issues negotiated were the quantities of each type of leaves the Canadian manufacturers and the Canadian tobacco exporter planned to buy from the farmers. This information directly contradicts the version of events that Valerie Dyer had presented earlier this month -- that the companies had no control over which types of tobacco leaves were available for sale at the auction house.

As this fact sunk in, Philip Trudelle asked Mr. Robitaille a question that indirectly asked him to similarly contradict ITL's position that it was the government that determined the nicotine levels in cigarettes. Did the government ever tell you what grade or plant position you should buy or how you should blend them?"
"No" said Mr. Robitaille.

There were only a few more questions before Mr. Robitaille was invited to step down.

Burns II

Justice Riordan tied off the hanging threads related to the request by the plaintiffs for Dr. David Burns to be allowed to testify as an expert in rebuttal of the criticisms of Monograph 13 by Michael Dixon. (The issue was first discussed on December 5, 2013)

Simon Potter again lead the attempt to dislodge Dr. Burns as a witness for this purpose - arguing that the short report that had been prepared to Justice Riordan's tight specifications was still too broad for the purpose. Justice Riordan seemed sympathetic about his concerns about one paragraph of the report, which the plaintiffs agreed to cut from the report before being asked to do so. But the bulk of his objections were disgarded, and Dr. Burns has again been cleared to testify in this trial. He is now the first identified witness in the plaintiffs' counter-proof.

Simon Potter was directed to report back on January 13th and say whether the defence teams will hire another expert to respond to Dr. Burns.

Merry Christmas to you too!

Despite some attempts to laugh about a Christmas truce, there weren't many signs of seasonal good will between the men and women who are entering their second winter in this trial. Both sides still kept to themselves as they made their customary exit down separate elevators.

Justice Riordan joked that a settlement would be "The Miracle on Notre-Dame Street," and wished everyone "good rest, health and peace in the new year."  It's a nice thought.

The Supreme Court says "no".  Again. 

We now have an eleventh court decision against attempts by British American Tobacco and RJ-Reynolds to be exempted from provincial governments' cost recovery suits. The Supreme Court of Canada ruled today that it will not entertain an appeal of Ontario courts' decisions that kept those companies in.
The Montreal tobacco trial resumes on January 13th.
** This post was made on December 22, and back-dated to the date of the events reported.