Friday, 21 November 2014

Day 251: Not a secret deal so much as a deal about secrets

Over the years it has been my experience that when normally adversarial parties utter the phrase "an agreement has been reached" there is a good chance that the agreement in question is one that I may not like.

And so it was today at the Montreal tobacco trials, as it was revealed that the plaintiffs and two of the defendant companies had agreed to keep the companies' financial records sealed.

There was a time when the earnings of two of the companies - Imperial Tobacco and Rothmans, Benson and Hedges - were a matter of public record because they were included in reports to shareholders filed with Canadian stock exchanges. Researchers and policy makers, too, could use this information to better understand the economics of this trade.

This public disclosure ended over the past decade, after the Canadian branches became wholly-owned subsidiaries of multinationals. Now only global-level aggregated data is available and Canadian financial results are apparently viewed by these defendants as a high-level secret.

A transparent capacity to pay

The general Court rule is that all trial exhibits are public unless a judge agrees to a request to keep them confidential. Earlier in the trial, the plaintiffs opposed all such requests, and the rulings which resulted suggest to me that Justice Riordan has a general preference for disclosure.

But as this trial draws to an end, the parties have negotiated "compromise" solutions regarding the financial records. (This financial information is required in any assessment of punitive damages, as Article 1621 of the Civil Code of Quebec directs the consideration of the wealth or "patrimonial situation" of a faulty party. )

Not telling, but asking

A few weeks ago, Justice Riordan made it clear that the decision about what could or could not be made public was one which belonged to him, and that he did not want to be considered a rubber stamp to any agreements made between parties.

Sensitive to this, perhaps, lawyers representing JTI-Macdonald and Rothmans, Benson and Hedges today presented a longish explanation of why he should accept an agreement to disclose the rolled-up earnings figures, but not any other information, such as gross revenues or expenses.

Justice Riordan had a solution of his own to propose. In a twink of an eye, the financial records of RBH were removed from the court record and replaced with only the "releasable" numbers. A somewhat more complicated arrangement - but to the same end - was set for JTI. (Previous discussions on the JTI situation have been partically disclosed).

Only Imperial Tobacco remained unwilling to reach such an agreement. Suzanne Côté, looking like she had torn herself from her sickbed for the occasion, gave Justice Riordan several reasons - and a handful of legal precedents - to support eternal secrecy for any financial information about her client. (Even under the weather she packs a pretty good wallop!)

And the public interest?

Plaintiff lawyer André Lespérance suggested to Justice Riordan that the two agreements arrived at reflected a "balancing" of competing public interests - the need for transparency and the beed to safeguard business information in a competitive market. He said it was concern for a competitive market that should encourage the judge to rule against ITL's request, and to impose a similar level of public release as had been agreed-to by the others.

I think this was the first time that the plaintiffs have appealed to the competitive cigarette market as something that should be respected.  It was a peculiar and disquieting moment.

Back to prescription

There are a number of laws which have been invoked in this trial -- the Quebec Civil Code and the Civil Code of Lower Canada, the Consumer Protection Act , the Quebec Charter of Rights and the Tobacco-related Damages and Health Care Costs Recovery Act.

These laws allow for different types of faults, different types of damages, different rules on time limitations. That is to say, there are lots of things to argue when trying to settle the question of when the companies can no longer be held liable for any damages simply because the events took place in the too distant past.

As if this were not complicated enough, some of the companies are arguing the date at which the three-year clock should start is September 1994, after which government-mandated warnings about specific diseases appeared on all cigarette packages.

This discussion has been dispersed over the past weeks and today Philippe Trudel provided the plaintiffs' response to the industry's positiosn.

He focused his comments on the inclusion that should be granted to people who became injured after the initial suit was filed (in 1998).

In support of his position, he referred Justice Riordan to the way the issue was managed by the court in a recent case involving bank charges. (Left unstated, but known to all was that the same plaintiffs had, mostly successfully, fought that case through to the Supreme Court.)

A final comb-through of exhibits

Even after several rounds of discussions on the status of certain exhibits, a number of documents remained in limbo. Among these were several which had been marked with a "reserve" because there had not been enough information when they were first proposed to satisfy a decision to rule them in or rule them out.

Again, an agreeable solution had been found between the plaintiffs and Rothmans, Benson and Hedges and JTI.  As a result, a number of exhibits had their status clarified without Justice Riordan's intervention (some were removed, some were given status as 2M documents, some became full exhibits).

And again, it was ITL that preferred to take their chances on a decision by Justice Riordan. Returning for this discussion was ITL's counsel, Nancy Roberts, who competed with plaintiff counsel Gabrielle Gagne for a thumbs up from the judge.

Ms. Roberts won some and she lost some. Included in her successes was what I think could only be described as a pyrrhic victory.

The plaintiffs had wanted to use a 2000 exchange of correspondence between BAT and the UK House of Commons to establish when the parent company accepted certain health consequences of smoking. Ms. Roberts convinced Justice Riordan to strike down this exhibit... only to have him request a more challenging proof:

"Now, I'd like to have an admission from you as to the dates when each company first admitted that smoking caused lung cancer, emphysema, all those throat cancers, and addiction."

Given that the proof closed in 1998, I wonder what they will come up with?

The final days of this trial will take place on December 8, 11, 12 and possibly 15th. Already people are being asked to clean off their desks to make way for the next trial to use this beautiful room....

This post has been back-dated to allow for consistency in indexing