Quebec judge issues Letters Rogatory on alleged spoliation of evidence by US and UK lawyers

shred

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The Quebec court decision in Conseil québécois sur le tabac et la santé c. JTI-MacDonald Corp., 2011 QCCS 2376 (CanLII), involved an application for letters rogatory in two tobacco industry class actions (recently settled on July 4, 2011,  between the Plaintiffs and the Government of Canada.  The Defendants had no part in this Agreement.)

The class plaintiffs sought to examine two attorneys: John Meltzer of London, England and David Schechter of Louisville, Kentucky, USA , whom they alleged were involved directly or indirectly with the spoliation of evidence (destruction of documents) by Imperial Tobacco Canada Ltee (“ITL”) during the early 1990’s:  Mr. Meltzer, then of the firm Lowell, White, Durrant, acted as outside counsel to British American Tobacco (“BAT“) and Mr. Schechter appears to have been in-house counsel at Brown and Williamson (“B&W“).

The Plaintiffs sought an order compelling each Attorney “to appear (near his place of business) to be examined, by way of a videoconference, by the attorneys for Petitioners on all facts of which he has knowledge with respect to the litigation between the parties and to give communication of any documents that may be in his possession and which are relevant to this litigation”.

The parties previously agreed on a discovery Protocol (similar to a Discovery Plan in Ontario). The Plaintiffs previously obtained copies of many relevant documents available through various Internet sites.  In the course of their online research, they discovered a number of ITL’s documents that, prima facie, appeared to be relevant were not disclosed by ITL, raising, as the court suggests,  “a concern that other relevant documents might have been omitted, whether wilfully or inadvertently.  As well, at least one undeclared memo authored by Mr. Meltzer requires explanation from him.” (at para. 6).

According to Riordan, J.S.C.:

 [7]              Both Attorneys are mentioned in documents communicated in the present cases, including as co-addressees[2] of two 1992 letters dated June 5 and July 30 sent by Simon Potter. In both letters, Mr. Potter writes: “It may be of interest to you to know that Imperial Tobacco Limited, in compliance with its document retention policy, proposes to destroy several documents, including the following which you will no longer be able to obtain from Imperial Tobacco Limited, which considers them of no further use to it, though it may at some later date request your assistance in finding copies of them:”.  Mr. Potter then goes on to list the internally-coded names of some 80 documents.

[8]              On August 7, 1992, Mr. Potter wrote to the same parties as follows: “This is to confirm to you that the documents mentioned in my letter of July 30 have indeed been destroyed”.  No similar letter was communicated with respect to the June 5th letter, a point that causes the Plaintiffs to question if such a document, as well as others sent out of Canada, exists and, if so, why they were not communicated to them.

[9]              Mr. Meltzer also authored a memo of June 5, 1992 to Mr. Chalfen discussing Mr. Potter’s letter of the same date.  There, Mr. Meltzer discusses in some detail the treatment of documents in light of the “potential impact on litigation of the research reports held in Canada”.  Plaintiffs allege that they should have the right to question him on that document, as well.

The Quebec court rejected ITL’s arguments that a previous Quebec Court judgment on the relevance of the issues of document retention and destruction by the companies meant that no other documents relating to document retention or destruction were relevant or may be produced, which Juge Riordan noted “ treats as irrelevant the fact that new documents have come to light after that date, documents that ITL chose not to declare in its document communications.  The Plaintiffs do not necessarily attribute bad faith to ITL on the last point, but the fact remains that the discovery of this situation changes things dramatically.” (at para. 14). The Quebec judge adds,

 [18]           The Court was dealing with the excessive demands of the Attorney General in the actions in warranty concerning draft documents and surrounding correspondence.  It was these types of documents that were ruled irrelevant and superfluous in the Judgment, not documents otherwise required under the Protocol that had not already been communicated.  The Judgment says nothing to restrict Plaintiffs’ access to those.

[19]           The discovery of new documents came about after the Court ordered the Companies to identify relevant documents that they had withheld because of solicitor-client privilege.  In October 2010, ITL advised the Plaintiffs that it “did not withhold any documents on the basis of privilege”.  It based that position on its interpretation of Paragraph 30, which reads as follows:

[30]  Une copie de tous les documents démontrant que ce sont les avocats de ITL qui étaient en charge d’appliquer la politique de rétention de documents de ITL, notamment de conserver ou de détruire des études scientifiques.

(The Court’s underlining)

 [22]           Since they wish to explore the actual role played in document destruction by attorneys acting for ITL or its related companies, Plaintiffs amended the present motion by adding the following conclusion:

ORDER ITL to provide Plaintiffs with all documents in its possession which show that its attorneys were in charge of, or involved in, the conception and/or implementation of ITL’s 1990 document destruction/retention policy, including by holding and/or destroying scientific studies, under reserve of ITL’s right to claim that such documents are privileged;

[23]           Whether or not this new language is broad enough to cover the Plaintiffs’ actual intentions, one point is clearly not in dispute: the Court has ruled that the issue of document retention and destruction by the Companies is relevant to these files.  ITL does not deny this.  Moreover, it produced the two letters of Mr. Potter during the authorization of the class action and, under the Protocol, provided at least the one of July 30, 1992.

[24]           It is thus difficult to understand how ITL can seriously take the position that the Plaintiffs should now be barred from completing the production of that chain of correspondence or from producing other relevant documents on the subject of document destruction by ITL.  On the merits, ITL will be able to argue that it cannot be held responsible for the acts of BAT’s attorneys, but at this stage proof of the facts related to the activity of those attorneys must be allowed to be made in light of Plaintiffs’ claim for punitive damages, a subject we discuss further in the next section of this judgment.”

With respect to ITL’s argument that the commission for letters rogatory is unnecessary, Riordan, J.S.C. writes,

 [29]           Plaintiffs’ purpose in this is to expose what they allege to be an effort to mask improper action behind the cloak of solicitor-client privilege.  They plan to use this evidence in support of their quest for punitive damages.  Such factors would be relevant to that issue under article 1621 of the Civil Code[3].

[30]           Given the relevance of this proof, and the likely refusal of the Attorneys to appear voluntarily, a fact that ITL does not deny, rogatory commissions are clearly necessary.

The Quebec court also rejected ITL’s arguments based upon the Plaintiff’s delay in bringing the motion. Given the likelihood of objections based on solicitor-client privilege, however, the learned judge did grant ITL’s request that the plaintiffs provide a “preapproved” list of principal questions to ask each witness based upon the following three-step process:

a.     The Plaintiffs submit to the Companies[4] a list of the principal questions for each Attorney, which should indicate clearly the general topics to be covered;

b.   The Companies notify Plaintiffs in writing within fifteen (15) days of their receiving the lists of all objections to the questions based on solicitor-client privilege and, for any question for which such notice is not received by Plaintiffs within that delay, the Companies will be deemed to have renounced to any objection based on that ground;

c.     Where an objection is announced, the Plaintiffs institute proceedings before the courts of the jurisdiction within which the Bar of each Attorney is located in order to have the objection ruled upon in advance.

Acknowledging the Quebec court’s lack of personal jurisdiction over both the American and English lawyers and inability to supervise and enforce any non-compliance with the terms of the letters rogatory, the Quebec court wryly observes that:

“…by complying with such an order, the Attorney would be risking sanctions at the hands of the Bar and the courts of his own jurisdiction.  It would be cold comfort to him in London or Louisville that a Montreal court had ruled that he could do something that was in violation of one of the most hallowed rules of a lawyer’s code of ethics.  It is nonsensical to think that he would answer without first seek a ruling from his own courts, thus bringing the parties back to square one.” (at para. 46)

Accordingly, the Quebec court granted an order to issue letters rogatory containing a list of pre-approved questions relating to the nature and scope of ITL’s document retention/destruction policy and each attorney’s knowledge and role in the design and implementation of same.

The Quebec court concludes:

 [63]           As we mentioned previously, it is clear from the oral arguments that what the Plaintiffs really want is to explore the role played in document destruction by attorneys acting for ITL or its related companies, e.g., BAT and related companies, including B&W.  This latter aspect might not be adequately covered by the language of the conclusion, since the expression “its attorneys” could be interpreted to refer only to attorneys working directly for or under the orders of ITL.

[64]           Consequently, and to avoid the parties’ having to come back to Court to clarify the ambit of the order, we shall amend the conclusion to add “, or attorneys working for or with British American Tobacco or any of its related or affiliated companies, including Brown and Williamson,” after the words “its attorneys”.  In the type of broad case management such as that upon which we are embarked, such a clarification is appropriate and, in our view, is not restrained by the ultra petita rule.”

Interestingly, Kentucky strictly prohibits destruction of evidence by an attorney. Benjamin Cowgill, in his article Ethical Hazards in Personal Injury Practice and Civil Litigation notes:

 “Once a lawsuit is pending, documents or other material relevant to a client’s claim or defense obviously carry ‘potential evidentiary value.’  Therefore, destruction of such evidence violated Rule 3.4(a) even if the conduct is not criminal and no discovery request has been made.”[8]

Mississippi Bar v. Land, 653 So.2d 899 (Miss. 1994) (lawyer violated Rule 3.4(a) by intentionally framing discovery responses to conceal damaging evidence that would have provided opposing party with new theory of liability).

 “Model Rule 8.4 [Kentucky Rule 8.3] on misconduct may come into play if a lawyer knows about document destruction but denies it or affirmatively takes advantage of the damaging evidence in pleadings, discovery responses or other aspects of litigation.  Such conduct by the lawyer arguably involves “dishonesty, fraud, deceit or misrepresentation” under Model Rule 8.4(c) [Kentucky Rule 8.3(c)].”[9]

In a similar vein, Del O’Roark, in his article Shredded Any Good Documents Lately? writes,

“What Does “Unlawfully” Really Mean?

Kentucky Rule of Professional Conduct (RPC) 3.4(a)ii makes it a professional responsibility violation to unlawfully obstruct access to evidence, unlawfully destroy documents, or counsel or assist another person to do so. Consequently, to apply RPC 3.4(a) to a document destruction question it is first necessary to glean from state and federal substantive law when destruction is lawful, at what point destruction becomes unlawful, and what documents are required by law to be retained.

For example, in Kentucky KRS 524.100, Tampering With Physical Evidence, must be considered. This law makes document destruction a Class D felony if intentionally done when believing that an official proceeding is pending or may be instituted. In criminal cases destruction is unlawful even if evidence has not been subpoenaed or proceedings actually instituted as long as the perpetrator believes an official proceeding may be instituted sometime in the future. It is not clear whether this guideline applies to civil actions as well, but a prudent lawyer will assume so.”

In Earles v Barclays Bank [2009] EWHC 2500 (Mercantile) at [27]-[30] Judge Simon Brown, QC held  that before proceedings are commenced there is a duty not to destroy documents deliberately, but no concomitant duty to preserve documents. Conversely, after the proceedings have been commenced documents must be preserved, and if they are not preserved, then the court may draw adverse inferences and may impose costs sanctions. (at para. 27-30).

As Jonathan Dickinson and Wayne Goldstein point out in an audio recording on Disclosure (Sep 2010) (via stublegal.co.uk):

It can be difficult to explain disclosure to the client. The difficulty is increased where the case involves a charge of dishonesty against the client, who may have every motive for concealing some of the relevant documents. Thus, the solicitor’s role is crucial to the requirements of the Civil Procedure Rules. It is necessary for solicitors to take positive steps to ensure that their clients appreciate at an early stage of the litigation, not only the duty of discovery and its width but also the importance of not destroying documents which might by any possibility have to be disclosed. This burden extends to taking steps to ensure that in any corporate organisation knowledge of this burden is passed on to any who may be affected by it.

The Practice Direction to Part 31 obliges a legal representative acting for a party giving disclosure to “endeavour to ensure that the person making the disclosure statement.. . understands the duty of disclosure under Part 31″. As the court said in Wagstaff v Coils {[2003] EWCA Civ 469}: ” …it is the solicitor who is in charge of deciding what documents are or are not to be disclosed and he cannot hide behind his client’s instructions. If he cannot persuade his client to comply with what is right in the circumstances, the solicitor must withdraw from the case.” [emphasis added]

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