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2 SUPREME COURT OF THE STATE OF NEW YORK 3 COUNTY OF NEW YORK ----------------------------------x 4 S s DOUGLAS LEIGH, INC., : t Plaintiff s 6 , s Index No. Vs• : 13894-69 7 s RAILWAY EXPRESS AGENCY, _ 8 s 8 10 11 12 13 14 15 ls 17 18' 19 20 21 0 23 ' Defendant. : : -------------------- -x March 16, 1971. 4:45 P.M. Deposition of ROBERT AUGUST RECHHOLTZ, ~...... . a witness, taken by plaintiff, pursuant to Consent, at the offices of R. J. Reynolds Tobacco Co., R. J. Reynolds Building, Winston-Salem, North Carolina, before C. A. Michaelini, a Certified Shorthand Reporter and Notary Public of the State of New York. 24

0 2 3 4 S 6 cmb 2 A P P E A R A N C E S: WHITE & CASE, ESQS., Attorneys for plaintiff, 14 Wall Street, New York, New York. 10005 By: JOHN M. JOHNSTON, ESQ., and MISS LAURA BANFIELD,. , of Counsel. CAHILL, GORDON, SONNETT, REINDEL & OHL, ESQS., 7 Attorneys for defendant, 80 Pine Street, 8 New York, New York. 10005 By: THOMAS F. CURNIN, ESQ., and 9 ROGER S. FINE, ESQ., of Counsel. 10 11 ALSO PRESENT: MAX H. CROHN, JR., ESQ., 12 Attorney for the witness. 13 14 15 16 17 18 19 20 21 0 23 24 MR. JOHNSTON: it is our mutual under- standing that portions of this record may be read into evidence. However, all objections except as to the form of the question are reserved until the trial. MR. CURNIN: Yes. 25

2 3 4 5 8 7 9 10 11 12 13 14 15 ls 17 18 19 20 21 22 0 24 R 0 B E R T A U G U S T R E C H H O L T Z, residing at 3351 Paddington Lane, Winston- Salem, North Carolina, called as a witness, having been first duly sworn by the Notary Public, Kay A. Matthews, was examined and testi- fied as follows: EXAMINATION BY MR.JOHNSTON: Q Mr. Rechholtz, by whom are you employed? A R. J. Reynolds Tobacco Company. Q How long have you been employed by that company? - A Since May 1961. Q What is your position now, your title, job title? A Marketing manager and a vice-president of the company. Q When did you become a vice-president? A In June of 1970.. , { i Is that the same time you became marketing --y i what was it, manager? ~ 0 A . . 3 No, sir, I was appointed marketing manager ~ in December 1967. Q Prior to that time What was your capacity, or title? 25

1 cmb ltechholtz 4 2 3 4 S A Advertising manager. 0 How long did you hold that title? A Since March 1964. Q Is it the fact that ever since you have . . . 6 been connected with Reynolds since 1961 that you were 7 in the advertising field? I 8 A Yes that is correct but I be an a , . g s r 9 export advertising coordinator. 10 Q Would you please state what your func- 11 tions are as vice-president and marketing manager l 12 of advertising? f 1 ~ 13 A My function, my principal function today ~ 14 is to develop the total marketing program for the 15 R. J. Reynolds Tobacco Company,.and to oversee the 18 implementation and periodic evaluation of that ~ 17 program. ~ ~ 18 Q Would you state, what was your title f ~ ~ ~ 19 again during this period of time, assuming the title ~ 20 remained the same, May, June, July, August and ~ 21 September and October 1969? i ~ 22 A 'Marketing manager. 23 Q Were your duties primarily the same as 24 they are today? ~ A Yes, very much the same. I

1 cmb Rechholtz 5 2 Q Was there a Mr. Berger, Al Berger em- 3 ployed by R. J. Reynolds & Company during those months- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18. 19 20 21 0 0 24 and that year? A Yes. Q What was his title? A Media manager. Q To whom did he report? A To me. Q Did there come a time when R. J. Reynolds or its advertising representatives approached you about an increase in rates during the period between August, the beginning of August and the end of September 1969? A ~ Yes. . Q Do you know who representing REA made tt~iis approach? MR. CURNIN: May we have it understood on the record that the reference either by Mr. Johnston or myself to REA means Railway Express Agency? , MR. JOHNSTON: Yes. Q Can you recall who on behalf of REA made this approach to increase the rates during those two months, August and September of 1969? ~ fl ~ ~ 0 ao 0 0

1 cmb .Rechholtz 6 2 A I don't recall the REA gentleman, because 3 the approach was not made directly to me, it was made C, 4 to Mr. Berger in a meeting down here. The representa- 5 tive for REA was Mr. Morrow, I believe that was his 8 name. 7 8 9 10 11 12 13 14 15 18 17 18 19 20 21 0 0 24 Q Did you meet him? A No, sir. Q Did Mr. Berger pass on to you the proposed increase in rates as made by Morrow and the REA gentleman? A He discussed it with me preparatory.to making a formal recommendation. Q Can you give us the substance of what he said and what you said during that conversation? Just generally. • It is a long time to remember. MR. CURNIN: Can we fix this as to point of time? MR. JOHNSTON: I fixed it as in August or September. Q • Can you be more precise? A Yes, as I recall it was early September, the 5th or 6th, right after the REA representative the REA representative and the executive, Morrow, __ 25 10 0

0 2 3 4 S 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 cmb - Rechholtz 7 visited Mr. Berger. Mr. Berger came in to see me, and he was quite surprised about the whole situation. Came in to see me and -- MR. CURNIN: I object to the character- ization , ization as to Mr. Berger. Q Well, did he say he was surprised in words or substance? A Yes, because it was a very substantial change in our previous arrangement in this medium, and he was quite concerned about it and wanted to discuss it with me before he made his formal recommenda tion. What was your reaction to Mr. Berger's MR. CURNIN: Objection as to form. I don't care if you ask him what he said 8 MR. JOHNSTON: I understand. I under- stand that your objection is noted. I ask that the witness answer the question. A I was shocked. Q Did you tell Mr. Berger that you were shocked? • A Yes. Q Was any decision made insofar as you were concerned when the meeting was concluded about

1 cmb ltechholtz 8 2 whether or not to recommend this rate increase 3 to the advertising committee? 4 A We decided to present the recommendation S in outline form to the advertising committee. . , 6 Q When you say you were shocked, did you 7 tell Mr. Berger why you were shocked? 8 A Yes. 9 MR. CURNIN: Well, are we clear that 10 the witness told m 11 MR. JOHNSTON: He just said it. He 12 said he told him he was shocked. 13 MR. CURNIN: Is that your testimony, 14 Mr. Rechholtz? • 1S THE WITNESS: Yes, that is correct. s ~ 16 MR. JOHNSTON: It is right on the l record Z 17 . 18 A I was shocked because in my experience, 19 I had never been involved in such a substantial per- 20 i centagewise rate increase that I could recall for 21 any particular medium, advertising medium. 0 Q..When was this recommendation proposed 0 to the advertising committee? za A It was presented formally to the committee ~ v+ 0 within a week. I don't recall exactly how many -- I o .F w t

0 2 3 4 S 6 7 8 9 10 11 12 13 14 1S 16 17 18 19 20 C 21 0 23 24 cmb Rechholtz 9 within a week of the time it was presented down here. Q Can you state at this point of whom the advertising committee consisted? A I will try to remember as best I can. At that time the advertising committee was comprised of myself, of course, Mr. W. S. Smith, who was executive vice-president of the company, was at that time. Mr. A. H. Galloway, president; B. R. Stewart, products manager at that time -- we are talking the period September 1969, is that correct?' Q That is right. A And our vice-president marketing was also a member of the committee. To the best of my knowledge these are the gentlemen that comprised the committee at that time. Q Insofar as you yourself were concerned, did you make any reference at this meeting to the then proposed ban on TV advertising of cigarettes? MR. CURNIN: Objection'as to form. MR. JOHNSTON: I will correct it if you will indicote to me how you think it is objectionable. MR. CURNIN: Well, you talk about a proposed ban, I don't think there has been any discussion about there being a proposed ban at this

0 cmb Rechholtz 10 ti 2 3 me. MR. JOHNSTON: You mean because it 4 hasn't been referred to? S MR. CURNIN: That's right. Q Well, Mr. Rechholtz, had you heard of 6 7 any proposed ban, or voluntary discontinuance by 8 the cigarette industry of TV advertising as of 9 September 1969? 10 MR. CURNIN: May I have the question,please? 11 (Question read.) MR. CURNIN: You mean that it was being ~" 12 ~ discussed in September of 1969? ~ 13 14 MR. JOHNSTON: Yes. That he had heard 1S of it. 16 A Yes. 17 Q Did you know that on or about July 22, . 1969, Mr. Cullman of Philip Morris on behalf of the 18 " 29 industry had made certain statements indicating that 20 under certain conditions the cigarette industry would voluntarily discontinue cigarette advertising? ~ 21 ~ A Yes. , 22 Q Cigarette advertising on radio and TV. 23 Do you want to add something? 1L^ 0 ^ ,. ., t A I just wanted to correct that point. ~~ 25 E o r m 0 LA