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3 6 IN THr., U?:ITF.D :'TATl?S DISTRICT COURT FOR T}i.~ DI:~iFtICT OF OF.::.GON CIVIL NO. 70-86 PACIFIC T0''1CCO CORP., an Oreron Corporation, dba PACIFIC '1'UuACCO COMiPANY, D iti f epos on o : Plaintiff, ( vs. ~ D. ~-'. GROUT 1'f3:-' T03ACC0 COMI'I:IIY, INC., a Delaware Corporation, et al Defendants. w 10 11 12 13 14 15 16 17 18 19 20 21 23 24 25 The deDositior_ of. D. ti•'. Grout wss taken in Room 217. of the Do%-mtowrier i41otor Inn, l•linston-&S~alem, North Carolina, cor~r~encin~.~- at 12:30 P.. 113. on the 2nd day of February, 1y7'! . APP.e:.'iRANC3 ;S For the Plaintiff: ROGER TILBURY, Esq. of the law firm of Tilbury and Kane, 1110 Standard. Plaza, PortXemd, Oregon, 97204. For the Defendants: l-I.%}: CROI-iiv, JR. , Esq. , Reynolds Tobacco Company, 401 P:ain utree;t, ?:'inston-Sale.i, ?~;ortt: Carolina, 27102. TI'_OtuAS P. GitIi:SS, Eac., of the w aw firm of Davis, Pclk & WardEil, 1 Chase Manhattan Plaza,. P?ew York, N. Y. DCNALD W. DicLt,'I:~N, Esq., of the law firm of Cake Jaurcf;v.y, Hardy, Buttler & i+icEwen, 1408 Standard Plaza, Portland,Oregon, 97204. D.ANII:L-J. 0'NLILL, Esq. of the law firm of Chadbourne, Ps.rk, WL.iteaide & ~-.olff, 25 3roadway,. New York, N. Y. 10004. J. -7-dward Switzer, Jr.,_Official Court Reporter. GRAHAM ERLACHER &.ASSOCIATES , OFFICIAL COURT REPORTERS ASHE DRIVE WINSTON.SALEM. N. C. PNOHE: 763•0686

0 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 ~dI~ SS I N D E X EXAMINATION BY PAGE D. W. Grout Mr. Tilbury 4, .43 Mr. Crohn 40 Mr. Griess 42 E X HIB I T S ... ... .~ _ , IDENTIFIED Plaintiffes 4 24 Plaintiff's 5 28 GRAHAM ERLACHER & ASSOCIATES C•FFICIAU COUNT RIPrjRTERS ASHE DRIVE WINSTON.SALEM,N.C. PHONE:765.0536

, 0 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 .11 STIPULATION By consent of Counsel for the Plaintiff.and the Defendant, the deposition of D. W. GROUT was taken by J. Edward Switzer, Jr., Notary Public, at the Downtowner ;lSotor Inn, : oom 217, .Jinston-Salem, North Carolina, commen cinz at 10:00 o'clock A. M., on Tuesday, February 2, 19'j1. A11 formalities with reference to notice of time and place and purpose of taking the deposition were expressly waived. Formalities with reference to sealing and filing the deposition were waived, and it is stipulated that the original transcript, upon being duly certified by the undersigned Court Reporter, will be filed with the U. S. District Court Clerk, District of Oregon. It is further stipulated that all objections to quections and motions to strike answers need not be made at the time of the taking of the testicony, but may be made at the tir:e the tEstinony or any part thereof is offered in evidence. GRAHAM ERLACHER & ASSOCIATES OfrICIAL COVRT REPORTERS ASHE DRIVE WINSTON.SALEM,N.C. PHONE: 7EiS.O6P.6

X 0 0 2 3 5 6 7 8 9 10 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4lHEREUPON, D. w. GROUT having been duly sworn, testified as tbllowss EXAML~IATION BY MR. TILBURY Q Would you state your name please? A Donald Wesley Grout. Q Where do you live, Mr. Grout? A Winston-: alem, Q How long have you lived here? A Eleven years. Q Prior to that time, where did you live? A Denver, Colorado. Q How long in Denver, and where else have-you lived? A Up unti 1959, in Denver, the only two locations, U r-ee -cy except for B^Colorado for about nine months. Q What is your educational background? A No formal education other than the Advanced Management Program at Harvard Business School. Q You are employed by the Reynolds Company, are you? A Reynolds Tobacco, yes. Q In what capacity? A Asalatant National Sales 1y. anager. Q How long have you been an Assistant National Sale Manager? A Since 1967, April. GRAHAM ERLACHER & ASSOCIATES Olf1CIAL COURT REPORTERS ASHE DRIVE ' WINSTON-SALEM.N.C. PNCir+E: 765•0636

.7 0 0 0 2 3 4 5 6 7 9 10 11 12 13 14 15 16 17 ls 19 20 21 22 23 24 25 Q What other positions have you occupied with Reynolds? - A Zone Sales Manager, in two different zones west coast and southpast. I spent some time handling the national military market for the eompany; about a year in the advertising department with the company; assistant Division i-.anager in Denver; a salesman. Q In all, how many years with Reynolds? A Eighteen this month. Q In 1967, what position did you occupy with the company? A Western Zone Sales Manager up until April of 167; after that, I was promoted to.Assistant National Manager. Q Did you reside in Winston-Salem? In 1967? Sale s A Yes. Q Had you, in connection with your work, been in Oregon from time to time? A Yes. Q Let'n say, during the last five years, how many times have you been in Oregon? A I would have to check the r ecords to be exact on that. Five years - I just couldn't say. Q Once a year, something like that? A I couldn't aay that either. GRAHAM ERLACHER & ASSOCIATES Ofi'ICIAL COURT REPORTERS ASHE DRIVE WINSTONSALEM.N.C. P.4ONE 765•OG3G ~.-w..~--~ ..~.....•c,.:..

3 5 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q I understand from the last witness that you were in Oregon in March of 1967? A Yes. Q Why did you happen to be there at that particular time? A A regular business trip, primarily to look at personnel for promotion. Q Okay; haw long had you been out of the home offic on this particular trip? Before you reached Portland.. A I came in from Winston-Salem. Q You flew direct to Portland from Winston-Salem? A Yes. Q All right; did your visit have to do with C ancer cigarettes in any way; was that your reason for going? A No. Q In whole or in part? A No. Q VI'hat was your primary reason for this trip? A To work with, primarily, Mr. Iieeseti and Mr. S. E Marion,. to determine their potential for promotion. Q How long were you away from your home office on thi© trip? A It was one week. Q Did you go any place else besides Portland? A I was in the Portland area; I didn't go out of GRAHAM ERLACHER & ASSOCIATES OiFICIAL COURT REPORTERS ASHE DRIVE WINSTON.SALEM.N C. PHONE: 766.3636 - ~ 0 N O C

0 3 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that division, letts say. Q And then you returned to, directly, I take it, from the Portland division back to your home base in Winsto - Salem? A Yes. _ Q Had you any prior knowledge of Cancer cigarettes before you made this trip in March of 1967? A Only from reading something about it in a weekly national magazine. I don 't rel/ ember the name of the rraga wine . Q Could it have been Readers Digest? A yez. P`"le. Q Or was it a weekly magazine? A I think it was Time or BusineDs `neek, or somethin like that, in the business section; in fact, I didn't really relate it to what area it was being marketed in. Q Had you discussed or had anyone discussed Cancer cigarettes with you before you made this trip in March of 1967? A No. Q Uren you reached the Portland area, when did the subject of Cancer cigarettes first arise on this trip that you descr:.bed? A I would say to the best of my memory, it was the day I worked with Frank Kecseti; I think that was on a GRAHAM ERLACHER & ASSOCIATESOfflCl,kl COVkT REPORTCRs ASHE ORIVE WINSTON•SALE.M. N.C. PH-iNE 765-OG36 ,

0 O 0 2 3 5 6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Friday$ the 17th. Q Now who brought the subject up? A I believe Frank did, in our discussion of what's aoing on in Portland, and the general trade conditions, and so forth. Q What did he say? About that? A ivgll, he mentioned the fact that the brand i$ in the area, and after questioning about the brand, naturally, he mentioned the owners of the Bel-Air Pharmacy were the people behind the brand, that were marketing the brand. Q How did he put it; how did he describe Cancer cigarettes to you; did he say that it was any kind of threat to the cigarette industry, or hor: did he put it? A I don't remember. Q Was this the first call that you made that day? A No, it was not t.ie first call. Q Can you recall wY,ere else you went? A No. Q In a general way can you r ecall, any types of accounts, -werc:_ tr,ey just distributors, or retailers? A To the best of my memory, I can't recall; they were general trade calls, if I rememberright, reviewing the wales::,en's reports; we had the report in hand and we were going into calls that he h ad made prior, previously, to :.eej GRAHAM ERLACHCR & ASSOCIATES O«iCI4L COURT RF.PORTEHS AsMr nRIVE WINSTON S.1LEM. N C. P.+Or.I 7G5-•.)ai36

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 how effective he was, and how productive he was in his work; and I don't remember the type of callsj just the general trad3, you might say./ Q k'aa the Bel-Air Pharmacy one that i4r. Kee3eti would ca.ll on, or did call on periodically in connection with his wor;~c as aale::man? A No, he was not a salesrnan; he -was an Assistant Division Rana ;cr at the time. Q 0'.cay; was this tize sort of call that he would nave made nor:lally, or ,vas this an unusual thin3? a, A Tie ,all :.as in the aalesman 's assignAnent, and t~r. Kecseti, in revie.~in; the aalesman 's work or working wlth the salea:nan, would have called on the Bel-Air F',aar:Zacy, yeS. Q ,:aN your reason to go to the Bel-Air Pharmacy related in any way to the subject of Cancer cigarettes? In w"noLe or in part? A ;;y reason was, yes. Q has that your sole reason for going there? A Y Q ~'.:s this an unusual thinG for you to go to a retail store ;:ith so~iabody like :1r. Y•ecseti? A :.o, not wnusual at all. Q 1i1l riC.l:t; :rhat time of day did you reach the :tcre: GRAHAM ERL&CHER & ASSOCIATES OliIIIAL COURT REPORTERS ASHE DRIVE WiNSTON-SALEM. N C. P.OtiE765063G i 9

2V 1 2 3 4 5 6 7 8 9 10 it 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A I don't remember. I don't know whether it :ras before or after lunch. q Can you describe what happened when you got there' A V;ell, I remember tellin , Frank that we would not take a salesman's bal; in, you know, that way we would not make a regular type call out of it; it ,aas a fact-finding call for me; I wanted to ask the clerk, or whoever was there in charge, the manager, and so forth, questions about Cancer Cigarettes; so we walked in without the usual pro- cedure in making a call. iie forfeited that in the fact- findi.-- mission that I was on, so to speak. At the time, we wayked in and introduced ourselves as being with the fieynolds Tobacco Company, and looked at the Cancer C ibarett on display, on our pacitage fixturej'; and talked to this one gentl :;..5an, I don 't remember his nane; can 't remember what he looked like. q Can you describe him at all? A He was big - fairly good size in ~ t~t re ~.A G~ . q Was he dre_ :sed in any particular ;;ay? A No; I don ft remember whether he had on a pharr,a- eeutical smocl', or not. Arid I aslceu hin questions about the Cancer ci.garattt brand. 4~ How did you put it? A I asl",od hii-,i how j,t ,;a; s211ing. q ',;ha t did he say? GRAHAM ERLACHER & ASSOCIATES OFFL.IAL COURT REPORTERS ASHE DRIVE WINSTON-SALE:M. N. C. P..onr 7F:S-Ob3G s