Tobacco Documents Online

S7'AT!':ci IJ1S'hitl CT COURT t,'OR T'i.Ll Da STitYCT Ol, oitEGON '1'O'3A;.:,::U Ci>iiP, , OreE.;on j(:}Yi C:lbEi I"ACIF'1Ci `.TUDACC0 LtC)i,+'~•;d: ~~', P2 " :1_n tla.ff, , 'i'H:: k;v'i;R:iCAN TOBACCO COIf!'A:TY , 1:NC. corpov.atio:a; AN:E.RaCAN } RAIv~~`~, :CNC., a Nek -JerseSr corporation, et al, Defendants. Civil No. 70-86 , llH:POS]:TI:ON OF' STANLEY E, HAF,rflIAN Taken in Uenalf of Defendant The American Tobacco Company,.Inc. American Brand;, Inc. ~ . ~ Volume VII P~.,€;es 804 - 982 Aug,ust 12, 1970 and MIC1'IELE'i, SOWERS, JOHNSON & COMPANY COURT REPORTERS 7" Pacifit Duilding, Portlend, Oregon 97204 . Phone ?•281,671 •

Volume VII 4 S 7 ~ .,;xamin.:ati.on i by Mr. Griesa. ---______-___.,__ --.-.833 to 927 l:;xa.a7ina+..ion by 'lr . '.Icl,17en ---______.._-r.._____ --_927 to 964 1,xi,mination hy t1r.. Hart to 982 INDI,X OT' EXHIBIS'I' 10 11 12 13 14 15 16 17 18 19 20 21 22 7.3 24 7S 1i1;a'l., q U:Vi 4 T ' S R. 11 ~uw_Iber. Description P. age _ 1'7 A cony off a statement to Richs Cigar St:ore, dated 3-31-67, fxom Pacific Tobacco Co. 844 lh A copy of an Empire Candy & Tobacco Company Invoice No. (:1 and 2) B 4699 to Bel. Aire Pharmacy, dated 3/29/67, stapled to a copy off an Empire Candy & Tobacco Comnany Invoice No. B 6475, dated 4/19/67 to Bel ni.re Pharrlacy, (marked 1 and 2 resPe (-- ctive3.y) . 847 19 A letter to Mr. lloward U. St:ei-nbac?i, dated April 10, (1 through 4) 1.967, from Dr.ucr Toa:ics, signed by Charles G. D' ltuyvetter (rlarked 2) ; a classified ad from Drug Toni.c.s (r+larked 1) ; a cony of a leti:er~ to ;1r. Charles G. 1-)'1iulivetter, dated April 13,1967, from Iloward fiteinbac`Z (marked 3) ; and a letter to Harrison S. Fraker, dated April 13, 1967, from Howard St.einbach (marked 4) . 20 Copies of six harres of a tranc;cri.pt of a tape. (1 trrrounli c ) 850 880

INPJ:x f'!I' C?:;Ill.tz'1'S (COWINl7!•;I)> :•1 UiiNO 3' I`escrin ti.on Paae 21 A cony of ~~I chec?: to G. A. Coornonulo and Co., Inc., dated 3/15/G7 from Pacific Tobacco C'or.)-)any. 891 22 A cony of a letter to t'r. Panoa Georgopulo, dated June 20, 19G7, from Stan Hartman. 891 2 3 P. cooy of' a check to G. A. 10 (:eorgonulo & Co., dated June 20, 1967, ain the amount of $776.23 from Pacific Tobacco Company. 891 11 24 A letter to Pacific Tohacco 12 Corn., dated 7!uclust' 9,• .1970, 13 from A. P. A.nderson, attached to two balance sheets. 902 14 25 A two--pane copy of a letterr to 15 Presa.dent P. L7. fieynolds Tobacco Co. '.dinston-Sal.em, North Carolina 903 16 unsigned. 2G A cony off a letter addressed to 17 ":3lank Distributor" unsigned. 903 18 27 ?A cony of' a letter to Panos 19 Georgonu]o, dated :1nri1 13, 1967, from Stan Ilartman. 905 28 A t,,%,o-nac~e cony, of a letter to 21 :Izde 3. Patterson, ;t.13.1i., dated Anril 26, 1967, ffrom Rbnalc9 G. Vincent, M.1). . 911 22 2:7 A copy of a letter to Baleon Tobacco Co. , dated May 31st, 1967, from Iioward Steinbach, 912 24 attached to a l.etterr to C3osc:1 2S ticnc7r,z a'ohacco Co., dated t-lay 31, 1967 ffrom Ifo•aard Steinl>acli and a cony of a letter to Tobacs-Trans. :;toinba&i. (a]so mar.l:n.r3 P 1, P.2, an(I 1'.3) 913

~ 01' 2 nl.I,i;;as)r, a1" S S , 3 V urI',) c r 4 30 S 6 31 7 8 (1 and 2) 9 10 32 11 12 13 33 14 15 16 nr;F'I :Ill~'~ 1T' S Al3 17 93A 18 19 20 21 93t3 through J 22 23 93Y. 24 25 i, _•F; cr r_ i. n t ii on P~^ T cony of a letter from the Iionrl 3;cmri Cenr.ral C'»mher of Cor,Unerc:i , dated 1. Ariril 1967, acl dre,se(; to "I)ear Sir,." 914 T,. col-.)y nf a lett^rr from Cidar.ette }?actcr.y Private Ltd., Janakcur-, Nenal, dated 'Nov. 14, 1.967, to Dear Itr. st!.i.nhach,• attached to a copy of a r.eplv letter to G. Ii. Devacota, dated Decer.lhc;r 916 5, 1.967 (also marked 1 and 2) 917 Coni.es of a four-page document entitled "IsNNUAL RRPORT 1966 CO`I7`INI.NTAL TU3ACCO CO'1PP-NY nI' SOUTH C11I:OLIN11. 919 A copy off a letter to Conti.nental Toba.cco Co., dated 1-23-70 from Stanley lIar_tman. 920 A cony of a docPment in UEFENnA.UT'S TxIIIBI;l AI3 93, entitl`(? "SThTE, OF OR.r CoN CI Cr.RFTTr DI sTI:]: i3UTOr,' s T?1X I'.I;TUI?'d STrT::'i'na Cn'-I;iISSIO'N Period henun Ilarca 1, 1967 Period ended Anril 1, 1967. " 896 A ryroun of State of Oregon Cidarette l;istril:)utor.'s Tax Return i in DI:PI,NnT-N `C' S rXI[IIiIT M 93 from the neriod be(jinning 4/1/67 through Docen).'ber 31, 1967. 899 A yellow shc:ot of pantirr with two adcli.ng machine taPes ntapled to it. . 902

3 4 5 6 7 8 9 10 11 12- 13 14 15 16 17 18 19 20 21 24 11 I f?T:F;';.^NI)11`~rl'~ r Pi1 ; I uml')e r l. »I;hENDMT " s r,M ]. .,._.~_..-------- _ INDL;Y. O1' T;X,iII3IT> (('n'4TI:1ULI)) Descrintion Pauc R lettor to ;!r.. Henry ?(ane, dated Octobnr 21, 1969, ffrom 2'lie Tobacco Inst.itute, Inc., si.c3ned by .1acv Galhr.oath. 944 Copies of a document entitled, "UNI'1'FD STr1T1:S DISTRICT COURT FOR THE DISTRICT OF ORE GOV PnCZ FIC T0;3ACC0 CORP., and Oreclon cor;~or.ati.on dba P1ICIFIC TO3ACC'0 COPIPZ:NY, Plaintiff, v. T;lr A.•1L:PICAN `1'O3TCCO COMPANY, x1•1C. , a Delawar.e cornoration, et al, Defendants, CIVIL NO. 7(1-f3G PLAINTIFI'' S fi1S;IERS TO IN-• TI'.P,ROGI:TC)RII:S OF DEFI]iJDNJT LICCI.Tl` & P1YERS, I"7CnI:PC)MTED. 965

_ ., .._. ~... ._••_..~....-,.-..... _ ...~=a:c: • rsa.za rul!>:aTPaG SES:;IOtd Volurrte VII Wednesday, August 12, ].974 9:40 a.m. I:PPrTI',ANCIss : Mr. lio-nry I;ane, Attorney for Plaintiff; Messrs. Wayne 1lilliard and Stanley R. Loeb, Attorneys for Defendants The r,merican `1'o}>acco Company, Inc. and American Lirands, Inc. ; Messrs. Thomas i•a. Trinlett and Thomas P. Griesa, Att:orneys for Defendant R. J. Reynolds Tobacco Comnany; Mr. Fred P+.. Aebi, httor.nev for Defendant Loew's Theatres; Inc. ftr. Donald :J. Mc;.wen, Attorney for Defendant . Phi lip 1•lorris, Incornorated; Nr. Dennis t9. Skarytad, Attorney for Defendant G. A. Geornonulo & Co., Inc; Mr. Allan Hart, Attorney for Defendant Liggett & ~,ye rs, Incor. porated; Mr. John R. Sabin, T.t:tornev for American Machine & Foundry Con~oany., A`1F. PnOCr1.,DI:PJGS MR. GRIESA: Mr. Kane, during yesterday's session you sa:i.d. that you would make a search of your office and seQ if there were any additional documents covered by the subpoena which you could discover. MR. KAP71:: Yes, Mr. Griesa. I did that. Isnent several V 0 goin9 throuql~i each of the file y, including the files that o . ~ m w 00

wex•c mercly rleadi»g,<1nd in the m.zterial »rova.ded by somn of 4 6 7 8 9 10 11 .12 13 14 IS 16 17 18 19 20 21 22 24 25 khe def:endants checking ever.ythind against I:xhibit A to the subpoena. P'irst I can verif:y that each off the numbered files had nothinn toithdrawn from ther,i. I.verythina called for has been pr.oduced. In addition -- wait a second. Let me finish, or did you want to i.nt-c:rrunt me? MR. GRILSR: Let him finish his statement. MR. LOEB: Finish yourr statement. MR. KANE: 'The closest to a failure to produce is the reference to cigarette sales vouchers. It says Pacific Tobacco Cor-lDorati.on cigarette sales vouchers for 1967 to 170. 1 have he.ree an Empire Candy •& Tobacco.voucher that ;•Yas discovered in our attorney work product file dated -- two of them, dated--~ 3/29/67, Invoice 13 4669, which lists or states, "Credit 1 carton Cancer Cigarette" and then 4/19/67, Rmpire. Candy & Tobacco Company, Invoice No. B 6475, and it says., "Credit 2 carton I'ilter.." Doesn't say ---- MR. LnhE3: P4r. Kane, are copies of those in the record? MR. GRIESA: Let him finish. MR. K&NE: These are the two things that are not specific tohac;co sales vouchers, but which were discovered in the attorney wmr'; product. I hand those to you now. MR. GRYrSA: Anything else? t4lt. KhNL : 'Now, in addition to that I went through the fS..a.es to determine if there was anything that would support the

., . 2 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 24 0 inat.erl i.a]. that has been prr.sented. I state to you catccyoricall.y th,at: everything called for by this exhibit ha s been produced. There are some brand new or very recent orders. Iler.e is the currr.nt: liel. l,ire Pharmacy deal and that show> some recent orders anc3 sor.n correspondence or induir.ie , as we ca11 it. So this is a small handful. I haven't tallied them. I hand you an li. S. Smith & Son Invoice P 14058 12-28 1966 on the first sheet. Attar.hed to it is a white piece of paper that appears to be a pencil design for Cancer Cigarettes and the third page is an 11. S. Smith & Son, what looks to be an invoice, Vancouver, ;•Ia>hinaton, 12-28-66, saying, "Credit 2 Package King Cigarettes," and it says, "60 cents." I hand that to you. That is outside of the period. I al.so.hand you another item that is not called for hy the subpoena. It is a copy of the assumed business name of Pacific Tobacco Co., filed December 29, '66, with llr. iiartman as the representative. The gent].emeri were not even aware that thE:y had it until -- orr is this -•--- `1'H1; tr'ITN1?SS: There is one thing about this. In reading this I think this may have been an application fill-out. I don' t)cnow whether this was ever consummated or not. I had even forgotten a!)out it, Henry. '1''4hat's the only -- wc stumbled onto t.hiltt c3ocument. }9I;. KnNL•': There is a filing datr_. That was di scovered la~:c.~ last night. llere is. the t•lackoul Tobacco Co. Pur.chase Order. 'fiI c~ y are lastc~d as ~•~holcsale di ,t:ri}~utors This has been i th n e ... .9 .t 1 tn

.._.~.~.. 2 i 6 l0 11 12 13 14 t5 16 17 18 19 20 21 24 . orc'.cr i.ncjui.ry file and t.?tic, is ciatec3 2-7--Gt3, "1 case Cancer Ciyaret.tes" in the amount. of $190. We nulled from the or.dGr f.i.l.e the reference to ----- MF;. LOI:B : Is that the order file that is in her(--, or the ones tFlat are in your office? MIt. KMIa: Very large ones that ---- MFt. LOI:T3: That were not received. MR. KANE: Were not received, but in the interest of a complet:e record we pulled these records out. liere is a Ramsays, a set of material referr.inq to Ram,ays or from Ramsays of Las Vegas, that apnear to be a steady customer and wanted to sell. I am holdinq a Post-Kwik form letter to Pacific Tobacco saying, ":7e are interested in re-order.ind your -----" 14R. LOEM: You can look at t.'1e 5tuhs . ;•IR. K11N1.: There are a num')er of those and here is anotherr brand new or recentt order. 41e also checked the -- I should mention that before the deposition resumed I handed Mr. Grie:.=..a a file called, "Wall "treet Journal Correspondence - Pacif v. nr!ynolds 4540,"and underneath it in writing it says, "Observer Refusal to advertise ----" It shows the national or the 'hrun Toni.c.s correspondence referred to yesterday and the returned classa.fied ad for distributors that was submitted. We also ch(!c};.ed the Rmer.ican Interrogatories to the plaintiff with respect to Tar Card to determine why the r.iztter.ill was not added to thr: orr placed in that distri.hutor file and l.isted is a

c3istributorr offer. This ;aa:', clonc! last fall. and we also have a tar>e which goas into that, or copy of a tane recordi.ncJ and it woul{3, I•1I't. LOLr3: tlhich goes into .•rhat? I1J2. J:h;qE : '-1hy the status of this T.Zr Card Venturai thinq G anei it: turns out that it was classified as not an offer. It ~aas, :merea.y an expr.ession of interost on the aart of Mr. White. They did not consider him as having made an offer. MR. LOI:I3: . nre you testifying here at this time? 7 8 10 MR. K11NiJ : I am giving you the background of the file. l1 Anyway, that's my copy if you want to look at it. 12 MR. GRIESA: All ri ght. MR. KANE: And Mr. Iiartman has brought some Garden Home 13 19 phc>nca bills and some miscellaneous correspondence in terms of ].et:ter_:a hca has written that have no relation as far as I can l5 see t:o this case, but here they are. 6 •7 71It. GRIhSA: Let me ask you this: I: asked this yesterday and _[ .rei?eat today, the files that your client turned over to your office, have they all been produced, either to Reynolds last sor.i.ng, Reynolc3s' attorneys or on thi> de»osi.tion? .9 t0 11 t1R. Ic71NI:: Yes, with the exception of attorney work product. u MR. GRIESA: Well, do you cl airn --- let me ju st finish then. Do you claim that any of the files turned over to you by your client contained attorney work product? That's what I am .ldctres>ing myself to, fil.c, turned over to you by your client. t3 Yd l;i

03') t;r:. KA.1at,: r,o. 1;T;. GItIi!;SA: A11 r.ictl1t. ao am I to understand that everv- ~~ th_inct in i:he turnc'cl over to you by your client has been d made availa.>>.e eit-.her to Reynolda' counsel last spring or to the 5 variou -~ caefendant-, on this caUvosition? E3 ' 1•11t. KAi"" : Yes . 7 tu:. LOr13: llow about individual documents turned over, Q not necersari.ly files, you're nott drawiny a distinction, are 9 you? IQ 11 12 :3 4 s 6 .7 s W 11 12 13 24 25 MR. KANE: I did go through the file and I, 'for examnle, cai,ne across a memo rirenared at our request on the call of Mr. Belknan of the Tobacco Institute. That was 1-41:. LOE3: You have withdrawn that? MR. KA~VE : That is an attorney-client privilege. . MR. LOI',13: liow about memoranda of conversations, for exam.:)le, with Mr. Friis? 11 R. KANE : As far as I can tell everything relating to that, Mr. Friis or I•mnact Developers, has been turned over and I have her.e a"Transcription of Tape, Cancer Case" made by our secr.etary and says, "Apparently we hear the answers to an inter-- f viow, " and ;•Ir. . liarn tman can testi fy to that, but there are some references to what cvas goincT on. We haven't been able to find that: tjipe t'iat was referred to, hut I can state categorically everything that was turned over to us in the way of business files, anyt!iinq that we hac3 prior to the time they entered into

E C7N.Sl:,t'r~=. an - t~.qrec~ment- w3ah Ti1hiy `~, - t~aino _ ~A:rp `rc~i . y ou wan'C~.i> r.11ow' this ' to t.hem? i THE S4ITNE5S: Yes. I am delighted to. when we had communications 'and the like -- r1k. GRIESA: I will tell you, Mr. Kane, I am not sat:is- or Mr. Steinbach or Mr. 1luopin orr of Garden Home or of Bel Aire rel.ating to Cancer Cigarettes. MR. K11NR : You put a date on it or do you recognize at:t:orney work product? R. GRIESA: I request everything. V! o; N. 0 A f:a.ed. It seeris to me you told me a few moments ngo that you considered nothing contained in your clients' files work product and then you specif3.ed sonethinq ---- r. A9R. KhNE : When they walked in MR. GR2rsA: Just a minute. Then you snecified something to Mr. Loeb t_hat you considered work product. Now, I don' t know that: there is any utility in my pursuing this any further. I think we will have to pursue it with you at a later time. t9e won't take up this witness' time and it may be necessary to just ta}:e a short deposition of you and Mr. Tilbury. In my mind there ha> been some difficulty about the documents and I wi1.Il state that I am not satisfied with the situation and I would have you understand, nlease, that R. J. Reynolds certainly renews the demand that we made last spring that we want every document or paper of Pacific Tobacco Company or of P1r. Hartman

-- - ------~.~.,. 'a iil: ;9:LTNI,> ;: Can the witness say anytila.nn a6out these _t:ars pari:icu].arly? Itlt. K71vI:: One seconct, Stan. 1•gr. Loeb? !••JIt. LO:.'13: Mr.. Kane, I just wanted to clarify one '1'he sul:>naena duces tecum ,nocif:ied a nurah(-,r of files. point. I ]ust r~~a~nt to have you clarify, aside from the documents which you have given to Mr. Griesa and handed to him, are there any new c'ro~:ur.ieni:s which have been inserted in the files? MR.KN1R: Nothing has been inserted. MR. LODB: Nothing has been inserted? MR. K11.NR : N'o. MR. LOI,B : Ilave any documents been removed from the files since the he,ryinning of these depositions, of the files t.h,.A: were subpoenaed and first brought in here? Before you ans\;}er., I suggest you look for the original of Exhibit 98. There a, s a copy. I,iI:. K11NI,: ,-•7hat is Fxhibit 98? Let' s see, a letter, Luidat:ed, from Mr. 1lartman to, addressed, "Dear Roger." That is attornc:y work product comm unication. P1Z. LOrr3: it's already been disclosed. MR. KANE: It's been disclosed, then you have it. MR. LOEB: Approximately 15 other documents in the same file which have been removed. MR. IW]r : Yes, and those are attorne f work product and

(l!'.. LUL:13: Are you ta)cinq the position that once you ,~ c,c3ucecl ttinm that,you can thon take ther.i hacl;.? c9I,. KA.yE: I am takincl the position they are attorney product. J•II;. GRIF.f;h: I think we ought to --~- l9R. KANE: ',Nle can qo on al l day on this. 19It. :,cE;II,1•I: I was going to make an ohservation. Yerhaps I shoulc7 retire to ruy office until this matter is resolved, ;Zr. Hart c-uid I and several others in attendance here. These dcpo=.itions have been arranged by other parties. .Ve have attempted to accommodate in.the usual spirit that permeates this professional community for the most part and I have been imposed upon and certainly Philip. Aforris and Liggett & Myers and other people have been imposed upon. There hasn't been one word mentioned about Philip P11orris in the ten days so far and :1: fecll a-need to express it very mildly. I don't mean to spoak fo.rr h]r. Itart.. I'm sure he's able- of expressing his own views. 4 MIZ. LOEI3: I would like to ask whether or not the witness has made the investigation requested by Mr. Ililliard yesterday ,•dth regard to addit.ional. sales not reflected in the Amended nnswc~r.s To The Interroqatories and whether or not there is a suvp].enlental answer available at this time. riR. KANE: Stan --- °- Ta1L•' !aITNr,SS: Mr. Loeb, tn those additional sales should be ~,°, 0 ~ ~ 0 o%

'! , 4 7 0 2 3 --- 813 ._..__- 0 rr..c;orclr:ci in the book t:.hat: I thinlc Mr. Griesa now has, and tli'.it comcs out of a current ,•rorkinq book which I t:hinYk in fact you have, sir, which I incidentally fcel is still awor.'r;ing file. 'i'here are accounts in there that are not paid for, but tiZe sales to 1?ich's are made by Bel Aire Pharmacy and not Pacific ,robrzcco Corporation and the nature and devel.oprnent of these sales were alluded to in .'.r. Jiilliarcl's line of questioning, but I as a witness, I was unable to lead the interrogator into the relationship between Bel Aire Pharmacy and Pacific Tobacco Corporation. i,tR. GR7rSA: Do you have anything •further, Mr. Loeb? r1R. LoE13: No: MUR. IIART: Let me state my concurrence with Mr, i•1cl:wen'n ohservati.ons . 1•iR. I•;ANr : Mr. Gr, ies a, can you give us a target time for completing your deposition of Mr. H.artman? PIR. GI'.IESA: I cer.tainJ.y will attempt to finish today. I think the additional documents produced this nornincl cauae some repetition. I9R. R11N1;: Then 1-1r. Tilbury points out and asks me spec:if-i.cal1y to use his name. This has been going on close to two weeks and he would like to terminate this by 4:00 or A:30 tomorrow. There has hr.en a great deal of detail brought out. pluch off the clepo -dtion has been devoted to matters that ai-e qui.te rer:iote, even by 26 (h) standards, hut :'ir. llart:nan

.. .. . . ... ._ _..... z.....a...._.._ _ 844 xss- ar !~n ;!aecn c_ioinc7 a 1oncI time ~ancd he doos have to qc;t f)C-+c1; to his '.~us~_11eSS . I•1It. GRIDSII: 1111l r.ig;at. I under•stand your statement. c3,on' t we proceed? THI, WITVrS S: x. ------ riR. GRII:SA: Would you like to say somethinq? Ttll. WITNESS: I would just call your attention to this transcription of that. tape that became a matter of discussion and I have reviewed that and it is as complete ---- it is a complete transcriotion 'of that tape. .tR. GRIESA: I' 1.1 resume the questioning, if I may. Q (By Mr. Griesa) You just stated during the colloquy, ?1r.. Ilartman, that the purchases of Rich's Cigar store were made from F3el Aire Pharmacy? A Yess, sir. Q Not from Pacific Tobacco? A That's correct. MR. GRIESA: i-Jould you mark this as the next exhibit? (A copy of a statement to Richs Cigar Store, dated 3--31.--G7, from Pacific Tobacco Co., was marked DRFI.NDhNT' S EX}iII3IT R 17 for i.denti.fication. ) Q (By Mr. Gra.esa) Do you recognize R 17? n Yes, sir.

c - _ ..~...... _ ~ .... n h tl!hat .i s that? It's a statemcnt from Pacific Tobacco Cornoratl.on to ;,ic:r's Cirlar Store for 60 cartons of Cancer Filter Cigarettes. tiR. I1cF:0FN : llato? T11I: '•lITNL:SS: Date ;1ar.ch 31, 1967. ~' p (3v Iir. Griesa) And is this the sale referred to in connection with Itich's Cigar Store on page 34 of the Answers To ~ Intorrocratorie,, the sale dated t1arch 31, 1967. 0 0 A Yes, Sir. 0 And this sale was made by Pacific Tobacco to Rich's, was it riot? A That's correct, sir. ~ All the otherr sales referred to on page 34 to Rich's Cigar S'tore were made by Pacific Tobacco, were they not? A I am quite certain that they were, sir.. p What did you mean a. few minutes ago by telling us the sales were made by I3e1. Aire Pharmacy? Was that a mistake? A 140. Not whatsoever because we are talking about -- you wor-e qui77ing me and I made the statement ye ,terday that there have indeed been additional sales to Rich's Cicxar. Store and continuously. This record book over here indicates that there have l)een sales, but thc:v are made from I3e1 nire Pharmacy and this reflects the naturo of the dispensation of Oregon tax ; t~~~rnpS . So am I correct that in addition to the sales by Pacific a N O ~ O ~D

; lc:co xefl.ectror, nane 34 of the nn ,:.!er:i To xntc~•roc7at.araes, i i I tv,,,ro ,aer^ sales by I3el Ai.re Pharmacy? ;, 7"her.e are sales by Del Aire Pharmacy. 'Caen did they atart? I'rohahlv after the heriod i.ndi_c7i:ed there of January l0th, You can see, I think, what's dictated ----- You really ---- that's all I need to kno;a. A I'm sorry. I don't mean to ~-iander on aimlessly. 0 I don't need to pursue that. On the subject of production of c?ocuments, I have an additional request. Did you, Mr. IIartman or did 'Mr. Kane l.ocate last night the draft, proposed draft letters to tobacco distributors and to tobacco manufacturers? MR. K1uyL: Let; me answer that. As you may recall, I c:allccd the law office of Mr. Leigal and I was told the office Wa :, c; ]-osc.d, cal l at f3 : 00 o' clock and talk to hi s secretary. Idicl so. She indicated Mr. Leiqh is on vacation, hac:k til:l. next week. I told her my need. won't be She indicated stuff 'oac: in there,mater.i.al was in their inactive or dead files in `icacon's Storage. She turned me over. to, I believe, A9r. Klarquist. I reviewed again what was sought and he said he pre--fe,rred to x-;ait till Mr. Leigh returned next week ancl coul-cd dici into his o,.an files wherever thev are. It's an inactive file, `lR. GRTLS~n: Do I take it when and if these drafts, ~rc>;~c~ ,~~d draft l.ett:erS arO located, t1iey tlil l be produced?

i Yes . I can s:end the:n to !;r. '1'rt inlett or P9r. i ,,...:,, wh a to. var you pr.efer. lilz. C:ItII:SA: I would aor>reciate you sending one set to '!r. Triplett. r1R. KNJL:: Okay. i•;R. CI2Il:SA: hti.ong the documents nroducc:d t'.iis morninn :ay your counsel are two invoices of rmpire Candy &''a'obacco Cr,rr%').ny, one dated March 29, 1967 and one dated April 19, 1967. May I have these marked as the next Reynolds Y,}:}iibit? (A coray of an Emnire Candy & Tobacco Company, Invoice No. B 4699 to Bel Aire Pharmacy, dated 3/29/19G7, was marked DI:rL'tJDANT' S EXHIBIT R 18 1 for identification, stapled to a cony of an Emnire Candy & Tobacco Company, Invoice i-1o. D 6475, dated 4/19/1967 to s3el Aire Pharmacy, which was markecd 2 for identification. ) ~? (By 17r . Gri.es a) You had previous ly produced, Mr. fiartman, invoi ces dated Ma,y 3.5 z-nd hnril 5., 19G7, Exhibit 1C3 110 ----- raR. IIART: March, Tom. March 15. 0 (By 1-tr. Gri.esa) I meant ;•iarch 15, 1.9G7 and April 5. 'r,`ic:Ise, C-tre ones you rireviously produced, and they reflected "aUrchzic,es hy Larry 1••1oor.e off cartons of Cancer Cigarettes, did . .. .,,r.•..v.a.,,...:~ ~.. ..v,._ . ..-... .wna..yn,.,,u....-..~..r.......,.x~,

? r A ~ il . . % ~ t !t ~ ; c: lr~ct n Yes, si.r, they did. voa, did thc t~•jo i.nvoices containcc', in I;xliibit R 18 additional 1-)urc'_iasr.s by Larry Moorc of Cancer Cigarettes? It 18 is the ori.ryinall of n3 1.1.0. As near as X can see in ~ , f.: ~t t.~ey are. 1 > r! i 0 hool: at the dates again (indicating) . ~ t n Wait a minute here. 3/15. i ~ (Discussion off the record.) ! ); A Yes. I guess they do. I hadn't noted that before. ~ I!} p (By Mr. Griesa) The answer is Yes? ! ~ A Yes. is it correct that they reflect a sale to Larry Moore E r off one carton of Cancer Cigarettes on March 29, 1967? C r A Yes, sir. ~ Juid a sale of two cartons of Cancer Cigarettes to Larry ~ ::oorf! on Apri l 19, 19 G 7? A Judging by the price extension I would say that that i ,•,as t.•.ao cartons of Cancer T`ilter Cigarettes. harry did not i I f wr_i.tcr! in Cancer, though. lie just says, "Credit 2 carton Filters.' 0 My question to you ---- Iar.r not asking you to read the CGoC:U'^le;it.. I am just askinCl a question of fact. Is it the fact that t:here was a sale of two cartons of Cancer Cigarettes to Iarr'y :loore on April 19, 1967? A Yes, sir. I • r~M1hM•/w.V+.., .._.. •.y+"1'.~., ..... . . . •wR.yE.V'?1.w.~,..... ...RT+M~fM~fL/~...M'.. . .rr...+.....~. ,...~~.ww...r..........w....~__-- _ _-

i t ~ 11nc1 so We ar.re a!}-,oa.utr.ly clear, t:))c:,re hacl al.,o J>ecn a ,rll.i? of one car.ton of Cancer Clc'jarrttC'.s to Larry Moore on 29, 19G7? I „ 'a'hat' :cor.rect, sii:. t 'Now, is there any as:;urance that I;xliihit AJ3 ] 10 and Ii 18 reflec:t: all of the sales by 13e1 Aire Pharmacy to Larry Moore C)r .r:rnTAr.e Candy & Tobacco Comnany? i, A 71s.near as I can determine, sir. I i i I S If you find any additional records of sales by I3el Aire or Pacific to Larry ;,•loore orr to Empire, I would request that you pre oduce them. A I have brought•all of the invoices I can find on our transactions with those company. It is possible that Larry finally was reduced to paying cash for these things. I do not reczcll whether there were such cash transactions or not. A The cash transactions would not be recorded in writing? That's correct. Larry Moore was in, was warned not to buy those from us. Q That's incorrect, is it not? A 1^]hdt? ~ That Larry Moore was warned not to buy from you. A Maybe you hot:ter ask Larry I!oore. ~ ~Iell, your records ---- A My recollection is that Larry ttoore was tapped on the slhou] der.

, 0 y 1! C? ta 14 ts n I think we can resolvc tha.s quite simhly. . I sho~•i you :;;tji'.)i.t: hf3 8£3, W;lich states in part -- this is a memo J-1ay 24, free You unc3errtood -.- you were advisecl of 'that statement c i. t'ier by seeing th i s r.ier:io or from 11r. Steinhach, were you not? 11er1> ;t dic3 tell Jtr.. lloore that I•'.r. °;oore wa3 io oick uP and sell Cancer _cigarettes on his. own ***" 1) 0 Yes, sir. Now I was acki.ng you yesterday about a l.etter of April 5, 1967, fr.om yau to 'Mr. Georgopulo, Exhibit T,b 62, page 13. Do you rr:calx that? A ]: recall this letter, sir.. 9 hn(9 this letterr state s in part, "If these --" meaning Your 1allecled two national marketing firms -- "fail to materialize ,re have already advertised f'orr distributors in every state throucIh the drug trade ***" You told me yesterday that you referred to an attemht to rtil,ace an ad in Druct Tooics. A YeF; , si.r. MR. GRIESA: Would you mark these two documents as the ncxt t:•io Reynolds 1r7xha.hita? (n letter to P1r. lio:aard 1). Steinhach, dated T,nri 1 10, 1967, f rom Drug Topics, si(j.ned by C,Zar.les C. i)' Huyvetter, was marked D131'EN- I ~ ti Dr.raT's r-.?:11II3I71 P 19 2 for i.c)entifi.catiol*o t m b wr - ~

k .. - ---- ._ _.._ _ ._~.- -. __.._~= _.=: :---= ~- . _ --._ .S t so A 9 :l 12 0 you reco(Jnize that? 13 IZ a Q iS n contained a form to be filled out if you wanted to place an ad t} - t ma a' e~ zi i a classified ad from Drurt Tonics waa marked 1, a copy of a letter to P'r. . Charles C~ . D' Huyvetter, dated R~?ril 13, 19G7, from Howard Steinbach ~•ias tnarke~l 3 for identification, and a letter to lt~lrri.son S. I'raker, dated April 13, 1967, ffrom Howard Steinhach, was marked 4 for identification.) MR. GRIESA: Can we take this out of the file? MR. KANE: Yes. (I3y Mr. Griesa) I~,how you Exhibit R 19, page 1. I recognize this document. Is this a c]i.r»inry from the magazine Dz-ug Tani.Ycs, which n . n a~i g 1€' ~ 17 A Yes, sir. Did you fill out that form? No, sir. t7ho filled it out? A A 1; : t 1 0 A I beli.eve :,tr.. Steinbach did, sir. Was this then sent in to nruq Tov)i cs? Yes, sir. You recall whGn that was? Underneath this top page there is another

fi.x t.L1 a t. c:a tc, 0 ,ir; t•7hat ;a.is the t'aat: yc)l.l can fix? A It: woul(I have bcC?T7 earl y in Anr.i1 of 1967. 7 don't see ~ t}Jc, c•ra cf].nal cover lctter. I that Mr. 5teinloach may S1ave sent: a c}v:cl; and t`ti s vri.thout any reason to bcl ieve that a.t- vaoulc3n't l)e puhlishec] and I notice that there were a series .. of let t.ers developed as a result. << p Youre getting way heyond my question. MR. McE'.aL•'N: Tom, what did he say about reason? Read that back again. (The reporter read the last answer. ) TIiI; ;9IT:.1I~5S : I had no reason to believe that the letter :,:oulc'1n't be published or the ad•wouldn't be published, Mr. r 1cI_~.•~E_.n . rtR. rtcI,`,atF;N : All right. (~ (I3y Mr. Griesa) And am I correctt that this page 1 of R 39 wou:ld have been sent fioraetime before the date of naqe 2? That is, sometime before P.r->ril 10, 1967? A I would have reason to believe'that, sir. Perhaps we could find a check in the checkbook that ~.aould indicate when he ~,,rote the check. If he wrote a Pacific Tobacco Corporation che!c!: it: would stand to reason there would be a voided check or somet:hing in those files, sir. ~~ I: shour you a stub dated March 17, 190, contjined in LM I:xhilait A3 10. noes that hcln you fix the date that this I o 4z --__j CD .. Ch

I c1 ir>j)incl was sent to Uruq Tonics.;? p That would 'certainlv indicate that March 17 Mr. Steinbach wrote a check, 880, which coincides with his calculation on the U:rurJ 'TOpics ad rate. 0 < n April 5. 0 Your letter to Geor(jopulo was written rpr.il 5, was it not? Let's see here. Yes. The Geordopulo letter was written By the time of your letter of npri7. 5 to Georgopulo you had z:'ec:cived no reply to your request for advertisement, had fou? A :I. do not recall, sir, without looking at these letters. Q Well, look at the letters and refresh your recollection. , A All right. Let's see, the first response that we had bzickk from Drug Topics was April 10th. 0 So the answer to my question is Yes, by the time you wi:ote Mr. Georgopulo representing that you had advertised for distributors you had received no reply whatever from Drug Topics? A That's correct, sir. Q All right. A That's correct. Q Is I:xhibit R 19, aage 2, the reply you received from urucl Topics? - A Yes. We ~_.._. (? Is it Yes? A Yes. Yes, yes, yes. ........__. ~ w .4

. ._. ...... .__sxr:w= ~ ~-; : ._...._. ._._~-_....,~..r.a. ...._~.._.. ~'ffiiY:`.F_ ... - ..... ... ..-...~. ~, .~ ..... ...._ ~ : Di..c:3 they turn your ad down? '.Chey sure did. Di.d they suggest that since yours was a tobacco product ;,ou should try adver.tisind in tobacco journals such as 1"he Tobacco ~ I ? ~ --------.__ Xe,s. ~ ~ , ~ Did you follow that: suggestion? :[ did not follow that suggestion. Did i1r.. Steinbach follow that suggestion? G 2 t• No, sir. I think we should take note of t.tr.. Steinbach's Xetter to that man with Drug ''a'os, because I believe Mr. Ste-inbach was indeed in good form that day. Ar.4 you referring to. Mr. Steinbach's letter of April 13 ~ to Drug Topics, page 3? ` t, Yes, sir. E (~ Did Mr. Steinbach address another letter to another gentle- ~ rnan at. Drud Topics that same day, page 4? ~ t I believe so, sir. ~~ 0 Those letters speak for themselves. We don't have to ------ t? 11 r. ii k~) t~ They do indeed speak for themselves. ~~ I would like to attempt to fix a little more precisely t1ian we have the date when you made your first visit to Mr. Jlerbst: at Empire Candy & Tobacco. Let's go back to a few of the preceding event a and review those briefly. On "4areh 15 !,arry t•toor.e purchased 10 cartons of Cancers, correct?

J _, srW.ia:w~r h i Correct. And he said that ho ;,ioul.d (i str.ibutn tho~ae to his retail 1CCo1211tS ? ,, It. was my unc]er,tancl.ing t'lat: was his intention. ,~ At this noint you no reason to CC)ntaCt Mr. t'oor.e ,~ ~i)a.oyer? 11 I respect Mr. Moore as one who knows his relationship •.ri_th his employer and had no reason to contact him. S? Right. Now, a week later you wrote the Department o ,7usti.ce, or Mr. Stf-Anbach wrote the Department of Justice, as reflected in the letter of March 22, Exhibit R 9, is that cor.rect? A That's correct. 0 13et.wE:en these dates of March 15 and March 22, Mr. Grout E+nd Mr. ]Cecseti of R. J. Reynolds Tobacco Company had visited the Bel Aire Pharmacy, is that correct? A I believe that's correct, sir. ~ T.nd in addition Mr. -SteinUach had communicated with the United States Attorney's office in Portland, Oregon? A I do not recall. If it's in the record I'm sure he did. 0 'Would you ].ook at P 9 to perhaps refresh your memory? A 011. I-see that Mr. Steinbach has noted here that "The Portland office suctctrsted that we contact you. " And this is a letter addressed to U. S. Attorney General's Office,. Federal Bui.lcling, San f'rancisco.

Q That letter is date.d '.larch 22? ! r A Riqht. ~ 1 I n hnd would indicate that Mr. rtei.nbach's communication I ti•,ith t:ho Portland U. S. ht..torney's Office cjas prior to Narch 22? S~ A Could have been March 22, also, sir. 1 ~ ~ Q On or before? r A That' s right. ~ ~ 0 Now, t•1r. Stei.nhach advised you, did he not, of his approacr 9 41 •1 2 3 0 I r S / 2 3 4 to the U. S. Attorney's Office in Portland? A 1Ie may have. 'I don4 't recall whether he had or had not. (~ You knew about it, didn't you? A I: would have been aware of such a thing, I believe, in retrospect. Q Now, you knew that the United States Attorney's Office in Portland was a branch of the United States Department of Justice, did you not? A I: would make that a.ssumpti.on. Q Now, did Pacific `i'obacco contact the Department of .7ust.ic:e thinking of a possible violation of the Federal Anti- trust. Laws? A That's a good question for Mr. Steinbach. Q Mr. Hartman, I am asking for your knowledge and this was a significant matterr forr you to keep on top of, wasn't it? A I think that Mr. Steinbach didn't react vcry •well to the * ~ Subsequent notatl.(>nr on Mr. Crout' 4 visit. M

057 _...... «~. _......_. ..~. _.~ . __.......~ r ..... . _.._..... .+'T.'.r ~..r. nnd what the reaction that you're talking about was with a 1: i? :a ..J rc,--;})er,t to a possible antitrust Pr.oblem, wasn't it? ,n 0 That could welll have been, sir. Alll right. This is the reason that there was a contact with the Ju stice Department, was it not? ~ That could be, sir. Not: only could. It would be. It was. There would be o ot.her reason to go to the Justice Department, would there? There could he. Q Did you or Mr. Steinbach to your knowledge discuss an f ant:it.rust problem with an attorney (?ff yours prior to the communication with the Justice Department? A It is possible. I do not recall the specific incidents. 0 Iiow would your firm know to approach the United States Attorney's Office if you had not gotten word from an attorney of: yours? A Mr. Griesa, I tell you one thing: We read widely and .we also had attorneys at that time. I wouldn't remend:)er who or undex- what circumstances such a move was made. ~ And it is possible that it was made upon the advice of an a.t:tor.ney of yours? A Tl1at could be, yes, sir. t? Now, what is your best memory as to that possibility that. it was or was not? A My memor.y is that: I informed or Howard informed Jimmy ~ O Leigl t04 P N .0

858 ... ...._.. ~._..~...~..._ "T~_~......r~._.~...f....__....._..r.... c.jCve:loPments and i.i:'s possihle I could have mentioned ., tt,o 1'r ank 41iitaker-. I do not recall those matters. 3 Your best memory is you were in touch with Leigh at this Olir•e lbout your trademark matters? A '1'hat's right. That's right. In the course of being in touch with Mr. Leigh about 1 ; : rr,demark matters, either you or '•ir. Steinbach told him z - visi-t by Reynolds, did you not? That is possible. I am quite sure of it, sir. i 0 That's your best mr_mory, isn't *it? about t~ A I am doing my best, Mr. Griesa, believe me. ;: Q Possibilities don't help either of us. You see anything is .>c ~>ssih1e. I am asking you this: • Isn't itt your best mem , ory that whan this visit from Reynolds occurred to Lel Aire you told t•ir. 7[.,e3.gh about it before going to the Justice Department? A I don't keep memos, but I bet you Mr. Leigh does, his offic:e. Q Mr. Leigh is not a witness today. A I know it. Q c9hat is your best memory? ;9 S .7 !2 ,s t !i A hy memory is undoubtedly this matter came to his attention. t; Q Alll right. Now, that that is estab]ished I would like to ask you if you can hel.p me try to fix as best you can when it. w, a s that the matterr of a possible antitrust problem first brought to Mr. Leigh's attention. W a - ::

859 : ; I f i) ,4 li A A I can't recall Was it ----- -•- the specific day or ---- Coul.d it have been before the Reynolds' visit? ]: think whatt we had would have not had arly cause that I ~ So it would have bec:n only after the Reynolds' visit? ~1 Proh al> l.y . ~t Now two events occurred on March 29. That's a week after the lett:er to the Department of Justice. One is that Larry Moore L,urchased a carton of Cancer Cigarettes at I3el Aire, is that correct? A That's correct. Q Ihnd another, at least so the Exhibit AI3 75 states, is tt-<<zi. Larry Moore told your firm that neither lie nor Empire could handle Cancer Cigarettes any further, is that right? A That's right. Q Did you or Mr. cteinhach bring the March 29 developments to thc attention of Mr. Leigh? A I would imaqine we did, sir. Q Did Mr. Leigh tell you to record the March 29 developments in wri tinn? A I do not recall ~-any such instructions, Mr. Griesa. 0 Well, did he advise you to do that? A I cannot recall any such advice: o . N p ~._____._...--- ~.........~ ..~_. _._ F N w

F1G0 ti 0 D.'Ltl ho advise you to send the memo P.xhibit Ab 75 to the C,,;";lrt.rIent of. Justice? fl n t:hc 29 -me,no to the Department of Justice as shown in 7:t's true, is it not, that on March 30 '4r. Steinbach sent i a 4 15 t: I• It .. I:xhihit: R ].].? A 'X'hat' s quite no asihle. Q I cannot recall any such instructions, Mr. Griesa. You have already testifd i.ec? to that yesterday and it is shc:,wn by the documents. A Very well., Q Next on April 5, a little less than a week later, Larry ,'•toor(_! pur.chased an additional two cartons of cidarettes, is t.hat correct? A That's correct.. Q Was there. any discussion with Larry Moore at the time of: h:i.s purchase on April 5t.h? A I arq certain there was some discussion. Q Did you have any such di scussion? A I don't recall. any such discussion. 0 Did you sce Larry Moore on April 5? A I don't recal].. Don't recall whether you did or didn't? ll That's right. 0 Did Pir. Stea.n}aach report any discussions had 'wi.i.h, Lbr.ry ;doore at the time of this April 5 purcha'sR?

. ! A r , Q Hc: coul.d have. I would like you to pay attention to my questi.ons and them vory caref.ul.ly. r. Aren't I answering your question? MR. IIILLIARI): 110. I. state for the record you' re not an, war.i.ng. "Could have, " you kno~.a, is not an answer. lie asked i ~ for a factual response, 'tr. Hartnian. 7':t1.: WTTIM.SS: I am giving the best response I can, Mr. ililliard. p (I~~y Mr. Griesa) What's your memory? A My memory is I do not recalll whether lIoward and Larry is I had <) particular discussion on April 5th. 11t, least the record ;; shoua.d show I haven't heen sleeping during this interrogation. , :t p Next you received a letter from Georgopulo, dated April JJ 10, 1967, A13 Exhibit 62, page 14, did you not? lt I A Yes, sir. I' 16 Q That would have been received a day or so after April 10, correct? A `t'hat's correct, sir'. Q Uxd you show that letter to your counsel Mr. Leigh? ~ A I do not recalll showing it to him, sir. .. Q Dic3 Mr: Steinbach show it to him, to your knowledge? A I would tend to belxeve that he did not. Q j•lhat' s the basis for that tendency? A II don't recall that Mr. Steinbach ever pai.d any visits :

() t) !. '_-.._~~............ ~.._ . ~._-.-. ....._..~_...~....~.- .V . 1.0 rtr.. Leigh's office unless there had Ueen one particular ()cci>>i,on. I generally did the footwork. You did the footwork het,.,,enn your off•ice and Mr. Leigh's I made al_l oersonc-il calls on T-1r. hn-iryh regarding the er,tahlishrnent of the trademark as an exarnple. y ! 0 1 0 You were making it a practice, were you not, your firm, t`lat is, to advise 1ir.. heigh of important developments in this antitr.ust Prohlem? 1~ Yes, sir. I would imagine we would have, sir. 11 } 0 12 f Did you regard the letter of April 10 from Geornopulo as an :imnortant development in this problem? ;~ A I certainly did. ~ p nrid did Mr. Leigh? Is it not true that Mr. heigh would ,~ have been apprised of this letter of April 10? . !~ ]1 I am sure he would have been. C' Q And given a copy? ;~ A It is possible. I do not know, sir. 11 1 Q ':1 You testi fied yesterday that your call on Mr. Herbst was ;aade, 3o:nc1-t.ime between April 5, 1967, and May 24, 1967. A Yes. I couldn't recall, as you recall yesterday. I can't: recalll the precise date that I called on Mr. IierUst. I just want to remind you that ---- ,t A I am trying to fix ---- 2 That testimony --.-- I

Wo. are trying to find that date, I know. . No%a, I sho%qecl you yesterday -- maybe I should ~ you thi_s : , 4 4 4 t E t G 1 t Can you tell me whether your call.to Mr. Herbst ;,,)d boel) m~1dr by the time of this ; l;xhi.bi_t n;l 62, page 15? „ D it i nh t . letter of April 13, 1967, which This doesn't help me place that date, either, sir. You can't tell me whether you called on Mr. Ilerbst before rif_ter accepting the comanunication from Georqopulo of a negativ~ 1li3ture? A 7 can't recall,.sir. I showed you yesterday a letter dated April 19, 1967, f rom Mr. . Leigh to you, FxlZibit R 14. A Yes. p You recall being shown that? A ©h, yes. 0 Was your call, on Mr. Iierbst made before or after this date of April 19? A I still cannot recall, sir. Q Maybe ---- A It might have been. In structuring this it could have been. - I 'do not recall. , ~ You say it might have been before? A It could have been. I just can't remember. ~? Is it more likely that it was after? ~.n A It might havo been. N m ~ N J

I1ight been l)r,Jore or after April. 19? i <h A :[ have a devil of a time kec;ni.ng track of dates three lears a(ao that I did not j+iomor. iali z4. 4 .laybe we can reconstruct that chronology. Did you regard .~our• vi::;it with Mr. Ilerh ;t as having any si(rni fi.cance at all i.tl t.his antitrust question? < i n :[ was --- my visit. ----- i Yes or No. Did you regard it as having any significance? p Your visit to Idr. IIerbst you regarded as having no sig- ,1 nificance to this antitrust problem? A No. p You still say that? A YGs . p Well, l.et me approach it another way. Did you report to Mr. Leigh what had happened in your visit to Mr. Herbs.t? A I probably did, sir. 0 It's apparent thilt by the time of I1r..Leigh's letter of l:pr:i.l 19 he had not hear.cl about any visit to Mr. Iierbst, is it not:? Would you read that letter and tell me? MR. KAvI:: Tell him if the letter makes any reference to your visit to I9r. lierbst. MR. GRIESA: Please let me conduct iuy examination. '!'IIh '4ITNESS: NoW, state your question again, Mr. Griesa. p •()3y rlr. Gri.esa) It's quite evicaent-t from that letter that y, , _..,. ;,~ n ..-. . . ..,, . ~ .. .

Or t.hi s> c11te npra.x. 19 Mr. Leigh did not know about Mr. Ilorbst I i c;i I;rari.re. it I I would agree with that conclusion. Q So it is evident, is it not, that your visit with Mr. boen reported to P1r. Leiclh prior to ?;crh ,t had not occurred or 39, 1t3G?? n i cannot state unequivocally whetherr that's the statement or not ~.oithout examining all letters 'and records with regard to that: matter. 9 Le-t's go back. It's evident from this letter that by ~! ~ t_~ _. .•.L~ .i. ..... tf....•L~.. L V.. 4. _..- n 1... I1pYl..1 19 !•'!r. Leigh aa.Q not jcnoi+v auVuL 1°u. •l1cLiJ54. svu l1QVC ai ready answered that in the affirmative, have you not? A As near as I can recall. 0 So it is also evident that you had not visited Mr. Iierbst orr reported about such visit to 1•7r. Leigh by April 19. . That' a peraEGct].y clear, isn't it? A I can't say that at all unless I see all of the records and transactions between Mr. Leigh and Mr. Steinbach and myself on this matter. I can't recall that particular incident. MR. GRIESA: 1•1ay we have the file, the trademark file? Q (I3y I•ir. Cricsa) I siiow you the file which apparently you want to refresh your memory and would like to look at. I also show you Exhibit R 1.3 and R 14, which were taken from that . f.i lr_-•. You're now looking in letters dated 3968. R Yes . T quess all. thc: rest of this -_-- I think the balance

> . .._. ....__.... __. . ..__ . ..:'.c . 4 Uf' t:l~i > til.e c,>:cept; for t',u.ynol..cls' I:xhil)it 13 refers purely to tr, `Ic.r.i maneuvers, n I show you l.:xhihit h 13, vihich is your letter of Apri1 24 t.o Vlould you read that? 1 :[ have read that letter, t•ir. Griesa. Now, isn't it correct that neither in the letter of ! S ;S it 1T :.i .} ?~r>r:il_ 1'.) or in the letter of A»ril 24 is there any report about a v:isit. to t]r. Iterbst? A There is no r_eaort, that's correct. Q And I'ask you again is it not evident from this corres- nc~ndence taking the two 1-etters together .that: you had not made your vi.sit to Mr. lierbs.t or reported it to Mr. Leigh? A That is prior? Q Prior to April 24. A That is right. I am satisfied of that. Q I.asked you yesterday about the proposed letter to dis- ti-ibutors referred to in R 14, the letter of Mr. Leigh dated Apri.1 19. Can you tell me what was considered to be the purpose i of such a letter? A I cannot recall the precise purpose, but I did discuss this mattGr with Mr. Stea.nhach last night in an effort to re- f.re3h rAyself on i t. Q I want your memory, not Mr. Steinbach's. A I have no meYnory of it, sir. That's the reason I am very w'_c'11C in this area deternining wilat the devil hanpened, because I

h~wc for(Jott.ert all. about it. ,I 3 Q Mayhe I can rr.fresh your recollection. The letter of npr:i.l. 19 states, "Dear fitan: Enclosed is a draft of a proposed fori,~ off letter to be sent to various distributors with whom you !ic7vca tried to deal and whom you have reason to believe have l) cen ;) r.c! s ,ured by Roynolds or other manufacturers. In this letter ]: have requested that the distributorr reply stating his intent:ions. This was done with the 'hope that the distributor wou:ld write us back without consulting an attorney, stating some damacti.ng admissions." Is it not correct that the original intention in preparing this draft: letter was that it might be sent back by the distributor without consulting an attorney and stating some damaga.nq admissions? A ]:t's always the possibility that we could get distribution. 0 ldel.l, do you deny t:hat the intention of contemplating such a letter was i.n par.t at least to obtain damaging admissions? A This is Mr. Leigh's letter. Q Did you object to his stated intention? A I believe we did. You'll note in subsequent correspon- dcn~::e wc: put a delay on any such effort. .. Q You say you objected to his announced purpose of obtain- ing darnaying admissions? A We didn't concentratc: on that evaluation, si'r. 0 Then you didn't voice any objection to that stated

i n't.C)lti.on? I A 0 A 0 I notice we never carried it out. Would you stick to my question? I am doing the host I can, t1r. Criesa. My question to you is did you personally voice any o,'-)jec-- tion to Mr. Leigh wi.th regard to his intention of o',)taining damaging admissions? i , A I do not recall objecting to 'it, sir. To your knowledge did Mr. Steinhach voice any such objec- I do not recall. Q You recall any discussion with Mr. Leigh leading up to the April 19, 1967 letter? A As I have stated previously, Mr. Gr.iesa, I may have in- formed and I am sure I did inform Jimmy of the develor~ments as we understood them. Q I don't think my quc.3tion was clear. Do you recall any discu:;si.ons c•aith A9r. Leigh in advance of the IApril 19 letter about the draft letters t.o distributors or to Reynolds? A J: think P9r. Steinbach made those overtures and I do not recall t:he circumstances that led to that overture. Q The 1.etterr you see of h.pril 19 is to you. A Yes. 0 You know why the letter would be addressed to you i f. you had not had any con~,nunication aith ;•lr. 0 Leigh on i-ha.s suhject? o 1P CO ~ w N

._~_.. .. __. __ ._.__.._ _...., __.. .. -,_.. , /) xt' s qui.te sil,mle. Jinuny and 7are old friends from the , i s .a . :y :7 .:, o.rcclon T;epublican Clu!) and I mzdc the in person anpearancos in ;Ii: office. I don't know whethe~r he had ever met Mr. Stc:inhac'i, ,o it's quite possible he would address that corrosnonclenco to rn~:~, si.r. 0 So the discussions l.vith tir. Leiqh prior to the April 19 lrt.ter were had by you because of your friendship with him, r:i.c+1Ait? A Not necessarily, because Mr. Steinbach made telephone conununications with Mr. Leigh. Mr. Steinbach was known to Mr. I:0ei.gh as my associate in this matter, so.it's quite possible thzit Mr..Steinbach made that presentation. A So the distribution of responsibility was you would make the personal visits and Mr. Steinbach would make the telephone Cal]_s? A That has been a historic case in our association. 0 Now, tell me, did 11r. Steinbach to your knowledge have any telephone conversations with Mr. Leigh prior to April 19 a6out a nroposec] letter to distributors? A I am certain that that would have been his avenue of con.cid;;ration. Q The answer is Yes? A Yes, and I think he did. n t9ere you anprir;ed in general of what he was communicating over the telephone?

~ ..:.::>~ -. . ... ._-._.. ._._ ~..... A n Yes, I would have t,een awarc: of that. il11c1t wcre thosc discussions hetac.en '1r. Steinl)c7ch and :•1r» I,e].gh? I cannot recall the nature off those discus sion s. t x; p You can r,:~call nothing? g ; A That's correct. N~ 0 Did you have any d.lscussionS with t•{r. Leiqh regarding a or.onosc:d letter to distributors? A If I did I don't recall it, sir. Q You recall nothing? A Nothing. :1 Q Between the 1.etterr of April 19, 1967 to you and your letter of April 24, during that short span of time, did you have any c]iscu osions with Mr. Leigh about these proposed letters to d.a.stributors and to manufacturers? A I don't reca]1 any. p You don't recall having any or you don't recall whether :p I orr not you did have any? A Mr. Griesa, I had forgotten about t'.7is entire episode untill you popped these on me yesterday. Q Well, this is somn hours later tbmn yesterday, and let's st.arlc to my questions. I just have this to ask you, is it correct you don't recall whether or not yca had any discussions betvreen hpr. il 19 and April 24? A Ye:s.

;;tt•;,~;ions? Do you }:now whether t.tr. Steinbach had any such dl.s- i a ~:. 3 k i f a S A :1 lt . _ ~-, . - --- -. . lie could have h~ad. You don' t recall wheth,~-r or not he did? ]: do not rrczi.l.1, sir. 0 1 knol.•a the letter speaks for itself, hut maybe we can c:;tablish on the record, did you in the Apri]. 24 letter voice any objection to Mr. Leigh's intention of •obtaining dar.iaqing <ldmissions from distributors without havinh. them consult their att:orneys? A I don't recal.l, sir. Q Nothing of any such objection in the letter, is there? A No. No. There is no objection in the letter. (~ Rs of the time of the Apr.il 24 letter there was still in contemplation a letter to be sent to these distributors? A That could have been a possibility. Q It's perfectly evident, isn't it? A You can draw that conclusion. Q Maybe the testimony this morning will refresh your memory as to a question I asked you yesterday. That is, why was it that the proposed letter to distributors was not in fact sent? A I have testified earlier that I talked to t'.r. Steinbach about: this and I asked him. Q Lut me annroac!i it: this way. Do you have any memory of

i thc: reason? ~ I don't hava any memory of it. Mr. Steinbach, I asked }-jjm, "Ilow come we didn't send it?" i j 0 If you bear %At-h me a moment. You have no inc?enenG.ent I t 'r :3 ,3 ;t i ,5 ~ :'1 .•3 a :S rc'.TUoTy of that? A No. 0 None? A I had forgotten about this thing altogether. Q And you asked Mr. Steinbach last night? A Yes, sir. Q And what did Mr. Steinbach tell you? A He was afraid if we sent a letter to Reynolds, Grout would be fired. Did Mr. Steinbach explain to you the reason why the letterr was not sent to the distributors? A Iie did not. SVe did not discuss that element. MR. GRII?.S11: Let's have a break. MR. IiILZ.InRD: I might say on the record, Tom, while we are waiting to det started, on the record I am going to mark t.licse various files that you have with Henry that you produced for us here, so that the entire folder will be marked and the contents as part of the record in this case. ISR. KhNE': Better start reeling them off into the record, then. I•iR. IIIL7JhItD: I don't want to inter.r.upt `ibm rlg11t, now,

.._. _..__-,--- -----z ._~ .. _ - -:== ~ : .~...x....~ I i , .• t i i)ut. I)efore we c3,~,:)art tho.se de.no:;itiong I ajant them. n (3y 1•ir.. Cri.nsa) I-1r. Itar.lmzn, going f:orward c:-ironologic-- 3:11y, you have testa.fied that your vi ,it with Alr. Ilerbst uc.cur.roc] at son;e ciat,G sub:.ec,Iuent to npril 29, 1967. Are you now al~le to fix in any way how long after April 34 that visit oc"cUrred? A No, sir, and I can't thinl: of any document or memo or anytizing that would indicate that date, si.r. 0 Prior to making your visit to Mr. IIer.bst did you discuss such proposed visit witii Mr. Leigh? A I don't recall that I did, sir. ~ ]'s it your tnstimony that you may have or may not havp,? . You, j uc, t don' t recal l? A I certainly can't recall ever having discussed it with 1•:r. Leigh. Q You can't remember discussing in advance With I4r. Leigh about visiting Mr. Iierhst? A No. ~ Did you consult with Mr. Steinbach inadvance off visiting Tlr.. I-Ior.hst? A Yes, sir. Q ',•that was vour_ c3i ,cussi.on with 19r. Steinbach al)out the Pro,posed visit to Ilc~rhst? A IIowarc] wanted me to understancl that I had the widest I?ossihlo latitude in mal;inr a distribution agreement with

1174 ...•..._.- W=.:._-~-,- __ -•~ -_ t1erbst in service and - pricc, in billing or anything else. ;;cw wanted to cict i4r. Horbst to (Jc:t our ci.clar.otto moving. ~ p I asked you not .ahat we wanted, but what Mr. S teinbach ~ s r , ~ tolLI you and WWzt you saa.d to t-1r. Steinbach. A Yes, and this (•lai the ea:3C3nce of the discussion. ~ 1 : Q All right. ~ A The terms that wo could present to Mr. Ilerbst. i .7 : :1 Q Was at l.east one of your purposes in visiting Mr. Jierhst to find out why he had told Larry Moore that Emoire would not carry Cancer Cigarettes? A No. Q That was not in any respect a purpose of that visit? A No, sir. .r.-..r..... Q Your sole purpose in going on that visit was to obtain or attemot to obtain business from, do business with Mr.Ilerbst? A That's correct, sir. Q Now, this was not. one of those occasions like others irt these other instances where you were tzsing a device to verify the pos:ition of the person you were dealing with? A Th at' s true. 9 Mien you :•7ent to Mr. ller.bst did you tcl.l him that you .ad undrrstood from 1,1ir. ifoore that Empi.re would not deal. with you further? A r1o. n 0 You pret^nc?o<1 not to }:now alaout that nr.ohlem?

075 "~(:: not to l)clievc it. You cjic7n' t1.),Aicavo I•'r., Iloore? I wanted to deter.mi.ne forr myself why he wouldn't carry ;; t°4hCIt --- I j us t cnuldn' t imagine ---- , P.i nish your answer. I couldn't imagine why Mr. Iierlast wouldn't carry my (:icjarett.e, desnite these third-hand reports I had heard, second 1 'I'CA-h ~ hl t t r : . repor n( ~al E ~s . 0 4 a .t You wanted to find out first-hand what the situation was, i.s that correct? A I wanted to make him the most generous cigarette offer that industry had ever seen. MR. r1cLtVRPd : Oh, come on. p (By Mr.Griesa) Mly question was you were unwilling to acc:eptt a third-hand report, as you put it and you wanted to get a first-hand report, didn't you? A I wanted to• sell Mr. Herbst cigarettes. 4 And also to get a first-hand report in place of a third- hand report, correct? A I wanted to sel l_ Tir. Herbst ciclarettes. Q Well, granted. T~nswer my question. Did you as one r.)urhose in going want to got a first-hand report from :Ir. lIerbst' O•AIn I'~loutal? .A 7 wanted to clet his first-hand reaction to my proposal. ~ You have said sevoral. times that you wanted to obtain a N a a ' oa %0

£17G 7.^, you nut it. Did you offer a rIc>rMal. c?i.si.ri.t.autaon <<r.r.z~angement? 1'()u off'CZ'--~c1 M3'1 the ont>ortunity to handle your cigarette e-,,y FI ha:;i.s, c'.i.c1 you not? ,1 0 A Yc>~,, sir. That is not a normal distribution arrangement. Not as I uncierstand the cigarette industry. Did you renort to Mr. Leigh the resu].ts -- that's coverer.l. You have already said you did. I: show you again AB I,xhibit 88, the memo of Mr. Steinbach dated t9ay 24 and call yourr attonti.on again to the stat6ment, "Mr. Ilnrbst did tell Pir. Moore that Mr. Moore was free to aic}: up and sell Cancer ci.crarettes on his orrn, ***" My question to you is simply was that offer accepted by Pac:i f.i.c Tobacco? A I don't recall that: Larry asked for any cigarettes after that. t 0 ,1hen Larry t:ol(-.1 you or told your firm that he was free to pick up and sell Cancer Cigarettes on his own, what response t.oas n<~dc to T,ar. ry? A Those wore frtiely available to him. ;) i Q That response was made to hint? A Th.at response was made then and is available to him t:oclay. .

F;77 P I see. '4ho mado that response to him? , A That he could have cigarettes? ~ .0 ,1ho told him in re sponse to his statemont recorded in t P.13 1383 t:hzit you would selll cigarettes to him? ; A ?;r-!<-td that cruostion C-I( .1ai.n. (The rr.,porter r,-!ad the nend9.ng ctunstion. ) p (i3y *ir_. Gra.esa) Just as a matter of who, was it you or :1 r1z-. Stei..nl)ach that told him the cige-irettes were available as youu have alre ady testi fied? 71 it could have been Mr. Stei-nbach. (~ It wasn' t you? A I don't reca].].. Q Let me just ask you one more question about the purpose I of your visit to t°fr. Ilerbut, if I may. Is it possible that this vi;::it.t to !tr. Herbst by you was a substitute forr the proposed ].et:ter• to the distributors which had originally been contemplated? fa That is abso]utelv not possibl.e? A That is -- my answt~r is no. ;~ And you have a clear enough memory to answer no cateclor..ic:allv, is that: correct? A Yes, sir. :. n ljut is it corr.ect you still can't tell rne what the reason .for not sending the ]etterr t:o the distr.ibutors, what 'the actual )-cac:on was?

R7i3 1 ,tc~:in~.~ac,it last nic~ht llc~ could see no reason for having Mr. Grout fir(.!d. ~ You're going to a different subject. You're going to tl,,c, lett.er, proposr.d letterr to P.eynolds. E E .~ ~ E i t , n 0 I have already testified in my conversat.iong with Mr. '.Chat's what I tliou(jht: you had r.ef.erence to. T.,et me make mysel f clnar. I am talking about the pro- nosed letter to di.stributor s. Do you under stand that? n Q :[ understaml that, yes. Proposed letter; specifically to Lrnpire Tobacco. My cluest:ion to you is was your personal visit to Empire Tobacco i intended as a substit;utc for the letterr to Empire, which had or.iginall.y been contempl.ated? A No, sir. Q hnd that is a clear memory? A Yes, sir. Q Now, my further question is can you remember what was the purpose of not sending the letter to Empire? A I do not recall. Q nk ay . p Did ;-Ir.. Steinbach keep a diarl during this period of . t..ime? 1: mean ;larc'1 and npril, 1.967. A Yes, sir. (~ Ha, that diary been produced? 1.IR. KhN L:: l~re you, talking about a book diary?

.,».. -s :, IT7':I;I cirn kalkittq z-About the fact that he fsrono,ed t r?ai Jy mG'ifai3(1C0 to a tapCl. Mr. . Gr.ie sa) I woulc] like production of that diary. ,~ You have it. !;R. RnNL' : I f you' r.e referring to the tape, we mentioned efforts to ]ocate tho ta;>e. Mr. '1'ripl.ett has in his hands , tLran>cri.ntion of that ta»o that. was made as communication by ,,1,a at thc direction of counsel to the secretary, wiio transcribed We are looking for that tape and it is, I believe i1r. ::tcinbach's transcription made after the filing of the case. I•iR. TRIPLETT: Let me ask you this, Henry: This material :.0iich you have provided to us appar.ently commences in mid-March and it extends to Anr.il. and ---- MR. xANr : of ' 67. MR. TRII'LIaT'.C : Of 167. Are you saying that there are other tapes which would constitute a diary of events which occurre:d. either prior to mid-Alarch or subsequent to April 6? MR. KANE: I can't. answer that. Do you know if mr. ::t.einbach or you had other tapes? TIIE ',aITNCSS: No, sir. That was the extent. Howard ;•rantec? ma to record into it and I just neverr did. He was more c1i.ligrnt: in memos than 7w1s. I just didn't participate. The fir:.t part of that for the record is my side of a conversation on a live radio program with, I believe it was, I:C[1S in San I'ranci.sco. Thcy called me. I did not oall them. CD w

H f! () . '.1I'. GLi.II;Sh: 'rlou].(I you mark that as the next I;cytlold, tdould you numl)err the nacJes? (Conie, of six nages of a transcr.i.pt of a tanr_ caer-c: marked )aaJ''E1J1)nN'i" S ).; )17I31T R 2(1 1, 2, 3, 4, 5, and 6 forr iclent.ifi.cation. ) q (By l.r. Cric:sa) Mr. Hartvian, I show you Lxhibit I2 20. :;zich page 11a s been numb ered. :.hat is page 1.? t~ Page 1 is lzbeled "Transcription of tape, Cancer case," I and the first sentence says, "nnr~arently we hear the answers to an i.ntervi.ew. " And it goes on. 0 I don' t need a readi.ng. I j ust want to knola what it is .. A All right. This is a reduction to paper of a verbatim -- reduction to pa?aer of my interview and diary notes recorded by tJr. .~teinbach. Q I,et' s start with page 1. I : c A Page 1 and 2 are essentially that radio interview and 0 Just take it one step at a time. :9e may shorten it. Pagcy s]. and 2 are a tape, a trn anscriptj.on of a taped radio interview, am I correct? , A That's correct, sir. Q Jiow farr does this transcription of the taped radio inter- vie,;r extend? A It cyoes down to the -- it forms the first and second na:racJranh : of pacre 2 and in the third haractraph the beclinning

t(?.in!)c'ic:I' ; dIii ly n nta t:i.ona . ;>o t:he tiipccl int^rvi.ew goc, on all t:Ie aay on ncigo 2, fc,rr t~ie 1a rt l.in~~, isn't th~ttr correct? , ?lo. I just got t'Irounh s.avi.nct h''(Jlnnl_Ilry ri(j'.1t licr.e. 1 i3i?(jl,nlling wit:h t}1(? '.JCIrCl, "Stanlr y: To reca,~ri.tl.Il.ate -- [I In othC1r ~dQYCIs, 11C):`JdrCa is r^i.1(.'l.ng the tilne' ile says, ;;t,anl.ey: To recpi.t:ulate t'Ze la .t two days, ***" and then on. on. nar.aqrar)h begi.nning with "Stanley: To recapitulate ***" and so for.t.h starts a new item? A Precisely. t I I n That's clear. I'In sor.7y. So the first two naractr.aplis 1-~ac~e 2 conclude the taped radio interview and the third T:C.t's f..n.'a.sh iY19t11 i tlle tapC:. A Lot me again emphasxze this is only my•side off the inter- vie:~r . Q het's finish up with the interview for a moment. Whose statement.s are contained in the taped intervi_e~-i, the transcrip- tion? A They are my responses to questions by, I believe it was, A) Hart. Yes. It's Al Iiar.t. Q W.Ien was this? n There was no rnomo date on there that 1: nlaced in there, sir, but it was early in :tar.ch of 167, I believe. p In your T,nswers To The nmerican Interr.o(Iztories, page 28, you date the Al liar.t: inter.vio,r7 as P9arch 8, 1_9G7. OD .__... ,c a ~

I inc-!ic:at:inc3 the event.s, circumstances or reports that developed What is that mr.iter_ial commencincg on page 2? ~ I may !l~.c~ c~~l.c.t~1.:•,.:rcl t~i4tt d,lt:r:-hy calculati~)n back from I would be satisf.ied that £;th, 1967, was t?cc~ dte of that interview. ~ ,1oc7, tho. ne;:t ito ;n c:oy:wienca.itry t-J'ith, "Stcinlcy: To re- ;`~1')l.t:u~clt;e ***~~ I it This, t.laen, hec3in sa series off statements by Mr. Steinbach cliiririg that period date. I Q Do I understand correctly that beginning with "Stanley: '7'o recapitulate ***" on page 2,.this is a transcription of t mat.eri.al which Howard Steinbach dictated into, a tape recorder? A Yes. Q Iiow far does this material extend? A '0y ell, it extends from the bottom off page R 20 2 through R 20 G. Q 1[t 20, p z g e 2? A R 20, page 2 t.hrough R 20, page 6. Q Clear to the end of' this document? A T11a t' s correct. 0 llow clid it haianen that Howard made this dictation? A '1"iat's 'onc` of lii, deci.si.ons, sir. Q Did you discuns it wit1h hi.m in advance? A T4o . 0 WbrCa yoU nre.,ent ',-:11en lle made Vn( ie dictations?

. t I S a ) thl.~ <.`i1 t'.!1(' 7 !11`ri'fI11Gr~t'.l.on (~f CoutlsC.'~.? ?da. II zv3cl fcrr the recnrd iff it had been we would :7C1\'l.`, hclc? .1 l'1C)re C.C}a"')Zc'.ti'i rCcord than thdt. I)i.d 1toward faal:e cll'1y f.1thE.r_ tanes of thi,)cinc? oth•-~r than t.'le onc^ transcribed }ierr~? 0 I>icl he keen --- - A I take that back, 9ir. Mr. Stein'bach and I -- no. I :a;rci.e; a tape. I made an additional tape, sir, two additional r 0 I Ne will come to that in a moment, but to yourr knowledcte d:i.d PIr. Steinbachh make any additional tapes of the kind reflected here? A No, sir. Q Did you make any tapes? A Yes, sir. (~ When did you make these tapes? n I cannot recall. precisely when I did, sir. What year? A It would have t.>een in -- would it have been in t4arch? I an sure it was in t•iarch of 1967. (? Wel.l, any othE~r times t>r-.r3ides March? Did it begin and 0110, in March? A I believo so, sir. Probably beqan anci endec] viithin a

t ; 1 t 884 .. .. .. . ~ ...-~... c..~.•'.w:.3:::..~^^:.~:._ .-• .... . . ... ......-......... a:. -- . s} ;t ]f hol.lr. Do you sti.ll. have that tape? No, sir. .rhat: hannencci to it.? :[t w as a ta>>ed .intr.rvie~•j done at 1<C'] and k»s to bo ;u°)!)1ied to the NBC network for !'oni.torr radio program, so I do i1Ut hr°~Ve ;)osSesSlOn of that. 4 11 Did you everr receive a trtansc'rintion of that? ANo, sir. p Did you ever ma;~e any tarie for yourr personal use? R No, sir. Q Did either you or Howard keep written diaries of any kinca? n No, sir. Those !'onitor tane s should be available at ~ Is that a station in Portland? A Yes, sir.. n Just briefly, ttr.. Steinbach, with respect to Bxhihit R II-•- I a;!i sorry. Mr. liar_tman, ,Ath respect to Exhibit R 8 containing I a letter from ?:r.. f>tein'7ac'.1 to the Prnsidr~nt of Tar Gard, April. 1.a_, 1-9G7, that letter, last sentence of that letter sta.tes, ":[t zippc~ars that the c',omestic market may be more than we can cope wi th. " Tjow, i.n teat:i.fyincf about that ye yterday 'you dictn't inton(l to tell me that the nrohlem that would have to be cope;l

r l .,,i t',i "'rA'; yo~.xr distr.iizul.i on r»'o'O.crt, did you? I tlyi.n?c t'zat' s the tcrr) thatt it -~;oul.c: be xv,od in, sa.r. n The puipo,e of a (li .t;ribiItor., is it )lot, if, to oL)t,'Iin a r,~:z-'.;c:t forr your cignrc:ttes, 9_, that correct? 1) I'~tx"t.i_~1~.11 corrnct. I (r T)ii~; stater•lent ~::-ass renrr,seatincr to t.le nresicient of Tar . C'arc7 t-'.ia_t you had so much of a domestic market that you couldn't copC! .! itjz it, isn't that correct? A xt Wap. our viewpoint that that inc'eecl was the potential off tihis cz.rar.et.te.. t~ You testified to t,r. Hilliard that at some no3.nt a Mr. ~- Ital.ph ltol>ert:son went to Collins & Wilmes. Can you fix the date , .: ~ A . . :~ of the i.ncident that you «c:re referring to? ~ 1]o, sir. 0 1 asked you at the very end of the; day about your sales t to retail outlets for drugstores in Portland. .day I ask you nc31:1 wtic:t'Zerr there was any s,ystrmatie effort made to contact a1l. .1 ;t .a :.) the dr.uqrtores in Portland a!boutt handling your cigarettes? A No, sir. n Di.d you e.verr look in these yellow pages of the phone boo}: to :aee the namrs off such outlets so that you might approach thE.111? A I did not look in t,he nhono book at that li nt of names for that purnose. 0 X shol,a you ' oynol.ds ;;xhihit 1, nancs 570 thr.ounh 574 of

t...Ir_ 196G-G7 yltro>>-~r~o~:. cor.roct; that you nevor looked at :;U^,h a a.i!A to dC1.DrhlinC'. 1)C)tOnt.ial. r(?tail. ollt:lot;ri? f+ ]: did not 1:ave thait pl~in in mind ;atic~n II looked at that. You' la1 nnt.(; there has })een rr ti-c:,0nc7ou3 attrition in that list . c;1nCE3 that wr`1 i nu>>.Li :;lleC: (i.nc{icc'3tinq) You said vou di-cin't have that plan in minci -ahen you s loo};.ed att it. A :[ aookocl at: that li :t all the I got to call other ~irucJstores in conduct_ing my business, ;ir. :L understand. Woul.c7 you please turn to page Q 1:nsx,7er:: To `j'he limerican Int:errogatories? J1s3 Exhibit 1. MR. K11NE: :•lhere is At3 17 TliE ;1ITNFSS: Yes, sir. 34 of the MR. GRIT:S11: I'm sorry. Look at page 32 in the first :instance, In the listing of 9 firms conuiienci.ng at line 15, did you intend to t'Zere 3.i.st the out-of.-stzto retail and wholesale outlets to whom you sold Cancer Cigarettes? A Yes, sir. Theae are out-of--state businesses who used or resold ourr cigarette. Q Notia, tell me one by one which of these was a retailer, cli was a w,iolesalrr and which was a company of another nature. A On number 1, Pay Less Drug, I understood to be a large drucl chain in Tacoma, ,1ashington, that had access to orr a re-- latxi-nnslii.p with a wholes-aler.

uu7 Pay l,ess i.t.%eJ f war. a ret.ail ---- T ;~ A I would normall;~ think af t'.i<1t, but sameti.n;c:; these i ~~ cc~mp.-mies havc snec.ial relationships that almost mal.c you vyoncler. I S .t .3 :1 .~i :{ ahether t:hey ,-1r0 conclucti.n g ng a i~~lrtial ,.Jholes~-~le operation. 0 '.•7as the sale to Pay Less underatood by you to be a sale for A `l'(:) a retailer. n To a , retailer.? A Ye s, sir. . Q Item 2, Ohio State Life Insurc-ince Company, I take it they wc:re neither a retailer nor a wholesaler of cigarettes? A That's correct. 0 Highland Park Tobacco and Candy Company, was this a sale to a retailer or a wholesal.Gr? A This is interesting. Highland Park Drugstore calls us, but we shi.pped to Highlnnd Park Tobacco. I don't know whether it' ;; a coincidence of' na1ie orr whether there indeed is a whole- sale•--r.etaill relationship in. that. That was always rather con- fusing to me with that f:ir..m, sir. (~ You never found out whother your sale to them was a sale to a wholosaler. for further distribution to retailers? A I (lid not have a compl.ete und.~.,rstandincl of the ultimate disposition of those ci.qare.ttes. 0 A.. rlac)coul. TC)I)dcco Co., Inc. .•las this a retailer or a '.ahc) ].c:s<<ier?

tcxcst .1 1. uncicrstc,ncd that to 1>o a ,dllol(3~-,a1Clr, sl,r. j) TCPl '.ioolsol"l H:L(Jil`,Jdy Pharmacy, tilhoa.cr sc'ilC':r or retcli 1C?r? „ ~ 1'c t. a i. ) c r. 4 ~~ Isar.ry i)rug in Royal Oal:, mic}iicran? 1 I;e t%iiler. Sav "1or Stor s? t i e A hetailer.. 1)uf'fs Phar'macy? Q t A A retailer. 4~ P. O. Poole? : i . A I have since come to know that ;,ir. Poole is a retailer. You dicin' t know it at the time? 0 ~ 11 Oel1, I had a hunch he was and that has posed a real prob]ein r'T].th ;;r_ . Poo1.e. ~~ What problem? A ri '!'hare ha s been an imposition of a cigar(.te tax stamp in the State of Nortli Carolina that has led to a great burden on Percy Poole and that is Why this is still an active situation in r7y account aooks, and that's why I want it with me. t~ Is it correct that on page 33, beginning at line 11, you listed insofax as yourr existing recor.cls show, the dates, quant:i.t.ies and dollar_ volurae of sales to these nine 1--)art:ies %-ie havo :ju^ k di.scu saed? h Yes. tI nm I c:orrect in reading this that the earliest of any of

_ ..... .___....___ ,.._::r~... _...~ ~ i i'ict!;r ,Zl]c,':3 .L !3.,1dr(,:'1 31, 1967? I just want to gct a.t into the 1' ;cnrd . 11 Tai1t' S as c1o:..C' as I can see, sir. c! r~ And that the iEl1eS to one or mor.e of these firms con- f rortl.iand, Oregon, did they not? A Th at' s cor. rect. t;i.nooc; to nract:icc-Y11.y t'in nr.e -,ent time? ;, +1cll, a lot of thom dronpeci offf the •Iagon for one reason orr anothc:r. 0 And _ju•3t as in the case of the retailer s, all of these s11-< s tooJ; place subsequent to the visit of ;4r. Grout to ~ Do you claim that Reynolds interferred in any way with }= your sa1.tJs to these 9 firms? ~~ A T have no such knowled. e Zt this time. ~ ~ a : i (1 May we return for the moment to the suU ject of Mr. =------..~ j veorc(c7pulo? You note in your letter of March 10, 1967, that , thero was an order for 500,000 cigar.ettes and with that letter you esent a check for $6,000. A Yes, sir. Q My arithmetic is that would figure to be $1.2 per thousand. A Very we1.1. t) I:s that aclrec:able? ~ A I:' 11. accent your arithmetic. () It turned out, sul)requently that he cliarrIed you $13 per thou~;rznd for a11 of i:hc.:;e ci.qarett:es sent pur.suant: to that order,

I clon't. rcc~il.z t.~hat t!ZCv~r. final c:iarrjes were. t+ ~ I , n I can sho~e you all of t'),-~ invoices, 11% 12, IR 15 and R 1.6. A; , i not corr~.ct that the nra.co actuall- y citarcled wcv:i thirteen nc X' t:tlou,3i)nd ? :1 'I'hat cauM h,.lvc,;. bocn, sir. r~ Do you know why it wjls that vou sent aim a check on :taxcl~ 10, based upon a ne;rr thousand price of $12? A I imagine that. rc^5ul..tecd from his directions. Q '}lhat directions are you referring to? A 1Ie prohahly said, "Send me a check for $6,000 and I' ll start:: producing this product. " ¢ 'V-7hen you actually got billed at the rate of $13 per thoust-ind, was there any complaint made to him? A r I don't recall ti-ii s gross variance occurring to us. It's poss:ibl.e we should now apply to him for a credit. Tam just trying t:o find out if there was any dispute •I betwoen you and Mr. CYcornopulo about the price of this order? :t No. No, sir. I~1ppreciate that information. Q Yesterday we covered in the testimony certain of the pavl+lent:s made by you to Mr. Ceorgopulo, marked certain of the checks . T' would la.}:e to just. complete that record. Did you s,end t4r. reorgopu]o a. chec;; for $500 on March 15, 1967? n No, sir. 0 t~c>Z.1., I was aL)out to show you A13.62, page ].0: Does that ~ , refresh your Tnemory?

N That coul.d be. Z guess I c3i,d send it. I t.hCu(jht Mr. ;;~r a na~:~c}~ sant i t, htit ~~~~p7rrynk 1;~ I scitt: it nncl();rcl with this lc:i:t.nr, c.i..r. Ttld. GI:II;S1~: :7aixld you mar}; this as the~ next Reynolds (A coPy of a c}icck to C. A. Georgopulo and Co., Inc. , dated 3/7.5/1967, from Paci fic Tobacco Company, was marked UET'ENI7NJT' S EXHIBIT R 21 for identifi.cation. ) ~ (13y Mr. Griesa) Is this the c',ieck referred to sent on ;larch 15? A Yes, sir. It is a check that is dated I•farch 15th, signed by Mr. Stei.nbach. i M.R..GRILSn: would you mark this as the next Reynolds Exhibit, next two heynold;, Exhibits, pleaae? (h cony of a l.ntterr to 1•+.r. Panos Georgopulo, dated June 20, 1967, from Stan liar.t:man, wa , marked r)I;r'LN,nh:JT' S F;liII3TT r; 22 for iden- tification, and a copy of a check to G. A. G(:or.cJc,pulo & Co., dated June 20, 1967, in the amount of $776.23 fr.om Pacific 7'ohacco Com,)<<ny, !•ras mar?ce<.I M.,T1.:IUnNT' a I ; -1

. ft l .._. ._.. ...-..r:. ~-..cass.s.sw.~u. ' 1;xH z;3IT lt ?_:3 foy- i.c'; nLi. Cicali.on. ) I ;! ;S F V :t 0 (,3v Mr. Is I; 22 e-l lettea: whicli you sent to Mr. c;,2or[aohul o on .Tune 20 Cncl(~,i.nrj a chock for $77G .23? n Y e.^, , s i r- . 0 Is P ?.3 ihat c:hcc?; or a cooy thereof? n `1"irit could he. Yn,s, sir. S•]ait a minute here. Q Comr,are it. A rll. right. `1'hat', fine. Yes, sir. 0 T woulel ju,3t like to have for the record the total number off c::i-garettes receivad by Pacific Tobacco pursuant to this finaa order of March 10. You actually received more than A I believe there was a circumstance that led to that devea opmcrnt, ,ir.. Q And the total amount. received by you pursuant to that 500,000, did you not? order was 596 , 000 cigarettes? A That's correct., sir. 0 Do you know why? A I think that hanos was amenable to the idea of using up all our labels which ~.ve t!iought 1-yas an excellent idea, inasmuch he had shut us off and we wore glad to pay for them. ~zs; I Q Youu test•ified to Tir. Ilillir.jr.c3 that there was an occasion 4 Yes. ~? - tliere was n 1ryt.tnr nent to i-]r.. ceorclopu].c~ under a 0 CD %0 ~J1 Oti

;ict.it.ic7u.~ n~ltnc anc? t'z~7t le-tter involved a t•Inrtha 4r.icrht. I ,:orr't want to qet you to t•(-,neslt t:h~-At tostin~ony. t'y only quo>tion :h ~.Vou is when you received the reril.,y from :Sr.. Georcronulo offer- nn ~zV.; 7011 allerro to r:ianufr)cture the ciwirettc~-, for the f.ic-- 4. ). t;j.C)Lts C:orrc,any, l•)ilcltt follC)~1"u» !•IR i then ['1E1C3C: by yC1U or dnyont.'e c]sc: z.lt 'Pac:ific `J'ohacco? ~, No:ae '.Jhat;oovc`r. ~r Any follo•a-un rnade by 'tartha Wriqht? :; No, sir. ~~ :[ would ask you, Mr. ----- t~ :C should also state for the record that's not a fictitious }et.t:er.. MR. GRSrS1i: Ilr.. Kane, I wonder in connection with your i.nquiry for documents at the Duckhorn firm if you could inquire they have any corresnondence ---- TliE :1ITNrSS: I kno%7 where it is. Good idea:-- w r t1I:. GRII,Sh: --•- to Ceor.c,ronulo. That may be where the artha V:'r:iq}it cor.r.eshonc?ence is. I would suclqc at ---- MI?. KANE: I will attempt to, ~.vith the permission of ';r. I,ei.clh, to review his entire file and if there is anything t•hzrt- is even r.emoto_].v ner.t.i.nent or relevant or even of interest l' 1] see what I can c7o. P9R. IITI~LInIt~: r,r.. Karte, l1r. Jiar.trrtan is a client of that cIfficc. Iie hc-is an 7bsolut.e right to qo in now and look at i'ZC>~e fzle~~ . 4c r.ot-ilci .jave it for the c'amnl eta.on of t his

£304 ion if yOu caaulrl t-alCe him down t.:her.o. , I '1'IiF. t•1I't7•ll? SS: Mr. llill.i.nrd, in the discuss.i.()n of ri.u'its, ,1:1,~re clc~e:. the r.elat.ionship hetwec:n client and attorney begin and enc3? IIR. IIII.LIA1;i): :lot: right there in any event, just talking Lo y(.-.)ur attorney. MR. K11Nj:: As II made clear this rnornincx, I talked with '.)ot.h Mr. T..eigh' c secr.etzry and also with Mr. Leigh's Partner. Mr. I,oi.gh is on vacation and apparently the files are in ; l;eacan' ; dead storage. zt:'.: an inactive file, so it-would require ~ cever.al days and Mr. Klarqui yt prefers that Mr. Leigh dig into ~ it since it's his matter. Trii. WITNESS :' I should note for the record that firm has moved its offices from down on 5th. I think they are in the i i Georgia-Pacific Building now. MR. GRIESA: I would join in Mr. IIilliard's request. If ~ ! the docunients could be looked for at the noon hour it would 1 exncadf.te this. ~ ~ ''-IFt. KANI:: 2' ]..1 try. MR. HILhIhRD: They wa.].l. be available at Beacon' s dead :storage. :•le all. use 'icacon's. That is a Conlmon practice in law fir.ms. A11 vou have to do is get in toiich with them. They roi.l.la produce the file out of the storage file. :t ,II.. KniJI.: z' ].]1 att eTnnt as soon as -- my watch says ~, 0 N ~ fi.ve. to 12:00 -- to see if Mr. P,larcluist ca:-1 be avai].ab].e during co 0 ao

t.11e r.,ior,n hour to resolven aii ,1,1at.tar.. ; t f : 1 I I (By Mr. Griesa) 7T now you J:xhi.hit A13 90, which are your Orec1on excise and l'eoeral incolne tax returns for. 1967. Thsst i.s, the returns of Nccifir. :'ohacco Corr)orati.on. You see tho:3 C'? A Yes. I see thoso. 0 I direct your att.entinn to the 1'ederal. income tax r.eturns. To the host of yourr knowledge arc-% those returns correct? A Yes, sir. 9 Is it correct that in 1967 PPacific Tobacco had dross sales of 5?8,2G2? A Yes, sir. 0 And made a prof.it: on such sales after payment of all ani7lic<<")lcs expense:s and taxes of $115? A That's what the form shows, sir. Q You have reason to doubt that form? A I have no reason to doubt that form. Looks like Pacific Tobacco Ss a doing better than Penn Central, doesn't it? ~ t•lould you ho able to tell nie what quantity of cigarettes i-s represcatfad by the dollar figure of $8,262? A I can't brcalc that down, sir. (~ xs~ it correct that you filed a month],v report with the `;t<<t:c: of Oregon li..stincJ your A Out-of-state - -_- n --. sales of cigarettes?

_ ...__ ........... . . _..: ~,.,_:---.__4:__. ,~~.s Yes, -s ir.. I Sho~-I you A,3 93. I hr+ve tiirnec3 to the PR7(ja ~v:Iich, one r,;: t.~lc sev~rril pr)(Ie.:, v"?tic'.1 is hc:ad]ed "S'1'71'.l'h OF O1,,ta(,0,4 CIGnal:;'1i'1: 4 . t)7",'1'R:[:3U7'toR'S 'J':+X RL'TUI d. " You see this? Y~~s . :>>i. KT.:~I.: 4oul(I the court reporter mark that with a nun-ber, please? s; P1F:. GRIF,SA: Why don't we mark this 93A? (A copy of a document in DEFENDANT'S i rXIiII3]:T AB 93, entitled "STnTE OF OREGON CxG11R13TTL: DSSTRII3UTOR'S TAX Rk:TUP.'J STATE TAX COMMISSION Period begun March 1, 1967 Period ended April 1, 1.967" was marked 93A for identification.) GRIT;S11: Let's state for the record that 93A is the Ci.clar.,:~t:te Distributor's Tax Return for the month of Atarch, 1967, and it consist of four nages. o (By Mr. Griesa) Did your firm report monthly to the Stat.o of Oregon as to tha number of cigarettes purchased during . . , , :7 tn,"t. 111011ti1 and t:he nur,J)er of cigarettes dxstr.ibuted? A Yes, sir. Q And line 3 of Part I. of such report UeDr.s the heading "Tml~"or-ted from without Or.erlon. " For Mar.cli, 19G7 you rePort- a figure of 258, 400, is 0

0 t'l;xt. Cor•Lts(t? '7"hat' n cc,rrc~cL•. ,ry St ate of OreUUn corroct? .; ".le:., sir. Anci wit'i resnoct t:o thr! notation "xn.oorted frorti ',-;ithout t t r o:re(~on," all of the cig~~r.ettes wllich Pacific Tobacco obtained ,at?s 0 irnPorted from wit'iout oreclon, were they not? A That's correct. To the l)e ,t c,ff your l,no•,-iledcle nre the figures contained 0 Now, if- I tallied un -- strike that. In each off these r~~r. orts there is under Part 1. a line 8 head4d "TOTAL DISTkxBU'1'IOtJ: hUI:IiJG P113RIOD. " 1VIt -I not correct? , . r Q And if I add all off the numbers under line 8 in each of r ~( t?ic-se mont'zly reports for 1967 ]: can get the total number of ; c.i.ciar.ett:es sold by Pacific Tobac.co in that year, can I not? , A Yes , si r . ~ I A That's correct 0 There is a further category under Part 1, "Tax Exempt DiE,tri.huti.ons," line (). Iiere for the month of March the number is ;Z5,1G0. Did that r.c:f.er to sales to nar.ties_outside_of Oregon? A That.'s cor_r.ect. MR. G12I1'h11: Inc:i dGnta}.].y, I mirJ.1t read into the rocord the total distribution from linc: 8 hoth inters tate and intrivstatc a.4:3, 560. O, a ~ ~

L-~i;' : brC.a?; Ior lunch. (I ccc~=,.;^c1 at 12 :03 unti.] 1_:34 p.m. of t:he camc (l<ly. ) d 1

W) ) !1T'9'!.i"l:lO?J S1i11.11OiY a. : 4() n. nl . 4 T.1?11 :11,dCF;S : 1•1r. f{Gnr-I Kane, T.t:tor.nsy for Plai,nti.ff:; , t : Mess rs . .Ic1'Jne Hilliard and Stanley R. Loci), Tti.ornF~ys for 1),ufenclants `I'he Aynerican To,bacco C:oI`1?7dn_y, Inc. and American Iirands, ]:nc. ; '•7essrs. Thol,iarc '1. 'I'ri.plett and Thomas P. Griesa, Attorneys for Defendant R. J. Iteynolds xol,acco Company; Mr. I'red 111. Aebi, T.ttorriey for Dr-.fendant Loew's Theatres, Inc.; Mr. Donald W. P•ScY,t•7en, Attorney for Defendant Philip Morris, Incorporated; Mr. Dennis W. Skarstad, ~Attornev for Defendant G. A. Gcorgopulo & Co., Inc;. Mr. Allan Itart::,llttorney for Defendant Liggett & Myers, Incorporated; Mr. John 1;. Sabin, Attorney for American Machine & I'oundry Company, AMF. PROCfaI:DINGS , , V 9311 through 93,7 for identi.fication. ) MIR. GRZ:I.S11: Mr. Kane, you made a statement off the (A group of State of Oregon Cigarette Distributor's Tax Returns in DEFrraDA.*aT' S rXIII13LT n13 93 from the period beginning 4/1/67 through Dccenbor 31, 1967, wwere rnar.)eed record ahout the documrcit: record, please? situation. Coulcl you put that

`1 ~10 '.tit.;i respcrGt to R 20, nncjes 3 to 6, which is t~ ,~~,r;cript of n t:anc rocorc:in(j made t)y our secrotary la:,t fall in our offi.ce frorn the nersona]. t:ane maintainec) by 21r.. S)teinbacir, v;o informec, dura.nu the noon lrourr that t9r. Steinbach had di.scc_>vercd that tapo slior.tly bef.ore it was to be discarcluci at: hon:c, in Bnnks. '1",iat aLioul.d 1>o avai].ahle to you for conying torunrrow rnorninq. Secondly, I made a r.eferenc4 this morning t.o ~nt.t:orney vaor'r, product communications and a reference to a i.tr. Ituydens and this was a piece of note naper that T1r.. Ilartman preparod as a client to attorney conununicat:ion or series of 4 ,` x .t :t communi cations under our direction after we were retained to reprc;sent. Pacific Tobacco. There are Wo items. I'll let those speak for l liern<.clves , unless vou want me to read t',iem into the record. 't'his, camr from our attorney cvork product file. Pft;. LOL[3: That's ind3.cated by the two-hole punch at the top here. P•lR. KME: The U-io-hole punch has no MR. LOI:13: Are all your files that: way? MR. KANE: Fxcuse rne. The two--hol.e punch that has the si.gnifi_cance in the panor, t:he ,ahite paper. This is backing that ~•}as zic]ded during the noon hour, or whatever it was, but r'eCen't 1V . But it was *-)r.c'par.'ed undor our c3i rect.ion and wa s undnrr;tnod by all conaarned to he attorney-client or client to attornv-~y . c:ommun ii cation. I

tl:. GRI1;S71: '!"lan]: yr,u, J1r. Kano. I would l.i.lce to you or !Mr, (lartmtiri if you knovi what fi_l.e R 20 ca~nc from, 1 nc,)ti.co- a t',•yo--hole punch at the ton incii.cati»cr it wa., part of fi.le.: ;~ '1R. I:A?~::: PT . llartl111n, do you remember? I w~~s not nresent , t z tlc'.]1 tllc'lt w1.', be7.nq flnnF'. ,'las it out of our attornC'.y worlk I ~ ! r>rOc-lUCt file? 4 ],SS: It's out of the attorney work product. s I i f MR. GRI::Sn: tiave you given us the entire -- is there attc>rnoy ~aork product file as such? ,"IR. KA,1r: Not by that titl.e. an MR. GRIESA: Uell, I would like production of whatever file it was from, whichever R 20 came from. MR. hnyr : t f it' s an attorney i•ror': product f i le you' re not qoincl to clet it. w?R. GRIESA: You heard my request. r1I;. I;nNI? : Fine. So noted. MR. GRIESn: Can we »roceed with the questions? Q (By Mr. Griesa) Just before lunch I showed you Exhibit 9:3T., the Or.c~gon Cigaretth Distributor's Tax Return for Tiarch. tdo'.a, I have had the reporter mark during the noon recess the returr>> for rtnril throuclh December of 1967 as Txhihit 93t3 through 9:3,7, ancl I wonder if we can go through these quickly and I ask you ,•ihen we have gone through if those are in fact t}ie tax returns submitted for those mOnt:hs. 0 0 Can you just foll( a ~ %10 oN Ln

, r t~lc:V? .Iero Yn:> ]:' 1.3 :,o ql;acl to. ~ If I(ro too frl~;t. "'Yoll (i.ndicat.i.ng) . Is it corr.c:ct .1 O,-,t: r)3i3 tInr.ourIh J are t.')o. Ca.cTarctte nistr.ihiztor':: F'oturns for t'.)rouc;h I),~cE?r.11)or, l.`.)G7? A Yes, sir. (R yellow sheet of' naner with two acl(ling mar.hine tapes stanled to it was marked UIaFMNDANT' S EXHIBIT AB 93K for identification. ) GRII~:SA: Now, I also had him mark 'for identification 1 ~'in e}:hibit which I called ~.tl 93 K, which contains two adding machine tapes. I want you to verify these tapes. I just ~-i1nted to have this as part of the record. ^~.`hat will be sub ject to verif:i.cation later, but: I would like to state for the record that I have added the entries for cigarettes distributed from line 8 Part 1 of a1.1. thase returns and my addition shows a t.ota.1 distribution of cigarettes during 1967 oof 441,100. I have al you added the entries for cigarettes purchased, that frc)m l.i.ne 3 of Part 1, and I get the figure GG4, 400. ,loul.d you mark tlii s as the next exhibit? (A letter to Pacif:ic ',obacco Corp:, dated T.uqus t 4, 1970, from A. P. nnderson, attached to two balance sheets, was marked is

; ~=r---- ~- N:f•'I:TiD11NT IS i:XlC.II3IT It 2 4 for a.cten-tification. ) (rhort r.eces:; taken. ) ?il;. 1;AN Mr. Gr.a.esa, do you want me to mer.el.y hand to y(:)u, or do you want me to read them into the record? 90:3 r1R. GI;I:SA: I.,iou].d ratherr you laouldn't hand them. If you would h and them to mce and des cribe generally what you' re harid ing. MR. KN•]R : I wi l l h and you an hnri 1. , 19 ---_ t•1R. GRIESA: Are t:hc.se records that you have obtained a 4 ,: , from the I3uckhorn office? NIR. K11Nh : YeC, A secretary dave them. to me and I sign(-j!d a receipt for them. They purport to be from the files of the }3uckhorn firm and there is one letter from, or to Georoopu].o that I am not familiar with. MR. GRII.S11: l1ould you mark that as the next exhibit? (A t:•io--page copy of a letter to President R. J. Reynolds Tobacco Co. llinston-Salem, North Carolina unsigned, was marked DEFENDANT'S I:X11II3IT R 25 for i.dentif.ication, and a copy of a letter addressed to "Blank Distributor" unsigned was marked DI.fI;NDT.Nx'' S I.XfII13IT R 26 forr a.dentification. )

9 0.1 ? jn1.i:R11~> -.7SL:sc'1 and the (77it:C. "11/17/67" and tlle addre~is Reynold:a Tol)acco Co. l:7inston->al.em, North car.ol.ina. :Ir. liart:miin, is 11 25 one-e of the documents which i ; ~ . I + i ;ra~, encl oseci with the let:t:ei' of :1r. . LciUh dated hnril 19, 1967 n:zir)c:ed as R 14? 1 It hlust have heen. I don't reczill the transaction. ('3y Plr. C~ri.esa) P 2S is a document bearing the hoading Is the same thi.ng true of 1~ 26, which a.s a letter bearing t-:le sclaee ina.tials an(l date addressed to "Blank. L)istributor."? A YeS, sir. ? Now, does an examination of R 25 and R.26 refresh your I memory as to the reasons no letters vere actually sent to the distributors? Just referring to the distributors now.. A This would have been a lett:er that -- this is a recommendation of Mr. Leigh. S? yr_s. I understand that. find that neither that letter nor any nirailar letter was sent to the di rtri.uutor,, was it? A No, sir. No, sir. ~~ You said this morning you could not recall why no such :l.etter was >ent, and I am askinu, you if an ex7mination of R 26 ref:res,her; your. memory as to why no such letterr was sent. l1 .4o, but I did state in discusaing this matter with M r. ;;teinbacll why i.t wasn't sent and he says --• I don't -- if .~ic:t fi.r..ed. I recall we didn't want Grout to r

-. . - . .. . . . . .. . _ . , . . ... . , , . . .. .. _ . .. .~ i./ 1 YOi.a tr111ci»cJ :)~)cAlt t:'ic? lett,1r to T;eynolcls? Ye s . An oxcuni.nat.ion of T: 2 S, •:,hi.c!1 was, a dr. ~_tft letter to ;>>}c~lc?r:,, do^s not ciuse you to supplement that statementt you j,~'>t. ~77c1n? N' a. :Jo. I li<<d fornottrn ahout t?ds c:nti.re enAsode until i t:. oar dug up here. 111". GRI?.SA: I •iould like marked as the next Reynolds exhihit this document. (A copy of a letter to Panos Georgopulo, dated April 13, 1967, from Stan Hartman, was marked nx.rr,aDANT' S EXli7?3ZT R 27 forr a_denti.fi.cation. ) MR. GR:IiESA: Thi.s is R 27, a copy off a letter from Mr. Hartman to Mr. Georgopu].o, dated April 1.3, 1967, and is the swne as ~Ab G2P15. I don't need to ask Mr. Har.tman about it, but I~voulc', merely state that this is a document which has been produced to us by Mr. Kane from the Duckhorn firm file. Let mc ask the witnes s about R 24. 4 (By Mr. Griesct) Can you identify that for the record? n This is a cover letter to a series of financial statements dated 1?.ugust 4th, hnderson, CPA. 1970, and they are prepared by Arnold P. ~ Does R 24 contain the lialance sheet zYnd income ,i:ateiuent for the years 1967, 1968, and 1969?

Yes, sz.r.. '1'han!c vou. I3eforc lunch 1 was asl=.incj you about Fxhibit { , ; 4 i0, ~;?ll.r.h containr the orecicn I?e:cloral TaY I:(-,turns for 19G7. In i no I?ecler,-)1 and State return> there is ).i..nt.ecl uncler the an item of $1473 headinu c?cclueta.on ,. You see that ( inc7icating) ? ", It is under the heading "other cteductions." Yes, sir. I ~,0 r tt-itit. n Is there a schodule attached to the Oregon return itemizing the $1.9 73 amount? r'1 Yes, sir. ~ r ~ ~ ~ ~ To the best of yourr knowledge is that it.ernization correct? 11 Yes, sir. p Included in the $1473 item is $G78 for freight and postage. V.hat freir;ht and postage c?o^s that reforr to? h Fr.eidht, payment for freight, shipments of Cancer Filter Cigar.c.tt:eu into the State of' Oregon and an accounting of postage r)aid on cigarettes shipped, mailed orr freightod by us to other fitilt:e:y. ~a Am I correct that none of the expenses or deductions used in calculating the $13.5 profit refers to salaries? A That's correct. 4 And none really refers to anything that we would normally c:nll. overhead? A That: is correct, in the sen se that you asked the question. 0 No~,a, did you and 'tr. Steinbach have any 1?lan forr improvinq

))(?YOnd tite virtual break-- ,•~. »oa t)t: nlio••rn 1.)y tll^_ ,c statc:mantS? ;, 4e sure 1tad. ,~ Cou1c3 yOu de ac)'il>Ci t?iat plan? A increase in volur,te to accomplish such a thing. C.cnccrr J'iltr:r Cicl(rirett,-~~, t`irou(tiiouit tize CJni.t<~d States and the freo vorld, if: pos sihle Our ?A.an is to ~cet distrihution, to broaden the sale of That -aoula involve an increase in volume, correct? 7'h~~t would involve -- why, of course, it would take an I # t~ i Did you h zve any plan for cutting yourr percentage of ex- i)enc3it-urc:r and costs? A I thouaht we were al.ready doing a pretty good job of that, sir. ~~ So you had no plan for decreasing the percentage of ~ costs and exoenses incurred? ~ t. :[ would say that wht-2tr_e we could get land delivery in 1 ~ prefercnce to air froigtit, for example, we would certainly prefer i G I i t: a f the ti.rte perrni.tted. .',my otaher el.ement of cost or expense you hoped to reduce? A a'ha.t one cot,Ies to rnind. T.t the present time I can't c think of anything else offhand. One thing, if we could get G1.St1 ].i)utC~rs you could cut down on Stanley running around de- li.ver.i.nc3 Z,11 tiie tilrIc. x would rather deliver to one distribu- tor than I would ton retailers.

0 nf cour.:e, you ~.roulc3 he nelling to t'i,-~ c:i.stri'>>.lt:or at Zr!7;s tah<-tn ynu vioulc? I-)e sel.l.inn to the r.c~t:'ji.l ~%!c,ulc'. 7o<< not? ,1 '1"h~It's riry'lt. That's ra.(-!llt, sir.. n I r,tiovl you I:x'ia.bits 91 and 92, wilic'i are yourr t.zjx returns, :)ot:''1 Strit.~i and Fecl•-.ral, for 1968 Znc3 ].9G9. To t`_io~ l)e,;t: of your ;;n01,1lec?gc are the f.iryurcs forth therein correct? A I neverr doubt Andy' s f:i.gures. r i 0 I asked you this mor.nin( j iff you could tell me t,r?ien it was that t9r. Robert.son nai.d a visit to Collins &"Olilme s, and you you couldn't. r.omemiaer. I show you P~!ynolds F:xh.ibit 20. 1 Mr. Griosa, I don't recall you asking me such a question, (:)ven. t~ t`'el l, I' 1l ask it to you now. Do you recall whon it was that ;1r. Rol,)ert.,on mac3e his inquiry of Collins &;Jilrnea about .ahich you testified to ;~lr. Hilliard? rr No, sir. I don't recall whc:n he mac3z t'iose inquiries. I shota you Exhibit R 20, nacfe 6, an entry dlted Apri1. 5, z,nc7 ask you i.ff that r.c.freshes your recollection as to the time of such in<Jui.ry? A '.rhis. refreshes my memory hecause Howard made a notc:, lie Say s on npril 5th, he has in here his statement discu ssi.nc] Pa1 T,,,t1 Robertson. (? :;o was it on ntyr. i_l 5 that quir.y of Co] lins R.11ph Pobor.tson made the in-- ]t c:ou]c3 have bcon. 7t nnist havr--~ boon. Mr. stei.nbac?i

,'4 cnac:jC! il notation to that cf.fect. :t would lii:e now to go over a few ooint, r.elitting to I/ollr i1t:.tC?It11.7tS to rret nroduct;i.on from other sourcns tllcjn Gcoryo,)ulo. You rncall that :•tr.. Iiilliard as)ced you about r.o1Mmuni.c:ations bet~;jecn !ir-.].inn and Larus & Brother Company !I in t.'le i"a1.1l of 1966, and lic showed you I:xhiba.t 1113 17 and 18? Yes . I remember this, sir. n With respect to 1:13 17, which is a letter from Larus to La.nn, dated Septernber 13, 1966, did you see the letter after it `~ r~a::i received by Nr. l,irin? n I: am sure that I did, sir. Now this letter states in part "*** we would suggest that: you contact tlie _ Unitcd States Tobacco eTc_)urnal_; 99 Hudson Street, New York, New York, for the name or names of a manu- fact:urer specializing in small runs of cigarettes." Did you or anyone from Pacific Tobacco or anyone .? ' in•volved in this enterprise contact United States Tobacco J ournal? n Web could have. I don't recall, but I -- this does jar my memory. I think I was looking for this Journal at the library, Portland Public Library. I could never find it that I r;:z"Ln recall of. Q You don`t recal l anyone writing 99 Hudson Street•, do you? n '-Iomc~one could have. I ju st don't recall, sir. 0 idow, Mr. llart.man, the letter ask s, makes an al.tternative %,t W

:._,. .. _ . . - - . -. __. . __. _... _ ___~..~~...* . ~ ;u•1clc~;ti.on that tr. I,inn furni.:~h con~~~lc+tc c7aLui.1.:> on hcr:, you .K , I to i!).irket such a 17ir.oduct '.Ath u~~tail~~ on aclvertisi.ng, ;->l-o1;}OtiC)n and C71-StrJ.l)lltl.on. I`]O :;uCll [Ir'tFXia.-. '.Ji±r^ furni.shed to 1,arus , ,aerr tiley? ~, 'j'o my know].cclne t:;zey were not, sir. su.e'z uetails were again asked for in the l.otter of 9 octol.)er 7, 1966, from Larus to Linn, were they not? A 'r'iiat appear.r-, -t;hat ~.•ray, sir. Ar,d aqain no such details were furnished, isn't that Q correct? n I do not recall that: they were. .I 0 i i :: :1 You were also shown a letter dated October 13, 1966, from c:+-or,l,rinn ilrnt-ha?rS t[y I•tr. Lj-nn. A Yes. Q Was any follo:r-up made with r(--%snect to that letter? A tjot at that time, or I do not recall. any later cdevelbp- merit,c; on that. I think ,•re did have an T:13 somewhere that refers to l.ot:ters that Pacific Tobacco Corporation mailed to those. (~ Well, in response to the October 13, 1966 letter, was any follow-up made to Stephano? A Not on the basis of that letter at that time, sir. ~ In tl-iese form tax returns or form3 of returns 93A and so forth, there is a 7.isting of companies linder Part 4. You see that? Y C` ;, S 1. r, I do. 0 N 0 P a a P

0I] Qt•1c of ti1e Cot1,)a111.es 1.r `;tc:nhnno 1lrothc-:ra, anotlior is i 2 ` ., U. ~i . r2o17i1t;C0 ( of, 100 IIV c1n(1 0l('L"(o is an(-)tlier C)ne IZiqC~lO TOl)c"tGCo C'c~rp. Do you see tilat? n Yes, sir, I do. c7I1`j inqu] I?lmart )J'r Pacific Tobacco Connany or F]ny(anC'e invC7l.vC:m in this enter-pl].se of j?igg.Lo Tobacco Corporation? had in March, 1.9G7, with Larus &;3rother, United States Tobacco I have never heard of tilem until now. i•!r_. 1.'il_.l i.ard covered wi.t'l you cer.tain corresr)ondence you ' -inc? :~-:;t:c}?hano 13r.others. Excuse me. I don't think I need to cover anything on that. May I see, f•lr. Kane, a folder entitled "Responses to 1967 offers"? ~ (By h1r.Gr.iesa) Have you rjot Exhibit M 1 in front of you? A Yes, sir.. Woul.d 1.~ou nlease look at page 58a? You see commencing with line 22 there i.'3 a reference to a letter from Ronald G. Vi.ncrIni: to !9ado. 13. Pattnr son? IS Y e[l , s 1 .L . . . P-1R. GItII;ST.: Qoul.d you m1r)c thi s as the next exhibit, Pl.e{ise ? (A two-paqe copy of a letter to Wade ;3 . Patterson, M. P .1f . , dated Q N April 26, 1967, fron, T,onalcl G. Vi.ncent ~ aa %o LA

912 ~ 1 , ~ ; I i_n t`i;,.t Answcr 7'o Xni:errogatories? n Ye s, sa.ri p n:id you receive a cony off that letter? Did you receive (L3y Mr.. Criesa) Ts R 28 the letter refGr.red to in those ~ f the clocument before you, 12 28? A Yes. We received this from 1Sr.. Patterson. 4 14. h. , was mca rt;c:c] UI:L'Ia'J W1iJT ' S f;;ttIi3].T R 28 for idenri fff.cntion. ) TIII-. !;}lere did you get t!i.i ,? I sce . 11rid was it as a result of this letter that you made in- c;ui_ry to I3ose1 1•,endez Tobacco Co. and to Tobacs-Trans, and I3alec.>n Tobacco Co? A Yes, sir. j MIt. CRZI:Sh: ~ one, ? .S + .t :; ,, ;loul.d you mark the.se three as the next: (11 cot?y of a letter to Iialeon Tobacco Co., dated May 31st:, 1967, from Iloward Stei.nbach was marked L)I3I'I:NnANT' S rXIIZIiIT P, 29 for identification, attached to a copy of a letter to 3osel Menc3ez Tobacco Co., datecc Iiay 31, 19G7 from Howard StrinUach and a copy of a letter to Tnbacs-•Trans., dated rday 31. j 1967 from IIo%•rar.d

913 S t 'i l l l bt'l ca •) n ('3Y Mr. Doe s P 29 cont.ai.n 1c,tters you sent j to three comnantes 7 have Ju.,t referred to under date of C 31, 1967? ssir. ry ! , Q Whi-it are the docuwent~s? ~ A 't''lese are the let.t:ers that Pir. Steinhach sent. I ! i Q t am sor. ry. ~ 9~ A :[ am Mr. tTar. tman. ! , 4 { C .~ ; .1 Q Thank you. A You want me to wearr a name tag? 0 No. I'm sor.ry for the mistake. Those are letters Mr. St.e:i.nbach wrote following receint of the information from Vincent? . J A That's correct, sir. ;, 1 0 :3 or would the renorter do that? ('rhe: copy of the letter to I3aleon Tobacco Co. was marked the copy of the letter to 13osel a a Oere any r.er)lies received to those letters, P. 29, to your ):no;,a].ec?cle? A 11r.. Steinbach has in his handwriting indicated at the i) ottor, i:here was no renly from any of them. ;tit. GRIT'ST,: '.9ould you mark this as the next exhibit? MR. ]:AP,P:: Counsel.,wou]d you rflarl; t:hat: R 29 by the numbers for eac:Y pages, nl.ease, ~

1 c`')6cc(") C!.l. 1,rri i l?;tlrkecl V.2 an(1 the copy of t17c: lntter to 'I'U1.7dCi"Tran i . was fili.lrkC•d .13.3.) (n co,r)y of a letter from the Hong Kong Ceneral Chariher of Commcr.ce, dated 1. r.pr.il 1.967, address^d to "hryar_ Sirs ," was marke:d hL;I'1rNUr'1i7`.1'S ],XliIIiTT R 30 for xdwntific~-~tion. ) t? (By I'Ir. Grie.a) tlr. St,einh_a.c_h., c.v.h.at _i s R 30? I am sorry . Air. Iiar_t:rnan, what is R 30? A I1ould it help if 1: wore a blue wool., stocking cap? p 1'm afraid it .wouldn't.: help me. A What's the question again? p tAlhat is R 30? A rz 30 is a letter from the Hong Koncl Chamber of Commerce addr.-e.ssedd to "Dear Sir.s. " Was this letter received by Pacific Tobacco Company? A Yes, i t wa s. « Ilad an inquiry been made to the Hong Nong Chaml.~er of ~ ~ r , Con-tr,werr.e prior to At7ri1. 1, 1967, aabout tohacco or cictarette rU.r7talies? A Yes, sir. This letter ryi.ves you the names of two companies, liri.t::i.stt - American Tobacco Co. and lJanyanry Brothers Tobacco Co., 17ot,-,, in Hong ;;onq. ;las ~any inquiry made to either of those v m

I don't .r.ecall. that %rc :nac3e,- an inquiry t:o tho se comnanies, i :;ir. .•:1-tat' :: the date off that? t:he C7ate Of t11".It? c7:Zl;sn: T;ze date of r, 30 is r.nr.i.l 1, 1967. •~ o (;)y ?lr. Gricsa) You testified to Iti.lliard about an ! ~; :L;:-juiry through anominyues and y.ou identif:iea a memo of t :!ay 1£i, 19G7, A}3 27. Do you recall that? Yes, sir. I recall. that interrogation and this exhibit. Do you recal]. language in Exhibit Ab 27 about a third party purchasing the entir.e ca>>acity of r_er•tain companies? Do 1 you nc~c: that? Yes, sir. i.see that. I ju~-,t want to ask you simhly did you hear Mr. Domingues stato what the third party said? No, sir. r Did you hoar any of the comnanie y in Tijuana or Chihuahua ; !,tate what the third party Said? .. j~ No, sir_. Q You, of course, c?idn't hearr dixect].y from the third, party. No, sir. R (~ You have no i.rlua what the identity of the, third party ; refe)'.recl t:o i.s, cto you?

S I can oI"1 l"7 .`i:)CCuldt(_'.. A GTtII:.`;11: 'r)oulcl ~lou mar)c t:>>i.s? (A cor)1 of a l~~tter fror,l Cigar.ct:tc. Factory Privat^ Ltd. , ,Trnakpur., !1~r)tal, dlZt.ec1 ,1nv. 14, 1967, tto PC'c7r Mr. St:e]_n!)t'1O, ','1r,1s Ttl7irl:+:cZ I.»;FE !anANIT ' :: I.XHIBzT P. 31 for i.c?onti.fi.cation, attached to a cony I of a reply letter to G. M. Dev<<cota, dated December 5, 1967, frorn Howard ,; tainbach. ) (liy Mr. Criera) P. 31, would you identify the two pages n of l: 31 for the record, please? 17 R 31 is a letter on the lei:terllead of Cic?arette Factory A Il:i s 'lajesty' s Covt. Of Nenal Under_takinu,takinu, taith an address of ,Tan-F0;:pur, r1ena1.. 0 .01as that letter received by 14r. Steinbac}i? A Yes, sir. p 7s the second page of Tt 31 a letter of December 5, 1961 frolll !1r. St:einl)ach to the Cic<<ar.ette Factory Private Ltd. in ?lepa:1 ? 11 No, -dr. I thi.nk it was 167. n '67? A That's corr.ect. p Th~-u~k you. You •.vero asked ~ by ,"•tr.. l i i 11 i. a r. c1 about a l ca t tOr. o ~ co %o CD 0 _w . .,. _ . r . . .. .....wwy.+W> .n. _ •v~

oi' i-i<ay :37 , 1907, from f.tei.nb.1r.'r to tir., r,i_rsscll l,nr(l, nts 71, Arid you coulcln' t u11dor stand what connecti.on : tr. Russe11 Ix)i'Cl 1:1<~ 'll.t h fh1:3 1;l~tti~lr". Z s it CO] r'Ct V1Zt t1rOUqtl ;•!r. Lord you were rofer.rod to the country of yepall for no^~sa.>>] 0 i-r.ociuction of ci.rraratte s? A is nos>.i'rle and coa.ncic3entall to t;lat I should d t} I I d en . 1 :) r~o~~ lr.~t. C>> :e IIoward who in the dcvil I?ussell Lord ~.r<<s and hr said that he i, one of the t:op officials in the t:rixt:ccl :;tat.es Govnr.nment in the A.I.D. prograrr. 0 It is correct: as indicated by R 31 it was through russell J,orc-I that the inquiry to P7enal was made? . n That is correct. MR. KnNE: 'dou]d the reporter mark that second page off e;:'7ibi t: P-1I?. cr,zEsn: ][' 17. put: pacre numbers on it. MR. KTJ]E : I f' you would, please. i (n copy of the letterr from Cigarette F'actory Private Lt.d. , to I:oar Mr. Steinbach, dated Nov. 14, 1967, marked DT'I.'DI1DI\.I•7'I" S DXIjII3IT a 31 was rr,arked 1 and the copy of the reply letter to Mr. G. M. Devacota, dat:ec; Decer.iber a, 1967 from i(oward Steinhach was mar.cc:d 2.) 0 (13y i1r. Cr.ie~.;a) I would to.touc'r for a roorn~~nt on

, I I t i :3 itua ti.c»i vi th T:!i, ) i 1 c~~tc l.;r:v~~.lr) :~cr.:;, Inc. You iclc~;,t.z fi~d :;;;}-ii l) i.t r1 i* 74, I bcl.ie va s a n i iclreemcnt cl, -ctc, d .7uly 10, 1')67. n Ts it correct. t'.vct for the balance of that yoar and u,itvil. ,Tnnuzry ]5, 1968, you entrusted to Pr. Friis of Impact the rest.>on<;ihilit.y of obtaining Sources of production? ',"je could not; obtai.n 1?roduction and I-'rii.s took that n upon himself, sir. You entrus.tea that responsibility to him for that period? Q A IIr hacl ol)I.igat:lons that were co].nciCaental to that entrust- r,tont as you may charactcrize it. '1'he answer to my cluestion is Yes? Q A Yes, tliat's correct. .~e had a contract. You also identified a letter 7~,3 98, a letter from you ~ ; ; to Poc;ler. Ti_llaury. T t-7 ant -_--- t9R. ]:nNr: I think he testified it was a memorandum. Q (13y t]r. Griesa? Tt's immaterial. 1 j A It' s a memo addressed, "Pear T?oger. :" undated. 1 Q 7I want to be clear on this. t•lere the statements that : you r<ade i.n ' nB 9 8 to P:r. Tilbury true to the best of your :t kno,4leclrIc-~ at the ti..me you wrote them? 11 Yc,r,,;ir. Pa.rticularly inasmuch cis they were attorney work, a c:ornmunicati..on bet:ween a client anci his attorney and tha.s3 ].xt.t,le client wanted to lcnoa hva these thinel s U.:corne bill- :_)oi:c.rc]c~d t...11J"our{ilr)ut the countr.y. ~ 0 N 0 a ac kD OD ^.-_. N

n 919 . ., . ... _e: .,~,.. . . ... . , . . _. ..... . _ -.. _ I:n ttxis At3 9E; yoti recorcir.c3 ~-iccurrately yauz• oFZ:er•vati.ons of Mr. T'rii s at the timc' you met him in 1-9(;7, (:1d c1 yC) •U. n O t? P 0 YC3s,'31r, 11nd I tJl.ih to ('::j;?and on that. You can e?:ridI7d on cro~-,s 1~~! your CYan attorney if you ,;c,tl]ca. You recall VAat: one of the eompanic:: Mr. I•'r.iis reportedly ContaCt['Ct las Continental Tobacco? A Yecy, sir. 0 1)id you understand that Continental Tobacco was a private label manufacturer? A :C had neverr hear.d. of them before till he mentioned them. n After ho menti.onec3 it did you 'understand Continental was a }arivate i.aibei rnanur".acturer? A Yes. :•dait. I had no way of knowing one way or the other what their game was. '1R. GRIBCn: '7ould you mark this as the next exhibit? (Copies of a f:our.-raqe document entit:led "ANNUAL RI3PORT 1966 CONTINENTAL TODhCCO CO,dP11NY OF SOUTIi CAROLINA" was marked DDT'E1JDI:N`1'' S EXIiI13IT R 32 for identification.) ;~ (ily Mr. Criesa) I show you a document which you inde- ti.ficO (iurinn t.he interroqation by ;•tr..Chanman, a letter from tsr. T"zii_~ s~s to llo.~ard, Stan ~5.nd Jrv, dated T,u~7ust 24, 7.967, s_. 1;),:h:ilAt T~I•t1` 1_1. In it correct tiv1t in oat leti:er ttr.. I'rii.s `r 0 O ----- _ i=

4 tC)]d yC711 that ho l+laf~ el'tC:1C)sin,:( an r7nnl.1a1. rc'T-)n]_'t of cOl1tl.InCllt:ai? A Yo r, sir. (j And l.s R 32 C1e rjnnua]. r.eport of Contine_ntal Tobacco i'c~rrr~~,ny for l9GG, which !1r. . 1'rii. , enclosed? A ye s, sir. 0 1':; i t cort rec.t: t'•xat- you learned from that tliat thi , comr)atiy r7roduceci a brand of cicOr.ettes of a.ts own cllled a ~ Venit.ure? ~ ~ A Y'es, sir. ~ Q You l:new from that Chat Continental was not a private lrabcyl mrxnufact.urer? A I: would deducc: fr.om that that they produced Venture ciqarett:es. ~ j (A copy of a letter to Continental r ? Tobacco Co. , dated 1-23-70 ! fr.om Stanley IIartman, was marked ~ DhFENDhNT' S EXHIBIT R 33 for ~ identification.) ~ 0 (By Mr. Gr.iesa) What is R 33, Mr. Iiartman? ( ! A That is a copy of a letter dated January 23, 1970, to Coni:.inent:al Tobacco Company siclned by Stan Ilartman, Pacific , Toh r:xcco Corp. 1.2020 S. Id . Al len . 0 What wa , the occasion forr sencli.ng that letter? A 7'ryi.nq to net. nr.c7c7uction. Q Did you rece4ve any reply? P

'•):'.1 . s 1t R. LOI: I3 : A13 ?. 4. L71Z. MIci;`.II;PI : 22, Il~.~nry. . Try 22. of t}:e ?`•vi~,nc3ed Coranlai.nt. MR. KMI;: I don' L'vive the nleadi•nq •f:ia_e that contai.ns i:':c I\.i:;^:1dc~d Comnlai_nt "•».L-h me. I'm sorry. I~,I?. I1c~'~JI~,N : T}ierc is one benefit. ]: clcm't, t.hink -,ae evor got a ronly, sir. '•iR„ CRIi;Sh: T.•ronr3or if your counsell could s+1ow you a I•tR. KhNL: '.jhi.1.e Iam looking for that did you ~.aant just one naqe? MR. GRIrSh: Mayhe We could extract it. IIave you • founci it? I4I;. K11NE : Not yet. MR. CRIT:Sn: I can proceed without it. p (iiy T•ir. Gri.eSa) Let me as?;t you, Mr. IIartman, as President nff the Plaintiff Corporation, can you tell me whether plaintiff cla.ims that R. ,T. Reynolds or any of its representatives visited m,i.ro Tobacco Company in connection with Canc3r Cigarettes? A X C'. s , ~? Dc:es the Plaintif:f Corporation claim that R. J. I?eynolds visted Col.lin s, & Wil.mes? A Yes . x hel.ieve we (1o. C~ I)ocs the I71.t1J.nti I: f Corporation claim that P. J. Reynolds visi_ted any other tobacco cji atributor.s or who].G sal`rs aside from ztrld C011.i.n 3 & '4il.mes?

922 1 x(=a not rocall. t:h.at: wc make such a statc~rnarit:, Si.r. ~ You don't m~-i'co th,-)tt nar.t:i.cul.arr claim in thi n action? P . C can' t. 7 h~~ve no l;nc)"11edcie at this ti.r,ie of , ilr,;lvj(liate cr.•rlc~d(7r of ,-iny ot.)er visit. ''hc?rCT n,ay in(ieeC! have hec:n, but ---~ n. XC,ta haV!? no }:no"I1(?(1cje of any factri indicating viFiiti by I:. ~7. Peynold, to ~ny oth!-r disi:rihutor.s besides Collins &:-Jilmes e,nd 7;iir,uire? A r:ot at this tilfe. 0 Doe> the Plaintiff Cor.r-3oration claim in this action that I;. J. Rc:ynold:, pres>Ltre0 Georc7ooulo with resnec:t to Cancer Filter Ci. g(~Lrcr t. t:e s? i A ]: cto not have any such knowledge at tliis time that would .indic,at.e that, sir. 1k 0 I>o0s the Plaintif:f Corporation claim that P.. J. Reynolds ~:rer~r~urcacl any ot'~er manufacturers of cigarettes with respect to these Cancer C:iaarettes products? A ]: do not have any sucn knowledge at this time, sir. c) Does the Plaint.if f claim that fi. L7 . P.eynold s communicated trit1h any ot:herr defendant with r.esnect to Cancer Cigarettes? ll I have no such knoti•11.edcle at this time. t? Paz•rrctraph 50 of' the Amended Comnlaint allcge.s as follo:os : "J1:; a dirc:c:t and nroxi.matc, rc'sult of defendanta' conduct as alletleca hc:rcin, plaintiff lost notent-ial and oxisti.ng cuotomer.s, xevc`nl.ACo anc] it, businr.as off manufacturing 'Cancor I'ilter CiUaret.tns' all in an amount nr.er~ciitl,~ •un(3etc:rm-inocl. Plai.nti.ff

.. t J r.l ctt`; lc:ave of Coul.-t to a3rcnCt t;1-r is, Comr., l.ciint w li n n tlte t-i.noun t ~ . (,f c;Gza~a<~c to tilaa.nti.ff ha-, hor_n aacer.tainc:c'1. ~~ Now, my questi.on to you, mr. 117rtm<an, is can you riil'.' at tari o tino '••lllat ].:3 thC'. FmloUflt of daT.'.aCJr~ in G":ont.y terrfl:3 •,t,ic`'.1 !)lcl.l.nt].ff fiw;t<"ll.ned? I cannot give you such a f.idur(--% at this tirne. t~ Can you tell- mO anything about the amount of monetary l.oss; you claim to have occurred as a result of defendants' c;onduct? » I know I have been taking a beati.ng and a loss continuously :I do riot knovv the quantay ty or the substance of that loss. c) Have you made any attempt to estimate or calculate the amount in money terms of that loss? c ! A No, sir. To your kno'•aledg•e has Mr. Steinbach mac7e any such attempt? *4o, sir. q , ; t Would you look at the top of page 31 of your Anawers To The P.mer. i can Interr.oc?ator. i.es? A Ycs, sir. n 13eclinninq on r)ac7e 3 there is a statement, "Plaintiff )zas noil c-olTinllted the amount of.f revenuc~, it has lost." A On page 3? ~ Ium sorry. Let me start the question over. I think I macae a mi.stake. Lot me ask you to loolc at. page 31. A n(;a.i.n I have ,)aqe 31 in front of mr-. -7

_._._._. _. _......__----- you loo': back forr a womnnt at: lparre 34, 4 a t ? i n,~ 27, yocl sc'o that T-,r-ri_can c`t:-,':eJ vou to state thc 1~asin i .rt: i..:~ 4~verrecl t'~ini: -~1<~rinti.t:f ].o,t a~cv~•nue ,•nue, st:ntin~l t1:c ;,• ol)nt. lo:;t and d(i,cri.';)incr ,low such amount is colllnutr,d or t:L t.:,l:~rCl FIn(] t;1e'n as nart of ,lour and this 7.~3 contained f-) acxe ;31 , you state, "P] ai ntiff has not cor.li)uted the amotuit (J ireven,ue it has lost. Plaintiff wil.l retain one or more ex- narts to cornoute both its lost revcanue and such exper.tt or ax- ,-)eri s wi ll set forth in writing the amount estimatecd to have i)cen lost and describe ho,.v such amount is computed. Such writineln `.,i_11l be r,u?Dmitted to defenc3ants." You see t:hat answer? A Yes, sir. I sec that. p T,nt I to unQer.r.tand that even as of this date plaintiff l I has not computed the amount of revenue it has lost? I A '!'hat' s correct. r) Is it correct that you claim that the only way such loss or (3an,)anes ean be computed i.s by retaining an expert? A i would believe that would be the hest way. ~ 1 thinl; psr. ltill.iar.cd elicited from you the rather complete statewant of your hti:~iness background and can you expla~in to me 1-rhy as the head of several bu ainesses over a period of years yOll arC' unatiJ1.Ce to tcll yC)ll]`: ]Os SCS~? me anyt1ii.nq about the monetary amoun t o f N 0 N 71 This would call for a loncrthy ,tudy as near as I can see, a co aa

.iTiCI I dC)Tl' t i:I10'.J t til,It. i11 niV 1.)U s1 Ili:!'.3:i 1)i!C :(.l1'C 1111C1 Cliat Z !1aVC! ~ 1VeX 1c1C~ T~1'CC:?CIC'I1C('. fC>r suc'l a study ~71nd :dC)U)_d IlC)L jino% J flT~~'J :~Ltca i st:uCly should be r1ade even. 0 , r?r. ctei.nhzich i s tr_easurer off your coinpi-Iny and you have ;ZTi.d that: h<, hancl.l c~d manv of vour fitw,nci z] matters . J"s it c.c)rroct: tliat he is inew:)a):>le of calculati.ncJ the C-umount of monwt.ary loss sustained in this action ? A ',,7ould you accept hi.s ti.gures? 1 1 Q i I am not ob].a-qed to acc^pt anythinct. I want you to te11. mc :ahether or not you doei,,l ^4r. St:einbach ca?aable of calculating d<<nvTges for the purposes off this action. A I am not cert:ain that Mr. Steinbach would have that can,-t ci.ty. 'i'he quest:ion applied to him might elicit a different r0sj>C)21se, hut I don't know. I don't think he could comnute it. 0 In any event you have never asked him as treasurer to ccm,aut:e t:he amount of revenues estimated to have heen lost? A No, sir. . j 0 Now, has any step been taken to retain one or more ex- perts to comoute your losses? A ]: have no such knowledge of any exnert as yet being re- t~iineci. I Mlt. GP,IL~A: I: have no more questions. 7 SR . II ILL7. 71Rr) : Itefore you leave, have you hired anybody ~ yat: to do any cal cu]..ati,on? N i V tll;. Itn!4I:: ;do. 19e wa,nt to do it at ono time rather than ~ ~

ta.nc3 it. t4o, we !lnvhn' t. „ Itit. 1IILLI?1I?D: You hr.ven't com--ulted anlbody? i1R. KANE: Not yet. 11II,LIT,TM: Thosc T~.nswers to t:hose int:orroriatories are: : 7 It w ~c~at"l)1111.1)~~, as you kno:v, ano there i.s not .joinc{ to be any changc: in your situation, is t`-iere? I don't under.:at:ancd. MIR. Y,hNE : dc: are talking about a time period and we use t'.-le stanLiarc3 form paracara-)'.-i so we can amendd shortly before trial to have the ful.]. damage period, but we very specifically intend to have whoever wo retain cet out in his working papers every stop t.hat, he or s;ic: or it follows so that you may follow taa.a the procedural steps to arr_ ive at those figures. 1,,R. IIILLIARD • You understand we have a continuing i ntc. rx•oc<atory . :•ae: wil l expect in due course this. in de- P1l":. Kh.^dl:: '.,!hc:n a study is made we will make sure you h<avr-_• it well in advance. 1111. JIILLIT_RLy: I just want to let you knu,a I understand you l-ittvc:n't iaode any study 'or contact. You understand I am not accc~T~i:in7 your statement t:hat priorr to trial you are going to cc>mr: ui} with some figure. This interrogatory has been on file quite aper.ioca of t:.iiY.e and you'r-e supposed to have those cal- c:li1 Eition.; i f there is any (larnage by this date and I don't see ariy need for further del ay on it. At1,. KNIl.: As soon as we have something clown on paper tl-izit' s in prophrr form ~Iou'rn c7oing to cjet it and we sr) saicl. Lft 0 W p F 0

.__. . . .~~ ~ ~~~ . - _. _ .. . . . .... . - . . , .. ~,. _ _ . . . ..-_._ .., r __ ..-~~....1. . , .. ..._ . .. . . . . . ~'... . :~7t1~~t. caon' t 1>r~ ~urhra.;~ocl a f ~rr ii,iva sr.~t;~r; rotions. ~.. ;. , Pilt. I:11'I£:: 11. r_nL. l.].<I you want: to L'a':C a r~3coss so f ;ze can confer? (t'r.. 7'ho"::: s P. Cr.i(,r,a left the r.oom. ) E}YMXN.h'.PION i3Y I•1R. Mc'alVI:'*IJ P t-ir.. Ilartman, I am Don atcL•'wen. Ourr office represents Ph:ilip Nor.r.is in thi.s action. A (Noddinn head.) (l Iir. fIartman, I assume that you and your other associates, ~ ~ pr:inci.nal.s in Pacific To'r)acco Comnzny have sun.plied your attorncyr ~ :' vith all the information you had in any way rc.lated to this case. s A That' a correct, sir. :4 Q h.nd you havce responded as fully as possiblo to al]l in- qu:is r 9.e s th at: they rnade, o f you? A Yes, sir. Q And by "you, " I mean everyone connected with Pacific 7'ohacco, I9r.. 5teinbach, iSr. Iiunna.n and anyone else. A YoS, sir. Q li'hat's true and that was at the time the first Complaint `.a.~s f.i.lc~rl? A t•7c~ h.zve sunpl.iea ovc~rytiiinrJ that we thought W.:i relevant