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1 2 3 4 5 7 8 9 10 II 12 i3 14 IS 16 17 18 ~9 20 21 22 23 24 ORIGINAL 461 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT O~ KENTUCKY LOUISVILLE DIVISION BROWN AND WILLIAMSON TOBACCO CORPORAT~0N vs. PHILIP MORRIS, INCORPORATED ) VOLUME NO. C-89-04740-L-B ) PAGES 461-677 CONFIDENTIAL Continued deposition of NANCY G. NAUGKTON, held at the offices of Fish & Nea~ve, 875 Third Avenue, New York, New York 10022, commencing at i0:i0 A.M., Thursday, September 1.0, 1992, before JOYCE G. ABELES. 230 Par~ Avenue Sui(e 847 New York, New York 10t69 212-490-3430 Fex: 212,-4~).-3534

1 2 3 4 5 6 7 8 9 I0 ii 12 13 14 !5 16 17 18 19 2O 21 22 24 25 462 APPEARANCES OF COUNSEL FOR THE PARTY BROWN AND WILLIAMSO~ TOBACCO CORPORATION: MORGAN & FINNEGAN BY: JAMES W. GOULD, ESQ. 345 Park Avenue New York, New York I~154 FOR THE PARTY PHILIP MORRIS, INCORPORATED: FISH ~ NEAVE JOHN M. HINTZ, ~SQ. 875 Third Avenue New York, New York 10022 ALSO PRESENT: KEITH TAKEDA NOON & PRATT

1 2 3 4 5 6 7 8 I0 11 12 13 14 15 16 17 18 19 21 24 25 463 NANCY G. NAUGHTON, having been first duly sworn by JOYCE G. ABELES, a Notary P'ublic within and for the State of New York, was examined and testified .as follows: o0o EXAMINATION CONTINU~ED BY-MR. HINTZ ................................... Q. Ms. Naughtcn, it's a silly question we often ask but you are the same Ms. Naughton who was deposed earlier in ~his z~ction? A. That's right. Q. Since that deposition, which was May 14th and 15th, have you had any c<onversatioas with a man named Dennis Dugan? A. No. Q. How about a Dudley Smith? A. No. Have you ever heard ~f either of ~hose gentlemen? A. No. Q. Have you zevl~wed anT deposition NOON & PRATT

1 2 3 4 5 6 7 8 9 i0 ii 12 13 14 15 16 17 18 19 20 21 22 23 NANCY G. NAUGHTON - CONFIDENTIAL transcripts from this case? A. Just mine and some of Bonnie McCafferty's. Q. Why did you review s,ome of Bonnie McCafferty's? A. Mr. Gould and I just went through it, little portions of it. Q. Did you ask to see ilt? A. NO. Q. Have you reviewed an~ expert witness statements in this cas~? A. No. Q. Let me Just give you some names and see if these are familiar to you :in relation to this case: Dr. Hausman? A. No. Q. Dr. Meyer? A. No. Q. Mr. Zerschling? A. No. Q. Do you know a person by the name of Corky Newton from B&W? A. Yes. Q. who is that person? NOON & PRATT

l 2 3 4 5 6 7 8 9 i0 11 12 13 14 15 16 17 18 19 20 21 23 24 465 NANCY G. NAUG~TON - CONF'IDENTIAL A. Right now she's in MIIS, used to be director in marketing research. And what is her part.icular area of expertise if any? A. When Corky and I wor'ked together, she was in marketing research. Q. Is that MRD? A. That's right. Q. And when was that? A. I.don't remember the full time frame we worked together but it was up through April of this year. Q. Do you have any deal~ings with her now in her new position? A. Just a little as far as systems are concerned in terms of purchasing ]PCs, issues like that. Q. What are her responsibilities now, to your understanding? She handles O- terms of A. I don't really know ~peclfically. a lot of the systems work. But your interaction with her is hardware and software? That's correct. NOON & PRATT

1 2 3 4 5 6 v 9 I0 ii 12 14 15 16 17 18 19 2O 21 22 25 466 NANCY G. NAUGKTON CONFIDENTIAL Q. Acquisition and purclhase? A. That's right. Q. In your dealings witlh her, have those dealings involved creation ,of software in-heuse at B&W? A. Well, that's not -- :in terms of getting ~nformation out of our ma:in frame and how that's structured, that's an area that I would talk to her about if I had a ques~tlon. Q. Let me hand you what"s been previously marked as Exhibit 707. Have you seen this document before today? A. I don't believe so. MR. GOULD: You should look through all the pages. THE WITNESS: Oh, ~es, I did see this yesterday. BY MR. HINTZ: Q. And if you turn to the third page, what's called Schedule A, you'11 see that there's an item 8 regarding B&W's Bal~imo~e heavy spend program and other B&W heavy spend activity, do you see that? A. That's right. NOON & PRATT

1 2 3 4 5 7 8 I0 11 13 14 15 16 17 18 19 2O 21 23 25 467 NANCY G. NAUGHT0~ - CONFIDENTIAL Q. Is it your understan,ding that part of what you're being asked to do today is to testify on behalf of B&W regardln!g that paragraph MR. GOULD: Ceunseil, that's subject to all the objections I m~ade of record during Mr. Fitzmaurice's depositi,on with respect to generally B&W's so-called heav~y spend activity, not related to reduced ~circumference cigarettes. You can answer subje~ct to that objection. BY MR. THE WITNESS: I un~derstand that I HINTZ: Q. And is the same true for paragraph 9, that part of your responsibilizy or part of our purpose of being here today is for you to testify on behalf of B&W with regard to paragraph 9 of Exhibi~ 707? A. That's correct. Q. And paragraph Ii of ~xhibi~ 707? MR. GOULD~ Again, subject to the same objections of record. NOON & PRATT

5 6 v 9 i0 ii 12 13 15 16 17 18 19 2O 24 25 NANCY G. NAUGKTON - THE WITNESS: BY MR. HINTZ: A. Q. CONF~IDENTIAL That's correct. 468 And paragraph 12 of IExhibit 707? That's right. Is it your understan~ding that you're also here to testify as a cOntlnu~tion of your individual deposition that was taken earlier? A. That's right. MR. GOULD: Counsel, I don't want to have any confusion as to when Ms. Naughton is testifying as a 30(b) {6) witness ~r as an individual. So if you would tell me now which you elect to start with -- MR. HINTZ: I don'~ think it's possible to do one first and then the other. MR. GOULD: I will not allow mixed deposition, counsel, I will not a~low that. MR. HINTZ: Then you may want to seek a protective order because I"m not going to operate under that procedure. MR. GOULD: That's the way the rules require it. MR. HINTZ: Read mR the rule. MR. GOULD: When y~u notice a NOON & PRATT

1 2 3 4 5 6 7 8 I0 II , 12 13 14 15 16 17 18 19 2O 22 23 24 25 469 NANCY G. NAUGHTON CONF'IDENTIAL 30(b) (6), it's limited to ths categories and it's clear the person is testifying as a representative of the party. As .an individual the testimony is not limited to tlhose specified categories and in that as a representative of Now, that case she i~s not speaking the corpor~atlon. is the pra,ctice that we've been following throughout the cas,e and that is the practice we are going to foll~ow now. MR. HINTZ: It's n~ot true that the rules require that. There's case law that says when a 30(b) (6) witness testifies., raises their hand and swears to ~estify, they ~can testify and they can testify to all matters t~ey are asked to testify and are net limited to 30 (b) (6) matters. Secondly, that has n~t been the practice in this action. And fun~tionally, it's going to be difficult to do that because we are talking about different matters amd differe,nt times and her individual and representative capacities are going to cross. So to the best we can, we will try to make it clear- MR. GOULD: So you"resaying yoU're proceeding with'both simul~aneously here? NOON & PRATT

1 3 4 5 6 7 8 9 i0 II 12 13 14 15 16 17 18 19 20 21 23 24 25 470 NANCY G. NAUGHTON CONF'IDENTIAL MR. HINTZ: Yes, e:ir. And to the extent we can make it clear -- MR. GOULD: Then, counsel, I will have to interpose objections when.ever I think it's appropriate, whe~ever I thln.k this is inside or outside of the scope and I will have to do that with respect to every question since you're insisting that we proceed that way. MR. HINTZ: The alternative will be to double the time that's required because we have to finish the individual and I will have to ask all those questions and then .we will have to do the 30(b) {6) and I will have t,o ask all ~hose questions again. MR, GOULD: You do]n't have to ask the same questions. If it's done under the 30(b) (6) and the topic is covered, there's absolutely no need to reask the s~ame questions as an individual, counsel. That's am absurd suggestion. MR. HINTZ: Are yom saying that Ms. Naughton's individual view is the same as B&W's in all instances, that her ~view is no different from the company line, ~he company NOON & PRATT GSZ l.3 84