Report Concerning Product Development Matters Prepared by RJR Outside Legal Counsel in Anticipation of Litigation for the Purpose of Rendering Legal Advice and Contains Summaries and Opinions.

Product Design

Report Concerning Product Development Matters Prepared by RJR Outside Legal Counsel in Anticipation of Litigation for the Purpose of Rendering Legal Advice and Contains Summaries and Opinions.

Date: 21 Jun 1994
Length: 208 pages
515873569-515873776
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Abstract

Information about Project CC intended for attorneys to defend against the plaintiff argument that RJR could have switched to a less harmful cigarette, but chose not to. One aspect of Project CC was the PRISM I project: assessing prototype cigarettes designed to address five top consumer "enduring wants": reduced controversial compounds, reduced second hand smoke, reduced teeth stain, odor improvement, and fresh breath. Marketing line was "we're not saying PRISM will lower the risks associated with smoking, no one can prove that. But we do know you can now get a smooth, flavorful cigarette with less claimed cancer causing compuinds than the leading lights brand." These cigarettes were not put on the market because of concerns of exposure to intense government regulator scrutiny.

Fields

Author: Jones Day
Hypothesis: Health effects
Design changes which have measurably altered health effects of cigarette smoke, both for smokers and nonsmokers.; Introduction of new/unconventional products
Research and development of novel nicotine delivery devices and experimental tobacco designs.; Perceptions of ETS
Design changes to reduce perception of environmental tobacco smoke among smokers and nonsmokers in response to public concerns about the dangers of ETS.
Keyword: PRISM I; Project CC; ETS; controversial compounds
Operation/Project: Project CC ("Controversial Compounds")
A project by the R.J.Reynolds Tobacco Company in 1993-94 to produce a cigarette that utilizes a carbon filter to "reduce certain compounds in cigarette smoke that are allegedly potentially harmful to human health." (Page 16, Bates No: 515873584 of RJR 515873569/3776); PRISM I
Named Organization: R.J. Reynolds Tobacco Co. (Cigarette manufacturer (Camel, Winston, Doral))
Cigarette manufacturer (Camel, Winston, Doral)
Subject: nicotine technology; Experimental Technology (Technology); Smoke Nicotine (Measures); Tar (Measures); Smoke Constituents; Puff Parameters (Measures); Smoothness/Harshness (Effects); Test/Consumer Preference (Testing); health effects; Secondhand Smoke/Perception
Brand: Winston Premier; CAMEL LIGHTS

Document Images

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PRIVILEGED la.ND CONFIDENTZIa.L ATTORNEY WORK PRODUCT TRP~DE SECRET R.J. REYNOLI~S TOBACCO COMPANY WORKING ISSUE AND LEGAL ANALYSIS OF PROJECT CC JONES, DAY, REAVIS & POGUE Draft of June 21, 1994

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PRIVILEGED I%ND CONFIDEI~Y.~L ~TTORNEY WORK PRODUCT TRP~DE SECRET TABLE OF CONTENTS Page I. Introduction ................... A. Purpose and Nature of Memorandum ...... B. Preparation of Memorandum .......... C. Organization of Memorandum .......... II. Historical Development ............. A. Project CC - Generally ........... B. CS Filter .................. i. Generally ................ 2. Evolution of the CS Filter ........ a. Premier ............... b. Beta 90 ............... c. XE .................. d. XC .................. e. Project CC .............. 3. Operation of the CS Filter ........ a. Reduction of Volatile Vapor Phase Compounds .............. b. Free Radicals ...... " c. Smoke Chemistry t the CS F 1 er . • d. Other Effects on Smoke Chemistry . • • e. Carbon Particle Transfer Analysis. . • f. Biological Theory and Testing .... i) Theory .............. 2) Testing .............. 1 1 4 6 7 i0 12 12 14 14 15 18 20 22 24 24 26 27 29 30 32 32 34 4. CS Filter Components ........... a. Carbon ................ b. Carbon Paper ............. c. Channels ............... 37 37 38 40

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PRIVILEGED AND CONFIDENTI~&L ATTORNEY WORK PRODUCT TRADE S~CRET Co 5. Product Configurations ......... a. Slit Width and Length of Filter . . . b. Air Dilution ............ c. Corrugated and Shredded Configurations ........... 6. Previous Carbon Filters ........ CT Blend .................. i. Evolution of the CT Blend ........ a. XE-RT and XE-AT ........... b. Termination of XE-AT ........ c. Development of Potassium Carbonate Casing ............... d. CT ................. 2. Smoke Chemistry of the CT Blend ..... a. Reductions in Nitrogen Oxides and Nitrosamines ............ b. Other Effects of the CT Blend on Smoke Chemistry ...... c. Meeting with Dietrich ~o~f~a~ .... 3. Biological Testing of the CT Blend . . . 4. Manufacturing Costs of the CT Blend . . . 5. CT Blend Versus Modified Camel Light Blend .................. D. Feasibility Issues ............. i. Technical Feasibility .......... a. Technical Innovations in the CS Filter .............-- b. Attempts to Improve the CS Filter . . c. Limitations of the CS Filter .... d. CS Filter Patent Application .... e. Technical Innovations in the CT Blend ............... f. Limitations of the CT Blend ..... 41 41 43 43 46 47 48 48 53 54 55 60 6O 65 66 67 68 70 72 72 72 78 84 88 90 92

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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT TRADE SECRET Paue III. 2. Commercial Feasibility ......... 3. Economic Feasibility .......... 4. Regulatory Feasibility ......... E. Marketing Issues .............. 1. Generally ............... 2. PRISMS I ......... 3. Project CC M~r~e~i~g R~s~a~ch ...... a. Wave I ............... b. Wave II ............... c. Recent Concept Testing ....... 4. Marketing Strategies .......... a. Direct Approach ........... b. Indirect Approach .......... 5. Claims Substantiation .......... a. Defining the Term "Controversial Compounds" ............. b. Claim Substantiation Methods .... 6. Brand Selection ............. Legal Issues and Analysis ............ ao Impact of Project CC On Design Defect Claims ................... Whether The Existence Of CC (Whether Or Not It Is Marketed) Increases The Likelihood In Future Smoking and Health Cases That Other Brands Will Be Found Defective On The Ground That CC Is A Feasible Alternative "Safer" Design ............. Whether CC is a Feasible Alternative "Safer" Design ........... 94 97 i00 102 103 105 107 107 112 113 114 114 120 127 127 133 136 137 138 138 139

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PRIVILEGED ~ (~ONFXDENTX,~LL ATTORNEY WORK PRODUCT TRADE SECRET Page be Whether It is Currently Feasible To Apply The CC Technology To All Other Reynolds Brands ....... c. The "Offered Option" Defense .... 149 151 Be Whether Plaintiffs In The Smoking And Health Litigation Will Be Able To Show That Some Or All Of The CC Technology Was Previously Feasible; Or In Other Words, Whether CC Should Have Been Developed And Marketed Earlier ................. a. "State Of The Art" ......... b. Feasibility . • ............ Whether Marketing A Version Of CC That Incorporates Some, But Not All Of The Technology (e.g., Using The CS Filter Without The CT Blend) Would Increase The Likelihood Of Liability Under An Alternative Design Theory ........ Whether Plaintiffs In The Smoking And Health Litigation Will Be Able To Argue Successfully That Development Of CC Is Evidence That Reynolds Believes That Other Cigarettes Cause Disease ..... Duty To Advise The Public Of CC's Alleged Health Benefits .............. Whether, And If So, Under What Circumstances, Reynolds Has A Duty To Publish Its Research Regarding Project CC ............... Whether, And If So, Under What Circumstances, Reynolds Has An Affirmative Legal Duty To Notify The Public About CC's Potential Health Benefits ............. 157 157 162 175 178 180 180 181

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PRIVILEGEDAND CONFIDENTIAL ATTORNEY WORK PRODUCT TRADE SECRET Paqe C. Fraud And Express Warranty Claims ....... Whether Reynolds Might Expose Itself To Fraud And/Or Breach Of Express Warranty Claims If It Claims That CC Reduces "Alleged Carcinogenic Compounds" by 50% By Weight 190 IV. D. Admissibility Of CS/CT Research Information . . 194 Whether, And If So Under What Circumstances, Documents Concerning The Development Of CC Will Be Admissible In Evidence Notwithstanding Federal Rule Of Evidence 407 And Similar State Rules Of Evidence Recommendations Regarding Potential Witnesses . . . 202

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PRIVILEGED i%ND CONFIDENTI~L ATTORNEY WOl~ PRODUCT TRADE SECRET Io INTRODUCTION A. PURPOSE AND NATURE OF MEMORANDUM. In late December 1993, Wayne W. Juchatz, Senior Vice President, Secretary and General Counsel, R.J. Reynolds Tobacco Company ("Reynolds"), requested the law firm of Jones, Day, Reavis & Pogue to provide legal advice regarding Project CC ("Controversial Compounds")I, a new cigarette product that Reynolds may introduce. This memorandum is intended to provide a "head-start" to attorneys defending Reynolds against future claims involving Project CC by providing them with detailed background information regarding the development, functioning and marketing of the product and a preliminary legal analysis of significant issues arising therefrom. It is obviously difficult, if not impossible, to anticipate all of the possible scenarios in which issues regarding Project CC may arise; this memorandum, therefore, errs on the side of providing more, rather than less, detailed information regarding the product. Further, because claims involving Project CC may, and probably will, be asserted in a number of different jurisdictions, the legal analysis provided herein is general in nature and is not intended to be a definitive or exhaustive discussion of the law in each and every 1 The name of Project CC was changed in late January 1994 to another acronym. For purposes of maintaining client confidentiality, this memorandum will continue to refer to the Project as CC.

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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT TRADE SECRET DRAFT jurisdiction. Finally, because Project CC is still under development and has not yet been marketed,2 the information and legal analysis contained in this memorandum are necessarily preliminary and tentative in nature. Thus, the memorandum is not a final product but, instead, reflects work in progress. Most of the information contained in this memorandum was communicated to the Jones, Day attorneys through confidential documents provided by Reynolds and confidential interviews with Reynolds employees. These confidential communications by Reynolds and its employees to Reynolds attorneys were made for the purpose of obtaining legal advice and, therefore, are protected by the attorney-client privilege. Further, because the memorandum was prepared in anticipation of pending and future litigation and contains the mental impressions and legal analysis of Reynolds attorneys, the entire memorandum constitutes privileged attorney work-product. In addition, much of the information obtained through confidential documents and interviews with Reynolds employees is proprietary and constitutes trade secrets. Much of the information in the memorandum regarding the development, design, and functioning of Project CC was obtained from documents authored by, and interviews with, scientists in Reynolds R&D Division, and is highly scientific and technical in 2 Neither the final product specifications nor the marketing claims to be made about the product have been finalized. Product research and development activities and marketing research efforts for Project CC are ongoing.

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PRIVILEGED ~ CONF~DEI~IAL ATTORNEY WORK PRODUCT TRADE SECRET DRAFT nature. In preparing this legal memorandum, the Jones, Day attorneys (who are not scientists) have attempted to interpret, understand and accurately communicate this highly scientific and technical information. Nevertheless, because such information has been subject to interpretation by non-scientists, it may not be completely accurate and, therefore, should not be considered definitive. Rather, the background information contained herein was developed only so far as necessary to support the legal analysis. This memorandum contains some discussion of the alleged biological relationship between smoking and health. This information is based on scientific literature from sources outside of Reynolds.3 The relationship between smoking and health, if any, however, has not been established and is subject to interpretation and dispute, both inside and outside of the scientific community. Nothing in this memorandum should be. viewed or interpreted as Reynolds' position regarding the alleged relationship between smoking and health. 3 For example, some of the information in the memorandum regarding smoking and health was obtained from the Surgeon General Reports. 3

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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT TRADE SECRET DRAFT B. PREPARATION OF MEMORANDUM. Charles A. Blixt, Staff Vice President and Assistant General Counsel, Reynolds, initially provided Jones, Day with a list of Reynolds personnel who were involved in Project CC. In January 1994, Womble, Carlyle, Sandridge & Rice attorneys contacted the personnel on the list and collected the documents concerning Project CC that each custodian had in his or her files. The documents received bates numbers and were added to the litigation document database. In January and February 1994, Jones, Day attorneys received and reviewed the documents provided by Womble, Carlyle and selected some of the documents for background information and inclusion in this memorandum. The document review process is ongoing. Project CC is still under development and new documents regarding the product have been generated since the initial document review. A review of recently generated documents has been requested and Womble, Carlyle is currently collecting such documents. In January through April 1994, Jones, Day attorneys conducted confidential interviews with several Reynolds employees who were involved with Project CC. The £ollowing is a list of the personnel who were interviewed and the dates: Dr. Chandra Banerjee Dr. Richard L. Blakely Dr. Michael Borgerding Dr. Gary T. Burger Evon L. Crooks Dr. Jeffery S. Gentry February 7, 1994 January 24 and 31, and April 6 and 20, 1994 March 29, 1994 February 18, 1994 March 29, 1994 January 31, and April 6 and 20, 1994

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