Smoking’s Big Guns
The tobacco industry has mobilized scores of talented law firms to fight an unprecedented siege of mega-lawsuits. But none of tobacco’s defenders is as busy, nor relied on as heavily, as this city’s Shook, Hardy & Bacon.
Shook, Hardy has been defending tobacco companies for nearly 40 years and has been instrumental in preserving the industry’s near-perfect courtroom record. In the process, it has become one of the great success stories in U.S. corporate law--a small firm of self-styled country lawyers that lucked into an early tobacco case, won in impressive style and grew into a 300-lawyer powerhouse.
Even though it has other Fortune 500 firms as clients, Shook, Hardy is virtually synonymous with the $50-billion-a-year tobacco industry, whose vast wealth and endless legal problems have fueled its tremendous growth.
Whereas most tobacco law firms have served a single company, Shook, Hardy has defended four of the top cigarette makers at one time or another--and counts three among its clients in the current legal onslaught by state attorneys general and private lawyers.
“They are the no-holds-barred representatives of the tobacco industry,” said consumer advocate Ralph Nader on a recent Kansas City radio talk show. “They take no prisoners.”
“They’re the fountainhead in terms of the [industry’s] defense strategy,” said Russ Herman, a New Orleans attorney involved in suits against the industry. “They’ve been at it longer, they do it better, they have exceptional lawyers in terms of their courtroom skills.”
Shook, Hardy’s notoriety has spread to the literary world, inspiring the mythical firm of Smoot, Hawking in the satirical novel “Thank You for Smoking.” (Smoot, Hawking’s watchword: “Smoking is the nation’s leading cause of statistics”).
Shook, Hardy’s trajectory in some ways parallels that of its biggest client, Philip Morris. A minor player in the industry when it first hired the firm, Philip Morris grew into the world’s biggest cigarette maker. Though it has diversified into food, beer and real estate, tobacco has remained its profit center.
Shook, Hardy has also diversified, and boasts such non-tobacco clients as Upjohn and Eli Lilly, but tobacco still pays for the partners’ big houses and expensive cars. Although Shook, Hardy won’t divulge financial data, tobacco accounts for roughly half its billings or more, former lawyers of the firm say.
Its ties to the industry transcend the courtroom. Former partner Steve Parrish is now senior vice president for corporate affairs
at Philip Morris, and Chuck Wall, another Shook, Hardy alum, is the tobacco company’s deputy general counsel.
Shook, Hardy has been called on to teach the gospel to new industry hires, including those who deal with the public and the news media. The industry line: Smoking is strictly a personal choice, and there is still doubt about whether it actually causes illness.
The firm has also been involved in managing several industry-funded scientific research projects--a controversial role for a law firm. Critics say that by shaping the research, Shook, Hardy worked hand in glove with the industry for decades in trying to suppress the truth about the consequences of smoking.
Shook, Hardy, which has denied these charges, nonetheless finds itself in the rare position of being sued along with its clients. A handful of the lawsuits charging the industry with fraudulently concealing the risks and addictiveness of smoking have also named Shook, Hardy and two other law firms as alleged co-conspirators.
One of the suits, filed in August by Oklahoma’s attorney general, called Shook, Hardy an “aider and abettor” of fraud.
At One Kansas City Place, the sleek office tower where Shook, Hardy occupies 12 floors, senior attorneys say they have done nothing more than faithfully represent their clients. In the words of one partner, “There’s nothing sinister” about it.
Shook, Hardy lawyers acknowledge that the firm cannot be a defendant and represent tobacco firms in the same case--and thus must step aside unless they can get the firm dismissed. Senior partner David K. Hardy called the suits a ploy “to separate the law firms from their clients” and said they won’t succeed.
Hardy, 52, is chairman of Shook, Hardy’s 100-lawyer tobacco division. As the son of the late David R. Hardy, who attained near legendary status in tobacco litigation, he is a man with big shoes to fill.
When a wrongful-death case against four tobacco companies went to trial in Indianapolis in August, the younger Hardy led the counterattack. Each company had its own legal team, but Hardy became the consensus choice to serve as lead trial lawyer. The jury ruled in favor of all defendants.
Not all Shook, Hardy lawyers consider tobacco a plum assignment. Some have begged off tobacco defense work, citing the heavy travel demands. But moral pangs, if any, are “never discussed in the firm,” one former partner said. “You don’t buck tobacco.”
Many Shook, Hardy lawyers--including the three for whom the firm is named--came from rural towns that few people outside Missouri or Kansas have heard of.
Among them is tobacco Vice Chairman Gary R. Long, a drawling native of the Missouri Bootheel region near the state’s borders with Arkansas, Kentucky and Tennessee. Long, 45, is a powerfully built former high school linebacker who strongly resembles John Riggins, the former Washington Redskins running back.
With tobacco being attacked as an outlaw industry, many people also view its defenders with considerable distaste. One former tobacco industry executive, who would not speak for attribution, described Shook, Hardy as “all these clean-cut Midwestern attorneys . . . sort of doing the work of the devil.”
“On a personal basis, there’s some nice guys down there,” said Ken McClain, an anti-tobacco lawyer in nearby Independence, Mo. “But you just wonder what kind of deal they’ve made with their own souls.”
Responded Long: “We could cast similar stones at the souls of some of our opponents.”
The attacks on tobacco lawyers seem to rankle Long more than most. He recalled the time he and his son, then 12, were watching a news report that featured a blast at unethical tobacco lawyers. Long said his son turned to him and said, “Dad, they’re not talking about you, are they?”
“We’re just trying to do our job,” Long said. “I don’t think I’ve ever represented a defendant in a case who wasn’t accused of hurting somebody. That’s what litigation’s about.”
But Long and Hardy both say they don’t want their kids to smoke--a view they say isn’t contradictory. “My position in court is on behalf of my clients,” Long said. “My position on my son is based on what I think is good or bad for him.”
Smoking “may cause disease, and it may not,” Hardy added, resorting to his courtroom argument. “That has not been scientifically established.”
Another key tobacco litigator is William S. Ohlemeyer, a 37-year-old who says he always “wanted to get involved as a lawyer [with] controversial clients.” He certainly got his wish.
Despite his status as a rising star, Ohlemeyer has the distinction of being the only Shook, Hardy lawyer ever to lose a tobacco-related case. He is lead attorney in a mini-wave of suits by people who say they got cancer from asbestos used in the original Kent “Micronite” filter in the early 1950s.
As attorneys for Lorillard, the maker of Kent, Ohlemeyer and his colleagues have lost two of the nine cases tried so far. In the bigger of the two defeats, the meticulous preparation that is the firm’s trademark may have backfired.
The case was brought by Milton Horowitz of Beverly Hills, a victim of mesothelioma, a type of cancer whose only significant known cause is breathing asbestos. During the trial last year, Horowitz testified that the bluish tinge of the Kent filter reminded him of his father’s eyes.
Ohlemeyer pounced, whipping out a 65-year-old immigration document that described Horowitz’s father as a brown-eyed man.
“That’s ridiculous,” Horowitz said, sputtering with emotion. “Are you trying to tell me what my father’s eyes were?”
The jury awarded Horowitz $2 million. Ohlemeyer does not think the exchange influenced the verdict, which is under appeal. “We did it [challenged Horowitz] in a way that I think was tactful,” he said. “The jury just didn’t like anything about our case.”
Firm’s Security Tight
Shook, Hardy’s offices in downtown Kansas City radiate elegance, with their wood and marble flooring, original artwork and mahogany veneer. But security is unusually tight for a law firm, including restricted access to certain floors and remote storage of sensitive documents.
The firm was rocked eight years ago when a sensitive memo by a Shook, Hardy lawyer was stolen and leaked to the news media. The memo described a purportedly safer cigarette being test marketed by R.J. Reynolds as a legal threat to the industry. Though Shook, Hardy hired the detective agency of former FBI director Clarence M. Kelley to investigate, the culprit was never found.
One stylish office touch is the wide spiral staircase that joins the 30th to the 31st floor, where a portrait of Dave Hardy the elder hangs in the attorneys lounge.
Hardy, a smoker who died of heart failure in 1976 at the age of 59, was without doubt the man most responsible for the firm’s ascent.
A native of tiny Tipton, Mo., Hardy was a baseball nut who used a transistor radio to keep up with the scores. His other passion was work, and colleagues nicknamed him “14-Hour-a-Day Dave.”
“Hardy had no small ego,” said John C. Dods, a senior partner and former colleague. “He was an exceedingly confident guy, and it was his drive and his ambition . . . that kept pushing the firm.”
Hardy gained local repute as a skilled trial lawyer, but his career might have topped off there but for two fortuitous events.
The first was that the first-ever product liability suit against Philip Morris happened to be filed in Kansas City by a man named John Ross, who lost his voice box to cancer. The second was that the Kansas City lawyer originally hired as lead counsel was appointed a federal judge and had to withdraw.
Hardy took over and won when the case came to trial in 1962. Impressed with Hardy’s work, Philip Morris made the firm, which at the time had fewer than 20 lawyers, its national counsel. Cigarette makers Lorillard and Brown & Williamson Tobacco later came on board.
“I think it was Dave Hardy’s genius that blueprinted the overall structure in the defense of the companies,” said New Jersey lawyer Marc Edell, who never met Hardy but battled his successors in 1988. “This guy had the whole package.”
Under Hardy’s leadership, Shook, Hardy would distinguish itself by its mastery of medical and scientific issues surrounding smoking and disease. Determined to yield to no one in technical sophistication, Shook, Hardy pioneered the practice, which continues today, of keeping a stable of scientific analysts on staff, some with advanced degrees.
“For a long period of time they knew the science better than anybody else in the country. They may still,” said attorney Peter Bleakly of Arnold & Porter, co-counsel to Philip Morris.
Hardy also had a knack for seeing the future and anticipating the worst--and in that connection offered advice to a client that resonates today.
The client was Brown & Williamson, a subsidiary of giant British American Tobacco. In Europe, the industry did not face the threat of lawsuits, and tobacco scientists and executives tended toward blunt statements on smoking and health that might later prove damaging in court.
In a long letter in 1970 to B&W;’s general counsel, Hardy complained about minutes of a research conference at which B&W; and BAT scientists had discussed smoking as a possible cause of lung cancer, emphysema and bronchitis.
It is one thing, Hardy said, when “known enemies” say smoking is dangerous. But “documentary evidence from the files of either BAT or B&W; which seems to acknowledge or tacitly admit that cigarettes cause cancer or other disease would likely be fatal to the defense . . . in a smoking and health case.”
In August, 26 years after the Hardy letter, a Florida jury awarded $750,000 in damages against B&W; in a lung cancer case, largely on the strength of internal company documents of the type Hardy feared. If the verdict survives appeal, it will be the industry’s first defeat (excluding the Kent asbestos suits) in 40 years of litigation.
Few Cases Tried
Those who follow the smoking wars are familiar with the industry’s great success in repelling lawsuits. But what isn’t often recognized is how rarely the companies actually have had to go to court to keep their winning streak intact. In fact, the industry has flicked away hundreds of damage lawsuits while going to trial but 21 times.
Realizing that a few losses could bring a tidal wave of claims, the companies used their superior firepower to overwhelm their adversaries before trial. By resisting every motion and appealing every ruling that could be appealed, they exploited the cash flow problems of plaintiff attorneys who work for contingency fees. The vast majority of cases were dismissed or simply abandoned by cash-strapped plaintiffs before they made it to trial.
As an R.J. Reynolds lawyer once put it, “To paraphrase Gen. Patton, the way we won these cases was not by spending all of Reynolds’ money, but by making that other son of a bitch spend his.”
However, when a case is tried, it is a big production.
Consider the Rose Cipollone trial in 1988 against Philip Morris, Lorillard and Liggett.
Shook, Hardy, lead counsel to Lorillard and co-counsel to Philip Morris, set up a war room a few miles from the federal courthouse in Newark, N.J.
“It was like they took a quarter of Kansas City and moved it up to . . . New Jersey,” marveled a former industry official.
“Not too many people saw it [the office] because they didn’t want to give the impression they were overpowering the little guy, but it was amazing.”
In court, the Shook, Hardy lawyers were the picture of Midwestern earnestness, according to Edell, the lead attorney for the Cipollone family. They “tried to maintain . . . the all-American . . . well-scrubbed, rosy-cheeked, nice-guy image, and I think they succeeded in large measure in doing that,” Edell said.
After a trial lasting nearly five months, Shook, Hardy’s clients were found not liable. Liggett was assessed damages of $400,000, but the judgment was overturned on appeal.
Although best known for its courtroom triumphs, Shook, Hardy’s behind-the-scenes role has been far broader. For instance, it has tutored some new industry hires who came to Kansas City to be schooled in the industry line.
The briefing was “half health-and-science lecture, half fear-of-God sort of sermon,” one former industry official recalled. The Shook, Hardy’s lawyers “impressed on you one last time that there was considerable peril associated with screwing up in terms of what you said.”
Jeffrey Wigand, the former B&W; vice president and research director who in 1995 became the highest-ranking defector in the industry’s history, also made the trip. Wigand’s handwritten diary, produced in B&W;’s lawsuit against him, described his visit to Kansas City in 1989.
“First time I’ve seen the lawyers do science!” wrote Wigand, adding sarcastically, “All the studies reviewed [linking smoking and disease] are flawed!”
“Their strategy is one of not acknowledging that there is a relationship between smoking, i.e. tar and disease,” he went on. “They will have to work a lot harder to brainwash me.”
It was Shook, Hardy’s involvement with the Council for Tobacco Research, disclosed in once-secret industry documents, that has been the most controversial.
The CTR was established to fund independent research on smoking and health. But tobacco foes contend the industry, with help from its lawyers, fraudulently used the council to advance its legal and public relations strategies.
The council was launched in 1954 in response to studies linking smoking and cancer. It was announced in a national ad campaign in which the industry proclaimed, “We accept an interest in people’s health as a basic responsibility, paramount to every other consideration in our business.”
Although funded by tobacco companies, the council was to be run by a board of respected scientists who would dispense research grants to independent investigators. The goal was to determine if smoking was indeed dangerous, and to learn how to eliminate any hazardous components.
The pledge has been central to the defense of tobacco lawsuits, with Shook, Hardy and other industry law firms citing lavish support for the council as proof of an honest quest for knowledge about the effects of smoking.
Over the years, the CTR has dispensed more than $250 million in grants to more than 1,000 researchers. The chief criticism, until recently, has been that little of the research was directly concerned with fundamental questions of smoking and disease.
But now, say industry foes, internal documents show that Shook, Hardy and a second law firm used the CTR to generate favorable science and recruit expert witnesses for use in lawsuits and legislative forums.
The documents show that Shook, Hardy and Jacob & Medinger of New York arranged for favored scientists to get the CTR “special projects” grants. Their work was meant to advance alternative explanations for the high rates of heart disease and cancer among smokers. According to the documents, the lawyers sometimes arranged the grants after the CTR science advisory board had rejected the researchers’ proposals.
Some of the research was published with credit given to “CTR special projects”--but without mentioning the lawyers’ role in selecting or influencing the research.
B&W; documents leaked to Congress and the media in 1994 included at least 50 letters from Shook, Hardy lawyers to general counsels for the tobacco companies concerning activities of “special projects” researchers.
A 1979 letter from a Shook, Hardy lawyer discussed a tour of Australia and New Zealand by Carl Seltzer, a former Harvard professor whose work on genetic and constitutional factors in heart disease had been regularly supported by the lawyers.
“Personal reports from colleagues in Australia and New Zealand indicate that Dr. Selzer’s visit ‘was a great success,’ ” the letter said. Enclosed were eight news articles and radio transcripts of interviews with Seltzer, under such headlines as “Dr. Slams Link Between Smoking and Heart Disease.”
Shook, Hardy lawyers also secured a series of special-project grants for researcher Theodore Sterling. Sterling was busy examining the “strong bias” in studies “claiming an association between smoking and disease,” according to a letter from a Shook, Hardy lawyer in 1984.
According to the letter, Sterling also was testing the theory that smoking, by promoting mucus formation, might actually protect “workers against some forms of hazardous dust exposure.”
Other documents concerned the CTR’s role in enhancing the companies’ legal defense and public relations.
For example, separate memos by executives of B&W; and Philip Morris in 1978 quoted a top Shook, Hardy lawyer on the value of the CTR--including “the direct legal protection derived” and “the political and public relations advantage accruing to the industry,” as the B&W; memo put it.
The Philip Morris memo quoted the lawyer, William Shinn, as saying the CTR had served as “an industry ‘shield’ . . . [and] ‘front.’ ”
“A very interesting point, made by Bill Shinn, is the opposition’s ‘the case is closed with regard to smoking and disease.’ . . . It is extremely important that the industry continue to spend their dollars on research to show that we don’t agree that the case against smoking is closed. . . . There is a ‘CTR basket’ which must be maintained for ‘PR’ purposes.”
Shinn, who retired from Shook, Hardy several years ago, declined to comment.
Some of these documents suggest that Shook, Hardy might have crossed the line between zealous defense of clients and aiding wrongful conduct, said Stephen McG. Bundy, a professor of law at UC Berkeley.
“They’re out of the courtroom now, and they’re not defending past conduct--they’re assisting [the industry] in carrying out its business strategy,” Bundy said.
“To the extent that this business strategy involves intentional material misrepresentations about the health and safety of a company’s products--or the company’s determination to address health and safety issues--that’s a fraud.”
But Long called the comment “off the wall” and said there was nothing problematic about the firm’s behavior. He said the threat of lawsuits had been nearly continuous, and that research funded under “special projects” was not concealed. “If the people wanted to publish, they published it,” he said.
In tobacco litigation, the old David and Goliath analogies no longer apply. Facing an unprecedented alliance of state attorneys general and wealthy plaintiffs’ attorneys, the industry can no longer win by reducing opponents to exhaustion.
“It’s not getting any easier to defend these cases,” Ohlemeyer acknowledged.
But “we all are still optimistic and still confident that when we get a chance to present our case . . . in a courthouse where there are rules of law and rules of evidence . . . that we’ll prevail.”
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Shook, Hardy & Bacon
* Offices: Headquartered in Kansas City, Mo. Regional offices in Houston; London; Zurich, Switzerland; Milan, Italy; and Overland Park, Kan.
* Attorneys: 304 lawyers--including 100 in its tobacco division--and 99 partners. 77th- largest firm in the country.
* Chairman of tobacco division: David K. Hardy. His father, the late David R. Hardy, won first anti-tobacco case tried against Philip Morris, more than 30 years ago.
* Clients: Philip Morris, Brown & Williamson Tobacco, Lorillard, Eli Lilly, Upjohn, Ford Motor. Tobacco believed to represent about half its billings.
* Tobacco cases: Firm is involved in all major lawsuits against the industry including 19 state suits seeking Medicaid expense reimbursement and 14 smoker class actions.
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Shook, Hardy & Bacon: A History
* 1889: Firm founded as Alderson & Sebree.
* 1954: Ross vs. Philip Morris filed in Kansas City, Mo. Plaintiff lost his voice box to throat cancer.
* 1962: Ross claim is defeated. Philip Morris soon appoints firm as its national counsel. Lorillard and Brown & Williamson later follow suit.
* 1970: Long letter from David R. Hardy to Brown & Williamson warns of company’s potential legal exposure from industry scientists and documents making blunt statements about smoking and disease.
* 1973: After numerous name changes, firm becomes Shook, Hardy & Bacon.
* 1988: Key Cipollone case goes to trial in New Jersey and Shook’s clients--Lorillard and Philip Morris--are exonerated.
* 1994-96: Surge in lawsuits against tobacco companies fuels major Shook expansion. Firm grows to more than 300 lawyers--a third of them assigned to tobacco division.
* 1996: Suit filed against tobacco companies by Oklahoma attorney general names Shook as co-defendant. Suit calls firm “aider and abettor and co-conspirator” in an industry fraud.