Ready for battle

Five years ago John Kiser went looking for what he calls the right “field general” to put together and marshal a powerful Canadian litigation team as Imperial Tobacco looked ahead to its pending legal action in Canada. As legal consultant to the largest cigarette manufacturer in Canada, Kiser knew that if Imperial Tobacco was going to be prepared for the litigation work in Canada, it needed a cohesive team led by a strong co-ordinating leader from its outside counsel.
A veteran of the tobacco industry, Kiser is responsible for advising on all major litigation for the company in both Canada and the United States. He was previously vice president and general counsel of Brown & Williamson Tobacco Corp. and was vice president of litigation for R.J. Reynolds Tobacco Co. He had managed complex multi-jurisdictional litigation in numerous countries throughout the world for more than two decades before coming to work for Imperial Tobacco in Montreal.

Imperial Tobacco is facing class action suits from smokers who consumed their cigarettes. Two class action lawsuits have trial dates pending in Quebec this coming March. British Columbia wants tobacco companies to pay for the health-care costs associated with smoking-related illnesses, passing legislation, the Health Care Costs Recovery Act, to allow it to try to hold tobacco companies accountable for those costs. Other provinces have since followed B.C.’s lead and all 10 provinces have similar legislation to the Health Care Costs Recovery Act.

“I realized we were going to have span of control and communication issues because the litigation was going to grow, I knew that. I’ve been doing this for 20 years and so I knew I wanted a more centralized approach,” says Kiser, who grew up in Kentucky, speaks with an engaging southern drawl, and is himself a reformed smoker. He went looking for a lawyer he thought could both handle the trials if necessary, as well as manage the team of lawyers needed to prepare for the litigation.

The most active cases at the moment are the two class actions in Quebec. The lawsuits allege damages on the part of millions of Quebeckers as a result of addiction to tobacco products and smoking-related illnesses.

The B.C. government argues that by 1950, the tobacco companies knew or ought to have known that cigarettes were hazardous to health and that they failed to warn the public about the health risks of their products.

Imperial Tobacco and others in the industry (including Rothmans Benson & Hedges Inc., Philip Morris International Inc., and others) argued that the federal government should be a third party to the suits on several grounds. However, the Supreme Court of Canada ruled in July 2011 that the federal government couldn’t be drawn into lawsuits against tobacco companies and held liable for damages. That left the tobacco companies on their own in what is very new legal territory in Canada. “Canada is a very different animal when it comes to litigation when you compare it to the states or anywhere else,” says Tamara Gitto, associate general counsel of litigation with Imperial Tobacco who has been with the company 11 years. “You have the provincial jurisdictions and in Quebec you have the civil code and the civil law you have to take into account.”

While Quebec has had a long history with class actions, the western provinces have not, so some of the cases in those jurisdictions will end up being the test cases. “We are dealing with several different companies across several jurisdictions so you need to make sure you are on top of the law and understand each company’s position and to the extent possible move forward in a co-ordinated and co-operative fashion,” says Gitto.

The development of the legal team and especially Kiser’s relationship with Imperial’s outside counsel point person was of utmost importance to him, especially since litigation of this nature is a multi-layered and complex endeavour that involves the in-house counsel managing the expectations of the company. Kiser and Gitto knew they needed a strong outside counsel partner who could work with them to develop and execute the strategy for the organization.

The person they chose would have to work on an international co-ordinating committee of lawyers representing all members of the tobacco industry and make themselves available almost 24-7.

Kiser and Gitto made their decision fairly quickly after seeing Deborah Glendinning of Osler Hoskin & Harcourt LLP in action. Glendinning is the chairwoman of Osler’s national litigation department. She acts as lead counsel on numerous multi-jurisdictional and cross-border corporate-commercial litigation matters. She is also the national co-ordinating counsel to Imperial Tobacco Canada. The effort requires extensive co-ordination across and between Canadian provinces and the U.S., which both Kiser and Glendinning know is critical to effectively executing a global litigation strategy. “The first time I saw Deborah in action we were involved in a regulatory matter with the Competition Bureau,” recalls Kiser. “It was the first time I dealt with her one-on-one — she was very tenacious and recognized the strengths and weaknesses of our position. I realized then what a fantastic lawyer she was.”

It was soon after Kiser asked Glendinning to build the litigation team for the cases coming along in Canada. Almost immediately, he says, he set out for her how he wanted the structure of the team to unfold. “We’ve got distinct roles: she’s the field general, the boots on the ground — the one who will be trying these cases with her counterparts. My job is to make sure we’re getting along with our parent company and that our strategies are aligned and communicating fully with our co-defendants at every level. It’s all about getting everyone singing off the same sheet at the same time,” says Kiser. “We want to make sure that when we do show up in court to say something we are in agreement, and we can agree to disagree with the other side as opposed to with ourselves.”

Osler represents Imperial on the litigation front, supported by local counsel in the jurisdictions where Imperial is facing legal challenges. Imperial has other firms that work on commercial litigation and business and tax matters, but on the tobacco litigation Osler is the primary firm.

The legal team knows 2012 will be an exceedingly busy year on many fronts: the trials in the Quebec class actions and other challenges in other provinces will be ramping up quickly. While the international tobacco companies have been engaged in litigation around the world for many years and have established views and ways of doing things, Glendinning and Kiser say it’s wrong to view Canada with preconceived notions of how to approach the actions here. “The challenge was getting the right balance because all the co-defendants and our parent company all have capable, competent counsel. Everybody has a wealth of knowledge and the trick is to get the right balance between getting the benefit of the experience without becoming a prisoner to the experience and tailoring to the situation at hand,” says Kiser.

The international players include Philip Morris International, Japan Tobacco International, and British American Tobacco — Imperial’s parent company. Because the international companies have been engaged in litigation around the world for many years, they have established views of approaching tobacco litigation. In some respects, Kiser says the issues are similar but in other respects they are very different. For example, the history of tobacco in Canada is not the same and the way the courts approach litigation is different. There are also provincial differences.

Glendinning works almost daily with the international co-ordinating committee taking conference calls and planning strategy. She says her team of 25 is ready to go to battle. “This is the first time we get an opportunity to tell our Canadian defence story,” she says. “So many of these cases are modelled after what people have heard or read about in the United States. But we are not the U.S. tobacco industry — we obviously have similarities, and the companies do business all over the world, but you can’t say, ‘There you go; they’re all the same,’ because they’re not. We have a uniquely Canadian situation. We have our own laws and processes so we need to educate people on the differences and make them realize the strategies employed in other jurisdictions may not exactly fit here as they have in other places. They can’t just bring a cookie-cutter approach and say it should apply here.”

When it comes to understanding the history of tobacco use in Canada, Glendinning says people have to be reminded that it involved societal and governmental decisions and not just industry decisions. “There were decisions weighed in on and thought was given by groups of people and teams of scientists and politicians who set policy back then,” she says.

She points to a similar situation today with the current on-again, off-again debate about the potential dangers of cellphone use. “Is the government going to come out and ban cellphones right now? I don’t think so. You’re going to see this replayed down the road where society deals with an issue and it comes out one way or another over time.”

Representing big tobacco

Ask Glendinning about how she views representing big tobacco and she gives you a steely look and you get an idea of what it might be like to litigate against her in court. “I look at them in bewilderment and ask them why they would ask that? Big tobacco is no different than any other big corporation. Why do people have these preconceived notions that it is different or should be treated differently?”

Kiser’s history with tobacco, he explains with a grin, is a little different. “I grew up and was raised on a tobacco farm. I worked with tobacco since I was a young child. I’ve been around tobacco, cigarettes, smoking, and quitting all of my life,” says Kiser, who smoked when he was younger. “I’m fitness oriented now — I believe it’s a choice like it’s a choice for so many other things. People still choose to smoke and still choose to quit and I have never had any moral dilemma with it whatsoever. Occasionally though, people will ask me the question.”

In building the litigation team, Kiser knew from the beginning he wanted a solid understanding of who was going to be on the roster and what they brought to the game. “I’m a huge believer in staffing plans. One of the things Tamara and I told Deborah from the beginning is we want to know every lawyer who is on our case and what they’re doing. We don’t get a bill that has names on it we don’t recognize and there’s a description of what everyone is doing.”

Glendinning started by introducing him to people at the firm and together they began identifying the strengths and weaknesses of people and strengths and weaknesses of the team, essentially building a huge litigation machine that was ready to face their opposition. “We were dealing with the provinces, the federal government, and various plaintiffs’ firms, and of course something that can never be overlooked, which is public scrutiny,” he says.

Glendinning doesn’t add or subtract lawyers to the team without letting Kiser know first. The team roster undergoes constant revision so if they think someone is underperforming they come off the team. If she has someone new she wants to introduce to the team, Kiser meets them. “For me, it’s knowing the team and the size of the team; then you can limit and estimate how many hours will be spent,” says Kiser.

What’s unique about the Imperial Tobacco case, says Glendinning, is the sheer magnitude of the organizational demands it presents. “Given the size and the importance and the scope of the litigation and the fact that it spans the country we didn’t just have to deal with internal issues relating to Imperial because it is industry wide. In some respects it is also international litigation, and so that presented a very unique set of challenges,” she says.

It means she must stickhandle around the politics of dealing not only with the client, the client’s related companies, the other players in the domestic industry, and the international industry. “In my view it’s the organization and co-ordination issues that are the biggest challenges. That’s what brought Tamara, John, and I together because we had to make sure our strategy was consistent across all of those lines.”

Why the relationship works

After five years on the case, Kiser and Glendinning have logged a lot of hours together. Often she’ll field a question when she’s at a hockey game and John’s talking to the parent company in England six hours ahead. Glendinning says it’s the most time she’s spent with any client in her entire career. “I have called Deborah mad and yelling at her and she’s done the same thing to me. We’ve been in cabs before where I’m sure the driver thought ‘these two are going through a divorce,’” jokes Kiser. “I never pull rank on her though and say I’m the client and that’s that. If she tells me something I may react emotionally but then go off and think.”

“If there’s any heated discussions, it’s typically reacting to external issues and how to deal with them — if there is any stress at all that’s where it comes from — not that we disagree with what we need to do but how do we best approach it,” Glendinning adds.

She says the relationship works because they have a “non-conventional solicitor-client relationship.” It’s not a situation where Kiser and Gitto are giving the instructions. “We actually work together as a team to develop strategies in full knowledge of what the business implications are, what the objectives are, and what our endgame in the litigation is and we very much come together as a team like that,” she says. That’s unique for an in-house client relationship. “We all work on a common base of knowledge so I understand what’s important to them and they understand what’s important in the legal landscape. We can talk through the issues and come to a solution.”

One aspect Glendinning found particularly unusual and appreciates is that she can openly voice her opinions. “It’s not that I have to defer to them — they won’t always agree with me but they always want me to push back as hard as I feel is appropriate so they get the benefit of my advice and my experience and that’s not always the way it works. Actually, most of the time that’s not the way it works,” she says.

Kiser views the relationship this way: given the protracted nature of tobacco litigation, by necessity the team must work together closely and over the course of long hours. “You’re working with these people for a period of years and it’s almost artificial to not  get to know them on some personal level and understand their strengths and weaknesses. Working as a team you learn to leverage that.”
Lessons learned — win the war, not every battle

Over the past five years, both Kiser and Glendinning say they have learned best practices from each other — in litigation and in managing people.

One of the biggest has been to build teams internally and execute nationally, which means as litigation comes up in each province, the team is ready to roll. “With our team at Osler we have been able to deploy people across the country as opposed to having different teams set up in different provinces, which would be duplicative, which is not as efficient and not as centrally organized.”

The lessons have also come on an individual, professional basis. “I’ve learned to be less of a lawyer and less of a litigator and more of a business strategist, which I have found very interesting and challenging,” says Glendinning. “Also, managing people is not necessarily something we learn in law school or in practice.”

Kiser says he has always approached tobacco litigation as one where it’s important to pick one’s battles. “Tobacco is always controversial, and what Deborah is referring to is that I think most lawyers are trained to win whatever is in front of them; in other words they are fighting the battle in front of them and sometimes I think it’s to the detriment of their long-term strategic outlook.”

He says one has to realize that sometimes the immediate battle may or may not be that important. If the co-defence wants to do something and Kiser, Gitto, and Glendinning don’t think it’s the right thing, they evaluate how important it is in the long-term scheme of things. “It’s about taking a higher, wider view of things and trying to solve the bigger problem. I say win the war, not necessarily every battle. Lawyers can sometimes be closed-minded and even one-minded. To me, one of the best things Deborah has done is to show her ability to adapt to a changing situation.”
Managing costs: How to avoid the ‘When in doubt, bill it to Imperial.’

When they joined forces, Kiser made it very clear to Glendinning that his costs were no different than the operations costs of any other business unit. “It’s a fact of life — it affects law like any other department so cost is constantly on our minds,” says Kiser. “One of the things we made Deborah very aware of is that cost is a constant issue. Even though this is massive litigation money is never not an issue — it’s always an issue — law does not get a ‘bye’ on that.”

Kiser knows that at the end of the day, it’s about the number of lawyers and exactly who the lawyers are that has the biggest impact on the bottom line. “I’ve worked with a lot of alternative billing arrangements and they suit certain tasks like document work and things like that, so you can come up with all the restrictive rates, restricting hours, flat fees, the list goes on and they all serve their purpose, but at the end of the day when you’re dealing with the large dollars it actually comes down to how many lawyers do you have billing you and what are they doing? When you know what that looks like you avoid the ‘when in doubt, bill it to Imperial’ that you can run into when you have cases of this magnitude.”

Kiser places great value in building such teams and values the relationship — he sees it as building equity in the partnership. “I’ve read articles where the in-house counsel says, ‘I’d rather pay the plaintiff a dollar than my defence team a dollar’ and that makes no sense to me. I don’t see how that plays into a partnership or ongoing legal and business relationships.”

As the associate general counsel, Gitto says Kiser and Glendinning have proven themselves and she is happy with what they’ve built thus far. “Deborah and John have been very successful and it’s certainly helped us deal with the litigation in Canada and elsewhere.”

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