Steve Parrish (Senior VP Philip Morris)

[MarylandQuitter]

Steve Parrish is Senior Vice President, Corporate Affairs, of Philip Morris and representative for the tobacco industry in settlement negotiations. He is in favor of the national settlement and has argued that the tobacco industry will reform under the proposed regulatory framework contained in the deal. He was "at the table" during the settlement talks and was considered a rational and fair negotiator by the participants we interviewed. Previously, Parrish was General Counsel for Philip Morris and worked with Philip Morris International in Switzerland. Prior to joining Philip Morris, Parrish was a partner at the law firm of Shook, Hardy and Bacon in Kansas City, MS. He was the main tobacco industry attorney in the famous Cipollone case.

Q. Mr. Parrish, why did the industry try to settle litigation with the Attorney's General?

Parrish: Well, we had been thinking for some period of time about trying to come up with a way to resolve a number of the very contentious issues that were facing the industry. The Attorney's General lawsuits, the class actions, there was a lot of legislative and regulatory issues that were out there, and we were really trying to come to grips with was there a way that we could try to resolve as many of these issues as possible, and the Attorney's Generals cases were a part of that....because we just felt that we could continue the litigation, whether it was the class action cases, the Attorney General cases, and if we won the cases we would still be in litigation and we would still be fighting and we were really....analyzed the situation. We didn't want to keep fighting. We wanted to sit down with others, people that we had disagreed with quite strongly on a lot of issues and see if we could find some common ground and try to resolve some of the issues.

Q. To those of us on the outside it seemed like a great sea change. You're a veteran of that litigation; you come from Shook, Hardy and Bacon before you were at Phillip Morris.

Parrish: That's right, I was a trial lawyer before I came with Phillip-Morris.

Q. Representing the tobacco industry.

Parrish: I represented Phillip-Morris in a case in New Jersey back in 1988, that's right.

Q. So that tobacco industry was known, if you will, for never giving up, for spending any amount of money to defend itself. What caused the sea change? Was there an event, or do you remember a conversation?

Parrish: Well, I think it was really a lot of different things that came together at one point in time, which sort of led us to this almost historic opportunity we have. We had the individual cases, which we had always very successfully defended, we'd had a large measure of success defending the class actions lawsuits, we felt like we had a good chance to win the AG cases. We thought ultimately we would probably prevail in our FDA lawsuit. But it just seemed to us that even if we won, every one of those lawsuits, how would the situation be better? And we just felt like we owed it to our shareholders, to our employees and our business partners, retailers, wholesalers, and our consumers to see if there was a way to end the acrimony and try to find some common ground with the Attorneys General, people in the public health community, regulators and legislators.

Q. You don't remember...there wasn't a meeting or someone came in with a memo or a proposal or a draft and said, "Hey, we've got to change the way we're doing business."

Parrish: No, not at all. Actually, at Phillip Morris, for example, we had been talking about this issue for some time, and as it turned out the other companies had been doing the same thing. And I think in late 1996 there was a discussion among some of the CEOs about trying to sit down and see if we could fashion a way to work out some differences with some of those who had been our opponents in the past, find some common ground, and see if we could resolve some of the issues.

Q. Was there a fear that you might lose a lawsuit?

Parrish: Well, anytime you're involved in litigation you're always worried about whether you'll win or lose the case. But again, it was really more than just the being concerned about winning or losing an individual case, or a series of cases, because while the litigation was a very serious thing to us, there was more involved. It was very obvious to us that there was more involved. It was very obvious to us that people around the United States were very concerned about the issue of youth smoking. We talked to people, we did polling, and it was very obvious that people were concerned about that. We were concerned about it, so we thought "is there a way that we could address the 'youth smoking' issue?" The Attorneys General and others in their lawsuits had claimed that the youth smoking issue was central to their claims against the industry, and we thought that might provide an opportunity to address the youth smoking issue, as well some of the litigation issues.

Q. Well, Mike Moore and Dick Scruggs and others who participated in the negotiations say to us they asked you or...Mike Moore said they asked you or Phil Carlton....that they be serious when they come to the negotiating table. And they all say that they were stunned, initially, when the industry said, "we'll give up our first amendment rights" or advertising rights. Somebody must have had a discussion about giving up that, after all the litigation and all the money, and all the argument against doing that.

Parrish: Well, we certainly had talked about that before we sat down to begin the negotiations. And I think there were really two key events early on in the negotiations. One was when Jeff Bible, the Chairman of Phillip Morris, and Steve Goldstone, the Chairman of RJR and Nabisco, sat down with the Attorneys General, the class action lawyers and some people from the public health community, and indicated very firmly their good faith and the fact that they were willing to make fundamental changes in the way we do business, going forward. I think that was very sincerely communicated to those on the other side of the table and I think they were impressed by that. And then, very quickly, we moved to the issue of our advertising and marketing practices, and I think when we, early on, indicated a willingness to forgo things like the Marlboro Man and Joe Camel in our advertising to give up billboards all across the country, that they realized that we were there in good faith and we were serious and we really wanted to try to work something out.

Q. Before I go back into the history here, I'm confused: are the Marlboro Man and Joe Camel still out there, or are you guys taking them out of the market place?

Parrish: If the comprehensive resolution that we negotiated last June is enacted into law, then they will be gone.

Q. Because it's not a good idea?

Parrish: I'm sorry, I don't understand.

Q. Well, you're willing to take them out of your advertising campaign because it's been alleged that it attracts kids and young people...it's not a good idea to have that out there attracting young people.

Parrish: Well, if I understand your question correctly that is one of the differences of opinion, if you will, that we have had with others, to whether the Marlboro Man, for example, is what causes kids to smoke. We don't think it is, but we were willing to give up the Marlboro Man as part of a comprehensive resolution of all these issues that were facing us. So, certainly, if this comprehensive resolution is enacted into law you'll never see the Marlboro Man again in this country.

Q. But if it isn't?

Parrish: Well, if it isn't, then I think that all of the companies in the industry have indicated that they...while we will do everything we can to address the issue of youth smoking, that we are not going to give up our First Amendment rights to communicate with our adult consumers. And the Marlboro Man, for example, is one way to do that. We're perfectly willing to try to work to eliminate youth smoking and do everything we can...we can't do it all by ourselves, and that's why this comprehensive approach, which involves money for education campaigns for kids as well as restrictions on advertising practices of the industry, is a much better way to go in our view.

Q. Okay, let me go back to a little history. When the Medicaid suit was first filed in Mississippi, and I assume you monitor litigation (related to Phillip Morris and the industry), what was your reaction?

Parrish: Well, it was a new theory. It was something that we really hadn't seen in the courtroom before; there had been discussions about theories like that in the past, and any time you have a lawsuit filed against you you take it very seriously. This one in particular we took seriously for a couple of reasons: it was a new theory, and just because of the potential amount of damages that was being alleged in the case.

Q. So you weren't like many of the other people we've interviewed who said when they first heard about it they thought "ah, it's a new theory and it's never going to go anywhere."

Parrish: Well, we took it seriously. We did our legal research and thought that we would win the case, that the law, if you will, was on our side. But, again, anytime you have a major lawsuit filed against you, you have to take it seriously--you owe that to your shareholders.

Q. At one point the governor of Mississippi went into the Supreme Court of Mississippi to try to get the whole suit and his Attorney General out of court, and you and your colleagues joined him in that suit. Once you lost that suit, did you really take it seriously then?

Parrish: Well, that was certainly a set-back, but we were taking it seriously before then. We were preparing for trial and we were preparing for trial right up until the moment we settled the case. So we were disappointed with the court's ruling, but we were prepared for it, and we were prepared to go forward if that's what we needed to do.

Q. So they were going forward in Pascagoula, these country lawyers in the shopping center in Pascagoula, but you took them seriously. They weren't just a bunch of hillbillies out there.

Parrish: The lawyers in the state of Mississippi in that case are excellent trial lawyers. They have done very well for clients all over this country, and as I've come to know them through the negotiation process I have a tremendous amount of respect for their ability; they're excellent lawyers.

Q. Were you guys home cooked in Mississippi?

Parrish: Well, I don't know what you mean by "home cooked." The state of Mississippi has a court system which functions very well. I'm not sure I would say that we were "home cooked."

Q. You're in Chancery Court, no jury, in Pascagoula and I think that the beauty of this comprehensive resolution was that despite our differences of opinion, the AGs, the private class action lawyers and the representatives from the public health community all had certain things that we could find common ground on. I think the Attorneys General, for example, realized that bankruptcy of the tobacco industry is not going to solve the youth smoking issue. It's not going to solve the public health issues that are trying to be addressed in this comprehhe law. I don't think that we thought we were going to be treated unfairly by the judge or anybody. Any place you try a case there's going to be a local lawyer.

Q. Well, but in Mississippi there was another case where the plaintiff complained that your people came in and hired all the prominent citizens as jury consultants, put them in the audience, and he wound up losing the case. He felt he got reverse cooked, if you will. I was just wondering whether if because the Mississippi case, in a sense, you may have felt outmaneuvered.

Parrish: No, I don't think we felt outmaneuvered. I think we thought at the end of the day if we had chosen to litigate that case all the way through the appellate process we ultimately would have prevailed, but at the end of the day we would have decided that it was in the best interest of our company and our shareholders and the industry to try to resolve that case as part of a comprehensive resolution of all the issues. And our firm belief was that to litigate these cases, one at a time, year after year after year, was not really going to be a satisfactory outcome for anybody; not for us, not for the citizens of Mississippi or the other states, and that there had to be a better way than 50 AG cases around the country.

Q. Well, isn't there the threat that you may lose one, two, three of these multi-billion dollar judgments and have to go into bankruptcy?

Parrish: Sure, that would be a terrible thing, and it would be not only terrible from the industry standpoint and all the hundreds of thousands of people around the country who depend on the industry for their livelihood, but I would submit it would be a bad thing for the public, because if you have a jackpot justice system where one, two, or three states get all the money, then what happens to the rest of the states? They get nothing, and that's why the comprehensive resolution that we negotiated with the Attorneys General, the class action lawyers and others, is a much better approach because it insures that the claims of all individuals and states will be satisfying.

Q. Fear of bankruptcy would have been a logical motive, though, for you to settle.

Parrish: Well, certainly, if this industry were to be bankrupt that would be, as I said, would be a terrible thing.

Q. When your share...the stock you own in the company would be worthless.

Parrish: It would not be worth much. And I think we owed it to our shareholders to try to resolve not only the AG cases, but all these other issues as well, and I think that the beauty of this comprehensive resolution was that despite our differences of opinion, the AGs, the private class action lawyers and the representatives from the public health community all had certain things that we could find common ground on. I think the Attorneys General, for example, realized that bankruptcy of the tobacco industry is not going to solve the youth smoking issue. It's not going to solve the public health issues that are trying to be addressed in this comprehensive resolution, because there will just be new manufacturers, whether they're foreign-based manufacturers or new manufacturing entities here in this country. There could very well be a black market. And I don't think anybody wants that. So we all said we all have the same concern here, so how can we fashion a resolution that addresses the very legitimate interests of everybody around the table.

Q.You know, in interview after interview that we do, people continue to refer back to the Spring of 1994 when the CEOs all were sworn in and then said they didn't believe that nicotine was addictive. From hindsight now, how do you look at that hearing and the strategy of that hearing?

Parrish: I think, in hindsight, that hearing in April of 1994 in front of Congressman Waxman's Subcommittee, was one of the seminal events over the last number of years as it relates to tobacco, and it was a very important hearing.

Q. Was it a disaster for the industry?

Parrish: I don't know if I would say it was a disaster, but it certainly focused a lot of attention on the smoking issue in this country.

Q. Would you have done it differently today?

Parrish: I don't know with 20-20 hindsight whether I would have or not. Not that I was the one who was making those decisions but I just don't know.

Q. Maybe, could you clarify what the industry position is now between the 1994 testimony about nicotine addiction and risk factors related to health and recent testimony that there's some acknowledgment that you may have contributed to 100,000 deaths a year, and similar statements or confusing statements from my point of view.

Parrish: I don't think you can say there's an "industry" position on those issues. I think what you have is different companies have different positions. The CEOs of the different companies have different views, as a personal matter. And I think you've seen that reflected in the recent congressional testimony, so I don't think you can say there is a industry position on those issues.

Q. Do you believe that nicotine is addictive?

Parrish: Do I personally? Under the definition that people apply today, I certainly do believe it is addictive.

Q. You do...

Parrish: I do!

Q. Okay, so that's no longer a controversy?

Parrish: Well, not as far as I'm concerned. And what we have said is, we've agreed as part of this comprehensive resolution to put bold new warnings on all packages of cigarettes, including the addiction warning. That's, again, one of the things that we agreed to do as part of this comprehensive resolution, to try to end the acrimony and focus on solutions to the issue, rather than this ceaseless, endless litigation and argument.

Q. So, if I understand correctly, the industry is no longer, and you are no longer, taking positions that have been reflected to some extent in all these documents, that we cannot admit something, like that there is addiction connected to nicotine?

Parrish: Well, I'm not sure what documents in particular you're referring to, but in a way it doesn't really matter. I think what the CEOs have said, their statements speak for themselves, and I think individual CEOs have different views from one another. There's not an "industry" position on addiction, for example.

Q. Do you agree that you sell a "nicotine-delivery device?"

Parrish: I'm not so sure I would characterize it as a "nicotine-delivery device," I'm not sure I know exactly what that means. I know that others have said that. I think the important question is: what is the public health policy going to be in this country going forward, and what role is the industry going to play in that policy. And as a part of the resolution that we've agreed to we're going to put a warning on the packs that says that cigarette smoking is addictive, that nicotine is addictive, and we as a company have agreed that we are not going to debate this issue endlessly, that we'll work with the public health community, not only on the nicotine addiction issue but the other public health issues, to try to forge common ground that will advance the public health goals or the public health community.

Q. When Benett Lebow decided that he was going to break ranks, do you remember that, when you found about that?

Parrish: I certainly do.

Q. What was your reaction?

Parrish: I went to the train station to get on the train to go to work, I picked up the Wall Street Journal, and read the article. And my first reaction was that I was surprised, and as I read the article I was even more surprised that it had been kept secret and broke in the Wall Street Journal that day. Those were my two immediate reactions. I was surprised that there had been a settlement with Mr. Lebow, and I was almost even more surprised that it hadn't leaked out.

Q. "Surprised" sounds a little understated. You're a veteran of Shook, Hardy and Bacon, you guys used to brief executives on what their stance should be, legally and otherwise related to these issues. This was like the fall of the Berlin Wall in terms of the success of your organization.

Parrish: It was a major event. I would say it was a major event...in the process that led us to June 20, 1997 that I think, as I said earlier, there were a number of things that came together. And certainly the Liggett settlement was a part of that.

Q. Well, you've got a turncoat. You've got somebody breaking ranks!

Parrish: Well, I'm not sure....

Q. I know you teach Sunday school, but you don't curse?

Parrish: Well, I didn't curse that day...I quietly read my paper. I don't know to this day everything that motivated Mr. Lebow to enter into that settlement. But the fact of the matter is--it happened! I'm not sure I would characterize him as a "turncoat" or that he broke ranks. The fact of the matter is, it happened. And that was one of the things that led us to the June 20, 1997 agreement.

Q. By the way, why did Phillip Morris pay his legal fees? Why did Phillip Morris pay the legal fees for Liggett?

Parrish: As I understand it, Mr. Lebow was...Liggett was in some financial difficulty and was having trouble paying its legal fees and defending the smoking and health litigation, and they asked us if we would assist them in that and we did.

Q. In order to keep a united front.

Parrish: We thought it was important that defendants coordinate and cooperate in the defense of the cases, and to that end we did agree to help Mr. Lebow with his legal expenses.

Q. Mr. Lebow told us that his attorney then met with your attorneys and other attorneys and one of them turned to him and said, "You just destroyed the most beautiful legal defense ever...the most successful legal defense in history."

Parrish: I wasn't there. I don't know if that comment was made or not.

Q. What was your reaction when you heard that President Clinton was going to give the FDA permission to promulgate their regulations?

Parrish: I wasn't surprised about that because we had heard that that was something that was under consideration. I was disappointed. One of our main concerns with FDA regulation in the past has been that FDA would have the authority to ban the sale of tobacco to adults in this country. We obviously would be concerned about that. We are concerned about that. The FDA's council, in an argument in the 4th Circuit, recently said that under the laws that exist today, if the FDA regulates tobacco products as drugs or devices, it could ban the sale of tobacco to adults. So we were concerned about that.

My company, Phillip Morris, had proposed a comprehensive federal legislative scheme to deal with the regulation of tobacco, to address the issue of youth smoking, and we were hopeful that that legislation could have passed as opposed to giving FDA jurisdiction under the Food, Drug, and Cosmetic Act. That didn't work out, so we had to think about another way to do it.

Q. Well, you were pretty tough in those days about Commissioner Kessler and the "Trojan Horse for Prohibition", "a bureaucrat out of control", "an authoritarian," do you still feel the same way?

Parrish: I think that today I would say that one of the lessons that I've learned (and I think one of the lessons that others on the other side have learned) is the best way to have a dialogue is in person, face-to-face, and not through the newspapers. And with 20-20 hindsight I would have loved to had more substantive discussions in those days with people in Congress, with people at the FDA, with people in the public health community; I think that's one of the things we've learned over the last year. It's that before you can really make progress you've got to sit down and have substantive talks one-on-one and not through the newspapers.

Q. Again, a clarification, the original settlement on June 20th accepted limited FDA jurisdiction with a lot of controls over that. Am I correct to understand that the industry now accepts the idea of unfettered FDA jurisdiction?

Parrish: No, we're still very much concerned about and opposed to giving FDA the authority to ban the sale of tobacco products to adults in this country. That is something that we are unalterably opposed to.

Q. Isn't that a contradiction? I mean, the FDA and many of the documents that have come out say that nicotine is an addictive drug...the FDA will have total authority. As it has over every other addictive drug.

Parrish: Well, again, I would say that if that means that FDA had the unbridled authority, the discretion to ban the sale of tobacco products to adults in this country, we are opposed to it. And I think that the overwhelming majority of Americans would be opposed to that, despite what they may think about smoking.

Q. What about regulating how much nicotine and what additives go into the nicotine in tobacco?

Parrish: Well, the agreement that we reached with the Attorneys General and others provides that the FDA would have authority over nicotine in the product. It does provide some measure of protection to the industry and to adults who want to continue to use the product.

Q. I guess the critics would say that the federal courts already acknowledged the North Carolina FDA jurisdiction, why give that up? Why water down what they can do and can't do?

Parrish: Well, I guess I would say to them and I have said this to them in those one-on-one discussions that we've had that if no one wants prohibition (and that's what they all say; everyone says "we don't want prohibition, it won't work"), and if that's the case then let's sit down and work out a reasonable regulatory regime for this product that doesn't run the risk of imposing prohibition on this country. It was a miserable failure with alcohol, and I think everybody agrees it would be a failure for tobacco products. So let's sit down and see if we can work that out.

Q. You know, some people that participated in negotiations told us that your side came in wanting...saying we want it to be like the beer industry. Is the goal of this to change the image of the tobacco industry from being, if you will, worse than a cocaine cartel, to quote Mike Moore?

Parrish: Well, I think that one of the things we'd like to see going forward is a recognition by all, including us, that tobacco products, cigarettes are a controversial product. I think that's always going to be the case; there are health risks associated with using the product. I think everybody knows that, everybody agrees with that. But if everybody agrees that tobacco use is going continue, at least for adults, let's figure out how we're going to regulate it, allow us to market it in responsible ways to adults under a regulatory regime that the American public is comfortable with. That, I think, is one of the goals that we have as a result of this negotiation process.

Q. If the bankruptcy really didn't worry you, and it was just this onslaught of general litigation, was it the image that people involved in the industry had to live with that forced you to settle?

Parrish: Sure, that was one of the concerns. As I say, it was a number of things. It was the financial threat from the litigation, it was the image that the companies had, it was the legislative and regulatory threats that we were facing, as well as the private and Attorney General litigation. So it was really all those things and I think it was a real sense on behalf of the industry because you have to realize that within the last few years there's really new leadership in the industry in this country, and as Jeff Bible from Phillip Morris said, when he became CEO he felt like he had a choice to make: am I going to rely....am I going to continue to fight about the past and defend the litigation, fight regulation and legislative initiatives, or am I going to look to the future and see if there's a way that I can fashion a compromise that will allow us to remain in business selling a legal product to adults while addressing some of the very legitimate concerns that some of our adversaries have.

Q.You say that you don't believe that nicotine is an addictive drug. Does Philip Morris now say that?

Parrish: Our company was asked by the Senate Judiciary Committee, I believe it was, last fall to state its position on that question, and we provided a rather lengthy response, but I think it's fair to summarize it as saying that we agree that under--at least certain definitions--nicotine is ad...or cigarette smoking is addictive. And we also said that we think it is more productive, rather than arguing about which is the appropriate definition and whether smoking falls under this definition or that definition, that we sit down and work toward a policy for regulating this product that's consistent with the goals of the public health community. And that's really Philip Morris's position.

Q. Understood, but the reason why I'm asking these questions is that we're trying to figure out what the position is now because in the past, for instance, Philip Morris and the industry has maintained that you don't manipulate nicotine in order to get people to smoke. Is that position changed?

Parrish: One of the problems (and this goes back to the definition issue), one of the problems we've always had is the term "manipulate" and exactly what that means; it's sort of a pejorative term. And what we think...

Q. Engineered. Change. Move around. Use whatever words you want to use, but do you change the impact of nicotine or its quantity in your products in order to make sure that people want to smoke or continue to smoke?

Parrish: We have a range of products on the market that go from 0.1 milligrams of nicotine, as measured by the government testing method, all the way up to in the...above 2.0 milligrams of nicotine. So clearly there is a wide range of products out there with a wide range of nicotine deliveries. So, again, I don't really see the purpose of continuing the debate over what does the word "manipulate" mean. Let's set about trying to fashion a comprehensive approach to the regulation of the product so that not only the FDA and the federal government, but the public health community and the public at large know what needs to be known about the product, and that's really what people have asked us for, and that's what we've tried in good faith to do.

Q. I understand now that the public position, now, is that you don't dispute the issue of nicotine addiction, basically, that's what you're saying: you don't dispute that there's health damage created by your product.

Parrish: Right.

Q. Okay, how do we deal with the past in order to trust you in the present?

Parrish: The agreement that we reached with the Attorneys General and the members of the public health community and the private class action lawyers provides for all industry information on the health risks of the product to be made available to the public at large: to the media, to plaintiff's lawyers, to members of the public. You put them in a document depository here in the Washington area and anybody who wants to look at it can go in and see it. In addition, the agreement provides for, on a continuing basis, additional documentation and information to be disposed to the Food and Drug Administration.

Q. Let me give you an example of what I mean by "history," and you should know this because you were a member of....what was the "Committee of Council?"

Parrish: The Committee of Council is made up of the general councils of the domestic tobacco companies in the United States who are members of the Tobacco Institute.

Q. You've attended those meetings?

Parrish: Sure, I used to be General Council of Philip Morris USA and I would attend those meetings.

Q. You've chaired some of the meetings.

Parrish: Sure.

Q. We interviewed G. Robert Blakey, a law professor in Notre Dame who worked in the Florida and Texas cases on the RICO aspects of those cases. He describes the Committee of Council to us as almost a conspiracy of Consigliari from a Mafia family, getting together to make policy, policy designed to deceive the American people.

Parrish: Could not disagree with that more. Don't know what else to say.

Q. Did you in these meetings attempt to steer research in certain directions that would help the industry and obfuscate the scientific debate?

Parrish: In the limited time that I attended those meetings, we got together to discuss common legal issues to the industry. We had updates on the litigation, we talked about bills that were being introduced in Congress and at the state level on things like excise taxes, and a variety of issues that the industry faced that were legal issues.

Q. We talked with Gary Huber, you know Gary Huber.

Parrish: I've met him, yes.

Q. He's gone to your Sunday school class, apparently. He remembers going to Kansas, he told us, going to your class. Do you remember that?

Parrish: I think he did go one time. That's right.

Q: Gary Huber says that the Committee of Council was described to him by your mentor Mr. Hardy as an "organization set up basically to obfuscate the scientific debate."

Parrish: Well, as far as I know, Dr. Huber has never been at any of the Committee of Council meetings. He certainly was never at any of the meetings that I attended. And I don't know what anybody has told Dr. Huber about the Committee of Council so I just, really, I don't know.

Q. He says he had discussions back in the 70s with Mr. Hardy who came to Harvard to look at his research and Mr. Hardy told him that they also arrange it so that one member of the industry is never there so they can get out of an anti-trust argument that they're conspiring together.

Parrish: Never heard that before so I don't....as I said, I wasn't part of those discussions and I've never heard that before.

Q.In reading about your Shook, Hardy experience and your background, it sounds to me...is there another law firm in the country that has pharmacologists, toxicologists, psychiatrists, doctors full-time on staff like that?

Parrish: Oh, I don't know, but I wouldn't be surprised. Shook, Hardy for example, in addition to representing tobacco companies, has a number of pharmaceutical clients. It's a big law firm, it may be the biggest in the state of Missouri's; I think they may have over 300 lawyers. They are involved in a lot of complex litigation. In my experience it wouldn't be unusual to either have on staff or have as consultants pharmacologists or people with expertise on issues like that.

Q.We've been told stories about the "24th Floor," that there was a secret floor that had limited access, at Shook, Hardy, is that true?

Parrish It wasn't when I was there. Whether it is since I left, I don't know.

Q. By the way, Chairman Bible I believe testified the other day that he didn't know anything about the Committee of Counsel, hadn't heard of it before. Is that believable?

Parrish: Well, you have to realized that Jeff Bible became chairman of Philip Morris, I believe, in 1995 and was never the head of Philip Morris USA. He's not a lawyer...that doesn't sound unusual to me.

Q. That he wouldn't know his general counsels are meeting semi-regularly with everyone else in the industry?

Parrish: Well, it wouldn't be his general counsel. Mr. Bible is chairman of the holding company. He has a general counsel who is general counsel of the holding company, so it wouldn't be Mr. Bible's general counsel who would be attending those meetings.

Q. If you had to do it again, would you have issued the Frank Statement, you know, in the 1950s, the statement where the industry promises to do any research and reveal all of its results?

Parrish: I was probably about three years old when the Frank Statement came out.

Q. But you've got to live with the consequences.

Parrish: And I've got to tell you that even by reading books and newspaper articles and talking to people who were involved, there is no way that I can construct in my mind what the situation was like at the time, what was going on in the minds of the people who were involved in making that decision. There's just no way I could make a judgment on that, even with the benefit of 20-20 hindsight.

Q. Yeah, but you wind up at the Committee of Council, which is related to this CTR--the Council of Tobacco Research, right?

Parrish: No.

Q. The Committee Counsel has no relationship to the Council on Tobacco Research?

Parrish: In my....the times that I attended meetings with the Committee of Counsel, no.

Q. Did it have anything to do with scientific research projects?

Parrish: I'm sure there were discussions of scientific research.

Q. Special projects.

Parrish: One of the key things that is a part of the smoking and health litigation is the science that people use to claim that cigarette smoking makes people sick. So I'm sure there was discussion about that.

Q. Didn't the Committee of Counsel consider what were called "special projects," special scientific research projects that they wanted controlled by the attorney-client privilege?

Parrish: I don't remember discussions like that at those meetings that I attended.

Q. There are documents and letters, some written by Bill Shin, who is an associate of yours at Shook, Hardy.

Parrish: He was one of my partners, that's right.

Q. Which talk about that--special projects involving Gary Huber, for instance.

Parrish: And I'm just not familiar with those documents. I'm sorry.

Q. What was Dr. Huber's role, do you know?

Parrish: As I understand it, he was a consultant to either the industry or to Shook, Hardy, I'm not sure which, or maybe both. I'm just not sure.

Q. So if he says that he was an independent researcher who happened to get funds through various universities, some funds came from the tobacco, you would dispute that.

Parrish: No, I think Dr. Huber obviously was an independent researcher, and maybe I'm wrong, but it was my impression that at least some points he had consulted with the industry, but maybe I'm wrong about that. I just don't know. I didn't really, as I said...I think I met Dr. Huber but didn't really work with him, so I wasn't, I'm not still familiar with his relationship.

Q. You know, he says to us that he has discovered now, now that he has access to documents about himself that...he says that now that he has access to documents from inside the industry, that he was actually being funded in cases to find out things that the industry already knew were true. That he was duped. That this was all a sham.

Parrish: I don't know how to respond to that. I haven't spoken to Dr. Huber about that. I don't know what documents he's referring to, I haven't seen those so I just don't know how to respond. I'm sorry.

Q. Yeah, well, we may show you a document but...have you seen any documents that describe the Council on Tobacco Research as a front?

Parrish: I may have. I know that claim has been made in the litigation.

Q. No, I mean an industry document that describes the Council on Tobacco Research as a front, as a public relations front. It was set up by Hill and Knowlton.

Parrish: Well, I know that that claim has been made in the litigation and I believe that the plaintiffs lawyers and others have tried to use industry documents in support of that claim and in that issue the Council for Tobacco Research was one that we talked about for a long time in our negotiations. And as part of the June 20th agreement, we've agreed to disband the Council for Tobacco Research.

Q. I guess my question is, in order for us accept that the industry has changed and wants to change, will there be an admission that much of this...will there be an admission at the Council on Tobacco Research and other entities that were set up by the industry, were set up, basically, to obfuscate and hide documents and not have admit nicotine addiction or the health damage caused by the industry?

Parrish: What there will be is a process by which those documents will be made available, not just to lawyers but to the public. Anybody who wants to look at those documents and draw whatever conclusion they want.

Q. But a judge in Minnesota has already said that. He's going to release almost...apparently he's releasing 39,000, he may be on his way to releasing everything.

Parrish: Fine, then those documents will be public and people, if that's the ruling of the courts, then people will be able to look at them. But the agreement that we've negotiated goes even further than that--there will be a public depository for millions of pages of documents for people to look at if they want to. And my point is that, let's make that stuff available. Let's comply with the terms of the agreement, make that stuff available, but let's not let that slow us down as we try to come up with a nation-wide policy on tobacco in this country--how the product is going to be manufactured, how it's going to be regulated, let's do something about the issue of youth smoking, and let's make these documents available as the June 20th agreement requires.

Q. The industry opposes youth smoking.

Parrish: That's right.

Q. The industry did, on occasion, target youth, to sell tobacco products to youth, no?

Parrish: Well, I have seen documents over the last few weeks and months, and without knowing the author of those documents or in the context under which those documents that are very troubling in that regard.

Q. I think this is one of them...

Parrish: What you have is, I believe, is sincere commitment in the industry not to target to kids. And it's not just a commitment. The agreement that we reached with the Attorneys General and the private lawyers provides for strict penalties on industry, on any company that targets kids or violates that agreement.

Q. In reaction to these....allegations about youth smoking, in the past you have said "we don't care about youth smoking, we'll give up youth smoking, it's a very small part of our market anyway."

Parrish: I believe that to be the case.

Q. But isn't that where you lay the seeds for future smokers?

Parrish: Well, I've heard people say that and I guess...

Q. Well, every study that exists...

Parrish: There are certainly a lot of studies that suggest that, and I guess all I can really say to you is that we are willing to abide by the rules of the June 20th agreement, we are willing to do everything we can as a company and as an industry to address the issue of youth smoking. We firmly believe that we cannot do it all ourselves, there's a role here for the government, there's a role for parents, educators, friends...we've all got to work together, and if that means youth smoking is eliminated that will be fine with us. If that means our business suffers over the long-term then we're prepared to accept that.

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