DID TOBACCO FIRMS SQUELCH 'SAFE' CIGARETTE?

Of all the accusations being hurled at tobacco companies, none is more
damning than the charge that they colluded to squelch development of
"safer" cigarettes, fixating on avoiding legal liability rather than
customers' welfare.

Cigarette makers have hotly denied the claim. But the line of attack
could get a significant boost from new evidence on the demise of a
supposedly "safer" smoke that struggling Liggett Group once viewed as
a breakthrough against lung cancer and salvation of its declining business.

In the first case of an industry lawyer cooperating with anti-tobacco
plaintiffs, Lawrence Meyer, former outside counsel to Liggett, has
agreed to testify for the state of Washington at its trial scheduled
to start next Monday.

His testimony is sure to rekindle a 20-year-old mystery concerning the
death of the "XA" project, which involved the blending of a catalyst
with tobacco to neutralize cancer-causing compounds in the smoke.

Meyer, 57, a Washington, D.C., attorney, also is expected to be
debriefed by lawyers for the three dozen other states with pending
anti-tobacco suits, and by Justice Department investigators involved
in a criminal investigation of Big Tobacco.

Nor is Meyer the only knowledgeable insider who has not been heard
from yet. Another who has not been contacted by the states is J. Bowen
Ross Jr., a former Liggett patent lawyer who recently gave the Los
Angeles Times copies of his notes from more than 100 meetings on the
XA project between 1976 and 1983.

Ross, 60, who said he has had three relatives die of lung cancer from
smoking, thinks Liggett blew a big opportunity - and not just because
it "would have made a lot of money."

"I thought if you came out with something that's beneficial, you have
an obligation" to bring it to market, Ross said.

The XA affair created a mild sensation in 1988 when it was first
revealed in a New Jersey tobacco case. Amid charges and denials, the
story soon faded.

But now Washington and other states - whose lawsuits charge cigarette
makers with conspiring not to compete on product safety - are
beginning to dig deeper.

Meyer was a partner in the law firm of Patton, Boggs & Blow, and an
outside lawyer for Liggett from 1974 to 1986. He advised the firm in
its dealings with federal agencies and at times represented Liggett on
the Committee of Counsel, where top industry lawyers plotted legal and
regulatory strategy.

Meyer also attended some of Liggett's meetings on the XA project. At
one such meeting, Ross said, Meyer made this statement that appears in
Ross' notes: "Other tobacco companies will look upon this (the XA) as
a catastrophic event."

Lawyers for Washington first contacted Meyer in May. His cooperation
would have been impossible but for the landmark out-of-court
settlement Liggett reached last year with Washington and other states.

Other tobacco companies are seeking to limit the scope of Meyer's
testimony. However, his recollections are outlined in a document filed
by his lawyer, Dwight Bostwick, earlier this month in state court in
Seattle. The 10-page "proffer" alludes to the pivotal role of Joseph
Greer - former general counsel of Liggett's tobacco division - in
scrubbing the XA.

Greer, a smoker who died of lung cancer in 1985 and was a close friend
of Meyer, was under pressure from Liggett defense lawyers, who thought
the XA would undermine their defense of smoking, the proffer states.

It says Greer also was leaned on "by other tobacco companies," which
feared that "Liggett's marketing and sale of a safe cigarette could
result in infinite liability in civil litigation as it would
constitute a direct or implied admission that all other cigarettes
were unsafe."

A tobacco-industry lawyer said he could not comment until Meyer
testifies.

But cigarette makers have always rejected claims that they ignored
health concerns, arguing that they have gradually lowered tar and
nicotine yields, and invested millions trying to come up with novel
new brands.

"Is there a silver bullet for cigarette design?" industry lawyer David
Bernick asked jurors earlier this year at the state of Minnesota's big
tobacco trial. "Nobody's told us about it. We've spent a hell of a lot
of money trying to find it. We can't."

The costly failure of R.J. Reynolds' Premier brand in the late 1980s
is an oft-cited example of the industry's efforts. Premier heated,
rather than burned, tobacco and appeared to lower risks from smoking
and from secondhand smoke. It was canceled after bombing in test markets.

But there also is evidence the industry took a dim view of such
efforts and the potential legal fallout. In 1987, for example, a
lawyer for Shook, Hardy & Bacon, Big Tobacco's leading courtroom
defenders, noted with alarm that Premier could prove injurious to "the
tobacco industry's joint defense efforts."

"The industry position has always been that there is no alternative
design for a cigarette as we know them," wrote the lawyer, William
Ohlemeyer. "Unfortunately, the Reynolds announcement . . . seriously
undercuts this component of industry's defense."

Liggett, smallest and weakest of the companies, was tormented by fears
of potential litigation as it planned the launch of its new product,
documents and interviews show.

In a 1977 memo in which Greer voiced his staunch opposition to the XA,
he noted that Liggett in defending itself in court had always debunked
the 1953 mouse-skin tests, in which cancerous tumors formed on the
backs of mice by daubing their skin with liquid condensate, or "tar,"
from cigarette smoke. To launch a brand whose superiority was based on
those very tests could be disastrous, Greer argued.

The company would be "taking enormous risks in the defense of
governmental actions and civil litigation with its attending
subjection to vast amounts of monetary liability," Greer wrote.

Greer earlier had taken the precaution of ordering that a lawyer
(often Ross) be present for all XA meetings, with all notes to be
collected by the law department so the firm could assert
attorney-client privilege and refuse to produce them in court.

Ross recalled being on an out-of-town trip when Greer ordered company
officials to ignore an impending deadline for paying the negligible
fee for issuance of an XA patent. "I went ballistic," Ross recalled,
adding that he got Greer to relent by raising the specter of
stockholders suing over the wasting of corporate assets.

Greer also interfered with a strategy Liggett officials had devised to
cope with the marketing problem, documents and testimony show.

In October 1978, former Liggett scientist James Mold and Charles
Kensler of Arthur D. Little flew to Buenos Aires, Argentina, for the
12th International Cancer Congress, hoping to drum up publicity for
the XA. They believed the scientific press would seize on the news,
and the popular media would pick it up from there.

As they prepared to stage a news conference, Mold recalled getting "a
frantic call from Mr. Greer" with orders to not distribute "the press
release and not hold a press conference, that they had changed their
mind."

According to the Meyer proffer, Greer feared that if "Mold went
forward with his comments at the Buenos Aires conference, the world
press would report on the attendant scientific advances . . . and,
thereafter, Liggett would not have the option of abandoning the
project," the document states.

Liggett's peril, according to Ross' rough notes, was thus twofold. The
XA could increase "potential (liability) for existing products." But
"if withheld, conspiracy," and "non-use of valuable asset to public
good."

Mold said Liggett President K.V. Dey Jr. told him in 1981 that a
Philip Morris executive had vowed unspecified retribution if the XA
were launched. "They would not sit back and allow us to market this
without creating problems," Mold said. Dey denied there were such
threats. Nonetheless, Liggett decided to avoid the U.S. and seek
licensing deals with foreign firms. If the XA succeeded overseas, they
might then bring it home.

Mold, Ross and another Liggett executive pitched cigarette makers in
France, Austria, Germany and Russia but found no takers. Mold, who
left Liggett in 1984, said the effort was doomed from the start.

In essence, Liggett told the Europeans, "This is a great product, but
we're not going to produce it," Mold recently told the Los Angeles
Times. The obvious question was "if it's that great, why aren't you
going to produce it?"

Checked-by: Patrick Henry