Judge: BAT Must Turn Over Key Document in $280B Tobacco Case

The federal judge overseeing the U.S. government's $280 billion racketeering case against major tobacco companies on Tuesday ordered a unit of British American Tobacco Plc (search) to turn over a key document that the company has been fighting to withhold.

U.S. District Judge Gladys Kessler gave British American Tobacco Investments Ltd until Friday to turn over a 1990 memorandum written by an outside lawyer named Andrew Foyle advising the company on its document retention policy.

"BATCo's actions in the course of its dogged fight against release of the Foyle memorandum constitute inexcusable conduct," Kessler wrote in her opinion.

The Justice Department (search) has been trying to get the memorandum for two years in connection with the racketeering case. But the company has resisted, arguing that it was privileged.

The memorandum contains advice to a BAT subsidiary in Australia "regarding modification of its document retention policy in light of increasing litigation against tobacco companies in the United States and Australia," the judge stated in her opinion.

Company spokeswoman Ann Tradigo said the ruling was "just another step" on the way to trial and that the company remained confident that the company would prevail.

Representatives of British American Tobacco were not immediately available for comment on Tuesday.

The document came to the U.S. government's attention because it was quoted in a previously sealed opinion that was released in 2002 by the Supreme Court of Victoria, Australia.

The lawsuit, filed by the Clinton administration in 1999, accuses British American Tobacco and other tobacco companies of deliberately misleading the public about the risks of smoking in a conspiracy going back to the 1950s.

Also targeted in the lawsuit are Philip Morris USA and Altria (MO); R.J. Reynolds Tobacco (RJR), the main unit of R.J. Reynolds Tobacco Holdings; Loews Corp.'s (LTR) Lorillard Tobacco unit, which has a tracking stock, Carolina Group (CG ); and Vector Group Ltd.'s (VGR) Liggett Group.

The tobacco companies deny the racketeering charges. They say the industry has changed its ways since 1998 because it has been operating under a landmark settlement with the states that severely restricts cigarette marketing and subjects the companies to oversight.

Government lawyers have said they will demonstrate the industry continued to flout the law even after the companies signed on to the settlement.