A. September 22, 1992: The subpoenas duces tecum.

Judge Zagel set aside September 30 and October 1 for an evidentiary hearing on Grove Fresh’s motion for sanctions in 89c1113 and its Rule 60(b)(3) motion in 89c1114.

In preparation for that hearing Grove Fresh served lawyers at McDermott Will & Emery and Schiff Hardin & Waite with subpoenas duces tecum requiring them to produce the originals of the following items, among others:

  • “The original report of the audit of Everfresh’s manufacturing practices prepared in February of 1989 and identified in the deposition of David Murray and in the affidavit of William Appler, along with all documents attached to the report or referred to in the report.”  
  • All documents that referred or related to “the importation of any products from Bio Trade, Ltd., IDEA, Ltd., or INGKO, Ltd.”
  • All documents that referred or related to “the importation and use of products known as Oleum 320/IDEA…or any similar or related compounds.” 
  • All documents that referred or related to “the chemical composition of the products known as Oleum 320/IDEA…or any similar or related compounds.”

B. The evidence supporting Grove Fresh’s FRCP 37 claims, and the collateral problems that evidence created for the defense.

Radler planned to call me as the first witness.  He spent three days preparing my direct examination, which would have taken two-three hours and covered about 24 exhibits.  The exhibits included:

  1. Excerpts from deposition testimony showing that Labatt received notice of Everfresh’s illegal practices in October 1986, two months before it acquired the firm.  (This evidence was material because the Labatt officers who would become responsible for supervising Everfresh would be subject to strict criminal liability if they failed to correct those practices.[1])
  2. Business records showing that in 1987 and 1988 Everfresh, under Labatt’s ownership, manufactured at least 3.2 million gallons of adulterated orange juice. 
  3. Business records showing that in 1987 and 1988, Everfresh made at least six bulk purchases of Oleum 320/IDEA, paying a total of $257,155 for the unsafe additive.[2]
  4. William Appler’s affidavit, establishing that Labatt retained him in February 1989 to investigate Everfresh and for advice on what Labatt should report to the FDA.
  5. Letter from Lazar Raynal confirming that as of February 1989, both Labatt and McDermott Will & Emery knew about Everfresh’s use of Oleum 320/IDEA.
  6. Memos prepared by FDA staff summarizing meetings with Labatt in May/June 1989 that resulted in amnesty for Labatt and Everfresh.  Neither memo mentioned Oleum 320/IDEA.  According to one of the memos, Labatt told the FDA that it first learned about Everfresh’s illegal practices “in early 1989.”
  7. Interrogatories and document requests that Grove Fresh served on Everfresh in 89c1113 in December 1989.  If answered truthfully, the interrogatories would have disclosed Everfresh’s use of Oleum 320/IDEA, and the document requests would have yielded the business records described in Item 3, above.
  8. Everfresh’s April 1990 interrogatory answers and response to document requests, which omitted any mention of Oleum 320/IDEA. 

Items 1, 3, 4, 5, 7 and 8 would establish that McDermott Will & Emery and Everfresh suppressed evidence of Oleum 320/IDEA, in violation of FRCP 37.

The theory of Grove Fresh’s motion was that the defense had suppressed evidence of Oleum 320/IDEA

for the improper purposes of protecting Everfresh from embarrassment with the FDA, and also to avoid the lawsuits that would follow if the public learned that over the ten-year period from 1979 to 1988, Everfresh illegally imported Oleum 320/IDEA and illegally added it to orange juice.[3]

Item 6, coupled with Items 1, 3, 4, 5, 7 and 8, supported this theory.

1. Grove Fresh’s evidence would also implicate Labatt in violations of 18 U.S.C. §1001.

Items 1, 2, and 6 would make a prima facie case that Labatt “knowingly and willfully” made a “false, fictitious[ ] or fraudulent statement[ ]” to a “department or agency of the United States,” in violation of 18 U.S.C. §1001, when it told the FDA that it first learned about Everfresh’s illegal practices “in early 1989.”[4]

Items 1, 3, 4, 5, and 6 would make a prima facie case that Labatt, in violation of 18 U.S.C. §1001, “knowingly and willfully…conceal[ed] or cover[ed] up…a material fact” when it failed to tell the FDA about Everfresh’s long-time use of Oleum 320/IDEA.

2. Grove Fresh’s evidence would also vitiate the defense’s opposition to the Coalition’s access claims. 

The central premise of Labatt’s and Everfresh’s opposition to the Coalition’s access claims was that the 90c5009 complaint made “unsubstantiated scandalous accusations that would damage the reputation of Everfresh and others.” 

Items 1, 2, and 3 would vitiate that argument.

3. Grove Fresh’s evidence would also vitiate Labatt’s claim of attorney-client privilege for the February 1989 audit report it delivered to McDermott Will & Emery.

In January 1991, Grove Fresh had moved in 89c1113 to compel production of a report that Labatt prepared in February 1989 for William Appler, Labatt’s lead lawyer at McDermott Will & Emery.  The report described the results of an internal investigation of Everfresh’s operations; Appler had designed and supervised the investigation himself.  Attached to the report were business records revealing Everfresh’s use of Oleum 320/IDEA. 

The 89c1113 defendants opposed the motion, claiming that the report was protected by the attorney-client privilege.  In support of this contention the defense submitted an affidavit from Appler, attesting that the

report was used by me to shape my subsequent presentation of information, both to the FDA and to the Canadian Health Protection Branch. It was also used as a basis for developing defense strategy in the Grove Fresh litigation.   (emphasis added)

If, as suggested above in §1, Labatt’s “presentation of information…to the FDA” resulted in two distinct violations of 18 U.S.C. §1001, then the communication that helped Appler to “shape” those false statements fell within the crime-fraud exception to the attorney-client privilege.[5]

4. Grove Fresh’s evidence would have exposed Labatt’s false representation about the date Everfresh stopped using Oleum 320/IDEA.

During the investigation that would lead to the February 1993 indictment of Flavor Fresh and Peninsular Products,[6] Labatt, purporting to cooperate with the FDA and Department of Justice, acknowledged that Everfresh had used Oleum 320/IDEA, but represented that Everfresh had stopped using the unsafe additive in December 1986, when Labatt acquired the company. 

This representation was affirmed in October 1993 in an affidavit by Bruno Moser, an Everfresh employee.[7] 

I don’t know the date on which Labatt first made this representation to the government.  If it was made before September 1992, the evidence at the hearing would have exposed the falsity. 

C. The Coalition’s right of access to the evidentiary hearing scheduled to commence September 30, 1992. 

If the evidentiary hearing went forward, the Coalition would have the right to attend it and report on what transpired.[8]  The Coalition would have the right to copy and describe to the public any exhibits filed in the course of the hearing.[9]

D. September 29, 1992: The suspension of litigation. 

We sent defense counsel courtesy copies of Grove Fresh’s trial exhibits late in the morning on September 29.  Shortly after lunch, a McDermott lawyer called Radler and requested an emergency settlement conference with Judge Zagel.  They met in chambers for about an hour. 

When Radler returned, he reported that he had agreed to postpone the hearing and engage in settlement discussions.

[1] See Memorandum 3-A, §VII-C.

[2] See Appendices F-G for copies of these purchase documents.

[3] Grove Fresh’s Amended Motion for Sanctions, ¶16.

[4] As of 1989, 18 U.S.C. §1001 provided as follows: “Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined under this title or imprisoned not more than five years, or both.”

[5] See generally, E. Epstein & M. Martin, The Attorney-Client Privilege and the Work Product Doctrine 88-93 (2d ed.1989)

[6] See Memorandum 3-A, §IX-D.

[7] See Appendix E for a copy of Moser Affidavit. The Department of Justice filed Moser’s affidavit in the related criminal case against Flavor Fresh.  See discussion in §VIII-I, below.

[8] Craig v. Harney, 331 U.S. 367, 374 (1947). 

[9] See, e.g., Stone v. University of Maryland Medical Sys. Corp., 948 F.2d 128 (4th Cir. 1991) (documents filed as exhibits in civil court actions are subject to the First Amendment right of access); Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165 (6th Cir. 1983) (First Amendment right of access to documents introduced in civil cases); Anderson v. Cryovac, 805 F.2d 1 (1st Cir. 1986) (limited First Amendment right of access to filed discovery documents); Barron v. Florida Freedom Newspapers, 531 So.2d 113 (Fla. 1988).