The four largest tobacco manufacturers have been granted a temporary restraining order that enjoins the Liggett Group from disclosing confidential documents jointly owned by the companies. The Liggett Group broke rank in March from the larger tobacco companies by settling a class-action lawsuit by smokers. The tobacco manufacturers argued that the documents were developed as joint work product at a time when Liggett took part in an industry-wide defense strategy against the class-action suits. Here is the March 20, 1997 ruling.

FORSYTH COUNTY

FILED 97 MAR. 20 AM 10:23

IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT
DIVISION 97
CVS 2173

R.J. REYNOLDS TOBACCO COMPANY, BROWN &
WILLIAMSON TOBACCO
CORPORATION, LORILLARD TOBACCO COMPANY, and
PHILIP MORRIS
INCORPORATED,
Plaintiffs

v.

LIGGETT GROUP, INC., and BROOKE GROUP, LTD., INC.,
Defendants.

MOTION FOR TEMPORARY RESTRAINING ORDER
AND/OR
PRELIMINARY INJUNCTION AND OTHER RELIEF

R. J. Reynolds Company, Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and Philip Moms Incorporated, through counsel and pursuant to N.C. Gen. Stat. Section 1-485 and Rule 65 of the North Carolina Rules of Civil Procedure, move this Court as follows:

1. For a Temporary Restraining Order, as requested in the verified complaint, enjoining defendants Liggett Group, Inc. ("Liggett") and Brooke Group, Inc. ("Brooke"), their officers, agents, servants, employees, attorneys and all other persons in active concert or participation with them, from any misuse or disclosure of confidential and privileged information relating to plaintiffs or involving matters in which they share a common interest and resulting from communications between counsel for plaintiffs and defendants;

2. For an Order, as requested in the verified complaint, directing Liggett and Brooke to identify and produce to the Court for an in camera inspection all documents, including those which defendants may have already disclosed to third parties, whose contents reflect confidential and privileged information relating to plaintiffs or involve matters in which plaintiffs and defendants share a common interest and result from communications among counsel for plaintiffs and defendants;

3. For an Order, as requested in the verified complaint, directing defendants to identify all persons to whom said disclosures in paragraph 2 above were made.

In support of this motion, Plaintiffs file their verified complaint.

This the day of March, 1997.

OF COUNSEL:

WOMBLE CARLYLE SANDRIDGE & RICE, a Professional Limited Liability Company
P. O. Drawer 84
Winston-Salem, NC 27102
(910) 721-3600

/s/ Keith W. Vaughan N.C. State Bar No. 6895

/s/ Thomas D. Schroeder N.C. State Bar No. 12546

Counsel for Plaintiffs

----------------------------------------

NORTH CAROLINA

FORSYTH COUNTY

IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION
97 CVS 2173

R.J. REYNOLDS TOBACCO COMPANY
BROWN & WILLIAMSON TOBACCO CORPORATION, LORILLARD TOBACCO COMPANY,
and PHILIP MORRIS INCORPORATED,

Plaintiffs

v.

LIGGETT GROUP, INC., and BROOKE GROUP, LTD ., INC

Defendants

TEMPORARY RESTRAINING ORDER

This cause coming OD to be heard and bung heard before the undersigned Superior Court Judge of Forsyth County, upon application of plaintiffs R. J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and Philip Morris Incorporated, for a temporary restraining order and motion for preliminary injunction, and it appearing to the Court as follows:

1. An action has been commenced by plaintiffs against defendants Liggett Group, Inc., ("Liggett") and Brooke Group, Ltd., Inc. ("Brooke") by the filing of a verified complaint and the issuance of summons. The verified complaint alleges, inter alia, that plaintiffs and defendants for many years and at all times relevant herein had pending against one or more of them litigation involving issues of common interest. Further, for many years and at all times relevant herein, there has been threatened litigation, legislation and/or regulatory action against one or more of them involving issues of common interest.

2. The verified complaint further alleges that legal counsel to the plaintiffs and defendants, acting on behalf of their respective clients, reviewed, discussed, developed, and provided legal advice as to pint work product and strategies on legal issues common to the tobacco companies that might emerge from pending or prospective litigation, legislation, regulation and matters in which they shared a common interest. The verified complaint further alleges that information shared by and among all counsel was highly confidential and protected by the attorney/client privilege, the attorney work product doctrine, the joint defense privilege, ant the common interest privilege, among other things.

3. The verified complaint further alleges that, upon information and belief, defendants have misused and disclosed confidential and privileged information pertaining to plaintiffs and that defendants intend to continue to misuse and disclose such confidential and privileged information by, among other things, disclosing same to third parties for the benefit of those suing plaintiffs and the defendant in litigation separate from the present lawsuit. The verified complaint seeks recovery for breach of contract, misuse and unauthorized disclosure of privileged and confidential information, and breach of fiduciary duty. The verified complaint further seeks to preliminarily and permanently enjoin defendants from any further misuse or disclosure of confidential and privileged information relating to plaintiffs or involving matters in which they bare a common interest and resulting from communications between counsel for plaintiffs and defendants. The verified complaint further requests that defendants identify and produce to the Court for an in camera inspection all documents, including those defendants, or anyone on their behalf , hac disclosed or intend or propose to disclose to third panics for the benefit of those suing or threatening to sue plaintiffs and defendants, resulting from communications between counsel for plaintiffs and defendants and reflecting confidential and privileged information relating to plaintiffs or involving matters in which plaintiffs and defendants share a common interest. The complaint further seeks the identification of all persons to whom said disclosures were made.

4. If defendants are not-stopped immediately and without notice, plaintiffs will suffer immediate and irreparable injury.

5. A temporary restraining order restraining defendants from future misuse or disclosure of confidential and privileged information relating to plaintiffs or involving matters in which they share a common interest and resulting from communications between counsel for plaintiffs and defendants is needed before notice can be served and a hearing can be had because, as clearly appears from the specific facts shown by the verified complaint:

(a) Defendants have divulged confidential and privileged information relating to plaintiffs which defendants gained in a capacity of trust and confidence resulting from privileged communications among counsel for plaintiffs and defendants;

(b) Counsel for plaintiffs herein previously sought and received assurances from defendants that they would not divulge such confidential and privileged information without first giving notice to plaintiffs and providing them an opportunity to seek Judicial protection;

(c) Defendants have breached its previous agreement to provide such prior notice,

(d) Defendants' continuing negotiations with third parties who are suing plaintiffs herein refute at least in part to efforts to obtain privileged and confidential information relating to plaintiffs;

(e) Such actions by defendants will result in immediate, substantial and irreparable injury and damage to plaintiffs; and

(f) The injury to plaintiffs is irreparable because plaintiffs have no adequate remedy at law in that, as a result of the actions of defendants, plaintiffs will have lost the confidential nature of the privileged information which defendants are attempting to misuse and disclose.

IT IS THEREFORE ORDERED that defendants Liggett and Brooke, their agents, servants, employees, attorneys, officers, directors, and controlling shareholders, including Bennett S. LeBow, and those persons in active concert or participation with them are hereby restraint ant enjoined from misusing or disclosing any privileged or confidential information relating to plaintiffs or involving matters in which they share a common interest and resulting from communications between counsel for plaintiffs and defendants, including but not limited to all notes, memoranda and other documents resulting from communications among counsel for plaintiffs and defendants. Defendants are Ordered to instruct their agents, servants, employees, attorneys, officers, directors, and controlling shareholders, including Bennett S. LeBow, and those persons in active concert or participation with them who have access to such privileged or confided information as to the proscriptions of this injunction.

IT IS FURTHER ORDERED that Liggett and Brooke appear before the undersigned Superior Court Judge, at Forsyth County Hall of Justice in Winston-Salem, North Carolina, on March 31st 1997, at 10:00 am. or as soon thereafter as may be heard to do the following

(a) Identify and produce to the Court under Seal for an in camera inspection all copies of all documents, including those which defendants (or anyone OD their behalf) have disclosed or propose to disclose for the benefit of parties suing or threatening to sue plaintiffs and defendants, resulting from communications between counsel for plaintiffs and defendants and reflecting confidential and privileged information relating to plaintiffs or involving matters in which plaintiffs and defendants share a common interest, and

(b) Then and there show cause, if any it may have, why they and their agents, servants, employees, attorneys, officers, directors, and controlling shareholders, including Bennett S. LeBow, and all other persons in active concert or participation with defendants should not be enjoined pending trial of this action from misusing or disclosing any privileged or confidential information relating to plaintiffs or involving matters in which they share a common interest and resulting from communications between counsel for plaintiffs and defendant, including but not limited to all notes, memoranda and other documents resulting from communications between counsel for plaintiffs and defendants; and

(c) Disclose to the Court and plaintiffs under Seal those persons to whom Liggett has disclosed the confidential and privileged information set forth in subparagraph (b) immediately above.

THIS ORDER shall become effective upon plaintiffs' filing with the Clerk of Superior Court a bond in the total amount of $ 1000.00 guaranteeing that plaintiffs will become bound unto defendants for such damages, not exceeding that amount, as defendants may sustain by reason of this Order in the event of a final judicial determination that defendants were wrongfully restrained.

THIS ORDER shall expire on March 31, 1997, unless before such tune, it is extended by good cause shown for an additional ten days or unless defendants consent that it may be extended for a longer period.

ENTERED this the 20th day of March , 1997, at 11:00 o'clock am.

SUPERIOR COURT JUDGE