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`Exhibit 15
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`Case 1:20-cv-00393-LMB-TCB Document 1417-1 Filed 08/19/22 Page 3 of 10 PageID# 35782
`Transcript of Nicholas Ray Gilley, Corporate Designee & Individually 1 (1 to 4)
`Conducted on December 3, 2020
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`3
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` A P P E A R A N C E S
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`ON BEHALF OF THE PLAINTIFFS AND COUNTERCLAIM
`
`DEFENDANTS:
`
` J. THOMAS VITT, ESQUIRE
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` JONES DAY
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` 90 South Seventh Street
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` Suite 4950
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` Minneapolis, Minnesota 55402
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`ON BEHALF OF THE DEFENDANTS AND COUNTERCLAIM
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`PLAINTIFFS:
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` BRETT M. SANDFORD, ESQUIRE
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` LATHAM & WATKINS
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` 140 Scott Drive
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` Menlo Park, California 94025
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` 650.328.4600
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`ALSO PRESENT:
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` JOSHUA TUBBS, VIDEOCONFERENCE TECHNICIAN
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` ADAM NUDELMAN, VIDEOGRAPHER
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`1
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` IN THE UNITED STATES DISTRICT COURT
` FOR THE EASTERN DISTRICT OF VIRGINIA
` Alexandria Division
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` x
`RAI STRATEGIC HOLDINGS, INC. : Case No.
`and R.J. REYNOLDS VAPOR : 1:20 cv 00393 LO TCB
`COMPANY, :
` Plaintiffs and :
`Counterclaim Defendants, :
` v. :
`ALTRIA CLIENT SERVICES LLC; :
`PHILIP MORRIS USA INC.; and :
`PHILIP MORRIS PRODUCTS S.A., :
` Defendants and :
`Counterclaim Plaintiffs. :
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`Videotaped Deposition of RAI STRATEGIC HOLDINGS, INC.
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` and R.J. REYNOLDS VAPOR COMPANY
`
` By and through its Corporate Representative
`
` NICHOLAS RAY GILLEY
`
` And in his Individual Capacity
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` Conducted Virtually
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` Thursday, December 3, 2020
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` 7:07 a.m. PST
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`
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`Job No.: 337459
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`Pages: 1 283
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`Reported By: Rhonda Norberg, CSR No. 9265, CCRR No. 185
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` CONFIDENTIAL Videotaped Deposition of
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` I N D E X
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`WITNESS: NICHOLAS RAY GILLEY
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`EXAMINATION PAGE
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` BY MR. SANDFORD 9
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` BY MR. SANDFORD CONTINUED 89
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` EXHIBITS
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` Deposition Pursuant to Fed. R.
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` Civ. P. 30 b
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`2 Deposition Transcript of Nicholas 12
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` Gilley, September 23, 2020
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`3 Deposition Transcript of Nicholas 13
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` Gilley, July 10, 2018.
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`4 Deposition Transcript of Nicholas 13
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` Gilley, June 26, 2020
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`5 R.J. Reynolds Vapor Company's 20
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` Second Supplemental Objections and
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` Responses to Plaintiff's Second
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` Set of Interrogatories Nos. 6 13
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`6 Monthly Detailed Financial 45
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` Statement, R.J. Reynolds
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`NICHOLAS RAY GILLEY, conducted virtually.
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` Pursuant to notice, before Rhonda Norberg,
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` Certified Shorthand Reporter No. 9265, CCRR No. 185
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` in and for the State of California.
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`PLANET DEPOS
`888.433.3767 | WWW.PLANETDEPOS.COM
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`Case 1:20-cv-00393-LMB-TCB Document 1417-1 Filed 08/19/22 Page 4 of 10 PageID# 35783
`Case 1:20-cv-00393-LM STiia of 10 PagelD# 35783
`Transcript of Nicholas Ray Gilley, Corporate Designee & Individually 32 (425 to 128)
`Conducted on December3, 2020
`
`A Probablythe last two or three years.
`Q_ Soat least let's say -- let me ask a
`different question.
`Juul has been RJRV's biggest competitor in
`the U.S. e-vapor market for the years 2019 and 2020,
`correct?
`A Thatis correct.
`
` Blu e-vapor product during the 2013 to 2018 time
`CAINDNWN
`oryAUNPWN=
`
`frame?
`MR.VITT: Objection. It's -- objection to
`form. It's tough as to time. Right? The whole
`time, did it change? It's kind ofan unfair
`question.
`MR. SANDFORD: You can answerif you can,
`Q_ And Juul's currently the leader in terms of
`Mr.Gilley.
`
`9 sales in the United States e-vapor market, right?
`THE WITNESS:It -- it would -- it would be
`9
`10 A_Thatis correct.
`10 dependent on the time frame and the market
`
`11 conditions when you're talking abouta five-year
`11 Q Andare you awarethat Altria invested in
`12 Juul in December 2018?
`12 period.
`
`13. A Yes.
`MR. SANDFORD:Let's look at 2018, then.
`
`
`
`14. Q Okay. Andsinceit invested in Juul in
`15 December of 2018, RJRV has been competingdirectly
`
`16 with Altria in the United States e-vapor market,
`
`17 correct?
`
`
`18
`MR. VITT: Objection to form, misstates the
`19 evidence.
`
`
`20
`THE WITNESS: Can -- can yourestate the
`21 time frame again, please?
`
`22
`MR. SANDFORD:Sure.
`
`
`23 Q Since -- well, since Altria invested in
`24 Juul -- since -- let me -- since the time that
`
`
`25 Altria made its investmentin Juul, Altria has
`
`facts.
`THE WITNESS: Based on my understanding of
`their arrangement, Altria has a minority investment
`in the Juul business, but the Juul company and
`entity remains intact and remains the competitor to
`9 the RJR Vapor Company.
`Q You're familiar with a company named Juul,
`9
`10 BY MR. SANDFORD:
`10 right?
`11
`A Yes.
`11 Q Well, sales of RJRV's Vuse products cut
`12 into Juul's market share -- correct? -- in the
`12. Q And Juul releasedits first e-vapor product
`13 in the United States around 2015, roughly?
`13 e-vapor market?
`14. A_Ithink that's correct.
`14.
`A_ Potentially.
`15 Q Okay. Since the time that Juul released
`15 Q Why"potentially"?
`16 its first e-vapor productin the United States, RJRV
`16 A_Well, it depends on how the industry
`17 and Juul have directly competedin the United States
`17 performs. It is possible that we both could grow
`18 e-vapor market, right?
`18 and then it would be subject to who is growing the
`19 A Thatis correct.
`19 fastest, I guess, at that point.
`20 Q And Juul currently is RIRV's biggest
`20
`"Cut in" is a relative term. I guess I'm
`21 competitor in the U.S. e-vapor market, right?
`21 not following exactly what you meanbythat.
`22 Q Okay. Let's switch gearsalittle bit.
`22 A Yes, that's correct.
`23 Q And for how long has Juul been RJRV's
`23
`RJRVbelieves that the Vuse products are
`24 biggest competitor in the U.S. e-vapor market,
`24 directly competitive with iQOSin the United States,
`25 correct?
`25 approximately?
`
`
`
`SINANhwWNY
`
`competed directly with RJRV via Juul in the
`United States e-vapor market, correct?
`MR. VITT: Objection to form, misstates the
`
`
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`CADUNPWN
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`PLANET DEPOS
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`Transcript of Nicholas Ray Gilley, Corporate Designee & Individually 33 (129 to 132)
`Conducted on December3, 2020
`
`
`OMANIADMPWN
`
`— =
`11
`
`Q_ And the Vuse products have directly
`competedin the United States with iQOSsince iQOS
`was released in October 2019, correct?
`A Thatis correct.
`
` A Thatis correct.
`ConAMWN=
`
`\o
`
`A_ R.J. Reynolds Tobacco Company currently has
`22
`23 an Eclipse-branded heat-not-burn productavailable
`24 for sale in the United States.
`25 Q Isthe Eclipse heat-not-burn product the
`
`30
`
`Q AndR.J. -- well, the Reynolds --
`Reynolds -- let me take a step back.
`Reynolds also sells heat-not-burn products,
`
`right?
`A_ R.J. Reynolds Tobacco Companyhas a
`10
`
`11 heat-not-burn product in the market.
`
`12 Q Right.
`12 Q Okay. RJRTC's Eclipse product competes
`13 directly with iQOSin the United States, correct?
`13
`RJRV doesn't have any heat-not-burn
`
`
`14 products, correct?
`14 A The RJR-- I'm sorry, the R.J. Reynolds
`
`15 A Not to my knowledge, correct.
`15 Tobacco CompanyEclipse productis a heat-not-burn
`16 Q Are all the heat-not-burn products that are
`16 product whichis similar in nature to the iQOS
`
`17 sold under the Reynolds umbrella sold by RJRTC?
`17 product in the United States, and so it would be a
`18
`A_ Yes, that's correct.
`18 competitive product.
`
`
`19 Q=And which heat-not-burn products are 19 Q RJRTC's heat-not-burn Eclipse product
`20 competes directly with iQOSin the UnitedStates,
`20 currently offered for sale in the United States by
`21 RJRTC?
`21 right?
`
`22
`MR.VITT: Asked and answered.
`
`23
`THE WITNESS: Correct, it would be a
`
`24 competitive product.
`25
`(Court reporterclarification.)
`
`
`32
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`
`
`CrAYDMNAPWN
`
`only heat-not-burn product that RJIRTC is currently
`selling in the U.S.?
`
`2 3 4 5 6 7 8
`
`THE WITNESS:I said "Correct, it would be
`a competitive product."
`BY MR. SANDFORD:
`Q_ When was RJRTC's Eclipse heat-not-burn
`product introduced into the market?
`MR. VITT:
`I think that's beyond the scope.
`You can answerif you know.
`THE WITNESS:I don't know.
`9 BY MR. SANDFORD:
`
`10 Q_ Do you havea-- okay.
`11
`Can we mark Tab 30, please, Josh?
`12
`THE VIDEOCONFERENCE TECHNICIAN:Stand by.
`13
`(Exhibit No. 16 was marked for
`14
`identification by the court
`15
`reporter; attached hereto.)
`16
`THE VIDEOCONFERENCETECHNICIAN: Exhibit 16
`17 is onscreen and ready.
`18 BY MR. SANDFORD:
`19 Q Do you have Exhibit 16 in front of you,
`20 Mr. Gilley?
`21
`A Yes.
`
`A Based on myknowledge,that's correct. 1
`
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`22 Q Do you recognize Exhibit 16?
`23 A Yes, Ido.
`
`
`24 Q=Whatisit?
`
`25 A_Itis the shipmentto retail report for
`PLANET DEPOS
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`Transcript of Nicholas Ray Gilley, Corporate Designee & Individually 41 (161 to 164)
`Conducted on December3, 2020
`
`CAIDUNPWNKe
`
`MR. VITT: Beyond the scope, lacks
`foundation.
`THE WITNESS: Basedonthe slide, that
`appears to be correct.
`BY MR. SANDFORD:
`Q_ And then in the segment on the right, it
`identifies RJRT as having de-prioritized
`heat-not-burn from 2005 -- between 2005 and 2016,
`correct?
`
`\o
`MR. VITT: Beyond the scope.
`10
`THE WITNESS:The title above the line
`11
`12 chart says "RJRT De-prioritization of HNB."
`13 BY MR. SANDFORD:
`14 Q Andso the slide indicates that RIRT had
`15 de-prioritized heat-not-burn between 2005 and 2016,
`16 right?
`17.
`A_ Thetitle says "RJRT De-prioritization of
`18 HNB."
`19
`Q_
`Iunderstand that's what the title says,
`20 sir. I'm askingthe slide indicates that RJRT had
`21 de-prioritized heat-not-burn between 2005 and 2016,
`22 correct?
`23
`MR. VITT: Objection; beyond the scope and
`24 lacks foundation.
`25
`THE WITNESS: Without the proper context,
`
`CADUN
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`PWN
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`it's hard for me to determine that and -- because
`the -- it appears in 2015 was when the Revo launch
`occurred, another relaunch.
`BY MR. SANDFORD:
`Q_ Well, we had agreedearlier that the
`segmenton the right pertained to 2005 to 2016,
`right?
`MR. VITT: Beyond the scope.
`THE WITNESS: That's what the label says.
`9
`10 It says 2016 at the end.
`11 BY MR. SANDFORD:
`12 Q Andassociated with the label of 2005 to
`13 2016,it states RJRT has de-prioritized
`14 heat-not-burn, right?
`15
`MR. VITT: Asked and answered, beyond the
`16 scope, and lacks foundation.
`17
`THE WITNESS: That is what the slide says,
`18 correct.
`19 BY MR. SANDFORD:
`20 Q Ifyou lookbackat the title which we
`21 discussedearlier, the title of the slide also says
`22 that RJRT "does not have a next-generation
`23 electronic heat-not-burn system in development."
`24
`Do yousee that?
`25
`MR. VITT: Beyond the scope.
`PLANET DEPOS
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`I -- I guess it would be a
`THE WITNESS:
`1
`2 disadvantage relative to -- I don't -- I don't know
`3
`exactly what you mean by "disadvantage."
`4 BY MR. SANDFORD:
`5
` Q Imean leaking of e-liquid from the
`6 cartridge is somethingthat is perceived negatively
`7 by consumers, correct?
`8
`MR. VITT: Beyond the scope.
`9
`THE WITNESS: Yes, consumers -- consumers
`10 would prefer the cartridges not leak.
`11
`MR. SANDFORD:Can youplease turn to the
`12 page ending in 896.
`13
`THE WITNESS: Yousaid 896?
`MR. SANDFORD: Yes.
`
`THE WITNESS: Okay.
`MR. SANDFORD: And according to this slide,
`17 RJR Tobacco had de-prioritized heat-not-burn in the
`18 years leading up to 2017.
`19 Q Do youseethat?
`20
`MR. VITT: Objection; beyond the scope.
`21
`THE WITNESS:Thetitle says "RJRT has
`22 de-prioritized HNB in recent years."
`23 BY MR. SANDFORD:
`24 Q And thefigure belowit is a time line
`25 running from 1980 to 2016, correct?
`
`MR. VITT: Beyond the scope.
`1
`THE WITNESS: Correct.
`2;
`3 BY MR. SANDFORD:
`4
`Q And that time line from 1980 to 2016 is
`5 split in two segments.
`6
`Do yousee that?
`e
`MR. VITT: Beyond the scope.
`8
`THE WITNESS:I see two different colors on
`9 the timeline, correct.
`MR. SANDFORD: Correct.
`Q One,the -- the segment onthe left is from
`12 1980 until approximately 2005, and the segment on
`13 the right is from 2005 to 2016, correct?
`MR. VITT: Beyond the scope.
`THE WITNESS: That appears to be a
`16 reasonable assessment, correct.
`17 BY MR. SANDFORD:
`18 Q And for the segment onthe left from 1980
`19 to 2005,the slide identifies RJRT emphasizing
`20 heat-not-burn, right?
`21
`MR. VITT: Beyond the scope.
`22
`THE WITNESS: The header says "RJT Emphasis
`
`25 Q Upuntil 2005, correct?
`
`
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`Transcript of Nicholas Ray Gilley, Corporate Designee & Individually 42 (65 to 168)
`Conducted on December3, 2020
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`THE WITNESS: Yes.
`MR. SANDFORD: And the date of this
`presentation is January 2017.
`Q Is it true that as of January 2017, RJRT
`did not have a next-generation electronic
`heat-not-burn system in development?
`MR. VITT: It's beyond the scope.
`THE WITNESS: That would be my
`8
`9 understanding based onthe slide.
`10 BY MR. SANDFORD:
`11 Q Do you have any reasonto dispute that the
`12 slide says RJRT did not have a next-generation
`13 electronic heat-not-burn system in development as of
`14 January 2017?
`15
`MR. VITT: It's beyond the scope.
`16
`THE WITNESS:I would not be aware of one
`17 personally.
`18
`MR. SANDFORD: Will you please turn the
`19 page, to the page ending in 897.
`20 Q Andonthis slide, RJR -- or let me back up
`21 asecond.
`22
`On this slide ending in Bates number 897,
`23 RAII is exploring three key issues with respect to
`24 heat-not-burn, right?
`25
`MR. VITT: Beyond the scope, lacks
`
`as PMI?" right?
`MR. VITT: It's beyond the scope.
`THE WITNESS: Yes.
`MR. SANDFORD: Okay. Can youturn the
`page, please, to the page ending in Bates number
`898.
`
`THE WITNESS: Okay.
`BY MR. SANDFORD:
`\o
`Q_ What is shown onthis slide?
`MR. VITT: It's beyond the scope and lacks
`10
`11 foundation.
`12
`THE WITNESS:It says that HNB appears to
`13 have potential and should be explored further.
`14 BY MR. SANDFORD:
`15 Q And then below -- and belowthe title of
`16 this slide, it identifies four reasons for exploring
`17 heat-not-burn further, right?
`18
`MR. VITT: It's beyond the scope, lacks
`19 foundation.
`20
`THE WITNESS: That appearsto be correct.
`21 BY MR. SANDFORD:
`22 Q Okay. And the first reason identified
`23 is -- for exploring heat-not-burn further is that
`24 consumers appear receptive to heat-not-burn, right?
`25
`MR. VITT: Beyond the scope and lacks
`
`CAIDUNPWNKe
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`CADUNPWN
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`\o
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`foundation.
`foundation.
`1
`THE WITNESS: The bullet point says
`THE WITNESS: There are three key issues
`2
`"Consumers appear receptive."
`for RAII to explore.
`3
`BY MR. SANDFORD:
`4 BY MR. SANDFORD:
`Q_ And the reason identified by RAII for
`5
` Q Andit's in the context ofheat-not-burn,
`consumers appearing receptive to heat-not-burn is
`6 right, sir?
`that heat-not-burn "offers unique advantages
`i!
`MR. VITT: It's beyond the scope and lacks
`8
`foundation.
`relative to vapor and may appeal to a large ATC
`9 BY MR. SANDFORD:
`segment dissatisfied with current cigarette
`10 Q Do you need meto repeat my question?
`10 alternatives," correct?
`11
`MR. VITT: It's beyond the scope and lacks
`
`11 A_Yes, can you please repeat the question?
`12 foundation.
`12. Q My question was just that you stated the
`13
`THE WITNESS:That's correct.
`13 title there, "Three Key Issues for RAII to Explore,"
`14 and my question was issues to explore in the context
`14
`MR. SANDFORD:If you lookat the fourth--
`15 we'll call it a bullet under -- on the slide ending
`15 of heat-not-burn, correct?
`16 in 898,it says "RAII does not have a
`16
`MR. VITT: Beyond the scope and lacks
`17 foundation.
`17 next-generation heat-not-burn product."
`18
`THE WITNESS:It appears that heat-not-burn
`18 Q Do youseethat?
`19 is part ofNumber | and Number2, and for Number3,
`19 A Yes,Ido.
`20 it appears to be a communicationstrategy for
`20 Q And thenthe slide in the fourth bullet
`21 alternative nicotine products.
`21 continues, says "Because RAII doesnot have a
`22 BY MR. SANDFORD:
`22 next-generation heat-not-burn product, it would take
`23 Q Andwith respectto Issue 3, the first
`23 significant time and investment to commercialize a
`24 new product and catch up to competitors," correct?
`24 bullet point, RAII is asking "How can RAII get the
`25 same recognition for alternative nicotine products
`25
`MR. VITT: It's beyond the scope and lacks
`PLANET DEPOS
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`Conducted on December3, 2020
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`foundation.
`1
`THE WITNESS: Correct.
`2
`3 BY MR. SANDFORD:
`4
` Q And those competitors would include
`5 Philip Morris, correct?
`6
`MR. VITT: It's beyond the scope.
`7
`THE WITNESS:
`I assume Philip Morris would
`8 be acompetitor, correct.
`9
`MR. SANDFORD: And thenat the bottom
`10 there's a summary sentence.
`11 Q Do youseethat on the slide?
`MR. VITT: Beyond the scope.
`THE WITNESS: Yes.
`14 BY MR. SANDFORD:
`15
` Q And the slide summarizes by saying "Should
`16 the heat-not-burn market emerge in the
`17 United States, RAII would be exposed givenits
`18 underinvestment relative to competitors," correct?
`19
`MR. VITT: Beyond the scope, foundation.
`20
`THE WITNESS: Yes.
`21 BY MR. SANDFORD:
`22 Q And has the heat-not-burn market emerged
`23 since January 2017 in the United States?
`24
`<A Since January 2018?
`25 Q Well, the -- the date of this presentation
`
`CAIDUNPWNKe
`
`But in January of 2017 our product
`portfolio was not the same as it is today.
`BY MR. SANDFORD:
`Q_ Do you understand this slide to mean that
`RAII would be at a competitive disadvantage relative
`to its competitors in the heat-not-burn market given
`its underinvestment in heat-not-burn technology?
`THE WITNESS:
`I think Tom has lost
`communication.
`
`\o
`MR. VITT: Can you all hear me?
`10
`MR. SANDFORD:Let's go offthe record for
`11
`12 asecond.
`13
`(Discussion held offthe record.)
`14
`THE VIDEOGRAPHER: Goingoff the record at
`15,12223;
`16
`(Arecess was taken from 12:32 p.m.
`17
`to 12:35 p.m.)
`18
`THE VIDEOGRAPHER:Back onthe record,
`19 12:35.
`20
`MR. SANDFORD: Before we hada -- a
`21 technical issue, Mr. Gilley, we had a question
`22 pending, so I'm just going to reaskit.
`23
`Wewere discussing the summary sentence on
`24 the slide of Exhibit 18 ending in 898 that said
`25 should the heat-not-burn emerge in the U.S., RAII
`
`25 alternative nicotine product portfolio that RJRV had
`
`is January 2017, so that's what I was referencing.
`1
`2 So I'll ask my question again.
`3
`Has the heat-not-burn market emergedin the
`4 United States since January 2017, the date of this
`5 presentation?
`6
`MR. VITT: Objection to form.
`'
`THE WITNESS: Products in the heat-not-burn
`8
`space have been introduced by competition since
`9 January of 2017 in the United States.
`10 BY MR. SANDFORD:
`11 Q And RAII has been exposed becauseofits
`12 underinvestment in heat-not-burn relative to its
`13 competitors in the United States, correct?
`14
`MR. VITT: Objection to form, beyond the
`15 scope.
`16
`THE WITNESS: I'm not exactly sure what is
`17 meant by the word or the term "exposed."
`18 BY MR. SANDFORD:
`19 Q What do you understand "exposed" to mean as
`20 it's used onthis slide?
`21
`MR. VITT: Lacks foundation, beyond the
`22 scope.
`I supposeit would be they
`23
`THE WITNESS:
`24 would have a heat-not-burn product that would be new
`25 to the market.
`
`72
`
`1 would be exposed givenits underinvestmentrelative
`2
`to competitors.
`3
`Q And the question that was pendingis, did
`4 you understand this statement to mean that RAII
`5 would be at a competitive disadvantage -- at a --
`6 the question that was pending was, do you understand
`7 this slide to mean that RAI would be at a
`8 competitive disadvantage relative to its competitors
`given its underinvestmentin heat-not-burn
`10 technology?
`11
`MR. VITT: It's beyond the scope and lacks
`12 foundation.
`I believe my answerwas,
`13
`THE WITNESS:
`14 based on the product portfolio we had in January of
`15 2017, that may have been the interpretation at that
`16 time.
`17 BY MR. SANDFORD:
`18
`Q_ So based on the heat-not-burn product
`19 portfolio that RJRTC had in January 2017, it was at
`20 acompetitive disadvantage relative to its
`21 competitors in the heat-not-burn market, correct?
`22
`MR. VITT: Beyond the scope and lacks
`23 foundation.
`24
`THE WITNESS:
`
`I would say more based on the
`
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`Case 1:20-cv-00393-LMB-TCB Document 1417-1 Filed 08/19/22 Page 9 of 10 PageID# 35788
`Transcript of Nicholas Ray Gilley, Corporate Designee & Individually 68 (269 to 272)
`Conducted on December3, 2020
`269
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`at
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`level, but I don't -- I don't recall a detailed
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`3 BY MR.SANDFORD:
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`BY MR. SANDFORD:
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`
`
`17. Q Now,the -- the Vuse products we discussed
`18 earlier, they're all currently still on the market,
`19 right?
`20
`A Canyou be specific?
`21
`Q Sure.
`22
`RJRVis still selling the Solo, Vibe, Ciro,
`23 and Alto as of today -- right? -- in the
`24 United States?
`
`25
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`A Yes, we are.
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`PLANET DEPOS
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`Case 1:20-cv-00393-LMB-TCB Document 1417-1 Filed 08/19/22 Page 10 of 10 PageID#
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