Canada: Three tobacco companies ordered to pay C$32.5 billion in landmark court settlement

October 22, 2024

Par: National Committee Against Smoking

Dernière mise à jour: October 22, 2024

Temps de lecture: 6 minutes

Canada : Trois fabricants de tabac contraints de payer 32,5 milliards de dollars canadiens dans le cadre d’un règlement judiciaire historique

In Canada, three tobacco companies will have to pay nearly C$25 billion to the provinces and territories and more than C$4 billion to tens of thousands of Quebec smokers and their loved ones as part of a new agreement proposed after a long legal battle. An additional C$2.5 billion will be paid to Canadians diagnosed with a tobacco-related illness between 2015 and 2019.

A proposed mediated settlement was filed in an Ontario court Thursday after a five-year process. The companies — JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. — filed for creditor protection in Ontario in early 2019 after losing an appeal in a landmark Quebec lawsuit.[1].

The proposed deal still needs to pass several steps before it can be implemented, including a vote of approval by creditors and a favorable court decision. Most creditors have already expressed official support for the plan. A final vote on the deal is expected by December 12. If approved, the court's decision could be announced in early 2025.

Consumers not aware of the risks associated with tobacco consumption

The three tobacco companies will have to pay $32.5 billion to settle lawsuits, including a landmark 2015 judgment by the Court of Quebec. The decision came after a trial that lasted 251 days. Evidence against the defendants included internal company documents showing that smokers did not know or understand the risks of the tobacco products they were using. The Quebec Superior Court ruled that the companies had failed to warn their customers and ordered them to pay billions of dollars in damages. At the time, JTI-Macdonald said the evidence presented to the court did not support the court's findings.

In 2016, the tobacco companies appealed the first judgment. After the Quebec Court of Appeal upheld it, JTI-Macdonald said it had complied with all laws and that Canadians, since the 1950s, had been “very aware” of the health risks of smoking. Rothmans, Benson & Hedges, for their part, had indicated that they would appeal to the Supreme Court. That did not happen. Instead, the three tobacco companies filed for court protection from creditors shortly after the decision.

The largest settlement in the world outside the United States

Ten provinces and three territories, engaged in the litigation and seeking to have manufacturers pay some of the health care costs caused by smoking-related illnesses, are set to receive C$24.8 billion from JTI-Macdonald Corp, Rothmans, Benson & Hedges Inc and Imperial Tobacco Canada Ltd under the mediator-supervised settlement filed late Thursday, Oct. 17, in Ontario court.

Members of two class actions in Quebec are set to receive $4.25 billion. This concerns about 100,000 people together and known as the Blais-Létourneau case, which was won in court in 2015 and upheld on appeal in 2019. Individuals could be compensated up to $60,000. An additional $2.521 billion would be paid to smokers in the rest of Canada who were diagnosed with lung cancer, throat cancer or chronic obstructive pulmonary disease between March 2015 and March 2019.

Rob Cunningham, lawyer for the Canadian Cancer Society, said the proposed agreement is so far "the largest proposed settlement in the world outside the United States " in a class action case of this type. The proposed settlement calls for the companies to pay more than $1 billion to a foundation dedicated to fighting tobacco-related diseases. But unlike the global settlement reached with tobacco companies in the United States in the late 1990s, it does not include policy measures to reduce tobacco use or a requirement for public disclosure of documents, he said.

In the United States, in the late 1990s, tobacco manufacturers had in fact reached an agreement with American states and had to pay more than $200 billion over 25 years. Thursday's Canadian agreement is partly part of this framework.

An agreement that lacks transparency and remains partial according to associations

Negotiations between tobacco companies and their creditors have remained confidential. Several health associations have argued that the lack of transparency surrounding the negotiations has benefited the companies at the expense of other stakeholders.

Three groups - Action on Smoking & Health, Physicians for a Smoke-Free Canada and the Quebec Coalition for Tobacco Control - said recent court filings suggested the provinces agreed to a deal that gave the three tobacco companies a veto over the final deal.

Organizations have consistently urged provinces to impose regulations and tobacco reduction measures as part of an agreement with companies. Some organizations, including the Canadian Cancer Society, have also called for the agreement to include public disclosure of internal company documents.

©Tobacco Free Generation

AE


[1] Paola Loriggio, Cigarette companies offer to pay $32.5 billion to provinces and sick smokers, The Canadian Press, published October 17, 2024, accessed October 18, 2024

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