The Supreme Court of Canada [official website] issued rulings in two major tobacco products cases Friday relieving the federal government of liability for tobacco-related health problems and allowing the provinces to sue the tobacco industry for damages for tobacco-related health care costs. The court ruled [text; materials] unanimously on Friday in R. v. Imperial Tobacco Canada Ltd. that the federal government is not liable for any tobacco-related death or illness. Citizens filed suit against Imperial Tobacco Canada Ltd. [corporate website] for causing their illnesses by improper advertising of "light" and "mild" cigarettes as healthier alternatives. Imperial Tobacco impleaded the federal government, alleging that if tobacco companies are held liable, Canada must also be liable for allowing misrepresentation and negligent design to occur, and claimed that Canada was also a manufacturer under the Business Practices and Consumer Protection Act and the Trade Practices Act [texts]. The Supreme Court rejected these arguments:
Here, on the facts as pleaded, Canada did not owe a prima facie duty of care to consumers. The relationship between the two was limited to Canada's statements to the general public that low-tar cigarettes are less hazardous. There were no specific interactions between Canada and the class members. Consequently, a finding of proximity in this relationship must arise from the governing statutes. However, the relevant statutes establish only general duties to the public, and no private law duties to consumers. ... As for the tobacco companies, the facts pleaded allege a history of interactions between Canada and the tobacco companies capable of establishing a special relationship of proximity giving rise to a prima facie duty of care. ... Canada's alleged negligent misrepresentations do not give rise to tort liability, however, because of conflicting policy considerations. The alleged representations constitute protected expressions of government policy. Core government policy decisions protected from suit are decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in bad faith. The representations in this case were part and parcel of a government policy, adopted at the highest level in the Canadian government and developed out of concern for the health of Canadians and the individual and institutional costs associated with tobacco-related disease, to encourage people who continued to smoke to switch to low-tar cigarettes.Although the Canadian government had encouraged the making of light cigarettes to reduce tobacco-related illnesses, the Court rejected that as proof of culpability. Imperial Tobacco has not commented [Reuters report] on the ruling.
In the same opinion on Friday, the Supreme Court ruled [materials] in Attorney General of Canada v. Her Majesty the Queen in Right of British Columbia that individual provinces are able to sue tobacco companies for damages to offset the cost of treating tobacco-related illnesses. In 2001, British Columbia attempted to recover funds from 14 tobacco companies that the government had spent paying for medical care of those afflicted with tobacco-related illnesses. They based their claim on the Tobacco Damages and Health Care Costs Recovery Act (CRA) [text], which makes tobacco manufacturers liable to the provinces for health care costs. As Canada has national healthcare, each province bears the cost of their citizens' medical bills. In this case as well, the appealing tobacco industries alleged that Canada is also a manufacturer and supplier of cigarettes and this preempts their liability. The Court refuted this understanding.
I conclude that Canada is not a manufacturer under the Act. Indeed, holding Canada accountable under the CRA would defeat the legislature's intention of transferring the health-care costs resulting from tobacco related wrongs from taxpayers to the tobacco industry. This conclusion makes it unnecessary to consider Canada's arguments that it would in any event be immune from liability under the provincial Act.The Court allowed British Columbia's claim against several tobacco companies to proceed, but did not rule on the merits of it. This has opened the door for suits from all the provinces worth potentially billions of dollars of damages against the tobacco industry.