Three tobacco companies proposed on Thursday to pay $32.5 billion to settle legal claims in Canada, stemming from decades of disputes. The proposal remains subject to further negotiation and court approval.
A mediator, appointed by the Ontario Superior Court of Justice to coordinate the tobacco-related claims and facilitate the negotiations, filed the proposed settlement arrangement. Under the proposal, $24.8 billion would go to provinces and territories, $2.5 billion to other Canadians, and $1 billion to a foundation for people not receiving direct payments. The Canadian Cancer Society criticized the proposed settlement for lacking public health measures, such as substantial long-term funding for tobacco control, and policy measures to control the tobacco industry.
The lawsuits arose from claims that the tobacco companies failed to warn consumers about the dangers of their products. In 1998, the Blais-Letourneau class action sought $20 billion in damages for Quebec residents suffering from throat cancer and emphysema due to smoking. In 2019, the Quebec Court of Appeal ordered the defendant companies to pay $6.8 billion in damages for decades of wrongful behaviour. The companies then obtained creditor protection under the Companies Creditors Arrangement Act (CCAA), suspending all ongoing lawsuits to negotiate a global settlement with all those who have claims against them.
The lawsuits target the Canadian subsidiaries of British American Tobacco, Philip Morris International and Japan Tobacco International, known respectively as Imperial Tobacco Canada Ltd, Rothmans, Benson & Hedges Inc. (RBH) and JTI-Macdonald Corp. These companies dominate the Canadian tobacco market, representing the majority of legal tobacco sales.
Tobacco use is the leading preventable cause of premature death in Canada. In 2000, British Columbia passed the Tobacco Damages and Health Care Costs Recovery Act, enabling the province to recover healthcare costs from tobacco companies related to smoking-related illnesses. The Supreme Court of Canada upheld the legislation in 2005, paving the way for other provinces to enact similar legislation. The provinces were collectively seeking more than $500 billion in damages for tobacco-related healthcare costs.
In 2018, British Columbia also enacted the Opioid Health Care Cost Recovery Act, allowing the province to sue manufacturers, distributors, and consultants for healthcare costs related to opioid misuse. Section 11 of the act allows the government to represent other provinces in a class-action lawsuit. The constitutionality of this multi-crown litigation provision was argued before the Supreme Court of Canada earlier this year, with a judgment pending.
