Quebec appeals court upholds landmark tobacco ruling

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The Quebec Court of Appeal has upheld a landmark judgment that ordered three tobacco companies to pay billions of dollars in damages to Quebec smokers, reports The Canadian Press.

Imperial Tobacco, JTI-Macdonald and Rothmans-Benson & Hedges had appealed a ruling that found the companies chose profits over the health of their customers.

Philippe Trudel, a lawyer for smokers who brought the class action, called this month’s appellate court decision a complete victory and excellent news for victims.

In June 2015, Quebec Superior Court Justice Brian Riordan ordered the companies to make payments of more than $15 billion to smokers who either fell ill or were addicted.

At the time, the ruling was believed to be the biggest class action award in Canadian history.

One lawsuit was started by people who were addicted to cigarettes and couldn’t quit, and the second was brought by those who had suffered from cancer or emphysema.

Some 76 witnesses testified at the Superior Court trial and nearly 43,000 documents were deposited as evidence, including internal tobacco company documents that showed smokers didn’t know or understand the risks associated with cigarettes.

The three cigarette companies argued their customers knew the risks of smoking. Moreover, the firms claimed their products were sold legally under strict regulation by the federal government.

Trudel estimated that after the appeal ruling, the total damages owed by the companies would be more than $17-billion.

“It is excellent news for victims who have been waiting for this day for a long time. We’re very happy with the result, clearly,” he said.

Quebec’s highest court, which began hearing the appeal in 2016, struck down almost all of the tobacco companies’ grounds for appeal and upheld the judge’s decision.

The court did find the judge erred in several minor aspects, including how the interest was calculated. Trudel called the change a “technicality” that would have little effect on the overall damages.

“Out of all the billions, I don’t think they’ll call it a victory,” he said. “But we call it a total victory on all fronts.”

Japan tobacco wins court protection in Canada over smoking

Japan Tobacco Inc.’s Canadian unit was granted creditor protection by the Ontario Superior Court after a legal defeat over the risks of smoking that threatens the existence of tobacco companies in the country, write Natnicha Chuwiruch, Jeff Sutherland and Robert Tuttle for Bloomberg.

The court extended protection late on Friday 8 March in favour of JTI-Macdonald Corp. after the company argued that the damage award of as much as C$1.77 billion ($1.32 billion) exceeds its capacity to pay, Japan Tobacco said in a statement. JTI-Macdonald must make an initial damages deposit of C$145 million.

The Canadian units of British American Tobacco PlcPhilip Morris International Inc. and Japan Tobacco were ordered earlier to pay damages initially estimated at about C$17 billion after losing an appeal of class actions filed by Quebec smokers. The total industry liability was later estimated at C$13.5 billion. BAT said this week the ruling would hit its profit and set aside C$758 million to cover damages, while Philip Morris cut its 2019 outlook.The legal defeat in Quebec was the latest blow to global tobacco companies, which have been undergoing a major shift as they try to lower their reliance on traditional cigarettes, seeking a future with alternative products as smoking demand wanes and countries tighten regulations

Bankrupt Industry

Analysts had warned that if Big Tobacco loses the Quebec cases, it could bankrupt the industry in Canada. The case stems from lawsuits originally filed in 1998, and involved the first damages against the industry in Canada. The lawsuits were in favor of smokers seeking damages for addiction and smoking-related diseases, who argued they were never warned of the risks.

JTI-Macdonald said the protection under Canada’s Companies’ Creditors Arrangement Act was its best option to allow it to continue doing business. The company said it will also proceed with an appeal to the Supreme Court of Canada.

“This extraordinary judgment forced JTI-Macdonald Corp. to seek protection under the CCAA to protect 500 Canadian jobs and carry on its business operations with minimal disruption,” the company said in the statement. “We fundamentally disagree with the court decision and are taking all necessary and appropriate measures to defend our lawful business.”

Anti-Cancer Group

Imperial Tobacco Canada, the Canadian unit of BAT, is assessing its position after the decision on JTI-Macdonald and will have no further comments until the assessment is complete, BAT said in a statement.

Rothmans, Benson & Hedges Inc., the Canadian unit of PMI, had “just received the JTI filing, is reviewing it, and has no further comment at this time,” spokesman Michael Westcott said in an email, adding that “while RBH is a party to the cases, PMI is not.”

‘Very Successful Company’

The Canadian Cancer Society objected to granting creditor production to JTI-Macdonald and expects the decision to be contested, Rob Cunningham, senior policy analyst with the organization, said by phone.

“This a tactic by JTI-Macdonald to try and avoid paying out what they are supposed to pay out,” he said. “They are a very successful company that has the capacity to pay.”

While this case poses a risk, the industry faces even bigger headaches in Canada, where the country’s provinces are also suing the tobacco industry to recover health-care costs. Ontario alone is claiming damages of C$50 billion.

The federal government may eventually need to step in to negotiate a settlement because if legal cigarette manufacturers go under, the country would face the risk of a boom in illicit tobacco, according to Citigroup analyst Adam Spielman.

The decision came a week after the U.S. Supreme Court turned away the tobacco industry’s effort to derail lawsuits by thousands of Florida smokers. In that case, the tobacco companies said they face another 2,300 pending suits.

Quebec Appeals Court upholds landmark tobacco ruling Japan Tobacco Wins Court Protection in Canada Over Smoking


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