Canadian Court Orders Tobacco Firms To Pay Quebec Smokers $12.5B

Three large tobacco companies lost in their 17-year-long court battle as a Canadian court ordered the firms on Tuesday to pay Quebec smokers $12.5 billion in damage. The class action suit was filed on behalf of one million smokers in the French-speaking province.

The lawsuit said that the subsidiaries of British American Tobacco, Philip Morris and Japan Tobacco must be held responsible for selling harmful products and for obscuring the negative impact of the vice on smokers. The case was filed in 1998 but started trial only in 2012.

The court ordered the cigarette companies to pay at least C$1.13 billion within 60 days regardless if the companies appeal the decision or not. In his landmark ruling, Quebec Superior Court Judge Brian Riordan, based in Montreal, said, “The companies earned billions of dollars at the expense of the lungs, the throats and the general well-being of their customers,” quoted The Wall Street Journal.

In their defense, the three tobacco companies - Rothman, Benson & Hedges Inc, Imperial Tobacco Canada and JTI-McDonald Corp. - insisted that Canadian smokers are highly aware of the risks they face when lighting up because of the health warnings on the cigarette packs. However, the plaintiffs countered that they were not properly warned of the risks which is a failure of the firms in their general duty not to cause injury to another person.

British American Tobacco spokesman Will Hill said the company would appeal within the next 30 days the initial compensation order and the total damages. Hill argued that Riordan didn’t consider the firm’s evidence and didn’t stick to recognised legal principles.

The court decision negatively affected the shareprices in UK of the three tobacco firms. Shares of British American Tobacco dipped 2.4 percent to 3,507 pence, while that of Imperial Tobacco decreased 1.9 percent to 3,245 pence.

Nomura said the $12.5 billion full payment set by the court has the potential of bankrupting the tobacco companies because the amount dwarfs the annual operating profit of the firms. However, Nomura noted that the three companies are separate legal entities from their parent companies which would not be affected financially by the ruling.

While tobacco companies managed to reverse the decisions in the US, it has no history in Canada since it is a first big ruling in the country. In February, three other cigarette companies agreed to settle hundreds of lawsuits in Florida through a $100 million settlement. In 1998, American tobacco companies agreed to pay American states $200 billion in fines. It was the largest civil litigation suit in the US, notes BBC.

In favouring the Quebec smokers, Riordan said, “If the companies are allowed to walk away unscathed now, what would be the message to other industries that today or tomorrow find themselves in a similar moral conflict?”

To contact the writer, email: vittoriohernandez@yahoo.com