A woman smokes on a street, in London, on April 16.Kin Cheung/The Associated Press
Max Krangle is a former general counsel of R.J. Reynolds Tobacco.
There is a dangerous legal standard growing in this country that many Canadians may be unaware of.
Canada’s provinces and local governments are exploring and gearing up for legal showdowns with a broad range of industries, from social-media to fossil fuel companies and now Big Pharma. You may not be aware, but these are all largely based on British Columbia’s original efforts starting in 1998 to hold the tobacco industry accountable.
Now over 25 years later, the B.C. government has been exploring the launch of a class-action lawsuit against social-media companies for the social harms they allegedly cause. (The government said on Thursday it shelved the move after reaching an agreement with companies, which it portrayed as favourable; evidently the threat of a lawsuit played a role.)
Meanwhile, the Toronto District School Board continues with its similar lawsuit, and a group of municipalities in the province are also planning to sue fossil fuel companies on similar grounds. British Columbia was also the first province to launch a lawsuit against manufacturers and distributors of opioids in 2018.
As these cases continue, it is vital to look back on how the original approach to Big Tobacco is now being used elsewhere and why this is dangerous for businesses.
Few Canadians would disagree that smoking and tobacco use requires control and regulation to protect public health. The argument that the tobacco industry deserves punishment for its role in smoking-related illnesses is indeed valid.
That is why the tobacco industry in Canada has faced mounting legal pressures. Canadian provinces have sought (and won) approximately $500-billion in damages from domestic tobacco companies, namely Imperial Tobacco, Rothmans, Benson & Hedges Inc., and JTI-Macdonald Corp.
But such legal action has broader implications. It directly set the stage for the current lawsuits against other legitimate businesses such as the social-media, pharmaceutical and fossil fuel companies. The legal framework for these lawsuits could set a dangerous precedent, potentially undermining the stability of laws and regulations for all businesses operating in Canada.
While the negative health effects of tobacco are indisputable, the means by which the industry is being held accountable have far-reaching consequences that go beyond dried leaves and paper.
In 1998, British Columbia made headlines by becoming the first Canadian province to pass a law that aimed to recoup health care costs related to tobacco use. While the law was struck down, B.C. eventually revised and reintroduced the legislation in 2000, which was eventually upheld as constitutional. This paved the way for other provinces to follow suit.
The tobacco health care cost recovery laws in Canada established a new cause of action based on the belief that harm caused by tobacco-related illnesses to a group of persons is a direct harm to the government. These laws also eliminated time limits for filing claims against tobacco companies and removed defences such as the assumption of risk. (That is: You knew the consequences of smoking cigarettes, but you ignored the health warnings, and so on.)
The legislation diverges from traditional common law principles by altering the rules surrounding causation, enterprise liability and damage assessment. This legislation permits recovery in civil matters without the need to demonstrate both causation and damages, distinguishing it from normal subrogation or class-action proceedings.
The legislation also enables provinces to sue tobacco manufacturers for past and future health costs incurred by an unspecified segment of the population treated for tobacco-related illnesses. Unlike traditional legal proceedings, the legislation does not require the Crown to identify specific individuals or prove that certain health care services were provided to them. Instead, provinces can rely on statistical research as evidence in their litigation.
This uniquely Canadian approach retroactively penalizes business actions that were not clearly punishable at the time of the offence. It has made it easy for the government to target legitimate businesses.
This legal nuance may be troublesome for other businesses operating in Canada (or thinking about coming to Canada to operate), both in terms of its potential impact on their financial bottom line and its questionable ethical implications, while at the same time portraying Canada as a country where legal rules can be upended in favour of the government.
Many Canadians may argue that this stealth approach was necessary to deal with Big Tobacco. Many would also not have any sympathy for social-media companies and fossil fuel companies. But look how little time it took for governments to move from tobacco to these other industries. How long more before governments expand their scope even further?
This should be unsettling for all Canadians who believe in the due process of the law.