Three large tobacco companies are set to pay $32.5-billion to settle legal claims, including a landmark 2015 Quebec court judgment that concluded the companies did not warn their customers about the dangers of using their products.
Ten provinces and three territories, which had sought to recoup health care costs, would receive $24.8-billion from JTI-Macdonald Corp., Rothmans, Benson & Hedges Inc., and Imperial Tobacco Canada Ltd. in a proposed plan of arrangement overseen by a mediator filed late Thursday in an Ontario court.
Members of two class-action lawsuits in Quebec would receive $4.25-billion. This includes about 100,000 people in what came to be known as the Blais-Létourneau case that won in court in 2015, and was upheld on appeal in 2019. Individuals may receive as much as $60,000. Other Canadians, separate from the main case, would also receive some money.
Thursday’s deal, which requires several more significant steps, vaults a legal odyssey that stretches back more than a quarter century toward a final conclusion. It was a battle at the intersection of complicated legal and philosophical questions: corporate responsibility when selling a legal and widely available product; individual choice and addiction; and the funding of public-health care as governments collect taxes from tobacco sales and corporate tobacco profits.
Hundreds of plaintiffs died before the deal was finally reached and some people, suffering from illness, chose medical assistance in dying. Many others have waited for this day for years.
“Tens of thousands of Canadians will receive compensation. This has never happened anywhere in the world,” said Bruce Johnston, a partner at Trudel Johnston & Lespérance in Montreal, the firm that acted for the initial Blais class-action.
Tobacco use, as of the late 2010s, killed about 50,000 Canadians every year – more people than all annual deaths from alcohol, opioids, suicide, murder and traffic crashes combined. Earlier in that decade, Canadians through their taxes were paying an estimated $6.5-billion a year in direct health care costs related to smoking.
In what is one of the biggest and longest legal cases of its kind in Canadian history, the details were argued and adjudicated by an all-star legal roster through the years, including Suzanne Coté, Mahmud Jamal, and Nicholas Kasirer before they were later appointed to the Supreme Court of Canada. The proposed plan of arrangement was mediated by Warren Winkler, former chief justice of Ontario.
Of the total settlement, JTI-Macdonald, Rothmans, Benson & Hedges, and Imperial Tobacco Canada are initially set to pay $12.5-billion upon implementation of the plan. The three companies have been in bankruptcy protection, under the federal Companies’ Creditors Arrangement Act, since 2019, shortly after the Quebec Court of Appeal unanimously upheld the 2015 lower-court ruling. About $12-billion has piled up from tobacco profits during the bankruptcy process.
Most creditors have already expressed formal support for the plan. A final vote on the deal is expected by Dec. 12. If that is approved, then final court approval could potentially follow in early 2025.
Imperial Tobacco Canada on Thursday said it is “supportive of the settlement framework” and that it is “hopeful that a comprehensive settlement can be achieved quickly.”
JTI-Macdonald said it is committed “to try to reach a consensual compromise” but added that “there are certain critical issues that would need to be resolved if we are to find a settlement plan that is workable.”
Rothmans, Benson & Hedges did not respond to requests for comment.
Of the $24.8-billion for the provinces and territories, $7.1-billion is for Ontario and $6.7-billion for Quebec. Beyond the class-action recipients, $2.5-billion would go to other Canadians. Finally, a $1-billion foundation is planned for people who do not receive direct payments.
The roots of Thursday’s deal between the companies and creditors reach back to the late 1990s, when class-actions lawsuits were launched, as well as British Columbia’s move to become the first province to try to recover health care costs from tobacco companies. All other provinces followed.
In the United States, also in the late 1990s, tobacco companies settled with U.S. states and agreed to pay more than US$200-billion over 25 years. The Canadian deal on Thursday in part follows this framework.
The 2015 court decision in Quebec that led to Thursday’s deal followed an epic trial that had 251 days of hearings. Evidence included internal corporate documents showing smokers didn’t know or understand the risks connected with the tobacco products they were using. A Quebec Superior Court ruled that the companies hadn’t warned their customers and they were ordered to pay billions of dollars. At the time, JTI-Macdonald said the evidence in court didn’t justify the court’s conclusions.
Among the plaintiffs was Jean-Luc Duval, whose wife, Monique, died of lung cancer on the couple’s 40th wedding anniversary in 2005. They both smoked for years and eventually quit. Earlier this year, Mr. Duval, in an open letter to the Quebec government, decried the continued legal sale of tobacco. “Nothing has changed,” Mr. Duval wrote. He added: “I’m not interested in the money, but I want justice.”
The tobacco companies in 2016 appealed the initial ruling. After it was upheld by the Quebec appeal court, JTI-Macdonald said it abided by all laws and claimed that Canadians, since the 1950s, had a “very high awareness” of the health risks of smoking. Rothmans, Benson & Hedges said it would appeal to the Supreme Court. It did not. Instead, all three tobacco companies soon after sought court protection from creditors.
Amid all the recent legal wrangling, in an elongated bankruptcy process that focuses on delivering money to creditors and a law that in part aims to keep companies in business after a restructuring, questions of public health were on the sidelines.
Groups such as the Canadian Cancer Society in 2023 called for 10 per cent of a legal settlement to go to an independent fund to promote reduced tobacco use. Others such as the Quebec Coalition for Tobacco Control this year said they wanted the legal settlement to include a required end to the sale of tobacco.
The Cancer Society on Thursday said the deal should have included public policy plans to further restrict the operations of tobacco companies, such as banning all promotions of their products.