Tejal Somvanshi
In Canada,JTI-Macdonald Corp., Rothmans, Benson & Hedges Inc. and Imperial Tobacco Canada have reached a $23.6 billion principle agreement with their creditors to compensate victims of tobacco as well as the Canadian provinces This historic agreement, due to the scale of the sums involved and the number of Canadians who will receive financial compensation, must be ratified on December 2024.
The legal saga began in 1998 when a Quebecker, who later died of lung cancer, launched a class action lawsuit supported by an anti-tobacco organization. Their argument was that cigarette manufacturers failed to warn customers about the dangers of their product. In 2015, a Quebec judgment condemned the tobacco giants to compensate 100,000 Quebecers who were victims of lung or throat cancer.
The Canadian provinces demanded compensation for money invested in treating tobacco-related illnesses. After five years of closed-door negotiations, a financing plan was reached between the three companies, victim representatives, and the provinces.
The agreement totals CAD 32.5 billion,(USD 23.5 billion) out of which CAD 24.8 billion for provinces and territories to recover health costs related to smoking, More than CAD 4 billion for Quebec victims, CAD 2.5 billion for victims in the rest of Canada, and nearly CAD 1 billion to create a fund for smoker treatment. According to lawyer André Lespérance, this is the largest settlement in value in Canadian litigation history.
In Quebec, cancer patients or their heirs will receive the largest compensation,up to €70,000.
The Conseil québécois sur le tabac et la santé (CQTS) cautions that if the CAD 4. billion is insufficient to pay the maximum compensation to all valid claims, the amounts will be adjusted downwards on a pro rata basis.
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The agreement follows the tobacco companies’ 2019 bankruptcy filing after their defeat in the Quebec Court of Appeal, which had condemned them to pay CAD $13.4 billion in compensation. The current plan must be approved by creditors, but lawyer André Lespérance believes it will be, noting that the companies have been forced to set aside $12.5 billion.
Quebecers concerned won’t have to prove their diagnosis. Information will be obtained from the Quebec Cancer Registry or MED-ECHO, a provincial database containing information on hospital stays. Victims or their families will need to provide the health insurance number of the tobacco victim and authorize lawyers to obtain diagnosis information on their behalf.
While this agreement brings relief to many victims and their families, some anti-smoking organizations criticize the lack of public health measures and the fact that tobacco companies can continue to sell e-cigarette products. “Every stay means some additional 75 class action members1 will never see justice for themselves, as they continue to die from the very diseases caused by these predatory companies,” notes Flory Doucas, co-director and spokesperson for the Coalition québécoise pour le contrôle du tabac (CQCT), “From court documents, we learn that companies are still investing in their future and looking to expand their product range. Will the courts and governments attempt to sell a deal that would allow these companies to market new products in what should be groundbreaking historical settlement? Alongside financial compensation, ancillary or token measures that do not alter the core addiction-based business model of the tobacco industry are simply unacceptable.”
Over the next five years, 85% of the cigarette manufacturers’ profits will be used to pay back the provinces, territories, and victims. Imperial Tobacco Canada confirmed that the settlement “will be financed by available cash and cash generated from the future sale of tobacco products in Canada.”
The overall arrangement plan, including compensation for Quebec class action members, will be submitted to a creditor vote no later than December 2024. For now, potential claimants don’t need to take any action, as lawyers representing the class actions are managing members’ interests, participating in discussions, and voting.
