Quebec Court of Appeal orders tobacco firms to put up $1 billion security

The Quebec Court of Appeal (Photo from Wikipedia/Jeangagnon)

MONTREAL – The Quebec Court of Appeal has ordered that two tobacco companies set aside just under $1 billion to compensate victims who won a landmark class-action lawsuit earlier this year.

In June, the Quebec Superior Court delivered a landmark ruling ordering three major cigarette companies to pay $15 billion to smokers in what is believed to be the biggest class-action lawsuit ever seen in Canada.

The province’s high court rendered a judgment late Tuesday ordering Imperial Tobacco pay $758 million and Rothman, Benson and Hedges set aside $226 million.

The amounts are to be paid in quarterly installments beginning in December and ending in 2017.

The judgment noted that a motion for security was not pursued against JTI-Macdonald, the third firm that lost, because a lawyer was unavailable due to health issues.

The case marked the first time tobacco companies have gone to trial in a civil suit in this country and involved two separate groups of plaintiffs: some who became seriously ill from smoking and others who said they couldn’t quit.

According to the judgment, the three firms will split the $15.6 billion according to a responsibly set out by the court – 67 per cent will fall to Imperial Tobacco ($10.5 billion), 20 per cent to Rothmans, Benson & Hedges ($3.1 billion) and 13 per cent to JTI-Macdonald ($2 billion).

The original judgment had ordered the companies to set aside $1 billion right away to ensure victims get some sort of compensation, and the Quebec Council on Tobacco and Health called Tuesday’s ruling an important one.

“This is an important moral victory,” said Mario Bujold, general manager of the council. “We now have the certainty that the victims will be compensated.”

The plaintiffs had argued the companies were liable because they knew they were putting out a harmful product and hid the health effects of tobacco.

The industry countered that people knew about the risks of smoking and that the products were sold legally and with federal government approval and strict regulation.

All three firms have appealed the ruling on its merits, but the case isn’t expected to be heard until next September before the Quebec Court of Appeal.

Rothmans, Benson & Hedges issued a statement Tuesday evening saying that the company “remains focused on its appeal.”

“RBH believes it has strong arguments for reversal of the judgment given plaintiffs’ total failure of proof that any class member smoked because of any alleged wrongdoing by RBH,” said spokeswoman Anne Edwards.

The case is likely to end up on the doorstep of the Supreme Court of Canada.

If the companies were to win on appeal, the $984 million would be returned to them.

“The class actions began in 1998,” said Rob Cunningham of the Canadian Cancer Society. “This will be the first time in 17 years that tobacco companies will forced to provide a financial payment outside the company.”