A person smokes in downtown Ottawa on Sept. 29, 2009. Three tobacco giants are proposing to pay $24 billion to provinces and territories and more than $4 billion to some 100,000 Quebec smokers and their loved ones as part of a corporate restructuring process triggered by a long-running legal battle. THE CANADIAN PRESS/Pawel Dwulit
Three major tobacco companies are set to pay nearly $25 billion to provinces and territories and over $4 billion to numerous smokers and their families in Quebec as part of a proposed settlement tied to a long-standing legal dispute.
This plan was submitted to an Ontario court on Thursday after five years of negotiations. The companies involved—JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd.—sought protection from creditors in Ontario in early 2019 after losing an important appeal in a Quebec court.
Following this, the Ontario court halted all legal actions against the companies, allowing them to negotiate with creditors, including plaintiffs from two Quebec class-action lawsuits and provincial governments looking to reclaim healthcare costs linked to smoking.
According to the proposal, payments to provinces and territories will be made gradually, with approximately $6 billion disbursed at the outset of the agreement. Quebec plaintiffs are eligible to file claims for compensation of up to $100,000 each.
The plan also sets aside over $2.5 billion for smokers in other provinces and territories diagnosed with lung cancer, throat cancer, or chronic obstructive pulmonary disease between March 2015 and March 2019. These individuals could receive up to $60,000 each.
Bruce W. Johnston, a lawyer for the Quebec plaintiffs, described the proposal as "historic and unprecedented," noting that it enables compensation for both smokers and governments. He highlighted the significant progress made since the case began in 1998, stating that previously, no plaintiff had received compensation from a tobacco company.
Despite many class-action members having passed away before receiving compensation, their heirs will be eligible to claim benefits, Johnston explained.
Additionally, the companies have committed to contribute over $1 billion to a foundation aimed at combating tobacco-related illnesses, which includes $131 million set aside for the Quebec plaintiffs.
Before the deal can take effect, it must pass through several stages, including a creditor vote and court approval. The mediation process was kept confidential, leading to confusion and frustration among class-action members regarding the lengthy timeline.
Several health organizations have criticized the lack of transparency in the negotiations, claiming it could favor the companies at the expense of other stakeholders. Last month, three groups—Action on Smoking & Health, Physicians for a Smoke-Free Canada, and the Quebec Coalition for Tobacco Control—expressed concern over reports indicating that the provinces had agreed to terms that would grant the companies veto power over the final settlement.
These groups have consistently urged provincial authorities to implement regulations and smoking reduction initiatives as part of any agreement with the tobacco firms. The Canadian Cancer Society has also called for public disclosure of internal company documents as part of the settlement.
Rob Cunningham, a lawyer for the Canadian Cancer Society, stated that this proposed deal is "the most significant proposed settlement in the world outside of the United States" for a case of this nature. However, he noted that it lacks the policy measures aimed at reducing tobacco use that were part of the U.S. settlement reached in the late 1990s.
The Quebec lawsuits involve smokers who began using tobacco between 1950 and 1998 and later suffered health issues or addiction, with the heirs of these individuals also participating in the lawsuits. Court documents from last year indicated that many class-action members have died since the creditor protection process started.
