Tobacco giants would pay out $32.5 billion to provinces, smokers in ‘historic’ proposed deal

Three tobacco giants are proposing to pay nearly $25 billion to provinces and territories and more than $4 billion to tens of thousands of Quebec smokers and their loved ones as part of a corporate restructuring process triggered by a protracted legal battle.

A proposed settlement was filed in an Ontario court Thursday after the companies – JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. – had spent more than five years in negotiations with their creditors.

The companies sought protection from creditors in Ontario in early 2019 after losing an appeal in a landmark lawsuit in Quebec.

An Ontario court has stayed all legal proceedings against the companies as they tried to reach a deal with their creditors, including plaintiffs in two class-action lawsuits in Quebec and provincial governments seeking to recover smoking-related health care costs. .

Under the proposed plan tabled Thursday, provinces and territories would receive payments over time, with about $6 billion disbursed as the deal is implemented.

‘Historic and unprecedented’

The Quebec plaintiffs would bring claims for damages of up to $100,000 each.

The proposed plan also includes more than $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. They would each be eligible for up to $60,000.

Bruce W. Johnston, one of the Quebec plaintiffs’ lawyers, said the proposal is “historic and unprecedented” because it would allow compensation for both smokers and governments.

“When we took this case, there had never been a single plaintiff who had received a single cent from a tobacco company,” he said Thursday.

“We tried this case in 1998 and as a result of our case, not only will tens of thousands of victims be compensated by the tobacco industry in Canada, most of them in Quebec, but governments will also share $24 billion.”

The plaintiffs have had to endure long delays and now they can finally see that there is “probably light at the end of the tunnel and they will receive compensation,” he said.

Many members of the class action have died

Although many of the class action members died before they could receive any money from the companies, their successors — and in some cases the successors of their successors — will be eligible for compensation, he said.

The proposed deal would also see the companies donate more than $1 billion to a foundation to combat tobacco-related diseases. That amount includes $131 million from the money allocated to the Quebec claimants.

The proposal still needs to go through a number of steps before it can be put into practice, including a vote by creditors and approval by the court.

Negotiations between the companies and their creditors were confidential, so members of the class action had no way of knowing how the cases were progressing and many did not understand why it was taking so long, Johnston said.

Several healthcare groups argued that the lack of transparency around the talks would benefit companies at the expense of other stakeholders.

Just last month, three groups — Action on Smoking & Health, Physicians for a Smoke-Free Canada and the Quebec Coalition for Tobacco Control — said recent lawsuits suggested the provinces had agreed to a process that would give the companies veto power over the latest agreement.

The groups have consistently urged provinces to impose regulations and measures to reduce smoking as part of a deal with the companies.

Some organizations, including the Canadian Cancer Society, also called for an agreement to release internal company documents.

Rob Cunningham, a lawyer for the Canadian Cancer Society, said the proposed deal is “the most significant proposed settlement in the world outside the United States” in a case of its kind to date.

But unlike the global settlement reached with U.S. tobacco companies in the late 1990s, this one does not include policies aimed at reducing tobacco use or any public disclosure of documents, he said.

He said the cancer society, which has been named as a social stakeholder in the case, will review the details of the roughly 1,400-page proposal and submit submissions as part of the approval process.

The Quebec lawsuits involved smokers who started the habit between 1950 and 1998 and became ill or addicted. Heirs of such smokers were also parties to the lawsuits.

Court filings from last year show that hundreds of members of the class action have died since the creditor protection proceedings began.