In a significant development, three prominent tobacco companies have proposed a settlement of CAD $32.5 billion to address longstanding legal claims in Canada. This proposal is part of ongoing efforts to resolve litigation over the risks associated with smoking, a contentious issue that has been the focus of extensive legal battles across the country. The settlement terms are still under negotiation and require approval from the court, notably facilitated by a mediator appointed by the Ontario Superior Court of Justice. Under this arrangement, the provinces and territories would receive CAD $24.8 billion, CAD $2.5 billion would be allocated to other Canadian individuals, and CAD $1 billion would be earmarked for a foundation benefiting those not receiving direct payments. This proposed settlement has attracted criticism from health advocacy groups including the Canadian Cancer Society, particularly due to the absence of robust public health measures aimed at controlling tobacco usage and related policies. More on the criticism of the proposal can be found here.
The legal claims against these tobacco companies, namely the Canadian subsidiaries of British American Tobacco, Philip Morris International, and Japan Tobacco International, have been ongoing for decades. In one landmark class action initiated in 1998, known as the Blais-Letourneau case, plaintiffs sought CAD $20 billion in damages for Quebec residents who developed serious health conditions such as throat cancer and emphysema due to smoking. In 2019, this culminated in a Quebec Court of Appeal decision that ordered the companies to pay CAD $6.8 billion. Following this ruling, the companies entered creditor protection under Canada’s Companies Creditors Arrangement Act (CCAA), halting ongoing litigation to negotiate a settlement that would address all claims. A detailed overview of the CCAA actions against the tobacco companies is available in court documents here.
Across Canada, tobacco usage has been identified as the leading preventable cause of premature deaths. In response, provinces have enacted legislation to recover healthcare costs linked to tobacco-induced illnesses, most notably with British Columbia’s 2000 Tobacco Damages and Health Care Costs Recovery Act, which was upheld by the Supreme Court of Canada in 2005. This legislation paved the way for similar actions in other provinces, aiming collectively for damages exceeding CAD $500 billion. Current related litigations include actions under British Columbia’s Opioid Health Care Cost Recovery Act, which is under constitutional review by the Supreme Court of Canada.
The outcome of these settlement negotiations and subsequent approval by the court will be scrutinized closely as it may not only have financial implications but also influence future health policy frameworks related to tobacco usage in Canada.