Tobacco giants must cough up R181bn in damages
BAT, Philip Morris and Japan Tobacco have lost an appeal against class-action lawsuits filed by Canadian smokers
London/Montreal — In the latest blow to tobacco companies seeking relief from lawsuits, the Canadian units of British American Tobacco (BAT), Philip Morris and Japan Tobacco were ordered to pay damages of about C$17bn (R181bn) after losing an appeal of class actions filed by Queec smokers.
British American Tobacco's shares opened 3.5% lower on the JSE at R517.50 on Monday.
The Quebec Court of Appeal upheld a lower court decision with minor changes, according to a ruling released on Friday. The lawsuits were in favour of smokers seeking damages for addiction and smoking-related diseases, who argued they were never warned of the risks.
“The risks associated with smoking have been known in Canada for decades. Consumers were aware and that’s why we think we shouldn’t be held responsible” said Eric Gagnon, the head of corporate and regulatory affairs for Imperial Tobacco Canada, BAT’s Canadian unit. ‘‘Today’s judgment is disappointing.”
Gagnon told reporters outside the court in Montreal that an appeal to the Supreme Court of Canada was an option. Rothmans, Benson and Hedges, the Canadian unit of Philip Morris, said it planned to appeal to Canada’s highest court, according to a statement. Japan Tobacco said JTI-MacDonald, the other defendant in the cases, was considering all options including an appeal.
The decision comes a week after the US Supreme Court turned away the tobacco industry’s effort to derail lawsuits by thousands of Florida smokers. Tobacco companies have been undergoing a major shift as they try to lower their reliance on traditional cigarettes, seeking a future with alternative products as smoking demand wanes and countries tighten regulations.
In the Supreme Court case, the tobacco companies say they face another 2,300 pending suits. The companies argue that smokers shouldn’t be able to rely on a jury’s factual findings in a class-action case against the industry 20 years ago. Lower courts have said many of those findings, including the conclusion that the companies conspired to conceal the dangers of smoking, can serve as the starting point for individual suits.
The Quebec cases stem from lawsuits originally filed in 1998 and involved the first damages against the industry in Canada. The decision comes four years after the ruling against the companies by a trial court in Quebec. The original damages were set at about C$15.5bn, though that has risen to about C$17bn with interest charges, according to estimates from the Canadian Cancer Society.
“This is a complete and resounding defeat for the tobacco industry,” said Rob Cunningham, senior policy analyst for the Ottawa-based cancer group. The industry “has engaged in decades of wrongful behaviour resulting in vast suffering, disease and death.”
Japan Tobacco shares fell as much as 2.1% in Tokyo trading on Monday. The shares may see limited impact from the decision, according to Citigroup analyst Nobuyoshi Miura, who noted that Japan Tobacco would be responsible for only a small portion of the payment and a final hearing may be years away.