According to a recent report by Reuters, Philip Morris International (PMI), British American Tobacco, and Japan Tobacco have agreed to pay 32.5 billion Canadian dollars (23.6 billion US dollars) to settle long-standing tobacco litigation in Canada. This is part of a plan proposed by a court-appointed mediator.
Jacob Shelley, co-director of the Western Canada University Laboratory for Ethics, Law, and Health Policy, stated that if the plan is accepted, this would be the largest settlement agreement in a similar case outside the United States.
According to reports, in 2015, subsidiaries of the three largest tobacco companies in Canada suffered a major blow in Quebec. A court ruled for them to compensate around 100,000 smokers or former smokers, as they claimed the companies knew since the 1950s that their products could cause cancer and other illnesses, but failed to warn consumers.
After an appeal, the Quebec Court upheld the 2015 ruling requiring tobacco companies to pay over $15.5 billion Canadian dollars in compensation to smokers. This has forced the subsidiaries of the three major tobacco manufacturers to seek bankruptcy protection. Canadian Tobacco Company is required to pay the largest amount of compensation, totaling $10.5 billion Canadian dollars. Philip Morris is obligated to pay $3.1 billion Canadian dollars, while Japan Tobacco's compensation amount is $2 billion Canadian dollars. The case is expected to be appealed to the Supreme Court of Canada.
Afterwards, the three companies entered into court-supervised mediation to discuss possible settlement agreements. It has been reported that the distribution of the total amount of the agreement remains unresolved.
Despite some important issues still to be resolved in the planned legal process, we hope that this will be concluded quickly, allowing RBH (Rothmans, Benson & Hedges) and stakeholders to focus on the future," said Jacek Olczak, CEO of Philip Morris International (PMI), on Friday. Rothmans, Benson & Hedges is a Canadian subsidiary of Philip Morris International (PMI).
On Friday, British American Tobacco announced that the proposed plan represents a step towards finding a solution. The company did not provide details of the plan like Philip Morris International (PMI) did. The company stated that its subsidiary, Imperial Tobacco Canada, supports the framework and structure of the plan, and the settlement will be funded by existing funds and future funds from the sale of tobacco products in Canada.
Philip Morris International (PMI) has stated that the plaintiffs (smokers) will decide by December 2024 whether to accept the plan, with judicial approval expected in the first half of the following year. A subsidiary of Japan Tobacco, JTI-Macdonald, has stated, "To find a viable solution, key issues must be addressed," but did not provide further details.
Jacob Shelley of Western Canada University believes that the settlement agreement missed an opportunity to incorporate company policy terms, but emphasizes the responsibility of manufacturers to warn consumers of the risks of their products. This could have implications for industries such as alcohol. He added, "We have not given sufficient warnings about the risks of many products. Manufacturers have a duty to alert us to these risks... Hopefully this will change manufacturers' views on potential liability.
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