BUSINESS

Quebec Tobacco Suit Hits Courtroom; Up To $27 Billion At Stake

03/10/2012 07:00 EST | Updated 05/10/2012 05:12 EDT
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MONTREAL - In the country next door, tobacco companies have been convicted in a landmark racketeering case and been forced because of other lawsuits to pay out at least US$206 billion over a quarter-century — a sum bigger than the annual GDP of most countries.

The legal skies have been somewhat less stormy here than in the United States.

But that could change next week.

A class-action lawsuit from smokers who claim they were duped for years by big tobacco companies as they became addicted to cigarettes, then suffered from serious health problems, will have its day in court.

Canada's three largest tobacco companies are set to square off against a group of Quebec smokers in a landmark civil case that is considered the biggest in Canadian history, with up to $27 billion in damages and penalties at stake.

The battleground will be a Montreal courtroom and the defendants are Imperial Tobacco Canada Ltd.; Rothmans, Benson & Hedges; and JTI-Macdonald.

The case will mark the first time tobacco companies have gone to trial in a civil suit in this country — stemming from two cases that were filed in 1998, certified and consolidated in 2005 by Quebec Superior Court, and marked by motions, delays and appeals.

One suit filed by a Quebec anti-tobacco group on behalf of Jean-Yves Blais seeks $105,000 in compensatory and punitive damages for smokers who suffered from cancer in their lungs, larynx or throat, or emphysema or have developed it since the motion.

Forced to have part of a lung removed because of cancer in 1997, Blais has smoked for 57 years and continues to this day. That suit was initially worth $5.1 billion.

"I've tried (to quit) five or six times in the last 14 years," Blais said in an interview at his home near Montreal, but he said some of the remedies triggered depression. "I smoke a little more than one package a day — maybe 30 cigarettes a day."

Blais began smoking at age 10. He says it wasn't until the 1970s that he started hearing how harmful it could be.

The other suit, worth $17 billion, was filed by Cecilia Letorneau on behalf of the province's roughly 1.8 million smokers who were addicted to nicotine and remained addicted or have died since without quitting. Letorneau, according to the claim, started smoking at age 19 in 1964. Despite her repeated attempt to quit, she said she's unable to do so. That suit seeks $10,000 in compensatory and punitive damages per plaintiff.

Since so much time has elapsed since those original filings, the anti-tobacco lobby believes the amounts sought have changed accordingly, to between $25 and $27 billion.

The allegations in the cases are similar: that the tobacco industry knew full well the effect of its products for years but failed to warn consumers; that it underestimated evidence relating to the harmful effects of tobacco; and that it engaged in unscrupulous marketing and destroyed documents.

Francois Damphousse of the Non-Smokers' Rights Association's Quebec branch says that while the trial will probe actions of the past, one of the goals is to get the tobacco industry to change its behaviour in the future.

"The tobacco industry knew very well the problems that were caused by their products ... but they withheld that information," Damphousse said.

"We don't want them to mislead the public about the hazards of their products and we also want them to stop misleading the public about the danger of their products (in the future)."

When the class actions were given the go-ahead by the presiding judge, Justice Pierre Jasmin, he identified a number of issues that needed to be considered.

Those questions included whether the companies trivialized the risks of smoking, or denied them altogether. Was there a policy of non-disclosure? Did they intentionally jeopardize the health of the plaintiffs?

The allegations are all vehemently denied by the companies.

The companies say the health risks associated with smoking are well known and have been exhaustively documented by governments and public-health officials. They say the companies have complied with government legislation and directives, such as adding big graphic labelling to packages.

A representative of one of the three companies — Rothmans, Benson & Hedges — said in an interview that there was no conspiracy.

"This case is not about whether cigarettes are harmful or addictive, clearly they are," said Chris Koddermann, director of corporate affairs for RBH, in an interview last week.

"What this case is about is whether Rothmans, Benson & Hedges misled smokers and former smokers in the province of Quebec about the health risk of smoking and the difficulty of quitting once you begin.

"We think it's clear we did not."

Koddermann says no consumer product is as heavily regulated as the cigarette industry and the risks associated with smoking have been common knowledge for years.

He points to government surveys and stories in the media as early as the 1950s that suggest the risks were common knowledge.

The case is expected to centre on the testimony of numerous experts, former executives and lawyers. Millions of pages of documents are part of the evidence.

High-profile witnesses are also expected to testify including Jeffrey Wigand, a former tobacco-executive-turned-whistleblower portrayed by Russell Crowe in the movie "The Insider".

Also expected to testify is Simon Potter — a former president of the Canadian Bar Association who represented Imperial Tobacco in the past — about alleged destruction of documents.

All of it will provide a view into what goes on inside the industry.

"There has to be some justice and truth that comes out so that the public can really understand the scope of the conspiracy," Damphousse said.

"People are going to learn a lot about the behaviour of the industry through this."

Barring any last-minute delays, the case will begin on Monday in Quebec Superior Court before Justice Brian Riordan. But it's only the beginning. After the plaintiffs make their case, the defendants won't start theirs until 2013. Eventual appeals are inevitable at the end.

The federal government is being pursued as a defendant in warranty — like a third-party defendant. The industry says that if it loses, the companies will seek to recover damages from the federal government.

The federal government will defend itself during the trial and deny any liability.

One other civil case that has been certified stems from a 2003 filing in British Columbia, involving light and mild cigarettes.

A trial date hasn't been set in that case and others filed elsewhere in Canada are nowhere near trial. The Quebec case took more than 13 years to make it before a judge after delays, motions and appeals.

"The most difficult thing is for a class-action is to get certified and get to court and in this case it has," said Rob Cunningham, senior policy analyst for the Canadian Cancer Society.

"It can be expensive and time-consuming to sue the industry and that's the benefit of a class-action where a large number of individuals can pool their resources."

Separately, provinces are also seeking the right to pursue tobacco companies to recoup health-care costs. Four provinces have filed: British Columbia, Ontario, New Brunswick and Newfoundland and Labrador.The six others have announced their intention to file.

In the United States, the tobacco industry has resolved legal actions by the states aimed at recovering tobacco-related health-care costs under the Tobacco Master Settlement Agreement.

That agreement, signed in 1998, calls on the companies to pay a minimum of US$206 billion over the first twenty-five years of the agreement. In 2006, the U.S. government won a racketeering suit against the major tobacco companies.

None of the cases involving the Canadian provinces have yet gone to trial.

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