Ontario court approves major $32.5B tobacco settlement

A historic deal has been finalized in Ontario, marking the end of a long legal battle involving three major tobacco companies in Canada. The agreement calls for JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd. to pay out a total of $32.5 billion in compensation to provinces, territories, and former smokers across the country.

Ontario Superior Court Chief Justice Geoffrey Morawetz approved the plan, calling it a “momentous achievement in Canadian restructuring history.” The settlement was the result of years of mediation between the companies and their creditors, which included plaintiffs in Quebec class-action lawsuits and provincial governments seeking to recover smoking-related health-care costs.

Thousands of claimants, whose case began in the late 1990s, have been waiting for justice. The approval of the settlement brings an end to years of uncertainty for those affected by the harmful practices of the tobacco companies. The Conseil québécois sur le tabac et la santé, one of the plaintiffs in the lawsuits, expressed relief at the ruling, emphasizing the importance of compensating tobacco victims for the harm they have endured.

While the financial compensation is significant, B.C. Attorney General Niki Sharma emphasized that the settlement goes beyond money. It is about holding corporations accountable for their wrongdoing and taking steps to prevent further harm. The plan entails the companies paying over $24 billion to provinces and territories over two decades, with more than $4 billion allocated to plaintiffs in Quebec class-action lawsuits. An additional $2.5 billion will compensate Canadian smokers not included in the lawsuits, and over $1 billion will fund a foundation dedicated to combating tobacco-related diseases.

The settlement, which was unanimously approved by creditors in December, faced its final hurdle in court. Issues raised by two of the companies were addressed through an amended plan, leading to the withdrawal of their opposition. Under the terms of the agreement, the companies will make upfront payments and contribute a portion of their after-tax income until the full amount is paid.

Despite the approval of the settlement, concerns were raised by the Canadian Cancer Society regarding the lack of smoking-reduction measures included in the proposal. The organization’s lawyer, Rob Cunningham, expressed disappointment and stressed the importance of using the settlement funds to strengthen smoking-reduction efforts at the provincial level.

The legal saga that culminated in this historic deal began with a ruling in Quebec that ordered the companies to pay approximately $15 billion to plaintiffs in class-action lawsuits. Following this ruling, the companies sought creditor protection in Ontario in 2019. All legal proceedings were put on hold during the confidential negotiations that ultimately led to the finalized settlement.

The resolution of this complex legal battle signifies a significant step towards justice for those affected by the tobacco industry’s harmful practices. The funds allocated through the settlement will provide much-needed support to provinces, territories, former smokers, and initiatives aimed at combating tobacco-related diseases.