Commonwealth_ Three major tobacco companies JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd.—are proposing a significant settlement of nearly $25 billion to resolve longstanding legal battles with provinces, territories, and Quebec smokers. The corporate restructuring effort, which began after years of litigation and negotiations, includes this settlement.
After more than five years of discussions, the tobacco companies and their creditors filed the proposed plan of arrangement in an Ontario court. The companies initially sought creditor protection in 2019, after losing an appeal in a pivotal court case in Quebec. This case, which began in the late 1990s, involves two class-action lawsuits representing Quebec smokers who started smoking between 1950 and 1998, many of whom became seriously ill or addicted. The suits also included the heirs of deceased smokers.
The Ontario court granted the companies creditor protection and paused all legal proceedings against them, allowing them time to negotiate a settlement with their creditors. These creditors include plaintiffs in the Quebec lawsuits, as well as provincial governments seeking reimbursement for the healthcare costs related to smoking.
Under the new proposed plan, provinces and territories would receive around $6 billion when the deal is implemented, with further payments to be distributed over time. The total amount for governments is expected to reach $25 billion, with Quebec alone receiving a significant portion.
In addition, Quebec plaintiffs would be able to claim compensation of up to $100,000 each. These plaintiffs and the organizations representing them have consistently urged provincial governments to include stronger smoking regulations and reduction measures in any settlement with the tobacco companies.
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Health organizations, such as the Canadian Cancer Society, have been particularly vocal about the need for greater transparency. They have advocated for public disclosure of internal tobacco company documents, which could reveal information about the companies’ practices regarding smoking-related health risks. Rob Cunningham, a lawyer for the Canadian Cancer Society, called the proposed deal “the most significant proposed settlement in the world outside of the United States” but expressed disappointment that it doesn’t include tobacco-reduction measures or the release of documents, as seen in the 1990s U.S. tobacco settlement.
Cunningham added that the Canadian Cancer Society, which has been named a social stakeholder in the case, would review the proposal and make submissions as part of the court’s approval process. The proposal spans approximately 1,400 pages and includes various stipulations for compensation and reform.
The Quebec class-action lawsuits center on smokers who either became ill or addicted between 1950 and 1998. Many of these plaintiffs have passed away since the case began, with hundreds dying after the companies sought creditor protection in 2019. However, their heirs, or in some cases their heirs’ successors, will still be eligible for compensation under the proposed settlement.
The proposed deal also provides for more than $2.5 billion in compensation for smokers from other provinces and territories who were diagnosed with lung cancer, throat cancer, or chronic obstructive pulmonary disease (COPD) between March 2015 and March 2019. These individuals could receive up to $60,000 each.
One of the lawyers for the Quebec plaintiffs, Bruce W. Johnston, described the proposal as “historic and unprecedented” because it allows for the compensation of both smokers and governments. “When we took this case in 1998, no plaintiff had ever received a penny from a tobacco company,” Johnston said. “Now, tens of thousands of victims will be compensated, and governments will share $24 billion.”
Johnston acknowledged that while many plaintiffs have passed away without receiving compensation, their successors will still benefit from the settlement. He added that after years of delays, plaintiffs now see “a light at the end of the tunnel.” The deal also includes the creation of a foundation to fight tobacco-related diseases, funded with more than $1 billion. The designated allocation for Quebec plaintiffs accounts for $131 million of this total.
