Twenty years after B.C. sued, settlement negotiations move behind closed doors.
17 January 2020
The long legal battle to try and force tobacco companies to pay for the damage done by their products in Canada has moved behind closed doors.
A small army of lawyers are meeting this month in Toronto as part of a mediation process aimed at settling lawsuits launched by 10 provinces, as well as class action suits and individual actions.
But public health advocates worry the negotiations will focus on cutting a financial deal rather than addressing the issues around tobacco use and the companies’ practices.
And former British Columbia premier Ujjal Dosanjh, whose government launched the first provincial lawsuit 22 years ago, shares the fear that the opportunity to hold the companies to account and protect Canadians will be lost.
Cynthia Callard, the Ottawa-based executive director of the health advocacy organization Physicians for a Smoke-Free Canada, said the group wants “a meaningful resolution or conclusion to the tobacco problem, a long-term solution.”
The closed-door negotiations might not provide that, she said. “If there is no capacity for discussion and dialogue and engagement with communities about how to deal with this sector, then the government’s not going to have the knowledge base to see how it could make reforms.”
The mediation process is aimed at resolving lawsuits launched by each of the 10 provinces to recover health care costs, plus 11 class action suits on behalf of smokers and half a dozen suits filed by individuals. The provinces’ claims against the industry for the recovery of health care costs add up to as much as $600 billion.
The resolution process was launched last March, after the Quebec Court of Appeal upheld a $15-billion judgment against three companies in a class action lawsuit launched on behalf of 100,000 smokers in the province. The companies — Imperial Tobacco, which owes $9.16 billion in damages; Rothmans, Benson & Hedges ($2.7 billion); and JTI Macdonald ($1.75 billion) — then applied for protection under the Companies’ Creditors Arrangement Act.
The act gives companies the opportunity to negotiate a deal with potential creditors to avoid bankruptcy.
The list of everyone involved in the creditor protection proceeding is 11 pages and includes nearly 120 lawyers representing some 42 parties, among them tobacco companies, provincial governments, court appointed bankruptcy monitors, class action plaintiffs and the minister of national revenue.
But Callard noted it doesn’t include experts in public health or the effects of tobacco use.
“The lawyers who are at the table are not public health experts,” she said. “As far as we know, they haven’t even engaged public health experts.”
Governments routinely run public consultations on important issues, she said. But not about the tobacco litigation.
“In 20 years, they’ve never solicited input from the public about where they can go,” she said. “None of them have ever launched a consultation saying, ‘We’re suing the companies, can you tell us how this fits into public health strategy, a public governance strategy, corporate control strategy, consumer protection strategy?’ Any of those things.”
Governments are being far too secretive about their goals for the mediation, said Callard, and it’s not even clear they’re having those discussions among themselves.
Lawyers representing most of the provinces, including B.C., said they would not give interviews during the mediation process.
A spokesperson for the B.C. Attorney General sent an emailed statement saying, “As a result of the court-ordered mediation and related confidentiality obligations, we can make no comments at this time.”
Nor were lawyers representing the various companies involved available to comment.
Former premier says companies still causing harm
Dosanjh was involved in starting the first Canadian case against the major tobacco companies in 1998.
“We suspected this was going to be a long-term project, but I’d be lying to you if I said I thought it would be 20 years,” Dosanjh said this week. “I thought it might take five or 10 years… Tobacco companies have deep pockets and obviously they would resist any attempt to hold them accountable.”
When B.C. filed its case the goal was to recover money the province spent treating diseases caused by smoking, Dosanjh said.
And to make a difference for public health, he added.
Similar efforts in the United States had led to a 1998 agreement between the four largest tobacco companies and 46 states. The companies agreed to make payments toward health care costs, end some tobacco marketing practices and fund an anti-smoking advocacy group.
Dosanjh said the provincial government faced criticism when it began discussing the idea of a lawsuit against tobacco companies.
“The idea was poo-poohed in Canada in some quarters that we were simply mimicking the U.S.,” he said. “But you know the fact is all these jurisdictions such as the U.S. and Western European countries, Australia and New Zealand, we learn from each other and our laws are very similar and we felt that we were on the right path despite the poo-poohing.”
“We felt that our legal action was grounded on a solid foundation and I never had second thoughts about that.”
Dosanjh said it’s still not clear how much of their health care costs provinces will recoup.
“I’m hoping that British Columbia recovers what it is entitled to from the tobacco companies for outright lies and misrepresentations that they continued making for a long, long time.”
But the lawsuit was also aimed at protecting the public, said Dosanjh, who later served as the federal health minister.
“I believe tobacco is not something that is healthy at all and if we can put it out of business we should,” he said. “I believe we should be leading the international effort to actually have it made illegal, have it banned across the world. What’s happening is that they were victimizing us and they still continue to victimize the poorer countries.”
Incentives to settle
Gar Mahood, the president of the Campaign for Justice on Tobacco Fraud, has been working on the issue since 1976.
The U.S. lawsuits led to increased awareness about the harms of smoking and tobacco company’s practices, and significant public health gains.
Mahood is worried that the creditor protection process in Canada will let the companies off the hook. “I’m deeply concerned about what will come out of the process,” he said. “I see things in a very negative light at this point.”
Many of the lawyers involved are working on a contingency basis, with their fees based on the payments the companies make to their clients, he said. “I would think the contingency lawyers would be strongly encouraging the provinces to settle, which of course isn’t what the health community wants.”
Mahood said he would like to see the cases go to trial so evidence would be heard in public.
But the provinces don’t appear to be listening to health advocates, Mahood said.
“Not a peep has come out of the provinces suggesting they’ve heard the message. Where’s the bloody leadership?” he said. “The responsibility of the provinces should be to end the tobacco epidemic.”
The fact the litigation has been dragging on for two decades “is a condemnation of our civil justice system,” he said.
A negotiated settlement would let companies avoid responsibility, he said. “It seems to me it has to be about justice, it has to be about repairing the damage done by six decades of negligence and fraud — outright fraud.”
Last February, Mahood’s organization co-ordinated the publication of an open letter in The Globe and Mail to premiers signed by health groups and academics in medicine, health and law.
“We are concerned that to avoid trials the provinces may resort to out-of-court financial settlements without any positive health outcomes,” the letter said. The goal should also be to “deter future ruthless, immoral conduct by Big Tobacco and others” and save lives, it added.
Mahood said the lack of public interest in the issue is disheartening. “Where are the voices demanding that public health be part of this process? Where are the voices? Where’s the noise? Is it only going to be a couple of very small organizations that have virtually no funding?”
Callard, the executive director of Physicians for a Smoke-Free Canada, said it would be tragic if a settlement allows the tobacco companies to carry on business as usual.
“After 20 years of this effort, for it to end up really where we started with an industry that is able to function like any other innocent company, as though it were just making pencils, in terms of its ability to expand its market or its product line, would be just a very tragic outcome both for Canadian public health and also for the idea of using litigation as a public health tool elsewhere,” she said.
Ultimately governments might be better off receiving no money from the lawsuit if they could arrive at an agreement that would see the tobacco industry agree to a phased shutdown, she said.
Callard warned about any settlement that allowed companies to defer payments.
“It means that any revenue flow is going to be based on tobacco sales, which means more people are going to be hurt, and whether those are more Canadians or more people in other countries is a problem.”
The tobacco lawsuits are being watched closely by observers who hope they can be a model for other efforts to hold corporations to account.
Callard said that makes the tobacco cases more important.
“These are the first cases of how we manage companies that have caused and externalized so much harm, not just hurt people but have actually forced so much cost of recovery onto the public,” she said.
Callard said the lack of public attention to the $600-billion case — with its public health implications — is troubling
“Part of what contributes to the risk of this going off the rails is this feeling that whatever they bring out the door is going to be fine and it’s not going to be scrutinized.”