Major tobacco firms must also stand in health-care suit, says Quebec judge

MONTREAL -- A Quebec judge has ruled that foreign-based tobacco companies are not immune from a lawsuit filed against their Canadian subsidiaries to recoup health costs.

The major international firms contended the lawsuit by the Quebec government didn't apply to them because the provincial court didn't have any jurisdiction over them.

But Justice Stephane Sansfacon wrote in a ruling dated July 4 that the major tobacco companies and their Canadian subsidiaries can be sued.

"Therefore, the tribunal, after reviewing all the evidence, considered the (province) has demonstrated prima facie to establish that Quebecers have been prejudiced by the actions of the defendants-appelants," Sansfacon wrote.

He says Quebec Superior Court is the right forum to hear the case involving the 11 companies and associations targeted by the suit.

The ruling can be appealed by the companies, which include Imperial Tobacco Canada, JTI-Macdonald, and Rothmans, Benson & Hedges. They all have Canadian firms but are controlled by foreign companies.

The $60-billion lawsuit was filed in June 2012 and is aimed at recouping health-care costs.

Quebec has argued the tobacco companies did not do enough to inform consumers about the risks of smoking as they ramped up the marketing of the products.

Some of the firms have said the provincial government has been licensing and taxing the industry for decades and now is simply trying to cash in. At the time, Imperial Tobacco called the Quebec suit "hypocrisy of the highest order."

Companies did not immediately return calls for comment on Wednesday.

Trying to get around the lawsuits because they are foreign entities has been a common tactic. So far, the industry has lost similar attempts to have itself recused from legal actions in British Columbia, Ontario, New Brunswick and now Quebec.

Almost every province in Canada has filed a similar lawsuit. Only Nova Scotia has not done so, but it has announced it will. All provinces have passed laws that allow them to go after so-called Big Tobacco for health care costs stemming from smoking-related disease.

Quebec's $60-billion suit is different from a landmark $27-billion suit in the province that is believed to be the biggest class-action ever seen in Canada.

That case, which is ongoing, pits an estimated 1.8 million Quebecers against three major Canadian tobacco manufacturers. The parent companies are not being sued.

It has taken 13 years to reach the trial phase. The trial stems from two cases that were filed in 1998 and certified and consolidated in 2005 by Quebec Superior Court. There were motions, delays and appeals before it got underway in 2012. That class action trial is expected to last about two years.

A lot of the issues and evidence overlaps in the cases: accusations the companies denied health effects, produced misleading advertising and hid internal research.

Rob Cunningham of the Canadian Cancer Society said he hopes a Quebec trial on the merits of the case will be held soon.

Cunningham says a lot of the provinces are inspired by experiences in U.S., where successful state-sponsored recovery lawsuits saw awards of US$245.5 billion to be paid over 25 years as well as new restrictions on marketing.

Those parent companies have very deep pockets, Cunningham said.

"The parent companies would have tremendous documentation of their own research ... and enormous capacity to pay judgments," Cunningham said. "There would be some materials the parent companies would have in respect to Canada that would not have been produced in U.S. court cases."