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A discarded cigarette pack lies in an ashtray outside an office tower in downtown Toronto February 19, 2007. (J.P. MOCZULSKI)
A discarded cigarette pack lies in an ashtray outside an office tower in downtown Toronto February 19, 2007. (J.P. MOCZULSKI)

Ontario files $50-billion suit against tobacco manufacturers Add to ...

Ontario said on Tuesday it has filed a lawsuit seeking $50-billion in damages from tobacco companies for health care costs incurred by taxpayers since 1955.

In doing so, Ontario became the third of Canada's 10 provinces to sue the country's tobacco manufacturers, all of which are units of foreign tobacco makers, including Philip Morris International Inc. , British American Tobacco PLC and Japan Tobacco Inc.

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The lawsuit by Ontario was planned under legislation passed earlier this year, and seeks damages for past and ongoing health care costs.

Ontario says tobacco use costs the province $1.6-billion a year for health care and causes about 13,000 deaths annually. It said smoking is the province's No. 1 cause of illness and premature death.

The legislation allows Ontario to directly sue tobacco companies for alleged wrongdoing and allocates liability among tobacco companies by market share.

A spokesman for Imperial Tobacco Canada Ltd., Canada's leading tobacco company and a wholly owned unit of British American Tobacco, said the Ontario lawsuit made no sense, given that the product is legal, regulated and taxed by the government.

"It's a little bit hypocritical to sue the legal tobacco manufacturers when the governments have been a partner of the industry for many decades now," spokesman Eric Gagnon said.

"They are the ones that legislate the industry. We operate, we do a legal product. [They also]collect billions of dollars in taxes, so to turn around today and sue the legal industry makes no sense whatsoever," Mr. Gagnon said.

He said Canadian governments collected $7-billion in taxes from tobacco in fiscal 2008-09, which ended in March. He said taxes make up 60 per cent to 70 per cent of the price of a pack of cigarettes in Canada.

Tobacco opponents applauded the long-awaited lawsuit.

"We're very pleased by this announcement - it is very significant. The tobacco industry has been engaged in decades of wrongful behaviour in Ontario and Canada and they need to be held to account," said Rob Cunningham, senior policy analyst at the Canadian Cancer Society.

"We see these lawsuits as being important to reform tobacco industry behaviour so they will not repeat the wrongs of the past. It is a question of justice," Mr. Cunningham said.

British Columbia and New Brunswick have already launched similar suits - B.C. has a 2011 trial date - but the move by Ontario is significant because most provinces are preparing similar suits, Mr. Cunningham said.

"Ontario being most populous province I think is going to influence the actions of the other provinces," he said.

All but two provinces have created legislation to lay the groundwork for similar lawsuits.

After years of battling lawsuits, Big Tobacco in 1998 agreed to pay U.S. states more than $200-billion (U.S.) to help pay for the costs of treating ailing smokers.

The Ontario case is expected to take years to resolve. Mr. Gagnon said Imperial Tobacco would not settle the Ontario case out of court.

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