The Supreme Court of Canada has opened the door for the provinces to try to recover billions of dollars in health-care costs related to smoking by ruling unanimously yesterday that British Columbia can proceed with a landmark suit against tobacco companies.
The top court said B.C. legislation that authorized the government to file a lawsuit is constitutional and the judges unequivocally rejected all the tobacco companies' arguments that the law is unfair. Now B.C. -- and other provinces-- can proceed with legal claims against Canadian tobacco companies and their U.S. counterparts.
"This is a great day for B.C. and, in particular, a great day for health care," B.C. Health Minister George Abbott said. "We are saying big tobacco has to be held to account."
Canada's cigarette companies could face years of expensive litigation and potential financial ruin. Don McCarty, Imperial Tobacco's general counsel, said the decision is a blueprint for any government to start a lawsuit against "any industry or any person or group of persons that a provincial government decides to target."
The B.C. government began its pursuit of the tobacco companies in 1998, when the legislature passed the Tobacco Damages and Health Care Costs Recovery Act. In addition to spelling out how a lawsuit could proceed, the legislation makes it easier to prove a link between smoking and disease.
B.C. soon filed suit against the three main Canadian tobacco companies -- Imperial Tobacco Ltd., JTI-Macdonald Corp. and Rothmans Benson & Hedges Inc. -- and several foreign cigarette makers. The suit was put on hold while the tobacco companies and the Canadian Tobacco Manufacturers Council challenged the enabling legislation before the Supreme Court.
No dollar value was given in the suit. But the B.C. government has suggested it could seek up to $10-billion. However, it will likely be two years before the case resumes, Mr. Abbott said.
Several other provinces are expected to join the tobacco suit bandwagon. All except PEI had intervened in the Supreme Court case to support B.C.
"I don't see how you can convince any court that the people who smoke didn't know about the health risks involved," said David McKean, 23, as he smoked and drank his coffee in downtown Vancouver.
"The only way I'll quit is when my health gets bad," said Mr. McKean, who has been smoking since he was 18.
"Right now, there's been nothing, but when it starts and I begin coughing and all that, I may quit."
Newfoundland and Labrador Attorney-General Tom Marshall described the ruling as "great news."
"I fully expect to move forward" with legislation that, like B.C.'s, will smooth the way for suits against the tobacco firms, he said.
Ontario Attorney-General Michael Bryant was more cautious. "Obviously a major constitutional hurdle has been cleared for actions of this sort," he said, but the province will have to consider issues such as the cost of pursuing a lengthy suit, and then weigh the prospects of winning a case, he said.
Quebec's Minister of Health and Social Services, Philippe Couillard, said launching a suit is tempting since Quebec could seek hundreds of millions of dollars in compensation. But he remained hesitant, raising questions about the difficulty of gathering proof to mount a case against the tobacco industry.
Manitoba Health Minister Tim Sale wondered whether the companies will have any assets left to tap after years of litigation.
U.S. tobacco firms have paid billions to settle suits in that country, he said. If the companies collapsed or were restructured, there might not be anything to recover. "This wouldn't be the first time companies have been reorganized after a massive disaster," he said.
David Sweanor, a law professor at the University of Ottawa, said the Supreme Court decision creates a "doomsday scenario" for the tobacco companies and could lead them to bankruptcy.
Rothman's spokesman John McDonald said yesterday that the tobacco manufacturers "don't have the resources" to make huge payments if they lose a suit. He said Rothman's denies the allegation that they are responsible for massive health costs, and "we're going to be very vigorously defending our position." There has been no talk of settlements, such as those that saw U.S. tobacco companies pay out $245-billion (U.S.) in the 1990s, Mr. McDonald said.
Mr. McCarty, the Imperial counsel, blasted B.C., saying its case was not about tobacco or health, but "about abuse of power and a grotesque cash grab by the government."
In their arguments to the Supreme Court, the tobacco companies suggested the B.C. legislation interfered with the role of judges because it created what they called "unfair" and "illogical" rules of evidence which make it harder for the tobacco companies to plead their case.
That's not true, the judges said. "Judicial independence can abide unconventional rules of civil procedure and evidence," adding that "tobacco manufacturers . . . will receive a fair civil trial."
The cigarette companies also said the B.C. law was unfairly reaching beyond the province to get at U.S.-based manufacturers. The court rejected this too, and it said the suits can legitimately reach back as far as 50 years to try to recover health-care costs from smoking.
B.C. Attorney-General Wally Oppal said the ruling now allows the province to put together its list of witnesses and prepare its case against the tobacco companies.
The province has spent at least $7-million so far in pursuing the case. Costs for taking it to the Supreme Court were awarded to B.C.
Federal Health Minister Ujjal Dosanjh was B.C. attorney-general when that legislation was launched. Yesterday, he said he was pleased that the "action is on its way forward." It will be up to the provinces to pursue suits, he said, but Ottawa will continue to work to stop people from smoking.