Canadian Court Approves Landmark Settlement in Tobacco Lawsuits
A significant chapter in Canadian legal history concluded as a court sanctioned a monumental settlement plan addressing extensive tobacco-related lawsuits. This agreement will see three major tobacco companies’ subsidiaries in Canada disburse a staggering CA$32.5 billion (equivalent to about $22.67 billion USD), according to statements from Philip Morris and British American Tobacco.
The lawsuits, which have persisted for years, accused the Canadian divisions of Philip Morris, British American Tobacco, and Japan Tobacco of concealing the health risks of their products. Since the 1950s, these companies allegedly failed to adequately warn consumers about the cancer and other health risks associated with smoking.
In a pivotal 2019 decision, a court in Quebec upheld a previous ruling from 2015, ordering damages of approximately CA$15 billion to around 100,000 smokers and former smokers who joined class action lawsuits. This judgment pushed the Canadian subsidiaries of the three tobacco giants—Imperial Tobacco Canada, Macdonald, and Rothmans, Benson & Hedges—to file for bankruptcy protection that same year.
The Canadian arm of Philip Morris, known as RBH, has been permitted to retain CA$750 million from the initial settlement payment, as revealed on Friday. The settlement plan dictates several operational covenants to guide RBH’s business in traditional tobacco products until the full settlement amount is disbursed.
Philip Morris announced that any objections to the settlement plan by its affiliates and other parties have been amicably resolved. The plan, crafted by a court-appointed mediator, is set to be executed and take full effect by 2025.
On a final note, British American Tobacco assured stakeholders that the settlement will not alter its financial projections for 2025.
