In a significant development, three major tobacco companies - Philip Morris International Inc., British American Tobacco Plc, and Japan Tobacco Inc. - are on the brink of reaching a landmark agreement to resolve ongoing legal claims in Canada alleging that they withheld critical information about the health risks associated with smoking.
A court-appointed mediator has put forth a groundbreaking proposal, suggesting that the Canadian subsidiaries of these tobacco giants collectively pay a substantial sum of C$32.5 billion ($23.6 billion) to settle product-related litigations. This potential settlement stems from a 2019 ruling against the Canadian units, where they were ordered to pay damages following the loss of an appeal on class action lawsuits brought forth by Quebec smokers. Notably, these lawsuits, originating in 1998, marked the first instance of damages being awarded against the tobacco industry in Canada, as smokers contended that they were never adequately informed about the dangers of tobacco use.
The proposed settlement, if approved, would offer compensation to the participants in the Quebec class action suits, a move supported by Bruce W. Johnston, one of the lawyers representing the plaintiffs. The plan is expected to be put to a vote by December 12th, with a strong belief that the majority of creditors will favor it. Additionally, the arrangement could potentially free British American Tobacco from $2.3 billion in cash reserved on its balance sheet for potential class action litigations in Canada, as highlighted by Bloomberg Intelligence's Duncan Fox.
While the proposal marks a significant step towards the resolution of all tobacco-related litigations in Canada, it is emphasized that further negotiations amongst the involved parties, along with approval from the claimants and Canadian court orders, are essential for finalizing the settlement. If accepted by the claimants, a hearing to review and approve the proposed plan is anticipated to take place in the first half of 2025, bringing potential closure to this longstanding legal battle within the tobacco industry.