Three tobacco companies plan to appeal a C$15.6 billion ($12.5 billion) decision by a Canadian court in favor of smokers in class-action lawsuits.
The Quebec trial court ruled that British American Tobacco Plc subsidiary Imperial Tobacco Canada Ltd. should pay about C$10.5 billion, with Rothmans, Benson & Hedges Inc. covering C$3.1 billion and JTI-MacDonald Corp. C$2 billion.
Past appeals of cases in the U.S. led to vastly reduced payments. Tobacco companies had been ordered to pay almost $145 billion in a Florida class action in 2000, before an appeals court overturned the verdict on the grounds that the members of the class were too diverse to be categorized as one. The class was disbanded in 2006. In February of this year, Altria Group Inc., Reynolds American Inc. and Lorillard Inc. paid a total of $100 million to settle 400 Florida lawsuits.
“Class actions always have big numbers attached, and having it quantified is a bit of a shock,” said Erik Bloomquist, an analyst at Berenberg in London. “It’s unlikely the full amount will ever be paid.”
There was a limited impact on the stock prices of companies involved in the Canadian suit on Tuesday, reflecting investor confidence that the final outcome will change.
BAT shares fell 2.4 percent to 3,506 pence at the close in London. JTI-MacDonald’s owner, Japan Tobacco Inc., declined 1.8 percent to 4,532.5 yen in Tokyo. And RBH parent Philip Morris International Inc., which was not a party to the lawsuit, declined 0.3 percent to $82.95 in New York.
The Quebec court decision covered two class actions, with one seeking damages for addiction and the other for smoking- related diseases, according to a statement from RBH.
“These cases are far from over,” said Anne Edwards, a spokeswoman for the company. “We will vigorously appeal this lower court’s judgment, and believe that we have very strong legal grounds to overturn the judgment in its entirety.”
None of the smokers suing in the case testified under oath, RBH said. The company added that the court ordered the tobacco companies to put a portion of the damages award — C$1.1 billion — into a trust account within 60 days.
Imperial Tobacco Canada also said it would challenge the judgment in Quebec’s Court of Appeal. While the plaintiffs claimed that smokers weren’t cognizant of the dangers of cigarettes, a Gallup Poll in 1963 found that 96 percent of Canadians were aware of the lung-cancer risk, the company said. The cases were filed in 1998.
“Today’s judgment ignores the reality that both adult consumers and governments have known about the risks associated with smoking for decades, and seeks to relieve adult consumers of any responsibility for their actions,” said Tamara Gitto, Imperial Tobacco Canada’s general counsel.
JTI-MacDonald said the evidence presented at the trial doesn’t justify the court’s conclusions.
“Since the 1950s, Canadians have had a very high awareness of the health risks of smoking,” the company said. “That awareness has been reinforced by the health warnings printed on every legal cigarette package for more than 40 years.”