Calls for major changes to landmark tobacco settlement too late: Imperial Tobacco

TORONTO — Imperial Tobacco is rejecting what it says are major changes to a landmark $32.5-billion settlement that would see it and two other tobacco companies compensate provinces, territories and ex-smokers in Canada.

Deborah Glendinning, a lawyer for Imperial Tobacco Canada Ltd., told an Ontario Superior Court hearing Thursday that changes being suggested to the settlement by one of the other firms has come too late. The option is to endorse the deal as is or send it back to the drawing board, Glendinning said.

It’s unacceptable that Rothmans, Benson & Hedges wants to fundamentally change how the funding for the global settlement is allocated, she told the court.

“It could have taken a different path and they didn’t,” Glendinning said of RBH. “Chief justice, you have one decision to make: approve this plan, which we fully support … or reject this plan and send us all back to the beginning.”

The proposed deal was crafted over more than five years by the monitors appointed to each company — JTI-Macdonald Corp., Imperial Tobacco Canada, and RBH — along with a court-appointed mediator. Creditors approved each of three plans — one drafted for each company — last year, and lawyers representing the monitors suggested this week they be accepted.

However, both JTI-Macondald and RBH have raised issues during hearings this week, with RBH calling for a change to the way the amounts are allocated between the companies.

Glendinning told the court the only thing the judge has to decide is whether the proposed plan is fair and reasonable.

“In the circumstances, is it fair or reasonable or in good faith for RBH to wait in the weeds until Jan. 24, 2025, six years into this process, to even communicate to us, to the court or to anyone, its significant demands in respect to its undefined, vague complaints about reallocation?” she asked.

“The clear answer is no, it’s not fair.”

Ontario Superior Court Chief Justice Geoffrey Morawetz is hearing submissions from companies and other stakeholders and will decide whether to approve the deal. The legal saga began in Quebec with a landmark ruling that found the companies had chosen profits over the health of their customers, and ordered them to pay about $15 billion to plaintiffs in two class-action lawsuits.

The case migrated to Ontario in 2019 when the companies sought creditor protection after the Quebec ruling was upheld on appeal.

The proposed deal includes more than $24 billion for the provinces and territories to settle lawsuits they brought against the companies for health-related costs due to tobacco use and $4 billion for plaintiffs in two class-action lawsuits heard in Quebec. Another $2.5 billion is earmarked for Canadian smokers not included in the Quebec lawsuits, and more than $1 billion would go to a foundation to fight tobacco-related diseases.

Of the $32.5 billion, an upfront contribution of $12.5 billion in cash would be paid by the three companies. The remaining $20 billion would be paid to creditors as annual contributions over roughly 20 years based on a percentage of after-tax profits.

The companies had faced claims totalling more than $1 trillion, including from lawsuits from provincial governments seeking to recover smoking-related health-care costs as well as other actions.

Except for the Quebec lawsuit, at the time of the creditor filing many of the other claims were only in preliminary stages or hadn’t yet made their way to court.

The deal is a pan-Canadian settlement of all outstanding tobacco litigation in the country.

This report by The Canadian Press was first published Jan. 30, 2025.

— By Sidhartha Banerjee in Montreal.

The Canadian Press