A landmark corporate restructuring proposal could see three major tobacco companies pay out a staggering $32.5 billion in compensation to Canadian provinces and tens of thousands of Quebec smokers, following decades of legal battles.
The proposed settlement, filed in an Ontario court, outlines payments totaling nearly $25 billion to provinces and territories and an additional $4 billion to Quebec smokers affected by smoking-related illnesses, marking what some are calling a historic resolution.
The agreement is part of a corporate restructuring triggered after tobacco giants JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd. sought creditor protection in 2019. This came after a major loss in Quebec’s courts, where the companies were ordered to pay for health-related damages.
Compensation for Smokers and Governments
The plan, which is the result of a court-appointed mediation, would see provincial and territorial governments receive billions in compensation to recover healthcare costs related to smoking. Quebec plaintiffs, who represent smokers or their heirs, will be able to file for claims of up to $100,000 each.
In addition, smokers in other provinces diagnosed with lung cancer, throat cancer, or chronic obstructive pulmonary disease between March 2015 and March 2019 could also receive up to $60,000 each under the terms of the settlement.
A Historic Legal Precedent
Bruce W. Johnston, one of the lawyers representing the Quebec plaintiffs, described the settlement as “historic and unprecedented,” noting that the tobacco industry has never before compensated individual victims in Canada. “This case started in 1998, and it’s a breakthrough not just for the tens of thousands of victims, but also for the governments who will share in the $24 billion payout,” Johnston said.
While many class-action members have since passed away, their successors will be eligible to claim compensation.
Transparency Concerns Raised
Despite the historic nature of the settlement, some healthcare advocacy groups have expressed concerns about the negotiations, citing a lack of transparency. Organizations like the Canadian Cancer Society and the Quebec Coalition for Tobacco Control argued that the closed-door negotiations could have given the tobacco companies too much control over the final terms.
Rob Cunningham, a lawyer for the Canadian Cancer Society, highlighted that this settlement, while significant, lacks policy measures aimed at reducing tobacco use or ensuring the public release of internal company documents, as was done in a similar U.S. settlement in the 1990s.
Future Impact on Tobacco Companies
The deal also includes a provision for the tobacco companies to contribute over $1 billion to a foundation dedicated to fighting tobacco-related diseases, including $131 million diverted from the Quebec plaintiffs’ compensation fund.
The proposal now awaits approval from creditors and the court, with several steps remaining before it can be implemented.
