Friday, 6 December 2019

Halifax lawyers are invited to the party to represent almost all Canadian smokers

A change of tactics

A lawyer friend of mine once explained to me a general pattern he had observed in class action lawsuits brought against big corporations. During the trial the corporate lawyers do all that they can to limit the number of members in the class. They do their best to restrict the period of liability to as short a period as possible. They seek to make it difficult for a person to prove he or she is a qualifying member of the class. These and other tricks of the lawyer trade are used to limit the financial hit that may be coming for their corporate client.

However, if and when the class action moves from trial to out-of-court settlement talks, a sea change comes over the corporate lawyers. From one day to the next they move from trying to exclude as many people from the class to including as many as possible. To be sure, they still want to hold the payout to each class member to a minimum, but they suddenly become zealous in searching in the most unlikely places to find as many class members as possible. Their strategy is to make small payouts to many people on the condition that the payees agree not to sue their corporate client in the future. In this way, they hope to limit the payout by their client to just one occasion, while guaranteeing that their client will not face more liability suits later on.

It is not known if this general pattern applies to the current specific CCAA proceedings protecting Big Tobacco from their creditors. Some elements of the general pattern seem to be present. Tobacco companies had some success in limiting the size of the classes in the Blais-Létourneau trial in Quebec. For example, Judge Riordan, wishing to foreclose any more discussion of who was in and who wss out of the class of cancer patients, did not accept the finding of the plaintiff's expert witness Jack Siemiaticki that the threshold level of smoking for inclusion in the class of cancer patients who had smoked was four pack-years. The judge accepted information from a tobacco company expert witness and moved the threshold up to twelve pack-years, thereby excluding thousands of cancer patients with shorter smoking histories.

The tobacco defendants recruit (and pay) someone to negotiate against them

Now that settlement talks are underway, there is newfound sympathy from the tobacco companies for the plight of smokers, not just in Quebec, but everywhere in Canada. They want Justice McEwen to appoint someone to represent their interests in the ongoing mediation.

The Independent Monitors, who are paid by the tobacco companies, state in their joint submission to Justice McEwen:
The efficient treatment of the TRW [Tobacco-related wrongs] Claims is necessary to fulfill the chief purpose of these Tobacco CCAA Proceedings: a pan Canadian global settlement.
The Monitors propose to hire a class-action law firm, Wagners of Halifax to "provide representation of the interests of individuals with TRW Claims."

The appointment of the Proposed Representative Counsel will also increase the TRW Claimants’ access to justice in these Tobacco CCAA Proceedings to the benefit of all TRW Claimants, the Applicants and the Applicants’ stakeholders.
One of the chief qualifications of Wagners for the job,  as identified by the monitors,  is that they know little of tobacco lawsuits, having never worked on one.  This ensures that Wagners will be independent and free from any possible conflict of interest.

This independence is called into question, however, by the fact that the Proposed Independent Representative Counsel (Wagners) will be paid by the tobacco companies:
65. The Proposed Representative Counsel will be paid its reasonable professional fees and disbursements on an hourly basis and shall be paid by the Applicants in a timely manner and in accordance with an agreement among the Applicants. 
Their joint report spells out the terms of reference for Mr. Wagner and his firm.
5. This appointment will provide representation of the interests of individuals with TRW Claims, to the extent they are not currently represented in the certified Quebec and British Columbia class actions, which includes: (i) various residual tobacco-related disease claims that fall outside a previously certified class definition; (ii) various tobacco-related disease claims that are currently the subject of uncertified class actions; and (iii) various tobacco-related disease claims for which no individual or class proceedings have been commenced. 
22. ... It is contemplated that the Proposed Representative Counsel would represent TRW Claimants in Alberta, Manitoba, Nova Scotia, Saskatchewan, Ontario and British Columbia. .... 
23. No class proceedings or individual proceedings have been commenced in New Brunswick, Newfoundland and Labrador, Prince Edward Island or any of the Territories with respect to any of the above-noted categories of potential claims. 
24. It is contemplated that the Proposed Representative Counsel would represent all TRW Claimants in such provinces and Territories. 
25. The Tobacco Monitors propose that the TRW Claimants for which the Proposed Representative Counsel will be appointed to represent be defined as: all individuals (including their respective successors, heirs, assigns, litigation guardians and designated representatives under applicable provincial family law legislation) who assert or may be entitled to assert a claim or cause of action as against one or more of the Applicants, the ITCAN subsidiaries, the BAT Group, the JTIM Group or the PMI Group, or persons indemnified by such entities, in respect of Tobacco-Related Wrongs in Canada, or in the case of the Applicants, anywhere else in the world. 
Wagners, while billing the tobacco companies for their work, could end up representing the interests of almost all Canadian smokers and former smokers, living or dead. It would add up to millions and millions of people. We will see how well that works out.

A couple of exceptions

Wagners will not be representing users of heat-not-burn products, nor vapers. Both are specifically excluded from Wagners terms of reference. Does this mean users of these products could still sue tobacco companies?  No, because all actions against tobacco companies, their subsidiaries and affiliates are stayed, even ones that are not yet started. Still, there is an exception to the exception for some vaping products. Only Vype and Logic are products of the companies in bankruptcy protection - ITCAN and JTIM, respectively. Vapers of other brands like JUUL, STLTH, Mylé, BLU and others could sue the manufacturers if they suffer illness or injury from using these products. One class action against JUUL has been launched in British Columbia. Even though Altria, a company affiliated with RBH, owns a 35% share of JUUL, the latter is not considered an affiliate of Altria, nor of RBH.

More secrecy

Settlement talks, including negotiation and mediation are all going on in secret, and that secrecy is being solidified. According to the November 26 report of ITCAN's Monitor, non-disclosure agreements have been concluded with the lawyers for the Quebec class action plaintiffs as well as with lawyers for all the provinces. As far as we know, only money is being discussed. None of parties under the veil of secrecy has said that they want to see non-monetary outcomes that would improve public health.

A late objection from the Merchant Group

One of the effects of the proposed appointment of Wagners would be to shove all the uncertified class actions of the Merchant Group aside. Not surprisingly, the Merchant Group objected. They did so in a late court filing on December 5, recruiting the class action firm Rochon Genova to ask Justice McEwan to suspend any hearing on the proposal (a motion for adjournment). And so it was tha six minutes after the appointed hour of 10:00 AM, Joel Rochon informed the court that his firm had only been retained by the Merchant Group on Wednesday and would like an adjournment for few days to prepare his arguments. There ensued some back-and-forth between Mr. Rochon and lawyers for the monitors on whether an adjournment could be granted.

While we have yet to see the Quebec Class Action Plaintiffs (QCAP) agree with the tobacco companies in these proceedings, it happened today. Avi Fishman for the QCAP spoke against the request for adjournment, stating that his group was anxious to see the settlement talks proceed quickly and an adjournment would only bring more delay.

Jeff Leon for the consortium of six provinces (NS, PEI, NB, Man, Sask and BC) also spoke against the request for adjournment. He pointed out that there had been no action on the Merchant Group claims for a decade and that no further delay could be justified.

After about an hour of lawyer back-and-forth,  Mr. Justice McEwen, reflecting the uncharacteristic hurry-up mood of the room, ruled that an adjournment would not be granted, but Mr. Rochon and his colleague Peter Jervis could argue why the Merchant Group and their new counsel should be given an important role in representing people suffering from tobacco-related wrongs (TRW). The one condition was that such arguments had to be made TODAY. This put Mssrs. Rochon and Jervis in the unenviable position of arguing their case on the fly, having done little homework and having no documents to present to the court. But argue they did.

Joel Rochon and Peter Jervis argue on behalf of the Merchant Group

By 11 AM the main arguments and counter-arguments were being presented. Jane Dietrich, counsel for RBH's Monitor gave an overview of the proposal to retain Wagner's to represent all those suffering tobacco-related wrongs who were not already represented. Natasha MacParland, counsel for  ITL's Monitor referred the Judge to the Book of Authorities and outlined points of law and legal precedents that supported their motion. Linc Rogers for JTIM's Monitor, walked the judge through the exact wording of the motion.

Mssrs. Rochon and Jervis pointed out that the Merchant Group had eight class actions in six provinces (Nova Scotia, Ontario, Manitoba, Saskatchewan (2), Alberta and British Columbia (2)) and that "sui generis", they should be granted the right to represent all suffering from tobacco-related wrongs in those provinces.

Jane Dietrich countered that none of those class actions was certified. meaning that the Merchant Group and Rochon Genova represented only eight people - the named plaintiffs in the uncertified class actions.

Mssrs. Rochon and Jervis argued that their group should be included because they had experience in tobacco class action suits. In addition to the Merchant Group's eight class actions, Rochon Genova had previously represented clients in failed claims against tobacco companies brought by Ragoonanan (cigarette-caused fire) and another by Joseph Battaglia (misrepresentation of light cigarettes). Jane Dietrich countered that Wagners should be favoured over the Merchant Group for precisely the opposite reason that they had no experience in tobacco cases and would therefore be impartial and have no conflict of interest.

Jane Dietrich pointed out that Quebec, Ontario and Alberta did not object to the motion to appoint Wagners and the QCAP and the six-province consortium supported the motion. From the back of the room, Doug Lennox, counsel in the certified class action in BC, the Knight case, spoke up to add his name to the list of supporters. Only the Merchant Group was opposed. The Rochon Genova lawyers argued back that their voice was no less valid for being lonely.

With no written documents to hand, Joel Rochon and Peter Jervis fell to reciting their previous experiences (Lac Megantic!) and mediators with whom they had worked in previous class action settlements (Winkler!, Iacobucci!). Jane Dietrich replied that this was not Lac Mégantic.

By 12:25, lawyers had wrapped up their arguments. Mr. Justice Thomas McEwen said he would ponder the matter over the weekend and inform the parties of his decision "very early next week."


Very early Monday morning Justice McEwen's decision was circulated. "the Orders shall go as per the draft filed. The request of Rochon Genova LLP/Merchant Law Group LLP to apepar as co-counsel is denied.

Mr. Wagner is at the table.