When the public hearing opened, Justice McEwen made transparent efforts to be more transparent about what had been discussed in secret. He summarized the one-hour discussion in a few short sentences: 'I met with counsel in chambers to go over what matters would be on consent ... We will now go through the matters, starting with uncontested and finishing with contested.'
And that was that. So let's do as he suggested.
THE UNCONTESTED ISSUES:
A LEVEL PLAYING FIELD FOR SOME, NOT SO MUCH FOR OTHERS
Collisions and health and safety with JTI-Macdonald
Justice McEwen has previously taken a 'no exceptions' stance with respect to whether any steps can be taken on the lawsuits the tobacco companies are facing. He has already flatly rejected requests from the government of Ontario and the Quebec class actions for limited exemptions to the stay that the tobacco companies asked for on all litigation proceedings against them.
Sauce for the goose, apparently, is not sauce for the gander. Last week, JTI-Macdonald filed requests for two such carve-outs from the litigation stay. One involved their desire to provide compensation for a man who had been severely injured when he was hit by a jet ski driven by a drunken JTI-Macdonald sales representative on a company-sponsored holiday. The other involved compensating a woman whose car had been rammed by a car being carelessly and recklessly driven by an on-duty JTI-Macdonald sales manager.
With no one in court opposing the motion, Justice McEwen decided that it was "fair and reasonable" to allow these lawsuits to be settled. He did not explain why he saw these individuals as more deserving of having their grievances addressed than the members of the Quebec class actions.
If the companies hurt you by accident, you will be compensated. If they hurt you intentionally, then you will have to wait!
JTI-Macdonald also requested dispensation to challenge demands from their unionized employees for enhancements to health and safety procedures. The irony seemed lost in the room, and this request also was deemed "fair and reasonable" by the court.
Imperial Tobacco's settlement with Genstar pensioners
The other uncontested exception granted today was on behalf of former employees of Genstar who are resident in the U.S. and who have until recently received pensions funded by Imperial Tobacco. Imperial Tobacco's proposed arrangement to manage this issue was also given swift approval, with consent voiced by the lawyers representing the retirees.
THE CONTESTED ISSUES:
WHOSE JURISDICTION? WHOSE MONEY?
Settling the Insurance Settlement
The uncontested issues took less time than a coffee break, and soon the focus had changed to the two issues that the Quebec class action plaintiffs wanted addressed. The first involved the right of the Justice Riordan's court to manage a small amount of money received from insurance companies.
As explained here earlier, the lawyers representing injured Quebec smokers had pushed two bankrupt insurance companies into a settlement for an amount of money that has been shared with judges but not made public. (By inference, it is at least $1 million, but not more than Justice McEwen considers 'de minimis' in the context of the tobacco settlements).
This settlement had been reached long before the CCAA proceedings took place, but before the Quebec Court of Appeal had ruled. The process required that Justice Riordan approve the agreement, something he was not in a position to do until the Court of Appeal had ruled. The settlement was written in a way that the plaintiffs would get the money notwithstanding any requests to the Supreme Court.
This issue has been on the agenda since the first comeback hearing (in late March). In late April, it seemed headed for resolution through the mediation of Justice Winkler -- so much so that a very optimistic sounding report was given to Justice Riordan on April 30th.
Things change. But the change of heart in this case seems to be on the part of the lawyers who are representing all the provinces except Quebec and Ontario. (Quebec is not present at these hearings, and Ontario sat silent throughout today).
So contested was this issue today that those provinces and the tobacco companies did not even want a discussion to take place.
Although the request for adjournment was made by Deborah Glendinning, the reasons she gave were focused on the desires of the 8 provinces. She said they needed more time "to decide whether there is going to be anything to distribute and to give the other parties an opportunity to weigh in." (Hearing the interests of British Columbia being presented by their once arch-rival was a head shaking moment).
Eventually, Justice McEwen rejected her request for an adjournment, and allowed Mark Meland to make his case on why their motion should be allowed to fully proceed before Justice Riordan. He did so engagingly and -- even in this acoustical desert of a courtroom -- clearly. He pointed out that the money in question had nothing to do with any of the creditor tobacco companies (they had terminated their relationships with the insurers at the time), that it affected the rights of none of the other 'stakeholders' (provinces), that it pre-dated the CCAA by a wide margin. "We are talking about OUR money."
It was a tough sell. Justice McEwen's body language and interjections were, to put it mildly, discouraging. "It is not your money. The money is being held [in trust]. I don’t think that is your best argument."
The tobacco company lawyers seem to have also decided that the judge was on their side. They threw away their prepared statements and made short interjections instead. They emphasized that even this small amount should be considered part of the "estate" that would be up for grabs by all litigants, that there was no basis for any discretion of the judge to grant this request, that answering phone calls by Quebec smokers wondering what was going on with the law suit was akin to setting up a parallel claims process that would compete with the rightful role of the Ontario court to "supervise" all claims.
Justice McEwen nodded along with these arguments. More than once he verbalized his agreement with their submissions.
Deborah Glendinning: You have jurisdiction, Justice Riordan does not.Justice McEwen: Right.
Acknowledge defeat or be defeated
At the end of the morning, Justice McEwen did not, however, rule against the Quebec requests. Instead he offered them a chance to retreat. He said he would decide on May 31st, and until then "I order you to go back to see Mr. Winkler to see if you can resolve this. At that point [May 31st] there will be a decision on one side or another."
The Elephant in the Room
Although the discussion was about the 'de minimis' hundreds of thousands or few millions involved in this settlement, a much bigger amount was the clear backdrop to today's hearings. In 2015 the Quebec Court of Appeal ordered the two biggest companies to post $984 million as security for an eventual award to Quebec Smokers. The 8 provinces have made clear that they want this money, and the tobacco companies have made clear that they intend to use it in any settlement that is reached.
Show us the money
The second issue brought forward by the Quebec lawyers concerned their desire for regular (monthly) statements on how much the companies' high priced help is receiving. As they pointed out today, the projected costs are $29 million per quarter.
At the hearing in April this request had been agreed to -- Imperial Tobacco's Monitor had reported that they were willing to make such payments public. "..commencing in May, 2019, the Monitor will make available on its website, a summary showing the fees paid in the preceding month to the following parties: i) counsel to Imperial; ii) the Monitor; iii) counsel to the Monitor; iv) the Court Appointed Mediator; v) counsel to the Court Appointed Mediator; and vi) any other counsel or advisors who may be engaged by any of these parties in the future."
Others apparently disagreed. Today an agreement was being hammered out that would result in Mr. Winkler being provided with these sums, but I did not hear any commitment to public disclosure.
MORE SECRET COMMUNICATIONS
Scheduled for discussion -- but never discussed in earshot - was a protocol to allow Justice Winkler to have private off the record conversations with Justice McEwen. As helpful as this may be to reaching a settlement, such back door channels only add to the highly secretive nature of these proceedings.
The protocol was not agreed to during today's hearing. My bet is that this will be agreed to through e-mails and other backdoor processes!
WHAT ELSE WE LEARNED
This morning's discussion was informative in many ways:
* We learned that the tobacco companies have not yet made any financial (or other) offers to the provinces or Quebec plaintiffs.
* Justice McEwen knows very little about Quebec class action law (he had not heard of the Fonds d'aide).
GET ON WITH THE SHOW!
ICYMI
Columnist Julius Melnitzer convinced some of the parties in theses proceedings to put on record some of their negotiating positions. The column appeared this week in the Financial Post. In it, Deborah Glendinning acknowledges the 'public policy' aspects of the negotiations.
“With government involved, public policy and national implications will have to be taken into account in any settlement... The court-ordered terms of the restructuring mean that neither the Quebec plaintiffs nor the governments-in-waiting can do a darn thing until the restructuring has been resolved.”
This morning's discussion was informative in many ways:
* We learned that the tobacco companies have not yet made any financial (or other) offers to the provinces or Quebec plaintiffs.
* Justice McEwen knows very little about Quebec class action law (he had not heard of the Fonds d'aide).
GET ON WITH THE SHOW!
Sprinkled throughout the day, and included in Justice McEwen's closing comments was an acknowledgement that two months into the protection order, negotiations had not progressed beyond the throat-clearing stage: "All of this [discussion on professional fees] is distracting from the main event - I am getting
concerned that we are spending a lot of time on minutiae."
Columnist Julius Melnitzer convinced some of the parties in theses proceedings to put on record some of their negotiating positions. The column appeared this week in the Financial Post. In it, Deborah Glendinning acknowledges the 'public policy' aspects of the negotiations.
“With government involved, public policy and national implications will have to be taken into account in any settlement... The court-ordered terms of the restructuring mean that neither the Quebec plaintiffs nor the governments-in-waiting can do a darn thing until the restructuring has been resolved.”
