Another virtual hearing before Justice Thomas McEwen of the Ontario Supreme Court took place this morning to decide how long the suspension of lawsuits against Canada's tobacco companies would be extended. The hearing ended without an immediate decision - but perhaps shed some light on a process that has been obscured from public gaze for most of the past 4 years.
The background
All lawsuits against the three major tobacco companies have been suspended since March 2019. This Ontario court order was the result of the companies asking for and receiving protection under the federal insolvency law (the Companies Creditors' Arrangement Act, CCAA). The companies sought this cover immediately after the Quebec Court of Appeal upheld a $13+ billion judgment against them in the first class action suit against them to reach judgement. The CCAA process also pre-empted the Supreme Court reviewing the unanimous decisions of the Quebec courts that this industry conspired to act wrongfully and that their behaviour was responsible for the harms experienced by some smokers.
The CCAA process became the framework for court-ordered negotiation process towards a "global settlement" with the companies and all Canadian parties suing them. Although the Quebec class action plaintiffs (QCAP) are the only claimants ('creditors') to have supportive court decisions, their claim is smaller than those of the provinces which have sued tobacco companies but have not yet gone to trial. Other creditors include class actions in other provinces, Ontario tobacco farmers and other parties. A fact sheet with further information on the process can be downloaded here.
This CCAA process has required the companies to return to the Ontario Court to apply for an extension to order that shields them from having to pay Quebec victims or to face other litigants in court. This has happened 9 times over the past 4 years, and since the fall of 2019 the Court has always granted 6 month extensions.
Last fall, lawyers representing the Quebec victims requested that the order be extended for only 3 months, arguing that this would accelerate negotiations and signal to their clients that the court was concerned with the impact of the delay. Justice McEwen turned the request down, giving his assent to the request of the companies.
The hearing
The question before the court today was the length of the extension to the stay order that would be granted after the current one expired at the end of this month. In mid-March, the companies submitted another request for a 6 month extension, and the Quebec plaintiffs repeated their request that the extension be limited to 3 months.
In many ways the session was a repeat of the hearing last fall: an insistence by the companies that things were going as well as could be expected, an appeal for the plight for Quebec smokers who having been injured by the companies were still not in receipt of any compensation; some sympathetic comments from the judge, together with an appeal for everyone to get on with the job.
Today, most parties drilled down on the approach they took last fall, but a few spoke out where they had previously been silent. During this longer-than-normal (1 hour) hearing, some parties who had previously been silent put their views on record.
In support of six months:
As usual, Imperial Tobacco/BAT was the first to present the industry's view (it is the company with the largest market share). Their lawyer argued that the reasons the judge gave for a longer extension were still in place (that requiring parties to return to court earlier would "distract" the negotiations, that there was no evidence of an undue delay and that the extension orders and the mediation follow independent timelines). As he emphasized these points, he tried to paint the Quebec plaintiffs as outliers in the process, claiming that "several of the stakeholders support a 6 month extension and/or do not oppose it" - and that the "focus must continue to be on the big picture and the interests of all stakeholders".
Lawyers for the other two companies agreed with his point, and added their own emphasis on the absence of evidence of any foot-dragging ("you have never heard a complaint that the parties are not working hard..") and the need to not interfere with the work of the mediator ("artificial deadlines should not be imposed on the mediators' timeline")
During last fall's hearing, the provinces had sat silent. This time most provided their own take on the situation. First to speak was the lawyer from Ontario's Ministry of the Attorney General. She reminded the court that Ontario had the biggest claim, and that this province did not oppose the longer extension. Her comments provided the most insight into the negotiations that has yet been put on record. Despite the "complex legal, financial and factual issues" and the fact that "a handful of difficult issues remain", she said that the province was optimistic that they are nearing the end of the negotiation - but that at least 6 months was needed "to focus on this work."
The private sector lawyers representing the jurisdictions proceeding on a contingency-fee basis spoke next (These jurisdictions are British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and the territories). He stated his position with respect to the length of the extension in an ambiguous way, saying they were "supportive of granting an extension for the stay for this process" with the hope work over the next 3 months would lead to a resolution. The lawyers representing Alberta and Newfoundland said nothing.
The lawyer representing smokers in provinces other than Quebec (now coined the "Pan Canadian Complainants, PCC") expressed his "non opposition" to a 6 month stay.
At the end of the hearing, each of the three monitors also expressed support for the 6 month duration.
In support of a 3 month deadline to return to court.
In their second attempt at a shorter extension, the lawyers for the Quebec victims again emphasized the human dimensions to the prolonged negotiations. They cited some messages sent to them by victims angry at or frustrated by the delay - (these are included in the material they filed with court, and cited below).
To further emphasize that this case involved real people with real lifespans, the plaintiff lawyers trained one of their virtual court cameras on their office board room, in which sat Mrs. Blais, who is now the representative class member for those injured with cancers and lung disease. (Her husband, Jean-Yves Blais, became the representative class member in 1998, but died in 2012 shortly after the trial opened).
Their main objective for shortening the extension was not to address members' concerns, however, but rather to put some pressure on the system.
"A shorter stay extension will act as a catalyst. It is a truism of human nature that work expands to meet time available - and that is exactly what has happened in the last 6 months... Most of the progress was accomplished in the last few weeks. The substantial issues that were dealt with could have be done in 3 months, they could have been done in one. ... A key component of a mediaiton process is momentum. A longer extension eases the pressure on the parties and removes momentum from the process."
"The time available determines how much time it will take. If we had 1 week and we sat in one conference room or several conference rooms – we could get this done."September 26, 2022 email (translated from the original French): It's all nonsense. The tobacco companies will ask for endless extensions […]. You should be totally opposed to this, even for 3 months. This is clearly an avoidance tactic.
September 27, 2022 email (translated from the original French): This is really a farce, pure cynicism, arrogance, contempt...Who are the person or persons responsible for this delay. Are the dice played out in advance? These killer companies, supposedly bankrupt, are now happily vaping and don't give a damn about their victims...It's really infuriating.
October 18, 2022 email (translated from the original French): To all lawyers that represent us but that bring us no results. […]. It’s a real joke. Let’s just give up and piss them off once and for all because it is obvious that we will never live long enough to see a conclusion.
October 21, 2022 email (translated from the original French): Can you explain to me why you who represent us and the lawyers of the other party STILL need 900 hours of negotiations? What is there left to negotiate that has not already been discussed? As an ex-lawyer I am sceptical, and I wonder what confidence we can have anymore? Did Justice McEwen write that this was the last extension he would grant? Did he give reasons for his decision and can we have a copy?
October 28, 2022 email (translated from the original French): I wish to express my appreciation for your attempt to challenge this further delay, which I suggest is pure abuse of the judicial system […] This has gone on for far too long and needs to come to a conclusion.
November 3, 2022 email (translated from the original French): I hope that you will be able to solve what you want before the year 2099. Merry Christmas.
November 24, 2022 email (translated from the original French): Really it is disappointing every time we receive information regarding this class action. […] How is it possible that nothing is happening in this file. My mother who died recently, will unfortunately never be able to know the end of this action. Let’s hope that us her kids will one day be able to see the end of it.
January 21, 2023 email (translated from the original French): After 25 years of no results for the members of the action I hope you will sing a mass for the victims... all deceased. Congratulations on your efficiency in passing the time unnecessarily.
March 3, 2023 email (translated from the original French): How much time can this CCAA stay last, I think we are now at 4 years… We don’t believe anymore…!! […] a real joke !!!
In addition, we received an email on February 18, 2023 from a Quebec Class Member who decided to end his life due to the pain and suffering resulting from the emphysema caused by his tobacco use. He had been a Class Member since the filing of the class action in 1998. He died on February 28, 2023:
February 18, 2023 email (translated from the original French): Just to clarify the subject and the reality, yes tobacco killed me and this after several years of cessation, since autumn 2022 pneumonia without end, water in the lungs at the same time and recently I asked for medical assistance in dying which will take place at the beginning of March at the Laval hospital. The family is aware and all my children as well as my wife respect my choice and I will stop suffering. I am enjoying these last moments with my family and friends and I feel at peace with myself. Yes tobacco killed me. Thank you for your understanding and especially for your collaboration to the members Your very devoted
Business intelligence contained in the monitor's reports:
Imperial Tobacco (British American Tobacco)
- Is reducing its footprint in Canada, laying off 30 people (with an average compensation of $80+k).
- Has appointed yet another CEO, with Roberta Palazzetti replacing Ralf Wittenberg, who has been in Canada for less than 3 years.
- The launch of disposable cigarettes last October is the reason given for the company's vaping revenues growing by 30 percent in 2022.
- The number of Vuse flagship stores will grow to 10 by the end of the year (8 are currently in operation).
- Sales were $84 million higher than expected -- because the slowdown in sales was lower than the company had predicted.
Rothmans, Benson and Hedges (Philip Morris International)
- had lower than forecast sales during the past 6 months
JTI Macdonald (Japan Tobacco)
- sold fewer cigarettes than it expected
- increased its spending on promotions and marketing by $17.7 million (to a total of $73 million) - and plans to increase this further.
