Sanction: a seal of approval brings Canada's tobacco lawsuits closer to the end

 Late this afternoon - presumably after the markets had closed - Chief Justice Geoffrey Morawetz released his decision in favour of the Plan of Arrangement that will resolve a quarter century of lawsuits against tobacco companies.

His ruling can be read here.   In about 50 pages, he translates the 1,200+ text of the proposed plan into readable English before giving a thumbs up to the compromise that was unanimously agreed to in December by those suing tobacco companies and which was the subject of hearings earlier this winter.  

Fair and Reasonable and Not Contrary to the Public Interest

The final objections of two companies having been removed earlier in the week, there were few roadblocks to his endorsing the agreement exactly as it was drafted by the team lead by former Chief Justice Warren Winkler. 

After Monday, the only nay-sayers in the process were the Heart and Stroke Foundation and the Canadian Cancer Society, which had urged him to consider that some health-oriented measures were required for the plan to be fair and reasonable.

Justice Morawetz acknowledged these requests in his ruling, but firmly turned them down. It was not  his job, he said, to interfere in this way. 

(165). The decision for the court to make is a binary one. It is to either sanction the CCAA Plans or to reject the CCAA Plans. It is not the role or the function of the court to redraft or amend the CCAA Plans. The views expressed by HSF and CCS are important to consider. However, in my view, these views have been taken into account by the drafters of the CCAA Plans. 

In assessing the fairness, reasonableness and public interest of the plan, Chief Justice Morawetz stressed that individuals and provinces will receive compensation, a research institute will be established -- and that tobacco companies will be able "to continue as going concerns, which will benefit their employees, suppliers and other stakeholders."  

Not decided

A number of details still remain to be decided -- including important ones like the day on which this agreement will take force and when money will change hands. The "Plan Implementation Date" has yet to be decided - but the litigation stay will be in force until then.

A separate ruling is to be expected for the questions of counsel fees, discussion of which will be the subject of a hearing tomorrow (March 7th).

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Misleading or misreading? 

To buttress his rejection of the concern expressed by HSF for injured smokers whose potential claims were being released, Justice Morawetz used the (not public) transcript to cite the views expressed by Ontario's lawyer on January 31st. 

In response to the theoretical case raised by the Heart and Stroke Foundation, she had asserted that no Canadian who started smoking after 1996 and who was injured by tobacco products would have a viable claim for damages. The reason she gave was her reading of the Quebec Court in the Blais-Létourneau case. 

 "The (Quebec) Court found that the (public-knowledge) date to be March 1st of 1996, so the breach period during which the tobacco companies committed their wrongful conduct which grounds the cause of action, begins in 1950 and ends, very important, ends at the public knowledge date."

This does not jive with a normal reading of Justice Riordan's ruling. (Riordan, 2015, paras 139-142, 643-646, 818-836).

Justice Riordan considered the behaviour of the companies from 1950 to November 1998 (the class period) and did not hear evidence or decide upon later behaviour. During the class period he reviewed, he never identified a time when the companies were not at fault. "Thus, the Members' knowledge does not arrest the Companies' faults under these other provisions. Since the Companies took no steps to correct their faulty conduct, their faults continued throughout the Class Period." Because fault is not the only condition of civil liability, he also considered the "contributory fault" of those smokers who started smoking after the harms were known - the "knowledge dates".

Justice Riordan identified separate knowledge dates for knowledge of harm (1976) and knowledge of addiction (1996). The liability of the companies towards their injured customers continued after these dates, he ruled, except for those under one section of the Quebec law (Civil Code article 1468). Their breach of three other sections of the law continued to establish liability (Civil Code Articles 1457, Quebec Charter, article 49, Consumer Protection act, articles 219, 228).

He ruled that although injured smokers who had started smoking after the "knowledge date" had to carry some responsibility (20%), the companies were 80% to blame, and they remained 100% responsible for punitive damages. This 20% deduction for those who started smoking after 1976 remains in the compensation which will be awarded through the CCAA plan.