The Supreme Court of Canada has cleared the way for the legal showdown between the provinces and Big Tobacco — with the stakes being billions of dollars in money for government coffers.
In a ruling Friday, the top court ruled the federal government cannot be considered a third-party defendant in provincial lawsuits over smoking and the drain it has put on health care.
That leaves the tobacco companies on the hook by themselves for any financial penalties awarded as the result of provincial lawsuits.
It's now a "two-party gunfight," one legal expert explained, a situation that could push lawsuits through the system quickly, leading to faster settlements.
"You clear up the issues, it's just two people, there's nothing else to talk about," said Erik Knutsen, a civil litigation expert from Queen's University in Kingston, Ont. "It's so much cleaner. If the cards are going to fall and settle . . . it will be sooner rather than later."
With the rules simplified, Knutsen said provinces preparing to sue Big Tobacco are likely to launch lawsuits soon.
"I think it's probably a matter of days and weeks before the others are coming," he said.
In a unanimous decision that cited legal precedents in the United States, Canada, Australia and Britain, the court ruled tobacco companies should bear the full financial brunt of any future settlements in lawsuits.
"(British Columbia) sought to transfer the medical costs from provincial taxpayers to the private sector that sold a harmful product. This object would be fundamentally undermined if the funds were simply recovered from the federal government, which draws its revenue from the same taxpayers," Chief Justice Beverley McLachlin wrote for the court.
B.C. Attorney General Barry Penner said the dollar figure being sought will be released at trial, but the province estimates smoking-related illness costs B.C. about $650 million annually.
The province has tried to recoup costs for about a decade, Penner said.
"I'm reluctant to estimate how much longer it will take, but with these hurdles out of the way it does set the stage for us to get down to trial," he said.
Tobacco companies sought to make the federal government a defendant in any lawsuit, arguing Ottawa was a key industry player since the 1960s.
It was also a smart legal manoeuvre, Knutsen said. With billions of dollars at stake, bringing the federal government into the legal fray would have dragged litigation on for years, he said, and spread around the financial burden.
The top court's decision doesn't mean settlements will happen within the next month or year. Knutsen said tobacco companies may try to bring in other defendants, including suppliers, retailers and maybe even smokers.
"The interesting thing is (the court) only actually decided who's not going to be at the table," Knutsen said. "Who knows who else big tobacco might bring to the table."
Imperial Tobacco indicated Friday it was not giving up its defence in the massive lawsuits.
"Unfortunately, the Supreme Court of Canada has decided that the federal government is not accountable for its decisions and actions," Donald McCarty, Imperial Tobacco Canada's vice-president of law, said in a statement.
"We nonetheless intend to set the record straight and believe it is important for the government of Canada to answer for its long and sustained involvement in the tobacco industry."
Ontario, New Brunswick and Newfoundland and Labrador have also launched lawsuits against tobacco companies for health-care costs associated with tobacco use. Four more have announced intentions to launch similar lawsuits.
The Ontario lawsuit seeks $50 billion.
Penner said B.C. was willing to partner with other provinces to push lawsuits forward.
The Supreme Court also ordered the tobacco companies to cover the government's legal bill in the case. Health Canada said the government's legal costs haven't been calculated.
Read more: http://www.canada.com/health/SCOC+decision+paves+tobacco+lawsuits/5178626/story.html#ixzz1TZKJ9Twj
