Canada court orders tobacco companies to set aside almost C$1 billion

[October 28, 2015]  By Alastair Sharp

TORONTO (Reuters) - A Canadian appeal court on Tuesday ordered two major tobacco companies to set aside a combined C$984 million ($742 million) while they challenge billions of dollars in damages awarded to smokers in the province of Quebec.

The more than C$15 billion in damages awarded in June, if upheld in an appeal of two class-action lawsuits, would compensate some 100,000 Quebec smokers and ex-smokers who allege the companies knew since the 1950s that their product was causing cancer and other illnesses and failed to warn consumers adequately.

Imperial Tobacco Canada Ltd - a subsidiary of British American Tobacco Plc - must put aside C$758 million, and Rothmans, Benson & Hedges Inc - a subsidiary of Philip Morris International - must deposit C$226 million, the Quebec Court of Appeal said.

Imperial said it was disappointed with the decision, as it does not believe it should have to secure a payment before all appeals are exhausted and a final judgment is rendered.

"Imperial Tobacco Canada continues to disagree with the overall judgment rendered by the Superior Court of Quebec," it said in a statement. "It is unjustified to hold legal manufacturers responsible for the personal choices of adult consumers and it will continue to defend that position as its appeals proceed."

The court in July said that the two companies plus a third, Japan Tobacco Inc's JTI-Macdonald Corp, would not have to make preliminary deposits.

"This is a major win for victims and a significant loss for tobacco companies," Rob Cunningham, a senior policy analyst at the Canadian Cancer Society, said via email.

Launched in 1998, the class action was considered to be the largest civil case in Canadian history, marking the first time tobacco companies have gone to trial in a civil suit in the country.

The companies were ordered to set aside the deposits in six and seven quarterly payments stretching to mid-2017, while a hearing on the appeal is scheduled for the autumn of 2016.

($1 = 1.3266 Canadian dollars)

(Reporting by Alastair Sharp; Additional reporting by Jeffrey Hodgson; Editing by Chris Reese, Cynthia Osterman and Leslie Adler)

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