courts may have simply decided to draw the line at
foreign governments and organizations other than
states suing tobacco companies, Mr . Daynard said.
"These are hard cases to bring in the
States," said the professor . "(Suing in
Canada) would be a much more certain way of
getting a recovery ."
Canadian federal suit against R .J. Reynolds
Tobacco Co . alleges the company deliberately
conspired to smuggle cigarettes into Canada and
undermine efforts to discourage smoking with
higher revenue .
different from the Ontario suit because it alleges
a direct injury by the company, said Mr . Daynard
the federal government may have missed a four-year
statute of limitation for filing RICO lawsuits,
said Seth Moskowitz, spokesman for R .J. Reynolds
in Winston-Salem, North Carolina "If the
government can deal with that problem, and they
may well be able to do that, then I think the case
ought to win," Mr. Daynard said .
announces filing of lawsuit against U.S. tobacco
Canada NewsWire. Ottawa:Mar 2, 2000.
TORONTO, March 2 /CNW/ - The Ontario government is
following through with its commitment to pursue
legal action against the tobacco industry in the
United States, Health and Long-Term Care Minister
Elizabeth Witmer announced today.
The government has retained U.S. counsel -- Ness
Motley -- and filed a lawsuit in the U.S. which
alleges violations under the Racketeer Influenced
and Corrupt Organization (RICO) Act. The RICO
statute is the legal vehicle by which Ontario is
proceeding with an action against the members of
the tobacco industry which the provincial
government believes is liable for its alleged
misconduct. The lawsuit was filed on March 1 in
New York City.
Tobacco use is the leading cause of preventable
illness and premature death -- killing 12,000
Ontarians a year. Tobacco use costs Ontario
billions in health care and related costs every
year, making it a threat to the sustainability of
Ontario's health care system.
Version francaise disponible
Ontario government is carrying through on... ]
Tom Blackwell, Southam Newspapers. CanWest News.
Don Mills, Ont.: Mar 2, 2000. pg. 1
- The Ontario government is carrying through on
its promise to take on Big Tobacco, filing a
racketeering lawsuit in the U.S. that aims to
recoup smoking-related health costs from a raft of
suit, made public Thursday, alleges the companies
were part of a international conspiracy whose goal
was to "ensure a market for their hazardous
products - cigarettes."
with a recent decision in the U.S. casting doubt
on the potential success of Ontario's case, the
provincial Health Ministry announced the suit's
launch late in the day and with minimal fanfare.
suit was quietly filed Wednesday in a New York
City court. The ministry didn't confirm it until
late Thursday afternoon, issuing a curt statement.
use costs Ontario billions in health-care and
related costs, making it a threat to the
sustainability of Ontario's health-care
system," said the statement, which also
pointed out that it is the leading cause of
preventable illness, killing 12,000 Ontarians a
the government refused to say what damages are
being sought, Ontario Health Minister Elizabeth
Witmer has previously said the province's goal was
to recover as much as $40 billion to defray the
cost of treating smoking-related illnesses.
spokeswoman Anne Matthews said the department had
not seen the statement of claim filed by its law
firm, Ness Motley of Charleston, S.C.
kinds of suits are probably destined to
fail," said Marie-Josee Lapointe of the
Canadian Tobacco Manufacturers Council, one of the
defendants named in the suit.
most reasonable Canadians, this is getting a
little silly: just law suit after law suit."
similar claim filed by the Guatemalan government
was tossed out recently by a federal court judge
in Washington, D.C., who ruled the injuries
alleged by the Central American nation are too far
removed from tobacco-industry conduct.
already launched by other countries are expected
to meet a similar fate.
supporters of Ontario's case said Thursday that
Canada is much more closely connected to the U.S.
and should stand a better chance in the courts.
fact is that the Ontario government is taking a
stand," said Rob Cunningham of the Canadian
Cancer Society. "We strongly support the
noted that suits launched by American states have
resulted in settlements requiring tobacco
companies to pay out $246 billion over 25 years,
as well as put curbs on their advertising.
suits have multiple benefits that include changing
tobacco companies future behaviour by sapping
their profits, said David Sweanor of the
Non-Smokers Rights Association.
companies are able to make huge amounts of money,
which encourages them to expand the
epidemic," he said.
Lapointe said it's ironic that governments like
Ontario are suing tobacco companies, since they're
complicit in the industry by allowing them to
exist legally and drawing tax revenue from them.
tobacco lawsuit filed in New York court: Unlikely
it will be heard
Richard Foot. National Post. Don
Mills, Ont.:Mar 3, 2000. p. A8
The Ontario government has gone to court in the
United States to claim $40-billion (US) worth of
smoking-related health-care costs from North
America's major tobacco companies.
The Ontario lawsuit was filed in a New York
Federal Court on Wednesday under the U.S.
Racketeer Influenced and Corrupt Organizations
law. The suit accuses cigarette makers of taking
part in an international conspiracy to
"ensure a market for their hazardous
Ontario also alleges that companies such as
Imperial Tobacco, Philip Morris Companies Inc. and
R.J. Reynolds Tobacco Holdings hid information
about the addictive nature of nicotine and planned
a conspiracy of "such scope and duration that
it is truly unique in the annals of American
"It constituted a scheme to defraud and cheat
that lasted almost half a century and spread its
shadow over North America and Europe," court
This is the first time a Canadian government has
gone to the U.S. to recoup the costs of
smoking-related health care. But observers say the
case has little chance of being heard in court.
The governments of Guatemala, Bolivia and Panama
have filed similar lawsuits in the U.S. On Dec.
30, the Guatemala case was dismissed by a U.S.
federal judge who said any such claims should be
pursued in Guatemala's own courts.
Doug Lennox, a Toronto lawyer who has brought
private lawsuits against tobacco companies, says
Ontario's decision to proceed with its case
despite the Guatemala ruling is a political effort
to make the province look like it is getting
serious with the tobacco industry.
"Pursuing a hopeless strategy in the U.S.
distracts the Ontario government from taking
constructive steps to control the costs of tobacco
use at home," said Mr. Lennox, writing last
month in Lawyer's Weekly magazine. "It allows
the Ontario government to say that it is being
tough with the tobacco industry, when in reality,
the opposite may be true."
The Ministry of Health has hired Ness Motley, a
South Carolina law firm, on a 20% contingency fee
basis. If the claim succeeds in earning
$40-billion, Ontario will pay Ness Motley
$8-billion in fees. If the claim fails, the
Ontario government will owe the firm nothing.
Officials from the Ontario Health Ministry
declined to discuss the lawsuit yesterday. But
Elizabeth Witmer, the Health Minister, has said
the province will take on tobacco companies in
U.S. courts because punitive damage awards are
Cynthia Callard, executive director of Physicians
for a Smoke- Free Canada, says even if Ontario
does win its case, it is wrong to do so on a
contingency-fee basis -- one in which the
province's lawyers seek only the highest possible
financial award. Rather, says Ms. Callard, Ontario
should be pressing tobacco companies to include
concessions about the way they sell and market
cigarettes, in any court settlement.
"I'm concerned that the Ontario approach is
about money, and not about improvements in
health," says Ms. Callard.
Rob Cunningham, a lawyer for the Canadian Cancer
Society, said the province is right to try to
recover health-care costs from the industry.
"Tobacco companies have spent decades
deceiving the public, concealing the truth,
advertising to children and engaging in activities
that have increased disease and health care
costs," he said. "They must be held
accountable before the law for their
Robert Parker, president of the Canadian Tobacco
Manufacturer's Council, which is also named in the
lawsuit, said Ontario's action is "hypocrisy
of high order." He said the province already
gets $750- million in annual tobacco revenues each
year and if the government wanted more money it
should simply raise taxes further.
judge dismisses Ontario's $40B lawsuit against
Cristin Schmitz. The Ottawa Citizen.
Ottawa, Ont.:Aug 11, 2000. p. A3
Ontario's $40-billion U.S. lawsuit against major
North American tobacco companies for
smoking-related health-care costs has been turfed
out of U.S. federal court, handing Big Tobacco its
second major legal victory against Canadian
governments in as many months.
U.S. District Court Judge Paul Friedman of
Washington, D.C., dismissed Ontario's health costs
recovery suit which alleges that Imperial Tobacco,
Phillip Morris Companies Inc., RJ Reynolds Tobacco
Holdings Inc. and other cigarette makers conspired
to misrepresent and hide information about the
health risks of smoking and the addictive nature
of nicotine, thus injuring smokers and forcing the
province to spend billions on otherwise
unnecessary medical expenses.
An Ontario Ministry of Health and Long-Term Care
spokesman declined to comment on the ruling.
"Our counsel has received the court's
decision, it is currently under review and we have
30 days to determine if there will be an
appeal," Geoff Bell said.
Released Aug. 7 during the Civic Holiday in
Ontario, Judge Friedman's decision comes barely a
month after an unrelated, $1- billion U.S. civil
fraud and racketeering suit by the federal
government against the RJ Reynolds tobacco empire.
That suit, claiming lost taxes due to alleged
tobacco smuggling, was tossed out by a U.S.
District Court judge in Binghamton, New York.
Canada is appealing.
In dismissing Ontario's suit, Judge Friedman
relied on the same reasoning he used last December
when he threw out a similar suit by Guatemala on
the basis that the injuries suffered by that
government were "too remote" to permit
legal recovery against the defendants.
Ontario launched its action under the U.S.
Racketeer Influenced and Corrupt Organizations
(RICO) Act March 1.
At the time, Canadian legal experts were dubious
about the suit's success, given the dismissal of
Guatemala's case. But Ontario Health Minister
Elizabeth Witmer said the province's goal was to
recover as much as $40 billion spent treating
The Ontario government has quietly appealed the...
Cristin Schmitz, For Southam Newspapers. CanWest
News. Don Mills, Ont.: Sep 19, 2000. pg. 1
- The Ontario government has quietly appealed the
dismissal of its $40-billion US lawsuit against
major North American tobacco companies for
smoking-related health-care costs.
appeal was launched without publicity Sept. 6 by
attorneys for Ontario Health Minister Elizabeth
Witmer in the U.S. District Court of Appeals in
Washington. D.C., just hours before the 30-day
appeal period expired. A lower court threw out
Ontario's health costs recovery action for damages
under the U.S. Racketeer Influenced and Corrupt
Organizations (RICO) Act.
claim is seeking damages against the tobacco
industry for entering into an illegal conspiracy
to conceal the harmful effects of cigarette
smoking, and we continue to seek redress,"
said Geoff Bell, spokesman for the Ontario
Ministry of Health and Long Term Care.
made a commitment to reduce and eliminate the use
of tobacco in the province of Ontario," Bell
said. "We stand by that commitment."
civil suit was dismissed Aug. 7 by U.S. District
Court Judge Paul Friedman, who earlier turfed
similar suits by Guatemala, Ukraine and Nicaragua.
The judge ruled that the injuries suffered by the
governments were "too remote" to permit
legal recovery against the tobacco manufacturers.
The judge also suggested that to permit such
foreign suits to proceed could flood U.S. courts
with massive and complex damages litigation.
alleges that Imperial Tobacco, Phillip Morris
Companies Inc., R.J. Reynolds Tobacco Holdings
Inc. and other cigarette makers conspired to
misrepresent and hide information about the health
risks of smoking and the addictive nature of
nicotine, thereby injuring smokers and forcing the
province to spend billions on otherwise
unnecessary medical expenses.
appeal has been scheduled for a hearing next
February, also in the appellate circuit of the
District of Columbia. Its outcome could affect
Ontario's appeal, given the similarity between the
Ontario launched its RICO action last March,
Canadian legal experts were skeptical, given the
dismissal of Guatemala's case two months earlier.
by the tobacco industry as a purely political
manoeuvre, Ontario's action was strongly endorsed
by such groups as the Canadian Cancer Society and
the Non-Smokers' Rights' Association.
Why our own governments are taking their tobacco
litigation down the road (and south of the border)
in order to get richer and more punitive legal
remedies against corporate defendants? The fact
that our own governments insist on using a foreign
By William Marsden
- MANY THINGS ABOUT CHICAGO lawyer Fred Bartlit
leave their mark. He's a big, ramrod guy with a
barrel chest and gruff military voice. A West
Point graduate, he's also magna cum laude,
University of Illinois College, and editor (1960)
of the University of Illinois Law Review. If
that's not enough, he served four years as a U.S.
Army Ranger. This alone is bound to bring a few
good men to attention. Be nice to this guy - or at
least be careful. One other thing about Bartlit
stands out. He is, at 67, a techno-whiz who
demands that his law firm is out there on the
cutting-edge of information technology so that
when he walks into a courtroom, he's ready.
creates a virtual office in any city where he's
pleading a case. He loads up a semi-tractor
trailer with computer equipment, taxes, telephones
and copying machines that he then transfers to a
hotel suite where he can run a 24-hour-a-day
operation. He calls it his travelling war room.
And he claims it gives him a strategic edge.
credentials as well as his respectable track
record are ostensibly the reason why the Canadian
government last year hired him to lead their $1
-billion racketeering lawsuit against R.J.
Reynolds Tobacco Co. and a string of affiliates
and subsidiaries, including Toronto-based
PJ.R.-Macdonald Inc. (now called JTI-Macdonald
after it was sold last year to Japan Tobacco).
lawyers might be excused, however, for regarding
Bartlit as an American carpetbagger stealing away
their livelihood. The exact details of his hourly
rate/contingency-fee agreement have never been
made public. What is known is that so far he and
his firm, Bartlit Beck, have collected $3.76
million US, the highest single legal tab run up by
Ottawa in a fiscal year. And the race hadn't even
begun before U.S. Federal judge Thomas McAvoy in
July dismissed the racketeering case claiming it
involved interpretation of a foreign government's
tax laws, which is forbidden under the common-law
Revenue Rule. (McAvoy's ruling invites appeal. He
stated that, in our modem global economy, he finds
the rule "outdated" and the rational
"unpersuasive,"and cites other judgments
that share this view. He appeared, however, bound
by judgments of the Second Circuit appeals court.)
before lawyers get too upset about the southern
migration of jumbo legal fees, it's important to
understand where Bartlit comes from and how his
hiring reflects on our own judicial system.
his accomplishments are considerable (44 cases
tried between 1971 and 1998, 32 wins, seven
settled, four lost), Bartlit is not self-made. In
fact, Bartlit is no special genus. He is part of
the collective experience of the entire American
plaintiff bar in organizing and pleading complex
cases against major corporations that take years
of preparation. In this sense, he is little more
than a product. One of many fashioned over more
than a century of aggressive, entrepreneurial,
risk-taking American plaintiff bar actions.
fact that the federal government has to go to the
U.S. to seek justice is, for many lawyers, an
admission that the Canadian legal system simply
fails to meet the grade for highly complex cases
involving massive corporate fraud. In contrast to
the bold vistas of the American bar, the Canadian
judicial landscape appears as a slow-growth garden
of perennially cautious, overly conservative,
often lazy, chronically underfunded and
all-too-elitist judiciaries. So if Canadian
lawyers complain that the tobacco bonanza is not
descending on their town, it's probably their own
fault. But the loss is that of all Canadians.
lawsuit been filed in Canada, the judicial system
would have had an infusion of much more than
windfall legal fees. Lawyers and judges would
benefit from the experience and the law likely
would advance. But that's not going to happen.
the intricacies of large litigation will be
explored outside Canada. Canadians will not garner
the benefits of courtroom debates that inevitably
probe the strength and weakness of evolving
justice systems. That will all happen in a foreign
jurisdiction where American lawyers and judges
will work with American legal systems to advance
American laws. The only benefit Canada will ever
get will be whatever money it might win from its
United States has an independent plaintiff bar
that is fearless in terms of its willingness to
take on powerful interests and we do not, and I
think that our democracy is weaker because of
that," said Toronto lawyer Doug Lennox, who
is litigating two tobacco-related actions here.
mere fact that Ottawa had filed its suit in
Syracuse, N.Y., and was using 18 U.S. Code Chapter
96 - the famous Racketeer Influenced and Corrupt
Organizations (RICO) statute for its remedy,
points to a gaping hole in our own system. Ottawa
claims tobacco companies aided and abetted
smuggling from 1991 to 1994, thereby defrauding
the Canadian government of taxes.
federal attorney general believes RICO is the
appropriate recourse, why does Canada not have a
RICO statute that makes sense for Canadians?
Perhaps it is because Canada's judiciary has not
been spirited to create the kind of debate that
would have given birth to a RICO statute. RICO in
the U.S. did not come out of nowhere. It evolved
out of a judiciary that is an active part of the
American political process.
a lot of hype here concerning people in the U.S.
being able to hold companies to ransom and get big
awards," said Toronto lawyer Andreas Seibert,
who has a class-action suit in the wings against
all three major tobacco companies. "But here
the average guy cannot even get into court. They
cannot get access to the courts because it's too
expensive and the payback is too small. So lawyers
will not even take the case unless it is a slam
growing evidence that tobacco companies have
willfully concealed the health hazards of smoking
from the public, Canadians have launched only five
tobacco liability lawsuits. The first was launched
in British Columbia in 1988 and was finally banged
out of court years later by judges who ruled it
was time barred: Perron v. R.J.R. Macdonald Inc.
(1990),66 D.L.R. (4th) 132.
Columbia is the only province to pursue in Canada
the tobacco manufacturers for health cost
recovery. The lawsuit springs from the Tobacco
Damages and Health Care Costs Recovery Act that
was enacted in 1998.
legislation is modeled after an American law -
Florida's highly successful 1995 Medicaid
Third-Pa" Liability Act. The B.C. Supreme
Court stuck down the statute in February on the
issue of extra-territoriality but recognized the
essential right of the province to pursue Big
Tobacco for health cost recovery. The province is
therefore redrafting the legislation: British
Columbia (Attorney General) v. JTI-Macdonald Corp.
(2000),184 D.L.R. (4th) 335.
the nation's most populated province, has only
three tobacco product liability suits, all of
which are barely off the ground. Ironically, the
furthest along is a mere $6,000 small claims suit
launched in 1997 by Joseph T. Battaglia, who's 58.
He smoked Imperial Tobacco Ltd. brands since he
was 16 when he began working as an office boy with
Rothmans of Pall Mall Ltd., later rising to
national sales manager.
the company encouraged him to smoke, claiming it
would advance his career and not damage his
health. Now, however, he says he has coronary
heart disease directly related to smoking and,
despite numerous attempts, can't cure his
to find a lawyer to take his case, Battaglia
initially represented himself until Doug Lennox
agreed to help out. Three years after the filing,
he only recently won the right to a trial. That is
the furthest a tobacco case has ever advanced in
this country (see sidebar).
doesn't care about the money. He wants the tobacco
executives to be forced to stand up in court and
explain themselves," Lennox said. "Civil
litigation to my mind is not about money. I don't
want to represent a client who tells me, 'I've
been wronged, I want money.' I want someone to
tell me 'I have been wronged and I want to make a
are a lot of Canadians who have lost loved ones to
the tobacco industry and they all deserve a chance
to go to a Montreal courtroom, or to a Toronto
courtroom or what have you, and sit there and
listen to these tobacco executives who have acted
so callously for so long."
Siebert filed his class-action product liability
case against R.J.R.-Macdonald, Imperial Tobacco
and Rothmans Benson & Hedges Inc. in 1995. The
case drags on. It still has not received
class-action certification. Siebert blames the
delays on the flood of motions from tobacco
companies seeking access to plaintiffs' medical
class-action legislation is fairly liberal. It
requires a cause of action that is capable of
proof. A plaintiff must also show there is one or
more individuals who would be recognized as a
class of similarly related individuals with common
cause. Finally, the lawyer must produce a workable
plan of litigation.
is currently in the Ontario Court of Appeal
seeking to file a separate action against the
tobacco companies for destruction of documents.
also is seeking class-action approval for a suit
alleging that the three major tobacco companies
conspired against the production of cigarettes
that carry a lower risk of fire.
the federal government, Ontario has chosen to seek
its remedy in the U.S. Last year it filed suit, a
health care cost recovery case, against Big
Tobacco and retained the hugely successful South
Carolina firm of Ness Motley Loadholt Richardson
& Poole. The Ontario Health Insurance Plan
(the province's public health insurer) claims
tobacco-related illnesses have cost the province
an estimated $40 billion US.
Motley (the same firm dramatized in the film The
Insider) represented 30 of the 50 U.S. states in
the $254-billion US settlement in 1997 with U.S.
tobacco companies. The firm stands to earn as much
as $12 billion US in contingency fees from that
case. Ontario has agreed to pay Ness Motley a
20-percent contingency fee, meaning the firm
stands to earn as much as $8 billion US from a
successful prosecution. Ron Motley has agreed to
spend $20 million US to prosecute the action. It's
a can't-lose situation for Ontario. But what does
it mean for the Canadian judicial system?
like Lennox claim Ontario's decision to seek
justice outside Canada is an admission that the
Canadian system is a failure.
only other tobacco-related action is in Quebec
where lawyers Bruce Johnston and Philippe Trudel
are seeking the right to file a health-related
class action against the three major Canadian
tobacco companies. The case was filed in 1998: See
Fortin c. Imperial Tobacco ltée  J.Q. no
tobacco companies contested the capacity of the
two lawyers to act on the file because a partner
at a previous law firm had once acted for a
tobacco company. The Quebec Appeals Court recently
denied Big Tobacco's motion to dismiss.
would say the plaintiff bar in Canada as a whole
is much more timid than it is in the States,"
Johnston said. "I think there is an important
element of corporate responsibility that is
lacking in this country because of this. [Tobacco
companies] market a product that addicts and kills
people and virtually no one has thought to bring
them to justice." Johnston calculates that he
and his partner have spent about $200,000 in time
and disbursements on the case so far.
the provinces have declared that they intend to
file health care cost recovery cases. The intended
venues have not been announced. The bandwagon is
getting crowded, but little action is evident.
Contrast this with the U.S., where tobacco
litigation goes back decades and literally
hundreds of cases have been filed. The first was
in 1953 and was quickly tossed out. But that
didn't stop the American plaintiffs' bar. It
continued to chase the tobacco companies until it
finally found the winning formula in 1994 with a
settlement in Mississippi. Since then, the
floodgates have opened culminating in the massive
$246-billion US settlement in 1997 creating a
windfall for American lawyers and state
money is hardly the point. The long history of
American tobacco litigation ultimately served a
higher purpose. It was a massive dose of truth
serum injected into the muscular arm of a
strapped-down industry. Millions of corporate and
scientific documents chronicling tobacco company
research and the behavior of tobacco executives
throughout the last century have been forced into
the public realm and are, in countless ways,
they are so revealing that they serve as the basis
for more and more suits and criminal
investigations not only in the U.S., but also in
Canada and throughout Europe. The tobacco
industry, which prided itself on never losing
lawsuits and spent hundreds of millions of dollar
in the process, is at bay. Its Achilles heel is
its own extensive documentation and databases,
revealed thanks to an undeterred American bar for
whom the big score offers the necessary incentive
to seek truth and restitution.
why Canada chose to take its anti-racketeering
case to JL Syracuse, NY. To deal with a more
sophisticated judiciary, well practiced in such
crucial primarily because Canada's case opens a
whole new area of tobacco litigation. It's not
about health or fire safety - it's about corporate
fraud and racketeering at a international level.
(The Republic of Ecuador and 23 states in Colombia
have since filed two similar lawsuits in the U.S.
claiming huge tax loses against Philip Morris
Companies Inc., Reynolds and British American
Tobacco Co. Ltd.)
cases will rely heavily on company documents and,
in Canada's case, on testimony from corporate
insiders such as former R.J.R. executives Les
Thompson and Stan Smith. Thompson is the sales
manager at R.J.R.-Macdonald who from 1991 to 1994
was in charge of organizing tobacco shipments into
the smuggling networks of Akwesasne Indian Reserve
near Cornwall, Ont. He pleaded guilty last year in
Syracuse to money laundering charges and is
currently serving a four-year sentence in federal
prison. He also pleaded guilty in Toronto in
February to one charge of conspiring to defraud
the federal government. He received a suspended
was R.J.R.-Macdonald's vice-president of sales
during the smuggling era. He was never charged in
the U.S. and has since resigned from the company
and moved to England. He was expected to testify
on behalf of the plaintiff and support Thompson's
evidence that R.J. R. conspired at the highest
levels to aid and abet smuggling. The government
is also negotiating with other former senior
executives at R.J.R.
department lawyer Duff Friesen, who is managing
the five-man tobacco legal team in Ottawa, says
the government might include Imperial Tobacco and
Rothmans as defendants. Like R.J.R., these
companies also had a network in place that
supplied cigarettes to smugglers. All three
companies have stated that they broke no laws.
permanent retainer, New York lawyer C. Steven
Heard Jr., will quarterback its defense. Heard is
the same lawyer who debriefed Thompson when he
learned in June 1998 that he was under
investigation for smuggling related charges.
Company lawyers urged him to stand tall, no wobbly
legs needed here. But when Thompson was arrested
last year at the Windsor-Detroit border crossing
and sent to Syracuse to stand trial on conspiracy
to defraud and money laundering charges, his
company-paid lawyers advised him to negotiate a
plea. Now he feels like the company's sacrificial
lamb. So there's no love lost between Thompson and
his former employers.
first move was to file a motion to dismiss the
entire case. He claimed:
case is essentially a tax recovery case and
under revenue rules, U.S. courts cannot
interpret foreign tax laws;
case is time-barred under RICO and the
Canadian government is not a
"person" as defined by the statute;
of the alleged illegal actions took place in
Canada and therefore Syracuse is not a forum
Canadian Tobacco Manufacturers' Council is
based exclusively in Canada, and is therefore
not subject to New York jurisdiction.
motion was debated June 23 before U.S. federal
Judge Thomas McAvoy in the sleepy university town
of Binghamton, NY. R.J.R. brought in 11 lawyers.
Canada's Fred Bartlit had five, two of whom sat
behind Bartlit with open laptops. Auditing the
procedure was a lawyer representing the Colombian
questions of sovereign tax law interpretation and
of time bar are crucial. The government alleges
its injuries took place between 1991 and 1997.
RICO requires that it file no less than four years
after discovery of its injury. R.J.R. claims the
government knew of its injury in 1994 when it
rolled back tobacco taxes.
arguments, the attorney general claimed that
equitable tolling permits a plaintiff to toll the
statute of limitations during the time in which it
is unable to obtain "vital information
bearing on the existence of his claim." This
includes the identify of the wrongdoer, which
Canada claims was only revealed, at the earliest
on June 20,1997, when a U.S. grand jury indicted
Thompson and 20 co-conspirators including R.J.R.
subsidiary, Northern Brands International Inc.
issue is whether the government applied due
diligence in attempting to discover who was
responsible for its injury. Given its vast
investigative resources, Ottawa might find it
difficult to convince a U.S. federal judge it
wasn't clever enough to uncover the truth until a
task force of U.S. police and prosecutors
succeeded in 1997. Essentially, Ottawa claims it
was hoodwinked by the tobacco companies and their
agent, the Canadian Tobacco Manufacturers Council
argues that the U.S. venue is appropriate because
most of the conspiracy occurred in the U.S. and
many of the defendants and potential witnesses are
in the U.S. Syracuse was convenient because it
served as the venue for the criminal charges
against Thompson and Northern Brands, the R.J. R.
company through which tobacco was funneled to the
smugglers. Even the judge is the same. Thomas
McAvoy presided over the criminal trials, so
Syracuse is a judicial environment well-versed in
the facts of the case.
same argument for holding the case in the U.S. can
also be made for holding it in Canada. The alleged
fraud is against the Canadian government and was
allegedly hatched on Canadian soil by a
Canadian-based company and its Canadian
awards are a major incentive to litigation in the
U.S. A RICO suit, for example, awards treble
damages. Canada's relatively paltry settlements
are largely the reason most Canadians do not have
access to justice, thereby stunting the nation's
judicial growth, lawyers say.
damages are a huge disincentive for a lawyer to
accept most cases. The Supreme Court in 1977, in
the famous "damages trilogy" of cases,
capped general damages at $100,000, which has
since risen, through indexation, to about
irony is if you are Brian Mulroney and there are
allegations against you, you can file a lawsuit
and you can get $2 million," Lennox said.
"But if you are a quadriplegic you can get
$250,000. So why take on a big company for
an abundance of cases demonstrating the folly of
suing even if you eventually win. Trial lawyers
like Montreal's Brahm Campbell know only too well
how quickly protracted suits can drain treasuries.
Campbell fought an action for 13 years before he
won a case where the Supreme Court of Canada ruled
on the question of constructive dismissal: Farber
v. Royal Trust (1997), 145 D.L.R. 4th 1. His
client's award including claim, interest,
indemnity and all judicial costs totaled only
$350,000. Did he recover his costs? Not even
close, Campbell says.
a counsel believes in the principle and his client
stands four-square with him, then it's possible
[to get justice]," he says. But "for the
vast majority of our population it's an impossible
dream to go for that long for that meager
addition to the problem of puny awards, Campbell
claims judges lack administrative backup to help
cases proceed quickly through the system. "We
spend $100 million on an Olympic Stadium roof but
we scrimp and save on judicial expenditures where
the true debates of society should be held - and
they are not being held because we don't spend the
money," he said. "The machinery of
justice has been left rusting and it's not fair to
average citizen does not have the wherewithal to
wait years before truth will out and his damages
are properly compensated," he said. "He
doesn't have the money. So what restriction is
there for a large corporation to stop abuse in our
system? There is none."
damages, or the lack thereof, is another problem.
In the recent insurance case of Whiten v. Pilot
Insurance Co., the plaintiff was awarded $1
million after its family home burned down and the
insurance company refused to pay the indemnity.
The company charged arson even though there was no
evidence to support the claim.
award was meant to punish the company for its
unreasonable conduct. But the Ontario Court of
Appeal last year reduced the award to $100,000.
Justice John 1. Laskin wrote a strong descent
claiming large punitive damages are needed to
counter corporate misconduct: (1999), 170 D.L.R.
(4th) 280. The Supreme Court has given leave to
appeal and scheduled the case for a hearing in the
costs can quickly bury a litigant and Ontario had
until recently forbidden contingency fees,
although the Ontario attorney general plans to
introduce them in the fall.
awards have allowed U.S. firms like Ness Motely to
accumulate massive war chests. They can afford to
absorb the high cost of litigation anticipating a
big payday. But Canadian courts frown on war
chests. Consequently, large companies can bankrupt
an individual with cost motions.
lawyer Leonard Siedman would love to have a war
chest to continue his battle against the federal
government on behalf of a translator who suffers
from multiple chemical sensitivity or sick
building syndrome as a result of working in a
federally administered building poisoned by
toxins. Siedman sued in 1997. The case still has
not gone to court. The federal government has used
all its resources to try to obtain a declinatory
exception. Losers in the Quebec Superior Court and
the Court of Appeal, Ottawa has taken the case to
the Supreme Court. Siedman is basically working
pro bono. Siedman views our justice system as
little more than an "ornament for the
tobacco litigation has not simply been a windfall
for U.S. lawyers and state treasuries. It has
educated the public about the dangers of smoking.
It has also directly reduced smoking. Tobacco
companies have had to increase prices to pay off
the awards. Escalating prices are a main reason
why young people decide not to smoke. Michael
Szymarczyk, Philip Morris CEO, told a Florida jury
in June that those higher prices have reduced his
company's sales volume 13 percent.
many lawyers, tobacco litigation and Canada's
journey south for justice serve to highlight
crucial issues concerning access to justice. They
beg the crucial question of how can people obtain
justice without a more entrepreneurial legal
Marsden is an investigative reporter for The
Gazette in Montreal He has reported extensively on
smuggling and the tobacco industry and this year
won his second National Newspaper Award