Ontario

 

April 23, 1999
Ontario government announces that it will file a lawsuit in the United States, using the RICO act.

March 2, 2000
Ontario files a medicare cost recovery lawsuit against the tobacco industry in U.S. federal court under the Racketeer-Influenced and Corrupt Organizations Act (RICO).   The case was managed by Ron Motley, on a contingency fee basis.

April 25, 2000
Defendants provided a reply to the complaint

August 7, 2000
The case was dismissed by Judge Friedman on the grounds that a foreign government such as Ontario could not sue in U.S. courts. 

September 6, 2000
Ontario appeals Friedman's decision. Appeal dismissed.

December 12, 2006
A coalition of health groups "Campaign for Justice on Tobacco Fraud" calls on Ontario government to sue for health care cost recovery from tobacco companies.
A private appeal had been sent to the Premier in April.

Premier Dalton McGuinty says that Ontario will not join suits and gives as a reason that doing so is "about punishing big tobacco. We have not embraced that agenda. That does not serve our purposes."

March 4, 2009

Ontario government introduces Bill 155, Tobacco Damages and Health Care Costs Recovery Act.

Thursday, May 7th, 2009

Testimony before the Legislative Justice Committee: Canadian Cancer Society, Non Smokers Rights Association, Ontario Campaign for Action on Tobacco, Imperial Tobacco Canada, Heart and Stroke Foundation,

May 14, 2009

Ontario's Tobacco Damages and Health Care Costs Recovery Act receives Royal Assent. Bill

September 29, 2009

Ontario files a statement of claim for $50 billion.


Media Coverage



Ontario to sue U.S. tobacco firms for $40-billion: Under Racketeering Act: Cigarette companies accused of being in `criminal conspiracy'; [Toronto Edition]
John Ibbitson. National Post. Don Mills, Ont.: Apr 24, 1999. pg. A.4
 

The Ontario government intends to sue the American tobacco industry, claiming it engaged in a criminal conspiracy to addict the province's smokers.

Elizabeth Witmer, the Minister of Health, said the provincial government hopes to recoup up to $40-billion (US) in damages from the industry under the U.S. Racketeer Influenced and Corrupt Organization (RICO) Act. American states, suing under the same act, recently settled a claim for damages with the industry totalling $250-billion over 25 years.

Ms. Witmer told reporters yesterday that now it's Ontario's turn.

The lawsuit "is based on a criminal conspiracy," she told reporters at a press conference. "We have a group of manufacturers who did conspire to produce a product which did addict."

The initiative, however, failed to placate the authors of a report on the government's anti-smoking strategy that Ms. Witmer commissioned and released yesterday.

The Expert Panel on the Renewal of the Ontario Tobacco Strategy chastised the Conservative government for failing to implement most of their recommendations.

"Today's announcement leaves us with more words and few actions," said Dr. Mary Jane Ashley, the chairman of the committee that produced the report.

"We have promises of intent rather than real commitments, and generalities abound."

Dr. Ashley was particularly disappointed that the government will not increase tobacco taxes. Ms. Witmer promised only to consult with the federal government and other provinces in an attempt to harmonize tobacco prices across Canada in hopes of deterring both smoking and smuggling.

Ontario is also avoiding the approach taken by British Columbia, which passed a law and launched a lawsuit to force Canadian tobacco companies to compensate the province for health and other costs associated with smoking.

The Conservative government believes its chances are better in the American courts, said Ms. Witmer, and that awards there are much higher.

However, it's not clear Ontario has the right to sue in U.S. courts under RICO. And anti-smoking activists were also unimpressed with the other half of Ms. Witmer's announcement, that the government will increase spending on anti-tobacco campaigns by $10- million.

They noted the province had previously cut spending on anti- tobacco campaigns by more than that amount.

"The minister is well-intentioned," said Michael Perley, of the Ontario Campaign for Action on Tobacco, "but why there is so little substance, and why there are not immediate legislative actions remains a mystery to us."


 

Province should have sued in Ontario court, U .S . expert says
Tom Blackwell
The Ottawa Citizen

TORONTO -- A lawsuit filed by the Ontario government against the tobacco industry might be doomed because of a court precedent set almost a year ago, says a U .S . expert in such cases .

The province should have sued in Canada instead of a New York court that's already rejected such third-party claims against the industry, said law professor Richard Daynard of Boston's Northeastern University .

"It would appear to be a formidable obstacle," said Mr . Daynard of the earlier ruling . "If you have a precedent in yourjurisdiction that goes against you, you have to find a strong distinction (from that case) . . . . I would be delighted if there was one, but if there isn't, then the case loses ."

A separate federal suit in the United States stands a much better chance of winning, but faces its own legal obstacle, said Mr . Daynard, who heads the Tobacco Product Liability Project, which supports such cases .

The Ontario Health Ministry won't comment on details of the suit, designed to recoup smoking-related health-care costs, said spokeswoman Anne Matthews .But she said the province decided to sue in the U .S . because it's "one of the principle hubs" of the tobacco industry, and so the province could use the Racketeer Influenced and Corrupt Organization Act (RICO), which awards a winning plaintiff triple the damages inflicted by the defendant .

The case has no upfront costs for taxpayers because the ministry hired the firm Ness Motley of Charleston, South Carolina, on a contingency-fee basis . The agreement gives the lawyers a percentage of any sum Ontario wins .
 Ontario launched its case in a Manhattan federal court last week with a 128-page complaint that's laced with allegations of a conspiracy it calls "unique in the annals of American jurisprudence ."

Suits like it by state governments have resulted in settlements requiring tobacco companies to pay out $246 billion over the next 25 years .

But last April 9, the U .S. Appeals Court of the 2nd Circuit, the same circuit that the Manhattan court belongs to, tossed out a similar suit filed by a union health and benefit fund .

The fund pays out long-term disability, death and other benefits to workers . The court said the fund's damages, which derive from smoking-related illness suffered by its members, are "too remote" from the tobacco companies' actions to warrant a claim.

U.S . 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 ."

The 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 .

It's different from the Ontario suit because it alleges a direct injury by the company, said Mr . Daynard .

However, 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 .


Government announces filing of lawsuit against U.S. tobacco manufacturers
Canada NewsWire.  Ottawa:Mar 2, 2000.  p. 1 
 
 
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.
 

http://www.gov.on.ca/health/
 
Version francaise disponible
 

Media Coverage


The Ontario government is carrying through on... ]
Tom Blackwell, Southam Newspapers. CanWest News. Don Mills, Ont.: Mar 2, 2000. pg. 1
 

TORONTO - 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 companies.

The 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."

But 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.

The 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.

"Tobacco 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 year.

While 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.

Ministry spokeswoman Anne Matthews said the department had not seen the statement of claim filed by its law firm, Ness Motley of Charleston, S.C.

"These 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.

"For most reasonable Canadians, this is getting a little silly: just law suit after law suit."

A 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.

Suits already launched by other countries are expected to meet a similar fate.

But 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.

"The fact is that the Ontario government is taking a stand," said Rob Cunningham of the Canadian Cancer Society. "We strongly support the lawsuit."

He 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.

Such suits have multiple benefits that include changing tobacco companies future behaviour by sapping their profits, said David Sweanor of the Non-Smokers Rights Association.

"Tobacco companies are able to make huge amounts of money, which encourages them to expand the epidemic," he said.

But 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.

She also said the federal and provincial governments take $1.5 billion in tobacco tax revenue from Ontario smokers annually, more than enough to cover smoking-related health costs.

The Ontario Health Ministry statement confirmed that its suit alleges violations of the Racketeer Influenced and Corrupt Organization Act, known as the RICO statute.

Among the extensive list of defendants named in the suit are the Canadian Tobacco Manufacturers Council, Imperial Tobacco PLC, British American Tobacco, Philip Morris Cos. Inc., R.J. Reynolds Tobacco Holdings Inc., Japan Tobacco Inc., Brooke Group Ltd., Lorillard Tobacco Co., Loews Corp. and the Council for Tobacco Research.

The federal government launched its own RICO suit in a U.S. court late last year, alleging that giant RJ Reynolds Tobacco ran a huge cigarette smuggling scheme which undermined attempts to curb smoking with higher taxes.

In B.C., the province sued tobacco companies in Canada but a court ruled recently the law making the suit possible was unconstitutional.


 

 

Ontario tobacco lawsuit filed in New York court: Unlikely it will be heard
:
[National Edition]
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 products."
 
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 jurisprudence.
 
"It constituted a scheme to defraud and cheat that lasted almost half a century and spread its shadow over North America and Europe," court documents say.
 
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 higher there.
 
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 actions."
 
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.
 


 

U.S. judge dismisses Ontario's $40B lawsuit against tobacco giants:
[Final Edition]
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 smoking-related illness.

 


 

[ The Ontario government has quietly appealed the... ]
Cristin Schmitz, For Southam Newspapers. CanWest News. Don Mills, Ont.: Sep 19, 2000. pg. 1
 

OTTAWA - 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.

The 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.

"Our 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.

"We've made a commitment to reduce and eliminate the use of tobacco in the province of Ontario," Bell said. "We stand by that commitment."

Ontario's 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.

Ontario 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.

Guatemala's 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 cases.

When Ontario launched its RICO action last March, Canadian legal experts were skeptical, given the dismissal of Guatemala's case two months earlier.

Denounced 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.


 

Tobacco Road
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 legal sys
September 2000
Canadian Lawyer

 

http://www.bartlit-beck.com/articles/detail.asp?whichid=1116507232004
By William Marsden

MONTREAL - 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.

He 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.

His 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).

Canadian 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.)

But 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.

Though 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.

The 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.

Had the 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.

Instead, 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 lawsuit.

"The 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.

The 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.

If the 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.

"There's 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 dunk."

Despite 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.

British 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.

The 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.

Ontario, 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.

He says 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 addiction.

Unable 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).

"He 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 difference.'

"There 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."

Andreas 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 records.

Ontario's 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.

Siebert is currently in the Ontario Court of Appeal seeking to file a separate action against the tobacco companies for destruction of documents.

Lennox 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.

Like 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.

Ness 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?

Lawyers like Lennox claim Ontario's decision to seek justice outside Canada is an admission that the Canadian system is a failure.

The 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 [1999] J.Q. no 2593.

The 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.

"I 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.

Most of 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 treasuries.

Yet the 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, breathtakingly revealing.

In fact 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.

This is why Canada chose to take its anti-racketeering case to JL Syracuse, NY. To deal with a more sophisticated judiciary, well practiced in such complex cases.

This is 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.)

These 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 sentence.

Smith 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.

Justice 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.

R.J.R.'s 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.

Heard's first move was to file a motion to dismiss the entire case. He claimed:

  • the case is essentially a tax recovery case and under revenue rules, U.S. courts cannot interpret foreign tax laws;

  • the case is time-barred under RICO and the Canadian government is not a "person" as defined by the statute;

  • most of the alleged illegal actions took place in Canada and therefore Syracuse is not a forum conveniens, and

  • The Canadian Tobacco Manufacturers' Council is based exclusively in Canada, and is therefore not subject to New York jurisdiction.

The 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 lawsuit.

The 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.

In its 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.

One key 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 (CTMC).

Canada 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.

Yet the 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 executives.

Big 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.

Caps on 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 $250,000.

"The 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 $250,000?"

There's 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.

"Unless 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 sum."

In 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 the judiciary.

"The 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."

Punitive 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.

The 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 fall.

Furthermore, 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.

Large 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.

Montreal 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 rich."

Aggressive 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.

For 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 system?

William 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
 

 

Ontario rejects lawsuit against big tobacco; [1]
April Lindgren. CanWest News. Don Mills, Ont.: Dec 12, 2006. pg. 1
 

TORONTO - Ontario won't go to court seeking to "punish" tobacco companies and to recover ongoing health-care costs related to smoking, Premier Dalton McGuinty said Monday.

"There are two agendas here," McGuinty told reporters. "We're pursuing one particular agenda and that is to reduce the incidence of tobacco use in Ontario, especially among our young people. We're enjoying some success.

"The other agenda is about punishing big tobacco. We have not embraced that agenda. That does not serve our purposes."

McGuinty said there is "considerable doubt" about governments' ability to win such suits in Canada and suggested he will await the results of ongoing litigation in B.C.

Ontario government officials said B.C. has already spent as much as $20 million on its lawsuit.

"(There is) no end in sight, no reasonable prospect of returns in sight so I think the prudent thing for us to do is to pursue our agenda in a single-minded way, which is to reduce the incidence of smoking," McGuinty said.

The premier's stand drew an angry response from anti-smoking activists who challenged his assumptions.

"This is an astonishing answer," said Ontario Campaign for Action on Tobacco director Michael Perley. "I don't know who he is listening to or who is advising him. Given the government's otherwise strong record on tobacco control, why would they back away from this?"

Perley said there have been delays in the B.C. case because the government spent five years fighting a constitutional challenge to its Tobacco Damages and Healthcare Costs Recovery Act, the legislation enabling a lawsuit against the tobacco companies.

The Supreme Court of Canada ruled in B.C.'s favour last year and now six provinces have introduced, or are in the process of introducing such legislation, he said.

Perley insisted the case against the tobacco companies in Canada is "extremely strong" just as it was in the United States, where 50 states won out-of-court settlements against tobacco firms in the amount of $246 billion, to be paid out over 25 years.

Ontario's previous Conservative government, in a lawsuit it filed and subsequently lost in the United States, suggested in court documents that smoking has cost the province as much as $40 billion in health care and related costs, Perley said.

Direct costs to the health-care system right now are about $1.7 billion a year, he said.

Anti-smoking and health groups, including the Heart and Stroke Foundation of Ontario and the Lung Association, called upon the McGuinty government Monday to sue tobacco companies to "obtain justice for thousands of Ontarians whose deaths were contributed to or caused by (the industry's) fraud and deception" and to recover billions of dollars in health-care costs.

CanWest News Service

 

Ontario files $50-billion lawsuit against tobacco companies
Observers believe provinces will band together in a national effort to seek compensation from cigarette makers

(Globe and Mail, September 30) - Jill Mahoney. 
In launching a $50-billion lawsuit against tobacco companies, Ontario is joining what many expect will eventually become a national battle to recover health costs linked to smoking.
The governments of British Columbia and New Brunswick have already filed claims against cigarette manufacturers and most of the other provinces have passed legislation enabling them to make similar cases.
"Let's be clear: This is important for the people of Ontario who have paid a lot of money for health-care costs directly related to tobacco use over the decades," Ontario Attorney-General Chris Bentley told reporters yesterday. "We believe the taxpayers should be compensated for the costs that they have paid. That's what this lawsuit is all about."

After years of legal wrangling in the United States, tobacco manufacturers agreed in 1998 to pay state governments $246-billion (U.S.) over 25 years to help pay for the costs of treating people with smoking-related illnesses.
In Canada, British Columbia led the way in confronting cigarette manufacturers when it passed legislation in 1998 allowing it to seek damages for smoking-related public health costs. Tobacco companies challenged the law, which was upheld by the Supreme Court of Canada in 2005. New Brunswick served notice of its claim in 2008. Both lawsuits are continuing.
Michael Perley, director of the Ontario Campaign for Action on Tobacco, said many observers believe the provinces will band together in a national effort to seek compensation from cigarette makers.
"There's strength in numbers in terms of ... opposing and countering the resources that the tobacco industry will inevitably bring to bear because it's not just the Canadian companies, it's their international parents whose assets are at risk here," he said. "Opposing them takes all the resources we have as a country."
Ontario's lawsuit was filed yesterday against the three major Canadian tobacco manufacturers: Imperial Tobacco Canada Ltd., JTI-Macdonald Corp. and Rothmans, Benson & Hedges Inc., along with their parent companies.
The government says taxpayers have spent $50-billion on smoking-related health-care costs since 1955 and that tobacco-related illnesses currently cost the province more than $1.6-billion annually.
Eric Gagnon, a spokesman for Imperial Tobacco Canada, the country's biggest tobacco company, argued that the government is a "senior partner" of the industry because it has collected billions of dollars in taxes.
"It's sheer hypocrisy by the government of Ontario," he said.
Mr. Gagnon said Imperial would not settle the Canadian lawsuits out of court because the situation here is different from the United States. When tobacco companies settled states' claims in 1998, they funded the deal by raising prices, which he said is not possible in Canada given high taxes and the large number of contraband cigarettes.
"One thing we need to understand is there's no hidden vault of money for the government to loot."
With a report from Karen Howlett



PSC - HOME

 

Litigation sub-site home

   

Timeline of tobacco litigation 
 

Canada

 

 


Class Actions - current

Blais & Letourneau

Knight

 


Class Action - historic

Caputo

Ragoonanan

Gagnon

Sparkes

 


Private litigation - current

Spasaic

Stright


Private litigation - historic

Battaglia

Chalut

McIntyre

Perron

Rowlands


Government Litigation-current and historic

Alberta

 

British Columbia

Canada

New Brunswick

Newfoundland  

Ontario

Quebec-Revenue

Quebec-Damages

   
   

Criminal