Tobacco firms granted another stay extension, but deadline unclear
A stay of proceedings was first granted in March to allow the companies to negotiate a settlement with their creditors
TORONTO – An Ontario court again agreed to extend an order suspending legal proceedings against three major tobacco companies on Wednesday, although the judge did not specify for how long.
Ontario Superior Court Justice Thomas McEwen said in court he would renew the stay but would release the end date on Thursday, and his reasons for the ruling at a later date.
A stay of proceedings was first granted to the companies in March to allow them to negotiate a settlement with their creditors, after the same firms lost an appeal in a multibillion-dollar class-action lawsuit in Quebec.
The stay was upheld the following month after some of the companies’ creditors challenged it, and was renewed in June for a period ending this Friday.
The companies – JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. – are now seeking an extension until next March, but lawyers representing the Quebec class-action members argue the deadline should be Jan. 15.
The court must give the companies an incentive to put forward a settlement proposal – or at least the framework of one – by year’s end, said lawyer Mark Meland, who represents the Quebec claimants. Otherwise, the class-action members will oppose any future requests to extend the stay, he said.
It’s not enough for the companies to simply participate in mediation, Meland said – the companies must work towards making an offer for the claimants to consider. “People tend to respond to deadlines,” he said, noting the claimants have “not seen the first molecule” of a plan from the companies so far.
For the Quebec claimants who have cancer, there are “real-life consequences” to delaying the process, he said, and some may die before any money is paid out.
The companies, meanwhile, argue they have been engaging in mediation in good faith and need the longer stay so they can continue to operate as they work towards a settlement plan.
“During the extended stay period, the applicants intend to conclude negotiations for forms of non-disclosure agreements, engage in the mediation process under the direction of the court-appointed mediator, and to work diligently (in consultation with the monitor) to explore a negotiated resolution with the tobacco litigation stakeholders,” Imperial Tobacco wrote in court filings.
The stay aims to preserve the status quo while the companies take part in mediation with all those who have claims against them, including the class-action members and several provincial governments.
It was initially put in place shortly after Quebec’s court of appeal upheld a landmark decision that ordered the companies to give smokers in two class-action lawsuits more than $15 billion in compensation.
McEwen is also expected to rule Thursday on a motion by the Canadian Cancer Society, which seeks to participate in the court case and mediation despite not being one of the companies’ creditors.
The organization says it has “direct financial interest” in the case because the settlement may include provisions to reduce tobacco use, which would affect how much of its resources will need to go to patient services, public education and research on tobacco-related cancer.
That, in turn, would divert funds from other cancer priorities and other individuals with cancer, the society wrote in documents filed with the court.
The organization says it also has an interest in the case as a social stakeholder” that can advocate for tobacco-control measures to be included in the settlement.
The judge previously denied a bid by the province of Ontario to move ahead with a lawsuit that aims to recover smoking-related health-care costs from a dozen Canadian firms and their parent companies, including the three companies in this case.
McEwen said at the time it would be unfair to other provincial governments if Ontario was allowed to proceed before the settlement talks are complete.