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Canadian Court Approves Tobacco Lawsuit Settlement
Major Settlement Reached
A Canadian court has approved a plan to resolve long-running tobacco lawsuits, requiring three major tobacco companies to pay C$32.5 billion ($22.67 billion). The settlement involves the Canadian units of Philip Morris, British American Tobacco, and Japan Tobacco, who faced claims that they failed to adequately warn consumers about the health risks of smoking.
Background of the Lawsuits
The legal battles date back to allegations that the companies were aware of the harmful effects of tobacco products since the 1950s but did not inform consumers properly. In 2015, a Quebec court ruled in favor of about 100,000 smokers and ex-smokers, awarding them C$15 billion in damages. The ruling was upheld in 2019, forcing the Canadian subsidiaries of the three companies—Imperial Tobacco Canada, JTI-Macdonald, and Rothmans, Benson & Hedges (RBH)—to seek bankruptcy protection.
Terms of the Settlement
The settlement plan, proposed by a court-appointed mediator, is set to take effect in 2025. Philip Morris’ Canadian unit, RBH, has been allowed to retain C$750 million from the upfront payment as part of the settlement. Additionally, the agreement includes operational restrictions governing RBH’s tobacco business until the full settlement amount is paid.
Impact on the Companies
Philip Morris announced that objections to the settlement had been resolved. British American Tobacco stated that the settlement would not impact its financial forecast for 2025. The agreement marks a significant resolution to one of the largest tobacco-related lawsuits in Canada’s history.