Big Tobacco ordered to put $1B in trust for class-action lawsuit members

The Quebec Court of Appeal has ordered two big tobacco companies — Imperial Tobacco and Rothmans Benson & Hedges — to start paying out almost $1 billion in a trust account to members of Canada’s largest class-action lawsuit.

Quebec Court of Appeal orders Imperial Tobacco, Rothmans Benson & Hedges to pay $1B in instalments

On Tuesday afternoon, a Quebec Court of Appeal judge ordered two tobacco companies to pay $1 billion in security. (Graham Hughes/Canadian Press)

The Quebec Court of Appeal has ordered two big tobacco companies — Imperial Tobacco and Rothmans Benson & Hedges — to set aside almost $1 billion for members of Canada's largest class-action lawsuit.

Back in June, the two companies, along with a third big tobacco company, JTI-Macdonald, were ordered to pay $15 billion in damages to more than one million Quebec smokers. The plaintiffs were separated into two groups: some who became seriously ill from smoking and others who said they became addicted.

The case marked the first time tobacco companies have gone to trial in a civil suit in this country.

The original judgment ordered the companies to set aside $1 billion right away to ensure victims get some sort of compensation.

The tobacco companies argued that they simply didn't have the funds, saying it could cause irreparable harm to their ability to appeal and even put them on the brink of bankruptcy.

On Tuesday afternoon Court of Appeal Justice Mark Schrager ordered the companies to start paying in instalments.

"It is not acceptable that appellants merely say that they have no funds to satisfy the judgment or an order to furnish security and continue to distribute earnings because that is 'business as usual,'" Schrager  said in his ruling.

"I do not question appellants' right to appeal but neither can I stand idly by while appellants pursue an appeal which will benefit them if they win but which will not operate to their detriment if they lose."

The judge said that Rothmans Benson & Hedges, which owes $226 million in security, must pay in in six instalments.

Imperial Tobacco, which owes $758 million, must pay in seven instalments.

The motion against JTI-Macdonald  was withdrawn because attorneys were unavailable. 

(Quebec Court of Appeal)

"The above amounts are less than average quarterly revenue. They are far easier to manage financially than a single lump sum," Schrager said.

The first payments are due at the end of December.

The Quebec Council on Tobacco and Health called Tuesday's ruling an important one.

"This is an important moral victory," said Mario Bujold, general manager of the council. "We now have the certainty that the victims will be compensated."

Imperial Tobacco issued a statement late Tuesday, saying it is disappointed with the Court of Appeal's decision.

"Imperial Tobacco Canada ... does not believe it should have to secure a payment before all appeals are exhausted and a final judgment is rendered," the statement said. "Imperial Tobacco Canada continues to disagree with the overall judgment rendered by the Superior Court of Quebec. It is unjustified to hold legal manufacturers responsible for the personal choices of adult consumers and it will continue to defend that position as its appeals proceed before the courts."

Read the full decision here:

With files from The Canadian Press