Ruling means Ottawa not liable for billions in damages

OTTAWA — Tobacco companies suffered a major defeat in Canada Friday when the Supreme Court ruled the federal government is not liable for damages from health-related lawsuits, possibly amounting to many billions of dollars.

The tobacco industry — facing suits from several Canadian provinces seeking to recoup health-care costs — had argued that Ottawa had allowed and regulated the use of tobacco and should therefore take at least some of the responsibility.

“I conclude that all the claims of Imperial [Tobacco] and the other tobacco companies brought against the government of Canada are bound to fail,” Supreme Court Chief Justice Beverley McLachlin wrote in the long, complex, and unanimous 9-0 judgment.

The case revolved around a suit that the province of British Columbia has launched against major tobacco companies.

British Columbia is suing R.J. Reynolds Tobacco Co., Japan Tobacco’s JTI-Macdonald unit, Rothmans Benson & Hedges Inc., which is partly owned by Philip Morris, and Imperial Tobacco Canada Ltd., a unit of British American Tobacco.

"This decision represents a significant defeat for the tobacco industry," said Rob Cunningham, a lawyer and senior policy analyst with the Canadian Cancer Society. "This industry has long tried to shift the blame to others for the enormous health burden caused by smoking, but the Supreme Court has rejected industry arguments.

"With this issue now decided, the B.C. government can move forward and focus on preparing its case to recover health-care costs caused by smoking," he added. "It's time for this case to get to trial. If the tobacco companies lose the B.C. case and other provincial lawsuits against them, they will be responsible for paying billions of dollars in damages, just as they should be."

Several of Canada's 10 provinces have sued or say they will sue the tobacco industry but British Columbia filed first and Canadian courts are using it as the lead case.

British Columbia declined to say how much money it was seeking in damages.

Ontario, Canada's most populous province, launched a suit against the companies in 2009 seeking $50 billion.

In a separate but similar case, the Supreme Court also ruled against Imperial Tobacco, which wanted Ottawa to be liable for any damages awarded against it in suits alleging the company wrongly marketed some tobacco products as “mild” or “light.”

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