Canadian Tobacco Firms To Appeal Order To Pay C$15.6 Bln To Quebec Smokers

(RTTNews) - Three Canadian tobacco manufacturers are ordered by the Quebec Superior Court in Canada to pay a total of C$15.6 billion or $12.5 billion in damages to resolve two Canadian class action lawsuits brought on behalf of two smoker groups. The total amount also includes interest.

The judgment follows a ten year legal challenge against Imperial Tobacco Canada, a subsidiary of British American Tobacco; JTI-Macdonald, part of Japan Tobacco Inc; and Rothmans, Benson & Hedges Inc., a subsidiary of Philip Morris International Inc. (PM).

Imperial Tobacco Canada plans to challenge the order within 30 days of the original 27 May ruling.

The class action were brought on behalf of two groups of Plaintiffs: smokers, who smoked a minimum of 12 pack-years and who were diagnosed with lung, throat and laryngeal cancer or emphysema prior to 12 March 2012 as well as smokers who were addicted to nicotine at the time the proceedings were commenced (September 1998) and remained addicted until at least 21 February 2005.

The Quebec smokers were seeking damages for failing to warn them about the health risks associated with smoking. However, the tobacco companies had argued that Canadians have been aware of smoking health risks since the 1950s.

The class-action lawsuits, seeking $27 billion in damages, was filed in 1998, but legal proceedings began only in March 2012.

The judge publicly issued a ruling in favor of the Plaintiffs awarding a total of C$15.6 billion in moral and punitive damages, including interest. Meanwhile, British American Tobacco said Imperial Tobacco Canada's share of the total damages would be C$10.4 billion. Rothmans, Benson & Hedges have to pay around C$ billion, while JTI-Macdonald's share is around C$2 billion.

According to the judgment, Imperial Tobacco Canada will pay 67 percent of the damages, Rothmans, Benson & Hedges will pay 20 percent, and JTI-Macdonald will pay the remaining 13 percent.

The judgment also stated that the companies will have to pay a total of C$1 billion within 60 days as per a provisional execution order, regardless of whether they go for an appeal. Meanwhile, Imperial Tobacco Canada's share of the provisional execution order would be C$743 million.

However, British American Tobacco said it was not a party to the proceeding and is not a party to the judgment, only its Canadian subsidiary, Imperial Tobacco Canada.

British American Tobacco added that there are strong legal grounds with which to challenge both the overall judgment, and to seek a stay of the provisional execution order. It confirmed that Imperial Tobacco Canada will challenge the order.

The company said no payments will be made until the request to stay the provisional execution order has been heard and a judgment made.

In Tuesday's trading session on the LSE, BATS.L is trading at 3,550.00 pence, down 42.50 pence or 1.18% on a volume of 0.21 million shares.