Canada ruling strikes blow to tobacco firms

Landmark decision allows a province to sue for smoking-related public health costs.

Canada is now the first country outside the US where governments can sue tobacco manufacturers to recover billions of dollars in smoking-related health costs, thanks to a unanimous Canadian Supreme Court ruling last week. Tobacco foes hope other countries will follow Canada's litigious lead.

"Canada is a pioneer in this," says Richard Daynard, president of the Tobacco Control Resource Center. "The legislation would obviously be available as a model for legislation in any other country."

British Columbia's law, upheld last Thursday by the Canadian Supreme Court, allows the western province to sue tobacco companies for the cost of treating past and future health problems related to smoking. Experts estimate the province's claim could reach $8.6 billion ($10 billion Canadian). If Canada's nine other provinces follow British Columbia's lead - and several already plan to do so - experts say claims against the tobacco industry could top $86 billion.

Whether other countries follow Canada's lead depends on political will. A key obstacle governments can face in recovering health care costs incurred by smoking-related problems is the burden of proving tobacco's harm to each individual. But British Columbia's legislation, which relieves the provincial government of providing such proof, provides a model for other governments to sue tobacco companies more readily.

"Not being the US is very important as far as serving as a model. There's the sense that the US is different," says Mr. Daynard, whose organization plans to help other countries draft similar laws. The Supreme Court decision, he adds, "is a great impetus for other countries."

The legislation was brought before the Supreme Court after tobacco companies challenged its constitutionality in connection with a lawsuit between British Columbia and the tobacco industry.

The legislation, passed in 2001, is modeled after a Florida law that allowed the state to sue tobacco companies for smoking-related health costs incurred by Medicaid recipients.

That legislation and the subsequent lawsuit prompted the landmark 1998 US settlement in which tobacco companies agreed to pay 46 states more than $200 billion over 25 years. Antitobacco activists in Canada hope to strike a similar blow to the industry.

"We see this as a mechanism to hold the industry accountable for their misbehavior over the decades," says Rob Cunningham, senior policy analyst for the Canadian Cancer Society.

In some ways the stakes could be even higher in Canada than in the US, since Canada provides universal healthcare whereas US-sponsored healthcare is generally limited to elderly and low-income individuals.

The Supreme Court's 9-0 decision focused solely on the constitutionality of the law. British Columbia will still have to make a legal case holding tobacco companies responsible for smoking-related illnesses, which cost the province more than $430 million last year.

"Tobacco manufacturers sued pursuant to the Act will receive a fair civil trial," Justice John Major wrote for the Supreme Court. "They are entitled to a public hearing, before an independent and impartial court."

Tobacco manufacturers warned against killing the goose that laid the golden egg. The Canadian federal and provincial governments collected $9 billion Canadian [$7.7 billion US] in tobacco taxes last year, notes Rothmans, Benson & Hedges spokesman John McDonald, while the three major tobacco companies in Canada earned less than $1 billion Canadian [$860 million US] in profits.

"The reality is in Canada, the federal and provincial governments have always had the largest share of tobacco profits," says Mr. McDonald, whose company is one of 13 tobacco groups involved in the case.

Canadian tobacco companies said a $8.6 billion judgment could bankrupt them. They also said they intend to fight every step of the way, predicting a long court battle. "Years and years and years," McDonald says.

But British Columbia Health Minister George Abbott said he worries more about smokers' health than tobacco companies' financial health.

"It would probably be absolutely naive of me to think we could drive them into bankruptcy," Mr. Abbott said at a news conference last week.

"I don't think they depend on British Columbia to maintain them. This is a huge, multibillion-dollar worldwide industry."