On June 9, 2022, an image captured a man smoking a cigarette as the Biden administration announced plans to propose a rule intended to limit nicotine levels in cigarettes and other finished tobacco products, aiming to reduce their addictive properties, according to the White House Budget Office.
Philip Morris, British American Tobacco, and Japan Tobacco are anticipated to allocate C$32.5 billion ($23.6 billion) to settle an ongoing tobacco lawsuit in Canada, a plan suggested by a court-appointed mediator, as reported by Philip Morris on Friday.
If endorsed, this agreement would represent the largest settlement of its nature outside the United States, stated Jacob Shelley, who co-directs the Health Ethics, Law and Policy lab at Canada’s Western University.
In 2015, these companies’ Canadian subsidiaries suffered a significant setback when a Quebec court ordered damages for about 100,000 smokers and former smokers who claimed the companies had been aware since the 1950s that their products caused cancer and other diseases but failed to sufficiently warn consumers.
Following an appeal, a Quebec court in 2019 maintained the 2015 ruling, awarding approximately C$15 billion to smokers in the province. This compelled the Canadian subsidiaries of the three tobacco companies to seek bankruptcy protection.
The subsidiaries have since been engaged in a court-supervised mediation to negotiate a potential settlement.
Philip Morris noted that the distribution of the total settlement amount among the tobacco companies remains unspecified.
Philip Morris CEO Jacek Olczak expressed hope on Friday that the legal process would soon conclude, enabling Rothmans, Benson & Hedges (its Canadian unit) and stakeholders to focus on the future.
British American Tobacco conveyed that the proposed plan marked a step forward in resolving the issue, without detailing the plan as Philip Morris did. Its unit, Imperial Tobacco Canada, supported the settlement framework and mentioned that funding would come from existing cash reserves and future sales of tobacco products in Canada.
BAT shares saw a decline of 3.5% on Friday. Philip Morris indicated that voting on the plan is scheduled for December this year, and if agreed upon by claimants, a hearing to consider the plan’s approval is projected for the first half of the following year.
JTI-Macdonald, a unit of Japan Tobacco, commented that critical issues need resolution for a feasible settlement plan but did not provide additional details.
Western University’s Shelley remarked that the settlement overlooked the incorporation of policy provisions but emphasized manufacturers’ responsibility to inform consumers of product risks, which could impact industries such as alcohol.
He stated, “We do not provide adequate warnings about the risks of many products.” He added that manufacturers should warn about these risks and anticipated a shift in how they might perceive potential liabilities in the future.
