Tobacco firms lose major Canada liability ruling

Fri Jul 29, 2011 2:07pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Tobacco companies suffered a major defeat in Canada on 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 healthcare costs -- had argued that Ottawa had allowed and regulated the use of tobacco and should therefore take at least some of the responsibility.

In a unanimous 9-0 judgment, the court disagreed.

"When Canada directed the tobacco industry about how it should conduct itself, it was doing so in its capacity as a government regulator that was concerned about the health of Canadians," the judgment said.

"Under such circumstances it is unreasonable to infer that Canada was implicitly promising to indemnify the industry for acting on its request."

The case deals with a suit by the province of British Columbia against 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.

The Supreme Court said the tobacco companies had failed to prove Ottawa had any liability in British Columbia.

Imperial Tobacco said the court had decided the federal government was not accountable for its decisions and actions.   Continued...

<p>An office worker smokes a cigarette in downtown Toronto February 19, 2007. REUTERS/J.P. Moczulski</p>