TORONTO (Reuters) - The Canadian province of Ontario said on Tuesday it has filed a lawsuit seeking C$50 billion ($45.9 billion) in damages from tobacco companies for healthcare costs incurred by taxpayers since 1955.
In doing so, Ontario became the third of Canada’s 10 provinces to sue the country’s tobacco manufacturers, all of which are units of foreign tobacco makers, including Philip Morris International Inc, British American Tobacco and Japan Tobacco Inc.
The lawsuit by Ontario, Canada’s most populous province, was planned under legislation passed by its legislature earlier this year, and seeks damages for past and ongoing healthcare costs.
Ontario says tobacco use costs the province C$1.6 billion a year for healthcare and causes about 13,000 deaths annually. It said smoking is the province’s No. 1 cause of illness and premature death.
The legislation allows Ontario to directly sue tobacco companies for alleged wrongdoing and allocates liability among tobacco companies by market share.
A spokesman for Imperial Tobacco Canada Ltd, Canada’s leading tobacco company and a wholly owned unit of British American Tobacco, said the Ontario lawsuit made no sense, given that the product is legal, regulated and taxed by the government.
“It’s a little bit hypocritical to sue the legal tobacco manufacturers when the governments have been a partner of the industry for many decades now,” spokesman Eric Gagnon said.
“They are the ones that legislate the industry. We operate, we do a legal product. (They also) collect billions of dollars in taxes, so to turn around today and sue the legal industry makes no sense whatsoever,” Gagnon said.
He said Canadian governments collected C$7 billion in taxes from tobacco in fiscal 2008-09, which ended in March. He said taxes make up 60 percent to 70 percent of the price of a pack of cigarettes.
A spokesman for Philip Morris, which owns Rothmans, Benson and Hedges Inc, confirmed the companies were among the defendants named in the lawsuit, but declined to comment.
Tobacco opponents applauded the long-awaited lawsuit.
“We’re very pleased by this announcement -- it is very significant. The tobacco industry has been engaged in decades of wrongful behavior in Ontario and Canada, and they need to be held to account,” said Rob Cunningham, senior policy analyst at the Canadian Cancer Society.
“We see these lawsuits as being important to reform tobacco industry behavior so they will not repeat the wrongs of the past. It is a question of justice,” Cunningham said.
The provinces of British Columbia and New Brunswick have already launched similar suits -- British Columbia has a 2011 trial date -- but the move by Ontario is significant because most provinces are preparing similar suits, Cunningham said.
“Ontario being most populous province I think is going to influence the actions of the other provinces,” he said.
All but two provinces have created legislation to lay the groundwork for similar lawsuits.
After years of battling lawsuits, Big Tobacco agreed in 1998 to pay U.S. states more than $200 billion to help fund the costs of treating ailing smokers.
The Ontario case is expected to take years to resolve. Gagnon said Imperial Tobacco would not settle the Ontario case out of court.
Reporting by Frank McGurty and Andrea Hopkins, additional reporting by Brad Dorfman in Chicago and Julie Crust in London; editing by Peter Galloway and Rob Wilson