June 2, 2015

Canadian smokers win $15 billion in punitive damages

CBC News reports that a judge in Montreal has ordered three tobacco companies to pay $15 billion in a class action brought by one million Canadian smokers.  The plaintiffs alleged that the defendants failed to warn about the dangers of smoking and engaged in unscrupulous marketing.  The defendants are Imperial Tobacco, Rothmans Benson & Hedges, and JTI-MacDonald.

Canadian courts are not known for dishing out large punitive damages awards.  A few years ago we reported on a case before the Supreme Court of Canada involving a $500,000 punitive damages award, which was reportedly the largest amount ever awarded in an employment case in Canada.  So this $15 billion award is somewhat of a shock.

Not surprisingly, the tobacco defendants say they intend to appeal.  But the story also says that the judge will permit the plaintiffs to enforce the judgment up to $1 billion while the appeal is pending.  So even if the defendants win on appeal, they'll be left with the prospect of trying to claw back $1 billion from a million individual smokers throughout Canada.