ONTARIO TOBACCO GROWERS

SUMMARY (Updated on September 16, 2016)

1.  Class actions have been commenced on behalf of Ontario flue-cured tobacco growers and producers against Rothman’s Benson & Hedges Inc. (“Rothmans”), Imperial Tobacco Canada Limited (“Imperial”) and JTI-MacDonald Corp. (“JTI”). The plaintiffs are the Ontario Flue-Cured Tobacco Growers’ Marketing Board (the “Board”) and individual Ontario flue-cured tobacco growers and producers. The proposed class consists of growers and producers in Ontario who sold tobacco through the Board pursuant to agreements during the period January 1, 1986 to December 31, 1996.

THE CLASS ACTIONS

2.  Rothmans, Imperial and JTI have settled civil claims by the federal and provincial governments in respect of those companies' roles in cross-border smuggling of tobacco. While the governments will be compensated for the losses they have sustained due to tobacco smuggling, the tobacco growers and producers, who claim they were underpaid for their crops, have not been compensated for their losses stemming from that same activity. The class actions are intended to achieve that purpose.

3.  On November 5, 2009, a class action was commenced on behalf of Ontario flue-cured tobacco growers and producers against Rothmans.  The statement of claim in the Rothmans class action may be reviewed here.

4.  On December 2, 2009, a class action was commenced on behalf of Ontario flue-cured tobacco growers and producers against Imperial.  The statement of claim in the Imperial class action may be reviewed here.

5.  On April 23, 2010, a class action was commenced on behalf of Ontario flue-cured tobacco growers and producers against JTI.  The statement of claim in the JTI class action may be reviewed here.

6.  The class actions seek to recover the difference between the export price paid by the domestic manufacturers (Rothmans, Imperial and JTI) for Ontario tobacco at the Board’s auctions and the higher price they ought to have paid because the tobacco was actually intended for domestic use. The pricing and payment obligations were contained in the agreements negotiated annually by the Board on behalf of Ontario flue-cured tobacco growers and producers.

IMPERIAL WITHHOLDS PAYMENT FROM ONTARIO AND DEMANDS ARBITRATION

7.  On March 29, 2010, following its receipt of the statement of claim, Imperial delivered a notice to the Province of Ontario (“Ontario”) of its intention to withhold payment under the settlement agreement for the civil claims brought by the federal and provincial governments for losses they sustained due to tobacco smuggling.  In essence, Imperial asserted that the Board’s claim is a “Released Claim” which is “a complete defence” to the class proceeding.  Ontario disagreed with Imperial’s position, and as a result, Ontario commenced an application for an order to compel Imperial to pay the settlement money to Ontario pursuant to the settlement agreement.   In response, Imperial insisted that this issue must be determined by arbitration pursuant to the settlement agreement.

8.  On July 26, 2010, a motion judge of the Ontario Superior Court of Justice ordered a stay of Ontario’s application and found that Ontario’s dispute with Imperial must be determined by arbitration pursuant to the settlement agreement.  Ontario appealed that order to the Ontario Court of Appeal. 

9.  The Board supported Ontario’s appeal by arguing that any defence to the class proceeding based on the settlement agreement between Imperial, on the one hand, and the federal and provincial governments, on the other, must be dealt with by the court in a proceeding in which the Board is a party (and since the Board was not a party to the settlement agreement between Imperial and the federal and provincial governments, the Board would not be entitled to participate in the arbitration).

10. On July 20, 2011, the Ontario Court of Appeal’s decision was released.  The Court of Appeal agreed with the Board’s position and allowed the appeal in part.  It found that the Board must be a party to the legal proceeding in which Imperial’s Released Claim defence is determined, and therefore, Ontario’s application should proceed for a determination of that issue.  However, the Court of Appeal concluded that the question of whether Imperial can withhold its payment to Ontario under the settlement agreement should be decided by arbitration. 

11. On September 19, 2012, a judge of the Ontario Superior Court of Justice heard arguments on Ontario’s application for a determination of Imperial’s Released Claim defence to the class proceeding.  Rothmans participated as an Intervener.  JTI agreed to be bound by the result of this decision.  On January 2, 2013, the Court’s decision on the application was released.  The Court rejected the positions of Imperial and Rothman and concluded that the class proceeding is not a released claim by a releasing entity.  The Court’s endorsement may be reviewed here.

12. Imperial and Rothmans appealed the decision on Ontario’s application to the Ontario Court of Appeal.  The appeal was heard on July 3, 2013.  On July 16, 2013, the Court of Appeal released its endorsement dismissing the appeal.  The Court of Appeal’s endorsement may be reviewed here.

THE DEFENDANTS’ SUMMARY JUDGMENT MOTIONS ON LIMITATIONS DEFENCES

13. On May 3, 2013, Rothmans, Imperial and JTI each delivered statements of defence.  Rothmans’ statement of defence may be reviewed here. Imperial’s statement of defence may be reviewed here. JTI’s statement of defence may be reviewed here

14. Each of Rothmans, Imperial and JTI have pleaded in their statements of defence that the class actions are barred by the provisions of the Limitations Act, R.S.O. 1990, c. L.15 or alternatively the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B..  The defendants allege that the class actions were not commenced within the time periods prescribed by those statutes.

15. The plaintiffs’ reply to Rothmans’ statement of defence may be reviewed here.  The plaintiffs’ reply to Imperial’s statement of defence may be reviewed here. The plaintiffs’ reply to JTI’s statement of defence may be reviewed here.

16. On May 23, 2013, each of Rothmans, Imperial and JTI served a notice of motion for summary judgment based on their limitations defences.  On January 30 and 31, 2014, a judge of the Ontario Superior Court of Justice heard arguments on these motions. 

17. On June 30, 2014, the Court’s decision on the summary judgment motions was released.  The Court dismissed the defendants’ motions for summary judgment.  The Court’s endorsement may be reviewed here.

18. Each of the defendants sought leave to appeal the dismissal of their summary judgment motions to the Divisional Court.  On January 14, 2015, the motions for leave to appeal were heard.  On April 23, 2015, the Court granted leave to appeal to the defendants.  The appeals were heard by the Divisional Court on April 21, 2016.

19. On July 4, 2016, the Divisional Court dismissed the defendants’ appeals of the orders dismissing the summary judgment motions.  The Divisional Court’s reasons may be viewed here.

20. On July 19, 2016, each of the defendants served motions for leave to appeal the Divisional Court’s dismissal of their appeals to the Ontario Court of Appeal.  The motions are to be heard in writing.  The plaintiffs have filed their responding submissions.  Further information on the Court of Appeal’s decision will be posted as soon as it is received.  

FURTHER INFORMATION

21. A list of frequently asked questions may be reviewed here.

22. If you have further questions about the class actions which are not answered on this website, please click here.

23. If you would like to learn more about how a class action works, please click here.

IMPORTANT NOTICE

This website provides general information to potential class members on three class actions commenced against Rothman’s Benson & Hedges Inc., Imperial Tobacco Canada Limited and JTI-MacDonald Corp.. The court will ultimately decide who will be included as a class member.

The information collected about potential class members will assist counsel in prosecuting the class action and assessing what damages were suffered by the class as a whole. Providing the information requested does not make you a client of Strosberg Sasso Sutts LLP.

The site is not designed to answer questions about your individual situation or entitlement. Do not rely upon the information provided on this website as legal advice in respect of your individual situation nor use it as a substitute for individual legal advice.

This website is updated from time to time to provide potential class members with further information.

1.  Pursuant to Regulation 435 made under the Farm Products Marketing Act, the Board made annual agreements with RBH, ITCL and JTI regarding the sale of tobacco to RBH, ITCL and JTI purchased from growers and producers at the Board’s auction exchanges on terms set out in the agreements including prices. The agreements provided for a guaranteed average price on certain tobacco sold to domestic accounts and a lower floor price for tobacco sold for domestic export accounts.

2.  On July 31, 2008, RBH and ITCL each pleaded guilty to a single count of violating section 240(1)(a) of the federal Excise Act by “aiding persons to sell or be in possession of tobacco products manufactured in Canada that were not packaged and were not stamped in conformity with the Excise Act and its amendments and the Ministerial regulations.” The essence of the charges under the Excise Act was that RBH and ITCL evaded the payment of excise taxes by treating tobacco products intended for domestic consumption as being for export. As a result, ITCL agreed to pay a $200 million fine and RBH agreed to pay a $100 million fine.

3.  Also on July 31, 2008, ITCL and RBH agreed to settle civil claims by the federal and provincial governments in respect of those companies’ roles in cross-border smuggling of tobacco in the period 1989 through 1996. While the governments will be compensated by ITCL and RBH for the losses they have sustained due to smuggling, the tobacco growers and producers, who claim they were underpaid for their crops, have not been compensated for their losses stemming from that same activity. The class actions are intended to achieve that purpose.

4.  On August 13, 2003, JTI and its related affiliates were sued in a civil action brought by the federal government for damage in the amount of $1.5 billion arising from those companies’ roles in cross-border smuggling of tobacco in the period from about 1989 through 1996.

5.  On August 24, 2004, JTI sought and received protection from its creditors under the Companies Creditors Arrangements Act (“CCAA”) granted by the Ontario Superior Court of Justice. As a result, a stay of proceedings was in effect that precluded the launching of any other civil action against JTI outside of the CCAA proceeding.

6.  On April 13, 2010, JTI announced that it had reached an agreement with the federal and provincial governments regarding its role in the cross-border smuggling of tobacco in the 1990s. JTI agreed to plead guilty to a single count of violating section 240(1)(a) of the federal Excise Act and to pay a $150 million fine. The company also entered into a separate agreement with the federal and provincial governments to resolve all civil claims by the governments arising from JTI’s role in the cross-border smuggling of tobacco.

7.  On April 16, 2010, JTI’s CCAA proceedings were terminated.

8.  While the governments will be compensated for the losses they have sustained due to tobacco smuggling, the tobacco growers and producers, who claim they were underpaid for their crops, have not been compensated for their losses stemming from that same activity.  The class actions are intended to achieve that purpose.

9.  For information relating to the class actions, return to the home page.

Contact information

To provide documents by fax, use our toll-free fax 1.866.316.5308. 

To provide documents to us by delivery or mail: 
     Strosberg Sasso Sutts LLP 
     1561 Ouellette Avenue
     Windsor ON N8X 1K5 
     Attention: Tobacco Growers' class action

Acknowledgement

GENERAL INFORMATION ABOUT THESE CLASS ACTIONS

Q:  What are these class actions about?
A:  These class actions seek to recover the difference between the export price paid by the domestic manufacturers (Rothman’s Benson & Hedges Inc., Imperial Tobacco Canada Limited and JTI-MacDonald Corp.) for Ontario tobacco at the Board’s auctions and the higher price they ought to have paid because the tobacco was actually intended for domestic use. The pricing and payment obligations were contained in the agreements negotiated annually by the Board on behalf of Ontario flue-cured tobacco growers and producers

Q:  How do I know if I may be a class member?
A:  The proposed class in each of the class actions consists of growers and producers in Ontario who sold tobacco through the Board pursuant to agreements during the period January 1, 1986 to December 31, 1996.A judge of the Ontario Superior Court of Justice will hear motions for certification of the class actions to determine whether the cases can proceed as class actions. At the certification motions, the judge will decide whether the class definition is appropriate. Until that time, we cannot determine with exact certainty who is a class member.

PARTICIPATION IN THESE CLASS ACTIONS

Q:  What is required of me if I participate in the class actions?
A:  If the class actions are successful and you are a class member, you will eventually be required to complete a claim form in order to submit your claim for payment.  You will not be required to attend a trial to determine whether the defendants are liable to the class.

Q:  How much money will be recovered and how much will I receive in the event of success?
A:  We can never predict how much money will be recovered in the event of success.  The amount of money that each person receives will depend upon the amount of the recovery, if any, and the particular losses that each person incurred.

PROGRESS OF THESE CLASS ACTIONS

Q:  How long will it take to resolve these actions?
A:  It is not possible to predict how long it will take to resolve these actions.  These actions are in the preliminary stages. A judge will eventually set a timetable for the conduct of the actions, but that has not occurred yet.

CLASS ACTIONS

Q:  Why should I participate in a class action?
A:  All of the members of the class stand to benefit from a successful class action and are not burdened with the expense and inconvenience of starting and prosecuting their own lawsuit.

Q:  What will it cost me to participate in a class action?
A:  Individual class members are not personally liable to pay counsel for prosecuting the common issues in the class action. Individual class members are also not liable to pay any costs if the class action unsuccessful.  Counsel will be paid for their services only if the class action is successful.  Counsel fees and disbursements are paid from the funds recovered in the action.  Court approval of counsel fees and disbursements must be obtained before they are paid.

Q:  What is a class action?
A:  A class action is a lawsuit commenced by one or more persons on his, her, or their own behalf, which seeks to include others who have suffered a similar harm at the hands of the same person, company or group.  At the certification motion, the court is asked to decide whether the lawsuit meets certain legal criteria to be certified as a class action on behalf of a group of people.Once a class action is certified, it allows a group of people to have access to the court in situations where the case would be too expensive or too complex for one person to sue on his or her own.

Q:  How does a class action work?
A:  In Ontario, class actions are governed by the Class Proceedings Act, 1992, S.O. 1992, c. 6, as amended. Please click here to review a copy of the Act.  At the certification motion, a judge decides whether to permit the lawsuit to proceed as a class action and, if so, who will be included in the group or class. If the court decides to permit the lawsuit to proceed as a class action, it will appoint one or more persons to act as the representative for the others in the class. The representative(s) will instruct counsel on behalf of the class members. The court also decides on questions of fact and law which are common to the members of the class. Subsequently, a trial may be held to determine these common issues or the parties to the action may arrive at a settlement.

July 19, 2016          The defendants served notices of motion for leave to appeal the Divisional Court’s dismissal of their appeals to the Ontario Court of Appeal. The motions are to be heard in writing. The plaintiffs have filed their responding submissions and await the Court of Appeal’s decision.

July 04, 2016          The Divisional Court dismissed the defendants’ appeal of the dismissal of their summary judgment motions

June 30, 2014         Ontario Superior Court of Justice releases decision dismissing the defendants' motions for summary judgment based on limitations defences. 

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