From Tobacco Info No. 7 - October 2011
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Big Tobacco sues 18 First Nations’ cigarette factories
Native manufacturers should collect taxes and be held accountable for health costs
By Joe Strizzi
Big Tobacco is a big bully. At least, that’s how tobacco manufacturers and retailers on First Nations reserves are feeling as Imperial Tobacco Canada (ITC) Ltd., Rothmans Inc. and Philip Morris USA launched a lawsuit against them.
"We operate with over 200 laws and regulations," said Eric Gagnon, a spokesperson for Imperial Tobacco in a press release. "There’s no reason why tobacco manufacturers on First Nations reserves should be treated any differently from legal manufacturers. This is what the lawsuit is all about."
"It is still inexplicable how the government of Canada and the government of Ontario can continue to turn a blind-eye on these illegal activities that are undermining tobacco regulations," added Gagnon. "This is why ITC has decided to take action and file this lawsuit."
The court action, announced in June, also includes adding the reserves, operating legally or illegally, as third-party defendants in Ontario’s Health Care Costs Recovery lawsuit against the tobacco industry.
"They are selling to kids, they are selling without collecting taxes and they’re not respecting display and labelling regulations. Since the government doesn’t want to take the responsibility, we’ve decided to move forward," said the ITC spokesperson.
"These manufacturers produce and sell tobacco products in Ontario, and this is why they should stand next to Canadian tobacco manufacturers and respond to the allegations made by the government of Ontario against tobacco companies. They currently represent more than a third of the volume of cigarettes sold in Ontario," Gagnon said.
In addition, the tobacco giants served papers to 18 manufacturers on reserves, targeting companies they allege to be contraband tobacco manufacturers. The multi-billion dollar lawsuit includes Jacobs Tobacco Company, from Akwesasne, Tyendinaga Mohawk Tobacco Products and Rice Mohawk Industries, from Kahnawake.
The original lawsuit
In September 2009, Ontario announced that it was seeking $50 billion in damages from the three major Canadian tobacco manufacturers: ITC, JTI-Macdonald Corp. and Rothmans, Benson & Hedges Inc., along with their parent companies.
"Ontario is taking the next step toward recovering taxpayer dollars spent fighting tobacco-related illnesses," said Attorney General Chris Bentley at the time.
The $50 billion figure represents the sum the province says it has paid to provide healthcare to those with tobacco-related diseases for more than half a century. Bentley said that the amount will have to be proven in court, but that he is confident that these figures represent provincial estimates spanning the years from 1955 to the present.
Ontario set the framework for the lawsuit through legislation passed in 2009. The Tobacco Damages and Health Care Costs Recovery Act gives the province the power to sue for recovery of past, present and continuing tobacco-related damages. It also creates a method for determining the costs associated with tobacco-related illnesses, and allocates liability according to the respective market share of the manufacturer.
The government said that tobacco-related illnesses currently cost the province more than $1.6 billion annually.
Reaction from the reserves
"We’re prepared to fight," said Shawn Brant, co-owner of Two Hawks tobacco store in Tyendinaga, in an interview with the National Post. "We are not going back to the stone ages. If they want to fight on the highways, we’ll fight on the highways. If they take it to court, we’ll meet them there... First Nations people have stepped forward to compete in a resource that is ancestrally theirs."
Not only has the tobacco industry improved the standard of living on reserves, Brant added, but he claims the government and police recognize the historical significance of tobacco within the native culture.
Robbie Dickson, President of Rainbow Tobacco in Kahnawake, a cigarette producer also named in the lawsuit, said that all the producers named need to band together to fight Big Tobacco. "I couldn’t believe it. It’s just another effort of theirs to put us out of business," he explained. "They want to lock us up in court and have us spend all of our money on lawyer fees, a plan to bankrupt every Native manufacturer in Canada so they can hold onto their market share."
It should be noted that Rainbow Tobacco is currently fighting the Alberta government in court over charges stemming from the seizure of millions of cigarettes.
Lawsuit simply a smoke screen?
"I question what the tobacco industry’s motives are here," said François Damphousse, Director of the Quebec chapter of the Non-Smokers’ Rights Association and a long time observer of illicit tobacco trade in Canada. "What are the big companies planning to gain in compensation for contraband by the 18 manufacturers? How do they plan to see any of the money? Will they just walk onto the reserves demanding it? If the RCMP doesn’t go onto reserves in order to avoid clashes, what is their plan?"
A request to interview ITC spokesperson Eric Gagnon to ask him just that went unanswered.
Regarding the third-party lawsuit, Damphousse suspects that this might be another ploy by tobacco multinationals to divert attention away from their own culpability. "The reason the big tobacco companies are getting sued for health care cost recovery is that they have withheld evidence and information for 60 years. The consequences of this include disease, death and elevated health care costs. It is clear that tobacco manufacturers on reserves do not comply with all the fiscal and public health regulations, and I share Mr. Gagnon’s view on that particular point, but Native cigarette makers are recent actors in the tragedy, so the percentage of their responsibility on health care costs would be very small compared to that of Big Tobacco," asserted Damphousse.
Mohawk cigarette producer Robbie Dickson mirrored some of what Damphousse said. "Being from a sovereign nation with treaties that go back hundreds of years, I’m not too worried about it," he told media outlets. "Big Tobacco is trying to involve us in [third-party defendant] charges stemming from the 1950s and 1960s including conspiracy and breach of Competition Act. I have only been in business since 2004 and my company has fully complied with all federal regulations. Therefore, I don’t see what our part is in all of this."