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When we last left our story, a group of large tobacco companies were left reeling from the Supreme Court of Canada ("SCC") decision in British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49 [Imperial Tobbaco] . This judgment upheld the constitutional validity of British Columbia legislation that allowed the provincial government to directly institute a claim against tobacco manufacturers to recover the costs of health care incurred by the government in treating individuals whose illnesses had been caused by exposure to their products. In particular, the SCC rejected Big Tobacco's claims that the Tobacco Damages and Health Care Costs Recovery Act, SBC 2000, c 30, was unconstitutional because its fell outside of the territorial jurisdiction of the provincial legislature or that it violated the principles of judicial independence or rule of law.
However, several of the tobacco companies, composed of non-Canadian manufacturers who were served ex juris with the action by the B.C. government, brought applications to set aside service on the basis that the B.C. court does not have jurisdiction, that it should exercise its discretion to decline jurisdiction, or that the legislation is constitutionally inapplicable. These applications were dismissed, both by the trial judge and the Court of Appeal. A decision by the SCC on the applications for leave to appeal is expected later today. I will provide an update when this occurs.
[Note: Imperial Tobacco, from which the initial proceedings takes its name, is not amongst these applicants; my title refers to the case name and not the company]
The grounds for the tobacco companies' applications appear to all be variations of the jurisdiction issue already canvassed by the SCC in its earlier Imperial Tobacco decision. While there are some differences between the "pith and substance" test for the legislative jurisdiction issue and the "real and substantial connection" test in determining court jurisdiction, in this case, the analysis for the latter appears closely related to the assessment made by the SCC with regard to extraterritoriality in the first Imperial Tobacco proceeding. This is particularly so because the SCC had conducted this analysis by closely examining the cause of action created by the legislation and its relationship with B.C.'s provincial jurisdiction. Similarly, the claim that the legislation is constitutionally inapplicable may be distinct from the claim that it is consitutionally invalid but it would appear difficult for the ex juris defendants to argue that the legislation should be interpreted so as to be inapplicable to extra-jurisdictional matters when the SCC has essentially concluded that the legislation which allows for an action against these defendants was not extra-jurisdictional.
Even if the application for leave is granted, I would be very suprised if the ex juris defendants' applications can succeed given the SCC's position on extraterritoriality of the legislation in its earlier decision less than two years ago.
It has been over six years since the main action against the tobacco companies was commenced by the Province of British Columbia and thus far, the case has accumulated numerous actions, applications and appeals, and this has only been on the preliminary issues of consitutionality and jurisdiction. The question is: when will the main action be decided so that it can make its own inevitable trek up to the SCC?
[UPDATE: The SCC has dismissed each of the tobacco manufacturers' applications for leave to appeal with costs. This was part of a wholesale dismissal of 22 applications for leave to appeal released today.]
5 Comments
Now that the application for leave to appeal has been dismssed, some people might also want to ask a few more questions, including these.
1. Did the foreign tobacco companies believe they had a reasonable chance of getting leave, in light of the refusal in the first "rule of law" appeal and current SCC jurisprudence?
2. If so, why?
3. If not, why was the application for leave to appeal made?
In considering the answer to those questions, ask yourself how the companies planned to get around this statement in the SCC jurisprudence on jurisdiction in tort claims against defendants foreign to the forum of the action.
By tendering his products in the market place directly or through normal distributive channels, a manufacturer ought to assume the burden of defending those products wherever they cause harm as long as the forum into which the manufacturer is taken is one that he reasonably ought to have had in his contemplation when he so tendered his goods. This is particularly true of dangerously defective goods placed in the interprovincial flow of commerce.
Whether the companies, in fact, did any of what's alleged goes to the merits of the allegations against them, not the jurisdictional question. The quotation comes from the SCC's Moran v Pyle [1974] 2 W.W.R. 586, 43 D.L.R. (3d) 239, 1 N.R. 122, [1975] 1 S.C.R. 393
The passage and the analysis was approved in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 and in subsequent SCC decisions which I won't bother to cite.
Did the companies' lawyers, perhaps, think they could build an argument around the possibility of an exception that some have seen in the concurring comments of Major J. in Tolofson v. Jensen, [1994] 3 S.C.R. 1022. Did the tobacco companies and their counsel believe that they stood a reasonable chance of convincing the SCC that an injustice would be done to the tobacco companies if the action was allowed to proceed in British Columbia?
I assume that a constitutional lawyer will tell me that there are subtleties, here, that somebody like me (who does not practice in the arcane world of constitutional litigation) has missed. I am all ears (metaphorically, of course).
The point is that, sometimes, the SCC doesn't forget about the audience. There are times when it seems the audience isn't listening. Or doesn't want to hear, if it is.
David,
I agree that the tobacco companies could not have reasonably believed that this appeal had any chance of success, given that this was the same court that had rejected their earlier and very similar claim. They may have gotten leave to appeal but, at the very least, their lawyers should have foreseen the ultimate outcome.
Even the trial judge, who had earlier held that the legislation was invalid for reasons of extra-territoriality, had ruled against them on this new line of argument (this was before the SCC's first Imperial Tobacco ruling was decided), which seems to suggest their position here was weaker than the constitutional arguments.
Of course I can't read their minds, but I do think it is in Big Tobacco's best interests to stretch the proceedings out as long as possible. I assume that many other provinces, who are considering similar actions, as well as potential individual plaintiffs (or class action lawyers), are waiting to see what happens in the main BC action before possibly commencing their own lawsuits. These preliminary applications would at least delay the opening of the floodgates for a few more years.
Yu Sung
Are you suggesting that the tobacco companies and their lawyers abused the Canadian legal system by filing frivilous leave to appeal applications? That the lawyers, then, are arguably breaching their obligations as officers of the court?
That is, I suggest, the necessary implication of the statement that the companies could not have reasonably believed they had any chance of success UNLESS they were told they didn't have a reasonable chance by their lawyers.
And if they were and told the lawyers to go ahead anyway? Not a bad gig for the lawyers, no?
Of course not, David.
As I said, I cannot speak for the company or its intentions.
I am only saying that from where I stand and from my limited understanding of the issues raised, it appeared very difficult for their appeal to succeed. That does not make their application frivilous and it is not like there were no legitimate issues raised in the application. Further, I am sure that the companies DID (very much so)want their application to succeed. But looking at what the SCC said in its earlier decision, if I was in their shoes, I would have thought the chances of success to be slim. Now if they want to spend their money to take that chance, then that is a perfectly legitimate exercise of their legal rights.
... looking at what the SCC said in its earlier decision, if I was in their shoes, I would have thought the chances of success to be slim. Now if they want to spend their money to take that chance, then that is a perfectly legitimate exercise of their legal rights.
Is it? If it's frivolous? If it consumes scare judicial resources that should be devoted to other activities? If the act can be done with effective impunity because the financial cost of losing is insignificant? Does anybody think the amount of the "with costs" order is going to matter a whit?
There's no doubt the companies wanted their application to succeed; but the SCC (in civil matters) is no longer a court of last resort as of right. The mere fact a provincial appellate decision is wrong, factually or legally, doesn't get one an audience in Ottawa in this sort of case.
Let's assume the companies were honestly convinced of the merits of their case, as unreasonable as that belief is. They've now consumed scarce judicial resources.
They've been told they shouldn't have. Does their punishment fit the crime?
You asked, not entirely rhetorically I assume: "The question is: when will the main
action be decided so that it can make its own inevitable trek up to the
SCC?" The answer is - never if the companies can bring that about legally.
Or, until the BC gov't makes them an offer they can't refuse. Or different gov't takes over. Legislation passed can be repealed. Would you care to speculate on the likelihood a provincial gov't of the ilk of the Ontario Tories under Mike Harris would have passed similar legislation. (That's an easy question. We know they wouldn't because they didn't.)
The tobacco companies can currently afford to. If there's any doubt in your mind about that, look up the amount of the large settlement in the US states' class action.
Let me pose the question to you this way. If, in order to complete the leave application, the lawyer of record had to certify that he or she had a belief that the companies' position discloses a reasonable defence in law (or similar wording) would you sign it? Bear in mind that if you won't, there's probably somebody down the street who will. And he or she will get the fee.