In a groundbreaking development, the tobacco industry is on the verge of settling long-standing Canadian lawsuits for a staggering C$32.5 billion ($23.6 billion). Industry heavyweights British American Tobacco, Japan Tobacco, and Philip Morris are set to pay this astronomical sum as part of a court-appointed mediator’s proposed plan, according to a statement from Philip Morris on Friday.

This settlement, if approved, would mark a watershed moment in tobacco litigation outside the United States. Jacob Shelley, co-director of the Health Ethics, Law and Policy lab at Canada’s Western University, highlighted its unprecedented scale.

The roots of this legal battle trace back to 2015 when a Quebec court delivered a crushing blow to the Canadian units of these tobacco giants. The court awarded damages to approximately 100,000 smokers and ex-smokers who claimed the companies had knowledge of their products’ cancer-causing properties since the 1950s but failed to adequately warn consumers.

Following an unsuccessful appeal in 2019, which upheld the original C$15 billion award to Quebec smokers, the Canadian subsidiaries of all three cigarette makers were forced to seek bankruptcy protection. Since then, these subsidiaries have been engaged in a court-supervised mediation process to negotiate a potential settlement.

While the proposed plan represents significant progress, some hurdles remain. The allocation of the settlement amount among the tobacco companies is yet to be finalized, as noted by Philip Morris.

Philip Morris CEO Jacek Olczak expressed cautious optimism, stating, “Although important issues with the plan remain to be resolved, we are hopeful that this legal process will soon conclude, allowing RBH (Rothmans, Benson & Hedges) and its stakeholders to focus on the future.”

British American Tobacco, whose shares dipped 3.5% following the news, confirmed its support for the settlement framework. The company plans to fund its portion through existing cash reserves and future tobacco sales revenue in Canada.

The settlement plan is slated for a vote in December, with a potential approval hearing in the first half of next year if accepted by claimants.

While this settlement represents a significant financial blow to the tobacco industry, some experts, including Shelley, note that it missed an opportunity to include policy provisions. Nevertheless, it underscores manufacturers’ duty to warn consumers about product risks – a principle that could have far-reaching implications for other industries, such as alcohol.

As this landmark case nears resolution, it serves as a stark reminder of the legal and financial risks faced by industries that fail to adequately disclose product dangers to consumers. The tobacco giants’ mammoth payout may well set a precedent for corporate accountability in the years to come.