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The legal threat posed by Canada got more real this month, when the three companies’ local units were ordered to pay damages of about $14 billion in a set of class actions filed by Quebec smokers. That lawsuit, which prompted the Canadian units of BAT and Japan Tobacco to file for protection from creditors, is separate from the provincial claims.

‘Wake-Up Call’

The decision sent a “wake-up call to the courts throughout Canada,” where the provincial cases have been mired in procedural delays, said Richard Daynard, a professor at Northeastern University School of Law in Boston who has followed litigation against the industry for decades. It shows “that these cases are serious, that a very serious multi-billion dollar judgment can get affirmed.”

In the 1980s, Daynard co-founded the Tobacco Products Liability Project at Northeastern, which helped provide resources to support lawsuits against cigarette makers.

The provinces argue that tobacco companies should compensate governments for smoking-related health costs. The firms say Canadian residents were fully aware of the risks since the 1950s.

Settlement Opportunity

The creditor protection gives BAT’s Canadian unit “an opportunity to settle all of its outstanding tobacco litigation” while continuing to run its business, a spokesman said. Consumers in Canada were well informed of the risks and tobacco is a legal product, according to JTI-Macdonald, Japan Tobacco’s Canadian unit. While the Tokyo-based company isn’t named as a defendant in the provincial cases, it has assumed obligations that could force it to pay penalties for R.J. Reynolds assets it had acquired. A spokesman for Philip Morris declined to comment.