Ontario court injunction bars outside claims administrators in $32.5 billion tobacco class action

Law360 Canada (April 4, 2025, 4:53 PM EDT) -- In a rare move, the Chief Justice of the Ontario Superior Court has granted an injunction preventing any third-party claims administrators from soliciting potential claimants in the mediated $32.5 billion class settlement action involving three tobacco companies, Canadian provinces and territories, and victims of tobacco use. 

In a March 26 decision on the Superior Court’s Commercial List, Chief Justice Geoffrey Morawetz granted a motion by counsel for the pan-Canadian claimants (PCC), Halifax-based Wagners, to bar unauthorized solicitations of class members by Little Rock, Ark.-based Attorney Group and its founder Anthony Johnson or any other outside administrator.

“I am satisfied that an injunction is necessary not only to restrain the Attorney Group from ongoing violations of the Non-Solicitation Provision in the Court-approved Plans, but also to ensure that future unauthorized solicitations do not compromise the integrity of the Claims Process,” wrote Chief Justice Morawetz.

“Given the financial incentives for third parties to solicit Tobacco Victims,” he added, “broader relief is warranted to deter and stop further violations, protect PCCs and QCAPs [Quebec Administration Plan claimants] from misleading solicitations, and avoid the need for repeated enforcement proceedings before this Court.”

Under the Companies' Creditors Arrangement Act (CCAA), the Ontario Superior Court approved plans of compromise and arrangement for the three tobacco companies — Montreal-based Imperial Tobacco Canada, Toronto-based Rothmans, Benson & Hedges (RBH), and Toronto-based JTI-Macdonald Corp. — on March 6, concluding decades of legislation and allowing the claims process to begin. Payouts under the settlement will occur over 18 to 20 years.

The case is one of the largest class-action settlements in Canadian legal history and dates to 1998, when two Quebec class-action lawsuits alleged the companies concealed smoking risks and misled the public for over 50 years. From 1998 to 2012, all Canadian provinces and territories filed suits to recover health-care costs tied to smoking and the negotiations became national in scope. After their loss at the Quebec Court of Appeal in 2019, the three tobacco companies filed for creditor protection under the CCAA, stalling payouts.

Kate Boyle, a partner with Wagners who has been acting with the firm’s founder, Raymond Wagner, as the court-appointed representative for the pan-Canadian claimants in the CCAA restructuring, said one unique aspect of the settlement is that the process of accessing financial relief for tobacco victims is supported by two official agents — Montreal-based claims administrator Proactio for Quebec class members, and global legal services provider Epiq for pan-Canadian claimants.

“What’s especially novel is that these agents are specifically tasked with assisting claimants throughout the claims process free of charge — a model we haven’t typically seen in traditional class action settlement processes,” Boyle said in an email to Law360 Canada.

“In most cases,” she added, “there’s no centralized support system, and individual claimants may need to rely on third-party lawyers or fend for themselves.”

Boyle said the claims process was designed to be as “claimant-friendly” as possible. But that’s been a two-edged sword.  

“This simplicity — combined with high individual compensation amounts — creates the risk that third-party lawyers could attempt to collect contingency fees as high as 30 per cent simply for submitting a claim form and gathering basic medical documentation,” she explained.

“In more complex cases,” she noted, “legal assistance can be essential. But here, that help is already being offered through court-appointed agents at no cost to the claimant.”

She said the injunction extends beyond Attorney Group, which also does business as AIAG LLC, and prohibits any person or entity from engaging in similar unauthorized solicitation of claimants.

In December 2024, another court injunction was issued specifically against Montreal-based Actis Law Group for similar unauthorized solicitation of pan-Canadian claimants through advertising legal services related to the tobacco settlement. The most recent injunction is more sweeping.

“This broad scope is key to protecting the integrity of the compensation process,” said Boyle.

As part of the settlement, the Quebec class-action plaintiffs will receive $4 billion collectively, with individual payouts of up to $100,000. An additional $2.5 billion has been allocated to Canadian smokers outside Quebec, with eligible claimants receiving up to $60,000 if they resided in Canada by March 2019, smoked 87,600 cigarettes or more from 1950 to 1998, and were diagnosed with lung or throat cancer or severe COPD between March 2015 and March 2019.

A total of $24 billion has been allocated to the provinces and territories, with specific payouts based in part on population and health-cost impacts. One billion dollars has also been set aside to create a national foundation to combat tobacco-related diseases.

Boyle said the settlement could involve up to 186,000 pan-Canadian claimants and, according to one estimate, about 100,000 Quebec plaintiffs.  

The two “official agents were engaged specifically to provide assistance, answer questions and help claimants navigate the process at no cost to them,” she explained. “This design helps ensure access to justice while protecting claimants from unnecessary legal fees.”

Attorney Group did not respond to an email request for comment.

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