(c) Individual cases
In 2006, proceedings were instituted by Donald Laurie in the Dust Diseases Tribunal (DDT) against British American Tobacco Australia Services Limited (BATAS), the Commonwealth of Australia and an asbestos manufacturer, alleging tobacco and asbestos-related illness. In November 2009, BATAS sought an order in the New South Wales Court of Appeal for the recusal of the judge appointed to hear the matter, having been unsuccessful at obtaining such relief from the DDT. On 17 December 2009, the Court of Appeal delivered its judgement against BATAS, denying its bid to recuse the trial judge. BATAS has now made an application for special leave to appeal the recusal decision to the High Court of Australia. While BATAS’s appeals have been pending, plaintiff has chosen not to prosecute the underlying claims in the DDT.
In January 2009, proceedings were commenced by Terry Gottlieb in the Supreme Court of Victoria against various BAT Group companies and other tobacco companies alleging smoking and passive smoking-related illness. These proceedings were discontinued on 27 October 2009.
In 2001, proceedings were instituted by Rolah Ann McCabe in the Supreme Court of Victoria against BATAS. Findings were made against BATAS in March, April and May 2002 by the trial court. These findings were overturned by the Victorian Court of Appeal in December 2002 and March 2003. An application for special leave to appeal to the High Court of Australia by the McCabe estate was refused in October 2003. Since that time, the case has largely been dormant. As of 19 November 2009, BATAS has been awarded AUS$1,102,378.45 (approximately £600,000) in costs (out of AUS$2,098,693 claimed (approximately £1.2 million)) arising out of the trial and the appeals before the Victorian Court of Appeal.
In November 2006, BATAS commenced proceedings against Slater & Gordon (an Australian plaintiff law firm who represented the plaintiff in the McCabe case (see above)) in a matter relating to the leaking of legal documents to the press and public. British American Tobacco Australia Limited commenced parallel proceedings against Slater & Gordon and Peter Gordon (a partner of the firm) regarding the same matter. In early 2007, Roxanne Cowell (executrix of the McCabe estate) was joined as a defendant in each proceeding. The proceedings are before the Victorian Supreme Court. On 15 December 2009, the respective proceedings against Slater & Gordon and Peter Gordon were resolved in favour of BATAS and British American Tobacco Australia Limited, with costs to be determined after the proceedings against Roxanne Cowell are resolved.
As of 31 December 2009, there were approximately 312 (2008: 310) individual cases that remain pending in Brazil against Souza Cruz in which it is contended that the smokers’ diseases or deaths were caused by cigarette smoking. Since 1995, approximately 598 individual cases have been filed in Brazil against Souza Cruz. Approximately 16 of these cases have resulted in court decisions favourable to plaintiffs in either the civil court or court of appeal, all of which remain on appeal.
Four individual smoking and health cases have been filed in Canada. Of these, two (Battaglia and Landry) have been in abeyance since 2004 and 2003 respectively. A third (Spasic) is active and currently at a preliminary stage. One smoking and health case (Stright) has been filed in Nova Scotia but had previously been in abeyance since 2005. The parties have been summoned to appear before the court where it is anticipated that the plaintiff will advance its case to avoid the claim being quashed.
On 16 December 2008, the Civil Court of Santiago dismissed an individual smoking and health action filed by Mr Andres Javier Rada Meza against Compania Chilena de Tabacos S.A. (Chiletabacos) and other tobacco manufacturers in 2006. In March 2009, plaintiff’s appeal period lapsed, making the Civil Court of Santiago’s decision final. There are eight smoking and health claims pending against Chiletabacos that have not been decided yet. The most recent smoking and health claim against Chiletabacos was purportedly served on 15 January 2010 and was brought by the estate of a smoker who allegedly died as a result of lung cancer.
In February 2006, Mr Jorge Enrique Guerra Ruiz filed a claim against, among others, British American Tobacco Central America S.A. (Costa Rica branch) (BAT Costa Rica), alleging improper use of terms in language other than the official country language (Spanish) on cigarette packs. BAT Costa Rica was cleared of Mr Ruiz’s allegations in October 2009, except for the Consumer Defence Commission’s finding that it was liable to a fine for the use of ‘light’. This decision has been challenged by BAT Costa Rica.
In 2003, a claim was filed against House of Prince A/S and Skandinavisk Tobakskompagni A/S claiming €65,000 (approximately £58,000) (plus damages and costs) for damages to health including addiction, arising from allegations of failure to warn, defective design, and product manipulation. The trial has been postponed until at least late 2010.
On 10 October 2008, following a consolidated trial, the Helsinki District Court dismissed three individual smoking and health actions that were brought against British American Tobacco Nordic Oy (BAT Nordic), amongst others, and ordered each plaintiff to pay BAT Nordic costs of €125,000 (approximately £100,000). In December 2008, plaintiffs appealed the District Court’s decisions in their entirety but one plaintiff (Lindroos) has subsequently withdrawn her appeal. Trial of the action before the Court of Appeal began on 31 August 2009 and concluded on 7 December 2009. A decision of the court is expected from the Court of Appeal in May 2010.
Fifteen individual smoking and health cases are ongoing in the Republic of Ireland, in which plaintiffs seek compensation for various alleged tobacco-related injuries. The Group defendants involved in these claims are PJ Carroll & Co. Ltd and Rothmans of Pall Mall (Ireland) Ltd, although both Group companies are not named in every action. One case (McCormack) was dismissed by judgment perfected on 17 July 2007, but plaintiff has filed a notice of appeal and no date for the appeal has yet been set. Dismissal motions in 13 other cases are pending the decision of the Supreme Court in McCormack. The fifteenth case is currently dormant.
As of 31 December 2009, there were approximately 226 individual ‘lights’ cases in Italy pending against British American Tobacco Italia S.p.A. (2008: 1,672). Almost 75 per cent of the individual ‘lights’ cases filed in Italy are pending before lower level (Justices of the Peace) courts, with the remainder on appeal. Because of the type of court involved, the maximum possible recovery in damages is €1,033 (approximately £900) (plus legal fees and costs). In 2007, 2,230 ‘lights’ cases were filed by a single plaintiffs’ counsel in the jurisdiction of Pescopagano. In 2008, all of these claims were withdrawn. As of 31 December 2009, approximately 1,128 cases (not including the Pescopagano cases) have been suspended or dismissed. There are 38 individual smoking and health cases pending before Italian Civil Courts (including eight cases on appeal, which includes both the seven cases pending before the Court of Appeal and the one case pending before the Supreme Court), in which it is contended that the smokers’ diseases or deaths were caused by cigarette smoking.
In October 2002, a plaintiff commenced a smoking and health case against British American Tobacco Kenya Limited. Since November 2007, the parties have been engaged in a dispute over plaintiff’s failure to produce requested discovery.
On 17 December 2008, the District Court of Amsterdam dismissed an individual smoking and health action filed in June 2005 by Peter Josef Romer against British American Tobacco Western Europe Area II B. V. and British American Tobacco Manufacturing B.V. Plaintiff had until 18 March 2009 to appeal the dismissal but failed to do so. Therefore the decision is now final.
A claim for PLN50,000 (approximately £11,000) was brought by an incarcerated plaintiff and served on British American Tobacco Polska S.A. in March 2009, alleging addiction and unspecified health losses. The plaintiff moved to voluntarily withdraw the claim in November 2009 and a decision from the court regarding costs and discontinuation of proceedings is currently pending.
In 2003, a plaintiff filed a smoking and health claim against Ceylon Tobacco Company Limited (CTC). CTC filed preliminary objections which were rejected by the District Court and Court of Appeal. Leave to appeal to the Supreme Court was granted and the appeal will be heard on 11 May 2010.
(d) Consumer protection litigation
On 8 September 2008, a consumer fraud action was filed in the Savelovsky District Court of Moscow by the Ministry of Health and Social Development in Russia against OJSC British American Tobacco – Yava (Yava) and its retail distributor, CJSC International Tobacco Marketing Services. The claim seeks a declaration from the court that the use of the words ‘light, superlight, and 1mg light’ on cigarette packets of Yava’s low tar cigarettes are misleading and unlawful, and further seeks the removal of these descriptors. In November 2008, the action was dismissed for lack of jurisdiction, but on 13 January 2009 the dismissal was reversed on appeal. Leave to appeal this decision was refused but the case was remitted to the district court for a hearing on the merits and on 25 March 2009 was dismissed in full. Plaintiff’s appeal, heard on 16 June 2009, upheld the first instance decision and plaintiff had until 16 December 2009 to lodge a further appeal. No appeal was filed.
Other litigation outside the US
Regulatory and Constitutional Challenges
In 2009, there were regulatory and constitutional challenges in Brazil, Canada (Quebec), South Africa, Paraguay, Turkey and Uruguay. In Brazil, a regulatory challenge was brought by Souza Cruz against the National Surveillance Health Agency (ANVISA). This action mainly challenged the legality of the images of new health warnings and sought an injunction to suspend the effects of the resolution that established these images until a final decision is issued on the merit of the case. Although initially granted, the injunction was later disregarded by the Court of Appeal. A first instance decision is pending. In Quebec, ITCAN and other Canadian manufacturers filed a constitutional challenge of the Quebec Medicaid Legislation. The Attorney-General of Quebec has filed a motion to dismiss the challenge and this motion will be heard on 8 to 9 April 2010. In South Africa, in September 2009, a constitutional challenge was commenced by British American Tobacco South Africa (Pty) Ltd against the Ministry of Health. This challenge relates to one to one communications between tobacco manufacturers (together with importers, wholesalers and retailers) and consenting adult tobacco consumers. Further regulatory challenges in Turkey, Paraguay and Uruguay have also been instituted to challenge certain health warning, and tobacco product packaging and labelling requirements.
On 9 December 2009, ITCAN was served with a class action filed by Ontario tobacco farmers and the Provincial Marketing Board, which alleges that between 1989 and 1994 ITCAN improperly paid lower prices for tobacco leaf destined for duty-free products, as opposed to the higher domestic leaf price.
In September 2008, a new action was commenced by a minority shareholder of Yava in relation to approval of interested-party transactions. The claim was filed by Branston Holdings Ltd. and its value was 4,362,537,236 roubles (approximately £89.1 million). The claim was filed against British American Tobacco Holdings (Russia) BV, whereas Yava was a third party to the case. We have been informed that Branston has filed an application with the court to withdraw its claims in full. The next hearing is currently planned for 22 April 2010, at which the issue of withdrawal of the claim and consequent termination of the proceedings will be examined by the court.
While it is impossible to be certain of the outcome of any particular case or of the amount of any possible adverse verdict, the Group believes that the defences of the Group’s companies to all these various claims are meritorious on both the law and the facts, and a vigorous defence is being made everywhere. If an adverse judgment is entered against any of the Group’s companies, an appeal will be made. Such appeals could require the appellants to post appeal bonds or substitute security in amounts which could in some cases equal or exceed the amount of the judgment. In any event, with regard to US litigation, the Group has the benefit of the RJRT Indemnification. At least in the aggregate, and despite the quality of defences available to the Group, it is not impossible that the Group’s results of operations or cash flows in particular quarterly or annual periods could be materially affected by the final outcome of any particular litigation.
Having regard to all these matters, the Group (i) does not consider it appropriate to make any provision in respect of any pending litigation and (ii) does not believe that the ultimate outcome of this litigation will significantly impair the Group’s financial condition.
Performance guarantees given to third parties in respect of Group companies were £nil (2008: £1 million).