Tobacco growers steer clear of dispute

Ontario tobacco growers are trying to keep from being caught in the crossfire of a legal battle between the provincial government and cigarette manufacturers.

The Ontario Flue-Cured Tobacco Growers' Marketing Board and some individual farmers launched class-action lawsuits during the past year for $50 million each against Imperial Tobacco, JTI-MacDonald and Rothman's, Benson and Hedges.
All three statements of claim in the action, filed in Superior Court in London, deal with a period of activities the companies are alleged to have carried on between 1986 and 1996 in which some tobacco was supposedly purchased under a lower export price than paid for domestic use, but was really used in the country.
The class action seeks the difference between the export price paid for tobacco sold during the period and the domestic rate the growers claim they should have been paid.

The allegations in the statements must still be proven in court.

More recently, though, Imperial notified the provincial government that it wanted to withhold periodic payments to the Ontario government on its portion of a global settlement of more than $1 billion that it reached with Ottawa and the provinces in 2008 after pleading guilty to violations of the Excise Act, which cover the same period.

Imperial's move is tied to the tobacco growers' class action in that the company holds to the position that the interests of the growers were covered in the global settlement.

The company claims that any money that might be due the growers in their action should be taken from the payments and put in trust.

The provincial government commenced its own action asking a court to rule on whether the claims of the growers should be settled by arbitration or by litigation.

Sutts, Strossberg LLP, the Windsor-based law firm pressing the class action, disagrees and says the growers were never a party to the global settlement.

"The position of the (tobacco) board is straightforward. Nobody settled our claim," said William Sasso, a lawyer with the firm.
"The board had no part in the negotiations leading to the global settlement. In fact, they weren't aware of the negotiations until they were done and a settlement was announced. So, we take the position that it has nothing to do with us."

"We are plowing ahead in our class proceedings against the cigarette manufacturers."

The three companies have not filed statements of defence yet because the class action has not been certified.

Meanwhile, other tobacco producers have filed separate class actions against the federal government on behalf of farmers who have suffered financial losses in Ottawa's alleged failure to enforce Excise Act provisions; and against the provincial government for its alleged failure to enforce provisions of the Ontario Tobacco Tax Act and Retail Sales Tax Act.

In their suits filed in October, Weninger Farms Ltd., an Elgin County-based company with a farm in Oxford County, and Stanley and Linda Koscik, who also operate an Elgin County farm, allege the federal government has not done enough to stem the illegal sale of tobacco products, by not enforcing provisions of the Excise Act and the; Excise Tax Act which regulate the production and taxation of tobacco products.