National Post
(Financial Post)

National Post Online

Thursday, November 25, 1999

Smoking out the rule of law

Stripping most legal defences from tobacco firms, but not from other makers of dangerous products, augurs a return to arbitrary rule

By George Bragues

Can things get much worse for the tobacco industry or for the rule of law in Canada? Some financial analysts in the United States are seriously contemplating the industry's bankruptcy in the wake of a recent Florida court decision that could eventually cost it hundreds of billions of dollars. Now comes another batch of internal company documents, released earlier this week by Health Canada, purportedly showing that the industry has been actively trying to addict youths as well as adults to smoking, and justifying in the minds of many a get-the-tobacco-industry-at-any-cost mentality.

The cost includes the integrity of our liberal democratic institutions, as evidenced by British Columbia's Tobacco Damages and Health Care Costs Recovery Act. Currently being challenged on constitutional grounds by the Canadian Tobacco Manufacturers Council, that act exposes the willingness of the anti-tobacco lobby -- aided by greedy politicians and moral fanatics -- to undermine the rule of law and the separation of powers.

B.C. got the idea for its law from Florida, which amended its Medicaid Third-Party Liability Act in 1994 to help it recover costs from companies whose products caused people to require government-funded health care. The Florida statute bars companies from arguing that individuals knowingly assumed the risk of consuming their products; allows the state to prove damages with statistical relationships taken from the general population, instead of having to show that the product caused a specific individual to suffer; and mandates that companies pay any court judgments in line with their market share.

Originally, the law contained a retroactive clause and declared companies liable for harming a class of individuals without the state having to identify any one of them. However, in 1996, the Florida Supreme Court ruled these breathtaking provisions unconstitutional, leaving the rest untouched.

When B.C. enacted its own legislation in 1997, it adopted most of the Florida provisions, even the ones struck down as unconstitutional. The law effectively diluted the possibility of arguing smokers were aware of the risks, the tobacco companies' most successful argument, by making the state the plaintiff. Industry lawyers have traditionally used the risk defence against individuals claiming damages. The law also prevents individuals from being compelled to testify in court about their smoking.

Meanwhile, the first sentence of the Charter reads: "Whereas Canada is founded upon principles that recognize ... the rule of law." That's a prohibition on the capricious exercise of power, meaning that the legal system must be predictable, so that individuals and firms can securely go about their business. Government officials cannot use the laws to single out particular parties for actions that otherwise pass muster. And legislators should not be able to foresee exactly who will be affected by the laws they make.

Instead, the B.C. statute's retroactive clause makes a mockery of legal predictability. Unlike the Florida legislation, which theoretically applies to any industry, the B.C. law's wording doesn't even bother hiding the fact that it is specifically targeting tobacco manufacturers. Providers of fast food, alcohol, skiing equipment and other goods that affect health care costs need not worry, at least for now, about being held to the same standards of liability as the tobacco companies. Nor need the retailers and distributors of tobacco, even though they are accessories -- but then they don't have as much money as the manufacturers.

What's more, the rule of law requires that defendants have the opportunity to defend themselves. Yet how can the government possibly lose when it doesn't much matter whether people rationally consented to the risks of smoking, when tobacco lawyers can't examine individual smokers on the witness stand, and when all the government has to do is point to statistics correlating smoking with various illnesses?

DON'T EXPECT THE COURTS TO STOP THE ANTI-TOBACCO LOBBY'S IMITATION OF HENRY VIII

Tobacco companies might still be able to contend that the government long ago recognized the dangers of smoking, while still continuing to cover tobacco-related health care expenses. They could also argue that, given all the tax revenues from tobacco, the government does not lose a cent on health care because smokers typically die before they collect on retirement benefits and incur charges for old age care. But government lawyers could counter that the state, because of a commitment to socialized medicine, has no choice but to fund their citizen's health care. Besides, the idea that tobacco saves the government money because it kills people off prematurely could be hard for judges and juries to stomach.

All this is reminiscent of Henry VIII, who, upset at a cardinal living in exile, decided to charge his mother with treason. No court, though, would convict her. Undaunted, the king got an obsequious legislature to pass a bill declaring her guilty on the claim that a flag adopted by rebel forces was found in her house.

Our democratic institutions were designed to prevent the usurpation of the judicial function for political purposes through the separation of powers. The legislative branch makes the law, the executive branch enforces the law and the judiciary interprets the law to determine culpability, or so goes the theory. The facts are otherwise.

Don't expect the courts to stop the anti-tobacco lobby's imitation of Henry VIII. The Supreme Court has been reluctant to use the rule of law clause in the Charter and judges long ago shied from rulings that would effectively preserve property rights, preferring instead to emphasize the collective's right to regulate business.

And don't expect other revenue-hungry jurisdictions, who are awaiting the fate of B.C.'s legislation, to uphold the rule of law. If the B.C. case is successful in snuffing out the tobacco industry's rights, this very dangerous precedent would embolden them, too, to turn the clock back to the days of arbitrary rule.

George Bragues teaches economics and humanities at Toronto's Humber College.