Victory from the Ashes of Defeat on Light Cigarettes? (2)

An opportunity exists for government to vindicate consumer rights otherwise denied by the decision in the light cigarettes class action.  As some will remember, the class action over light cigarettes - Sparkes v. Imperial Tobacco - was dismissed by the Newfoundland and Labrador Court of Appeal on March 22, 2010, on the ground that a direct relationship on "privity" between consumer and manufacturer was a requirement of the Act.

The suit claimed that light and mild cigarettes are a deceptive marketing scheme to encourage addicted smokers to smoke cigarettes using these descriptors, as a more healthful alternative to regular cigarettes, and an acceptable alternative to quitting. 

The government has an opportunity to snatch victory from the ashes of defeat.  Section 16 of the Trade Practices Act provides that the Director of Trade Practices may maintain an action that has been started by a consumer.  Privity would no longer be in issue if the Director were to use his powers under the Act. 

The passage of time and the tolling of limitations recommends that a decision on whether to proceed should soon be taken.  As a result of an agreement with the Director of Competition, Imperial Tobacco discontinued the manufacture of light and mild cigarette brands at the end of December 2006.  A six year limitation period governs, which means that the opportunity presently exists to claim damages on behalf of consumers arising over the period 2005 and 2006.  The amount of damages involved would still be very significant.  An argument also exists that Imperial Tobacco is guilty of fraudulent concealment of the cause of action, which would render the six year limitation inapplicable.  However, if the case were to settle, it would probably be on the basis of revenues from consumer deceptions perpetrated in 2005 and 2006.

A decision to proceed with a Director's action would be consistent with the reforming intent of Bill 33, and would garner widespread support from consumers and consumer organizations.  The Department of Justice is nearing a decision on whether to revive the light cigarettes class action with the assistance of the Director of Trade Practices.  The Department has had this issue under review for more than six months, and should make a decision soon.  The passage of time likely diminishes the potential financial recovery on behalf of consumers with each passing day.