Ontario court upholds stay of legal proceedings against 3 tobacco companies

An Ontario court has upheld an order that suspended legal proceedings against three major tobacco companies, rejecting arguments from lawyers representing Quebec smokers.

Ontario Superior Court Justice Thomas McEwen issued his decision Wednesday but did not lay out his reasons, saying those would be released at a later date.

The companies _ JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. _ were granted the stay last month as part of the creditor protection process.

They obtained the protection shortly after Quebec's highest court upheld a landmark decision that ordered them to pay more than $15 billion to smokers in two class-action lawsuits.

The companies have said they had no choice but to seek the stay so they could continue to operate as they try to negotiate a global settlement with all those who have claims against them, including the class-action members and several provincial governments.

But lawyers representing the class members argued the stay in their case should be revoked if the tobacco companies plan to appeal the Quebec ruling to the Supreme Court of Canada.

At a hearing earlier this month, they said the companies cannot negotiate a settlement in good faith while also challenging the findings of the court.

The lawyers said if the companies plan to seek leave to appeal, the matter should be sent back to the Quebec court so it halt the implementation of its ruling until the appeal process is complete.

In his decision, McEwen said the stay order would require parties to seek the court's permission before launching new proceedings involving the companies, including any applications for leave to appeal to the Supreme Court.

The judge had previously extended the order to June 28, with a hearing to be held a few days earlier.

The Quebec Council on Tobacco and Health, which was behind the class-action suits, said it would hold off commenting on the ruling until the judge's reasons were released.

Lawyers representing several provincial governments had opposed the Quebec lawyers' application, saying one group of claimants should not be prioritized over others.