Selling large quantities of a dangerous, addictive, product brings with it certain legal risks. >>>
LINK: Tobacco companies ordered to pay $15B in damages
Three tobacco companies have been ordered to pay $15 billion in damages after losing a historic class-action lawsuit.
Judge Brian Riordan on Monday ruled in favour of two groups representing Quebec smokers, ordering Imperial Tobacco, Rothmans Benson & Hedges and JTI-MacDonald to pay for punitive and moral damages…..
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Business Ethics Highlights 
The court was not right in holding the tobacco companies accountable for damages to the plaintiffs. It is not reasonable to blame companies for consumers’ ignorance of common knowledge, nor for the decisions that the consumers freely make when the necessary information is common knowledge. Also, this court decision could potentially have a negative effect on the public, as it may intimidate not only tobacco companies, but other companies in other industries into scaling back their operations, which would result in less jobs, less tax revenue, less production, and ultimately less goods available to be sold to the consumers who have the sense and discipline to enjoy those goods in moderation. These reasons are elaborated on below.
While it is true that tobacco companies during the 20th century were not keen on placing their products’ adverse health effects in their adverts or packaging, the linkage between tobacco and ill-health is known to have been general knowledge at that time. Awareness of potential risks of tobacco have been around since the early 20th century, and the results of a scientific study linking smoking and cancer were made publically available in Canada in December 1952. Some people might be tempted to jump quickly saying:
“But the public doesn’t normally read scientific journals, how can anyone be expected to have read THAT?”
That December 1952 publication was NOT in some obscure academic periodical, but in the widely-read Readers Digest, in an article titled “Cancer by Carton” written by an R. Norr (from “History of Tobacco Control in Canada,” by Neil Collishaw, 2009.) While it was not the tobacco companies who made this information public, it was made public nonetheless. Also, how complete that Reader’s Digest article is in listing all the possible dangers of tobacco is irrelevant; as long as it has the crucial point of tobacco being a possible source of disease and death, which it does, it serves the necessary purpose of letting the public know that tobacco bears significant danger. In addition, the dangers of tobacco were taught in government-funded public education programs since at least as far back as the 1960’s (Collishaw, 2009.) While it is true that such programs were less visible in the 1970’s, that reduction did not have a material effect on the average annual per adult consumption of cigarettes—during 1972-1980 the average annual adult consumption remained between 3,700 and 3,900 cigarettes (Collishaw, 2009.)
It is not reasonable to blame companies for consumers’ ignorance of what has become common knowledge, nor is it reasonable for a person to expect a company to refrain from downplaying the negative aspects of its products. That is not to say that companies are morally right in downplaying their products’ flaws; it is just that reasonable people would be aware that no company would want to say anything to tarnish the image of their own livelihood, and would not blindly trust the tobacco companies statements (or lack thereof) for information on how safe cigarettes are.
Ultimately, one of the wheels which needs to turn for capitalism to work is the consumers’ freedom to decide what, when, and how much they buy. Note, consumers’ freedom. If consumers choose to buy tobacco, despite its dangers being common knowledge, then that is their own conscious decision for which they must take responsibility.
In terms of social utility, there are two points I would like to raise.
First, one might think that this court decision is good, in the sense that it could discourage tobacco companies from advertising, making sales, etc. to the point where public exposure to second-hand cigarette smoke and its health risks is greatly reduced. While that is certainly a good outcome, the means to that outcome is not justified if it places the blame on the wrong party. It is not the tobacco companies’ fault whenever their consumers smoke in places they shouldn’t. Consumers, once they are in possession of the things they buy, become responsible for how, when, and where they are used. Cigarette buyers have legal obligations not to smoke by entrances, in public transit, and other prohibited places. They arguably also have the moral obligation not to smoke in situations or places where, while it is legal to smoke, there is a moral reason not to (e.g., in the presence of an infant, elderly person, person with respiratory illness, etc.) Just to illustrate the absurdity of blaming the tobacco companies for the consumers’ lack of self-control and blatant incompetence in making sound personal choices, consider these examples. Would you blame a sports equipment company for every car broken into with a baseball bat? Or would you blame the carjacker who misused their product? Would you blame a liquor company for every drunken punch, every drunken car accident, and every drunken death that ever happened? Or would you blame the people who lack a sense of moderation? Would you blame a fast food company (in a world where the dangers of cholesterol are common knowledge) for the death of avid eater? Or would you blame the eater’s poor thinking, discipline, and lifestyle? Would you blame Internet, phone, and other technology companies for people being lethargic social media addicts? Or would you glorify them further by continuing to be their loyal customer, continuing to pay them every month, and slavishly buying each and every new little toy they release? Just something to think about.
Those last examples bring me to my second point concerning social utility. Such a move by the courts could have an unintentional negative effect on the public; if the tobacco companies are held responsible for consumers’ irresponsible behavior, other companies in other industries might be intimidated as well. The liquor industry and the fast food industry, for instance, might now be afraid of being blamed for consumer irresponsibility as well. If these industries and companies are intimidated into scaling back their operations, jobs will be lost, production will be lost, tax revenue will be lost, and consumers may end up actually suffering—because there would be less goods available for the people who have the good sense and discipline to enjoy such products in moderation.
To conclude, the court was not right in holding the tobacco companies accountable for damages to the plaintiffs. It is not reasonable to blame companies for consumers’ ignorance of common knowledge, nor for the decisions that the consumers freely make when the necessary information is common knowledge. As discussed above, this court decision could also potentially have a negative effect on the public, as it may intimidate not only tobacco companies, but other companies in other industries into scaling back their operations, which would result in less jobs, less tax revenue, less production, and ultimately less goods available to be sold to the consumers who have the sense and discipline to enjoy those goods in moderation.