Tobacco Documents Online

1 Applicant RJR-MacDonald Inc. 's Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 CAUSE: 500-05-009755-883 C.s.M. i0 20 CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL No: 500-05-009755-883 SUPERIOR COURT RJR-MACDONALD INC., a body politic and corporate having its principal place of busi- ness in Quebec at 2455 Ontario Street East, in the City and District of Montreal, Applicant -vs - THE ATTORNEY GENERAL OF CANADA Respondent 30 40 MOTION FOR DECLARATORY JUDGMENT (Article 453 C.C.P.) INTRODUCTION i.- Applicant seeks a declaration that the Tobacco Products Control Act (S.C. 1988 c. 20) (hereinafter the "Control Act") which comes into force on January ist, 1989 is inoperative as being beyond the jurisdiction of the Parliament of Canada and as infringing the Canadian Charter of Rights and Freedoms (the "Charter"); 2.- The Control Act prohibits all forms of advertising of tobacco products with effect in large part on January i, 1989. The right to advertise a product which may be lawfully sold is a vital component of the right of free- dom of expression guaranteed by the Charter. The rights of consumers who choose to smoke to receive information as to the choice and type of tobacco products available

2 Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 20 3O 40 is likewise protected; 3.- The imminent suppression of Applicant's right to advertise its lawful products creates a situation of urgency, requiring an early resolution of the legal issues; THE APPLICANT AND ITS BUSINESS 4.- Applicant is a corporation governed by the laws of Canada which, together with its predecessor entities, has carried on business in Canada as a manufacturer and distributor of tobacco products continuously since 1858; 5.- Applicant has corporate offices and its principal manufacturing facilities in the City of Montreal. Appli- cant employs over i000 people across Canada, of whom approxi- mately 550 are located in Montreal; 6.- Applicant is the registered owner of the trade marks "Export 'A'", "MacDonald Special" and "MacDonald Select" and the registered user of the trade mark "Vantage", which are used to distinguish and identify its principal brands of cigarettes in Canada. It also owns the trade mark "Export" to identify adn distinguish its fine cut tobacco products as well as numerous other trade marks for other brands of cigars, cigarettes and pipe tobacco; 7.- Applicant makes its products and trade marks known by advertisements in print media such as magazines and news- papers, on outdoor billboards and other signs, at points of sale and by sponsoring cultural, sporting and other like events; 8.- Applicant has two principal competitors in Canada, Imperial Tobacco Limited (Imperial) and Rothmans Benson & Hedges Inc. (Rothmans). Applicant's present share of the Canadian cigarette market is approximately 17% compared to approximately 54% for Imperial and 27% for Rothmans; 9.- The total cigarette market in Canada has been de- creasing for several years. Advertising is Applicant's principal means of competing for a greater share in this declining market;

Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 2O 30 40 i0.- The advertising of tobacco products has been subject to industry self-regulation since 1964. Under the terms of the self-regulatory code of 1972 Applicant and its compe- titors voluntarily refrained from advertising cigarettes on radio and television, agreed to a number of other rules regulating the characteristics of cigarete advertising and promotion and undertook to carry on their cigarette packages and advertisements a health warning from Health and Welfare Canada; THE IMPUGNED LEGISLATION ii.- The purpose of the Control Act is stated in section 3 which provides as follows: "3. The purpose of this Act is to provide a legislative response to a national public health problem of substantial and pressing concern and, in particular, (a) to protect the health of Canadians in the light of conclusive evidence implicating tobacco use in the incidence of numerous debilitating and fatal diseases; (b) to protect young persons and others, to the extent that is reasonable in a free and democratic society, from inducements to use tobacco products and consequent dependence on them; and (c) to enhance public awareness of the hazards of tobacco use by ensuring the effective communication of pertinent informa- tion to consumers of tobacco products." 12.- The means chosen to effect the stated purpose of the Control Act relate exclusively to the advertisement of tobacco products and to requirements concerning health warnings. The Act does not purport to deal with the sale, distribution or use of tobacco products;

4 Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 20 30 40 13.- Effective January Ist, 1989 most Canadian advertising of tobacco products will be prohibited by section 4 of the Control Act, which provides in part as follows: "4(1) No person shall advertise any tobacco product offered for sale in Canada. (2) No person shall, for consideration, publish, broadcast or otherwise disseminate, on behalf of another person, an advertisement for any tobacco product offered for sale in Canada. (3) For greater certainty, subsection (2) does not apply in respect of the distribution for sale of publications imported into Canada or the retransmission of radio or television broadcasts originating outside Canada. (4) No person in Canada shall advertise a tobacco product by means of a publication published outside Canada or a radio or television broadcast originating outside Canada primarily for the purpose of promoting the sale in Canada of a tobacco product." 14.- By subsection 4(5) of the Control Act, advertising by means of billboards and other signs will be restricted commencing on january i, 1989 and banned as of January i, 1991; 15.- By section 5 of the Control Act, most point of sale advertising such as posters and display materials will be prohibited as of January i, 1989. As of that date - retailers will be permitted only: (a) to expose tobacco products for sale; (b) to post signs referring generically to those tobacco products and their prices, but only in the form prescribed by regulation and without the use of any trade mark; (c) to retain, but only until December 31, 1992 at the latest, advertising fixtures of a more permanent nature

5 Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 20 30 40 which they were already displaying before January 25, 1988 or which they are obliged to display under the terms of a contract entered into before that date; 16.- Section 8 of the Control Act prohibits any trade mark associated with tobacco products from being applied to, or used in association with, any non-tobacco products or any service, activity or event. To this prohibition there is a transitional exemption in respect of products already manufactured or under contract and an additional exemption so drafted as to permit the continued use of the "Dunhill" trade mark on non-tobacco products; 17.-(a) Section 9 provides inter alia for mandatory health messages to be carried on all tobacco packages in accord- ance with regulations; (b) Subsection 17(f) authorizes the Governor in Council to adopt regulations prescribing the content, position, configuration, size and prominence of such messages; (c) The purpose and effect of these provisions is to authorize the Governor in Council by regulation to further restrict or in its discretion to abolish Applicant's right to advertise its products through the use of its trade names and trade marks or otherwise on its product packaging; 18.- If validly enacted, the Control Act will prevent Applicant from advertising its lawful products and deprive those members of the public who choose to smoke of informa- tion which they are entitled to receive; 19.- Applicant has therefore an interest in having deter- mined as a matter of urgency, and in any event prior to January ist, 1989, the following questions: (i) Is the Tobacco Products Control Act within the legislative competence of the Parliament of Canada? (ii) Is the Tobacco Products Control Act inconsistent with the Canadian Charter of Rights and Freedoms? 20.- It is the submission of the Applicant that:

6 Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 20 3O 40 (i) The Tobacco Products Control Act is ultra vires the Parliament of Canada as being, in pith and substance, legislation with respect to classes of subjects falling within provincial legislative competence, and that (ii) The Tobacco Products Control Act ia inconsistent with the Canadian Charter of Rights and Freedoms and is, in consequence, of no force or effect. GROUNDS 21.- The grounds on which Applicant bases its submission are the following: A. DIVISION OF POWERS 22. The purpose and effect of the Control Act is to ban the advertisement of a class of products which may be legally sold. Subject to federal jurisdiction with respect to broadcasting the regulation and control and advertising is a class of subject falling within the legislative compe- tence of the several provinces; 23. Federal legislation with respect to a class of subject falling within provincial legislative competence enacted to remedy a "national public health concern" as described in section 3, would fall within the legislative competence of the Parliament of Canada rather than that of the provinces only if the necessary legislative response thereto were such that provincial legislation would be in- effective; 24. There is nothing to indicate that provincial le- gislation in respect of advertisements for tobacco products would be ineffective. Provincial legislation regulating, and in some cases prohibiting, advertisements for various classes of products is widespread; 25. The Control Act is, in pith and substance, legisla- tion to regulate the conduct of a particular business and is not legislation with respect to criminal law. Except for the fact that it is national in scope it is not in substance different from numerous provincial statutes cover- ing the same or analogous classes of subject;

7 Applicant RJR-MacDonald Inc. 's Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 2O 30 40 B. THE CANADIAN CHARTER OF RIGHTS & FREEDOMS 26. The right to advertise a product which may be legally sold is a fundamental right and freedom protected by section 2 of the Charter. The right of the public to receive infor- mation communicated through advertisements for lawful products is similarly protected. The Control Act abolishes the pro- tected right with respect to tobacco products and is there- fore inconsistent with the Charter. 27. The prohibition against advertising tobacco products does not constitute a reasonable limit which can be de- monstrably justified in a free and democratic society within the meaning of section 1 of the Charter; 28. A limit on a right or freedom protected by the Charter may be saved by the operation of section 1 only where the authority imposing the limit discharges the burden of demonstrating that: (i) the objective which the measure imposing the limit in question is designed to serve a is sufficiently important to permit overriding the protected right or freedom; (2)(a) the measure was carefully designed to achieve the objective of the legislation, with a rational connection of the objective; (b) the measure impairs the right or freedom as little as possible; (c) there is a proportionality between the effects of the impugned measures on the protected right and the attain- ment of the objective; 29. For the purpose of this motion Applicant does not put in issue the legislative purpose of the Control Act as stated in section 3 thereof but says that the require- ments set out in paragraph 28 (2) (a) and (b) above are not met and that the Control Act is not validated by section 1 of the Charter because:

8 Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 i0 20 30 40 (i) a ban on advertising tobacco products is not designed to achieve and will not achieve the stated legislative pur- pose; (2) a total ban on advertising does not impair the protected right as little as possible; 30. While the onus of demonstrating that the two condi- tions put in issue by Applicant are met falls upon the Respondent, the Applicant further says: (i) That advertising of consumer products such as tobacco products which are already well known to the public is a form of competition designed to induce users of competitive products to try the brand being advertised and to retain the brand loyalty of those already using that brand; (2) That advertising of such consumer products does not stimulate overall demand; (3) That cigarette advertising is directed at persons who already smoke and does not induce non-smokers including young people to begin smoking; 31. Even if a ban on cigarette advertising would have an effect on overall demand or on the decision of non-smokers to begin smoking, which is expressly denied, more than 60% of all print media cigarette advertising in Canada is of foreign origin and is expressly excluded by section 4(3) from the operation of the Control Act. The effect of the Control Act will therefore be largely restricted to the suppression of brand preference advertising by Canadian manufacturers; 32. Even if tobacco advertising could affect overall demand, which is expressly denied, a total ban on advertising does not affect the protected right as little as possible. Without limiting the foregoing the government of Canada has itself recognized in respect of braodcast advertising of alcoholic beverages that advertising designed to promote general consumption may be prohibited while at the same time permitting brand preference advertising.

9 10 20 30 40 Applicant RJR-MacDonald Inc.'s Motion for Declaratory Judgment (Art. 453 C.C.P.), September ist, 1988 CONCLUSIONS WHEREFORE Applicant prays that its motion be allowed and that this Honourable Court: DECLARE that the Tobacco Products Control Act (S.C. 1988 c-20) is beyond the legislative competence of the Parliament of Canada as trenching on the jurisdiction of the provinces under section 92 of the Constitution Act, 1867 and is in consequence inoperative and of no force or effect; DECLARE that the Tobacco Products Control Act (S.C. 1988 c-20) constitues an infringement of rights guaranteed by section 2 of the Canadian Charter of Rights and Freedoms and is in consequence inoper- ative and of no force or effect; DECLARE that unless and until the judgment herein be set aside or modified, Applicant is entitled to make, publish, and disseminate otherwise lawful advertisements for its tobacco products notwith- standing any provision of the Tobacco Products Control Act. THE WHOLE WITH COSTS. MONTREAL, September ist, 1988 (s) MACKENZIE GERVAIS MACKENZIE GERVAIS Attorneys for Applicant (s) C.K. IRVING C.K. IRVING OF Counsel

I0 Affidavit of Peter Hoult, September ist, 1988 I0 20 AFFIDAVIT I, the undersigned, PETER HOULT, executive, resid- ing at 175 Cumberland Street, suite 1108, Toronto, province of Ontario, being duly sworn, do depose and say: THAT I am the Vice-Chairman of the Applicant RJR-MACDONALD INC.; THAT the facts alleged in the foregoing Motion are true and correct. AND I HAVE SIGNED (s) PETER HOULT PETER HOULT Sworn to before me in the City of Montreal, this ist day of September, 1988 (s) DIANE PAYMENT (#99 ii0) Commissionner for oaths for the District of Montreal 30 40