Brazil gives big tobacco companies 30 days notice in smoking lawsuit

FILE PHOTO: Cigarettes are seen during manufacturing process in BAT Cigarette Factory in Bayreuth

BRASILIA (Reuters) - The world's largest cigarette makers, British American Tobacco Plc and Philip Morris International, will have until early March to defend themselves in a lawsuit in Brazil over compensation for tobacco-related diseases.

Since last year, the companies have refused to receive subpoenas delivered to their local subsidiaries in the lawsuit brought the Brazilian solicitor general's office.

Souza Cruz Ltda, Philip Morris Brasil Industria e Comercio Ltda and Philip Morris Brasil SA, which produce 90% of the cigarettes sold in Brazil, maintained they were subsidiaries only and notifications had to be sent directly to their parent companies' headquarters in Britain and the United States.

But the federal judge hearing the case in Porto Alegre, Graziela Bündchen, ruled on Tuesday that the companies are the operational wings of the parent companies and fully capable of relaying the notifications to their head offices. She gave them 30 days to present their defenses.

The solicitor general's office, known as the AGU, said in a statement on Thursday that the cigarette companies had tried to delay the lawsuit, which will now be able to proceed in seeking "the just compensation the Brazilian people deserve."

The landmark lawsuit was filed by the AGU in May against the two multinational companies seeking to recover the public health costs for the treatment of 26 tobacco-related diseases over the previous five years.

A spokesperson for Souza Cruz said the company will study the decision. Philip Morris did immediately reply to a request for comment. The companies' lawyers have argued that they are not subsidiaries but rather "branches" of parent companies.

The lawsuit was heralded as historic by groups advocating for reduced tobacco consumption, such as the Alliance to Control Smoking (ACT), which said this week's ruling put the lawsuit back on track.

"It is very important that international headquarters are also held accountable," ACT legal director Adriana Carvalho said by email. "They profit from the business in Brazil and have always exercised power of control over their Brazilian units," she wrote.


(Reporting by Anthony Boadle; Editing by Daniel Wallis)