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Product Liability e-COMMUNIQUÉ - February 2017

Published: 02/06/2017

By Glenn M. Zakaib, Peter Henein, Emily Larose, Stefanie Holland, Jason M. Holowachuk, Christopher Horkins, Jeremy Martin, Alexandra Murphy, Stephanie Voudouris

In This Issue

  1. Words from the Wise: Court Provides Guidance to Pharmaceutical Manufacturers and Products Litigators in Pre-Certification Dismissal of Drug Class Action
  2. Plaintiffs’ Failure to “Connect the Dots” Between Duty to Warn and Alleged Harm Leads to Certification Denial in Drug Class Action
  3. The Early Bird Catches the Win: Recent Decisions Affirm the Importance of Due Diligence in Limitations Defences to Product Liability Actions
  4. Occupier’s Waiver of Liability Invalidated under the Consumer Protection Act
  5. Regulating Risk: Keeping You Up-To-Date on Product Regulation
  6. What We’re Up To
  7. Editor’s Note

Words from the Wise: Court Provides Guidance to Pharmaceutical Manufacturers and Products Litigators in Pre-Certification Dismissal of Drug Class Action

By Jeremy Martin

Justice Perell’s summary judgment decision dismissing the plaintiff’s claim in Wise v. Abbott Laboratories Limited, a proposed pharmaceutical class action, is an important one for manufacturers not only for its central ruling, but for the procedural decisions and gestures towards future rulings that should give pharmaceutical manufacturers some guidance in respect of some of their day-to-day business practices.1

Background to the Case

The case concerned a drug called AndroGel™, a drug allegedly marketed for the treatment of low testosterone levels. The plaintiffs claimed that the condition the drug was marketed to treat, known as hypogonadism or “LowT,” was a ‘fabricated disease,’ and that the drug both caused adverse cardiac events and had no valid medical use.

The representative plaintiff was a 67 year old male with multiple cardiovascular risk factors, including a history of smoking and severe atherosclerosis. He took the drug and experienced no improvement, but had a heart attack within two months. He claimed it was due to the effects of the drug, and sued for negligence, unjust enrichment and waiver of tort.

Summary Judgment Granted

The Court granted summary judgment to the defendant prior to certification, after finding that no expert, on either side of the case, was comfortable making a causal connection between the drug and the likelihood of adverse cardiovascular events. The plaintiff had clearly established that use of the drug was associated with those events, but not that the events were caused by the drug.

Because the plaintiff could not establish that the drug could have caused the plaintiff’s heart attack, the other claims advanced on behalf of the proposed class fell apart. If the drug did not likely cause harm, then it could not have been dangerous enough to give rise to a claim for pure economic loss. Without proof that the drug provided no benefit there was no claim in unjust enrichment. Finally, as the law currently seems to stand, without predicate wrongdoing there could be no claim in waiver of tort.

Key Take-Away Principles

In coming to that decision, Justice Perell sent a few messages to the pharmaceutical industry:

  • There may be a duty to warn of non-causal associations: It was not necessary to decide the point in this case, but the Court mused that manufacturers may have a duty to warn of any negative health effects that tend to correlate with usage.
  • Experts are not ‘tainted’ by compensation from advisory panels or research grants: Justice Perell acknowledged the practical importance of advisory panels and the paucity of non-corporate funding for research projects, and rejected the plaintiffs’ position that these prior funding relationships with the defendant would have compromised the experts’ independence.
  • (Maybe) seek leave to bring more than three experts: His Honour candidly admitted he would not have permitted the defendant to produce seven expert witnesses (and their 19 reports), but for the fact that the plaintiff did not seek to enforce the expert limits under section 12 of the Ontario Evidence Act (which limits a party to three experts without leave or consent) until those horses had already left the stable. While the decision stated that there would be costs consequences to the defendant for exceeding the limits; having just won the case before certification on the strength of expert evidence, a products litigator is naturally left mulling over the third-grade maxim that it is often more productive to seek forgiveness than permission!

The decision is also highly recommended for anyone working through a case where general causation is in issue, as the Court goes into detail about how to assess the disparity between legal and scientific concepts of truth and causation.

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1 2016 ONSC 7275, <http://canlii.ca/t/gvsvz> [Wise].
 

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Plaintiffs’ Failure to “Connect the Dots” Between Duty to Warn and Alleged Harm Leads to Certification Denial in Drug Class Action

By Christopher Horkins

To date, we have reviewed a number of product liability cases in this newsletter that touch on the ongoing debate in Canadian class actions as to the degree to which evidence on the merits is appropriate to consider in a motion for certification. The Ontario Superior Court of Justice decision in Batten v Boehringer Ingelheim (Canada) Ltd., perhaps the first product liability class action decision of 2017, adds to this debate favouring a greater scrutiny of the merits in assessing the certification criteria.2 

Background to the Case

The plaintiffs in Batten sought to certify a class action against the manufacturer of Pradaxa, an anticoagulant medication used to treat sufferers of atrial fibrillation, a heart condition leading to strokes and heart attacks. Pradaxa was developed as an alternative to warfarin, another anticoagulant which many patients and physicians found inconvenient due to the need for constant monitoring, dose adjustments and dietary restrictions. Pradaxa, like warfarin and other anticoagulants, has the effect of propagating bleeding which, in some cases, may require the reversal of its anti-coagulant effect using an antidote. Up until April 2016, Pradaxa was sold in Canada without such an antidote. The plaintiffs alleged that Boehringer failed in its duty to warn patients about the lack of an antidote.

No Commonality, No Causation

While judges in other cases have been reluctant to delve into the merits at certification, Justice Perell did so here in issuing a rare denial of a pharmaceutical class action certification motion. Justice Perell’s analysis of the certification test focused almost exclusively on the “common issues” stage of the five part criteria under the Class Proceedings Act. He dismissed the plaintiffs’ motion for certification of a duty to warn claim due to a lack of commonality among the proposed common issues advanced by the plaintiffs, finding they “were unable to connect the dots between the duty to warn and the consequent harm suffered in a way that would satisfy the criteria for certification as a class action.”3

Justice Perell found that there was no basis in fact to conclude that the question of whether the defendants had a duty to warn patients of the absence of an antidote could be answered in common as there was no basis to conclude that the alleged failure to warn was either a source of harm or that the class would suffer any harm from not being warned. This was based, in part, on evidence presented by the defendants that a patient on Pradaxa who experienced a bleeding event was at no greater risk of unstoppable bleeding due to the lack of an antidote than a similarly situated patient on warfarin. Indeed, the evidence showed that the patient on Pradaxa would likely be in a preferable position.

Justice Perell also found that, even if there was a failure to warn, there was no basis in fact to conclude it would apply commonly across the proposed class. This finding was based on evidence that the decision to prescribe an anticoagulant, and the degree to which the availability of an antidote was relevant to that decision, was based on highly patient specific factors which were a matter of physician judgment on a case-by-case basis. In addition, Justice Perell adopted the British Columbia Court of Appeal’s reasoning in Charlton v Abbott Laboratories Ltd.4 to find that the plaintiffs’ failure to put forward a methodology to prove general causation (i.e., whether the lack of an antidote could give rise to or exacerbate life-threatening events among the proposed class) was fatal to the certification of the claim.

Key Take-Away Principles

Justice Perell’s decision in Batten adds weight to proponents of assessing a greater degree of merits based evidence at certification in product liability and other class actions. The decision affirms that a defendant may beat certification by leading evidence demonstrating a lack of causation between the alleged cause of action and the alleged harm suffered by the class. It also reaffirms the principle that, for a plaintiff to succeed in certifying a question of general causation, they must put forward a workable methodology for proving causation on a class-wide basis at certification. For manufactures faced with pharmaceutical and other product class actions, this is a welcome addition to a growing body of jurisprudence favouring a closer scrutiny of the merits before granting the court’s blessing to proceed as a class action.

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1 2017 ONSC 53, <http://canlii.ca/t/gwqds> [Batten].
2 Batten, supra at para. 7.
3 We discussed the Charlton case in our February 2015 newsletter.

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The Early Bird Catches the Win: Recent Decisions Affirm the Importance of Due Diligence in Limitations Defences to Product Liability Actions

By Alexandra Murphy

Two recent decisions in product liability cases before the Ontario Superior Court of Justice have reaffirmed the importance of plaintiffs conducting proper due diligence when amending a claim where the limitation period is at issue. In both Fontanilla v. Thermo Cool Mechanical and Ali v. Toyota, the Court closely scrutinized the due diligence conducted by plaintiffs seeking to amend their claims in the context of Ontario’s Limitations Act, 2002.1

Background to the Cases

The Ontario Limitations Act, 2002 creates a general two year limitation period for all claims, running from the day the claim was discovered, or ought to have been discovered by the plaintiff. In assessing when a claim ought to have been discovered, proper due diligence on the part of the moving party is a key consideration.

The Fontanilla and Ali decisions follow the recent Ontario Court of Appeal decision Galota v. Festival Hall Developments Ltd., wherein the Court took a permissive approach to when a plaintiff ought to have discovered a claim.2 In Galota, the Court found that a lack of due diligence is “not a stand-alone or independent ground to find a claim out of time.”3 Fontanilla and Ali clarify that, although due diligence is only one of a number of factors in assessing discoverability of a claim, it is an important factor that should not be overlooked. 

The Fontanilla Decision

The plaintiff commenced this action six days prior to the two year anniversary of an incident wherein the plaintiff suffered injuries at her nursing home from scalding water after her bathtub faucet burst. The nursing home operator and contractor were initially named as defendants. The plaintiff later brought a motion to amend its claim to add two additional defendants, alleged to be the manufacturer of the anti-scalding/mixing valve in the faucet. Since the plaintiff sought to add the new defendants more than two years after the incident, the Court had to consider whether the plaintiff had exercised reasonable diligence to identify the proposed new defendants within the two year period following the incident.

The plaintiff argued that the new defendants would not suffer prejudice from being joined as defendants since they were already third parties to the action. The Court rejected this argument, finding that as third parties to the main action, the new defendants were “protected by the intervening layer of defendants that serve as the first line of defence.”4 The Court also clarified that properly assessing limitations issues is equally important when bringing a separate action as it is for adding defendants.

The Court dismissed the plaintiff’s motion, largely on the basis that the plaintiff ought to have discovered the possible liability of the proposed new defendants earlier. The moving party failed to prove that it had taken sufficient steps in conducting its due diligence towards identifying the proposed new defendants. For instance, the plaintiff provided no evidence of steps taken to recover the plumbing pieces in question and also agreed to waive delivery of a statement of defence.

The Ali Decision

The Ali decision demonstrates how a due diligence defence may be effective where existing defendants are faced with amendments seeking to add new allegations of defects which were not raised in the initial claim. In Ali, the defendant automotive manufacturer brought a successful motion for summary judgment to strike various portions of the plaintiff’s Amended Statement of Claim asserting new allegations not raised in the plaintiff’s initial pleading. The plaintiff’s initial claim focused on alleged steering and brake defects, whereas the amended claim alleged for the first time that a defective throttle control module was the cause of the motor vehicle accident at issue. The plaintiff had not sought to amend the statement of claim until more than two years after the accident in question.

The Court found that the allegations surrounding the defective module was the core cause of action in the Amended Statement of Claim and agreed with the defendants that the amended pleadings implicitly recognized that the claim was a new cause of action introduced outside of the limitation period. In assessing whether or not the claim was discoverable within the general two year limitation period, the Court referred to evidence that the plaintiff was part of a class proceeding and received reports that included reference to the defective model. The Court concluded that the evidence was “overwhelming” that the plaintiff ought to have discovered the defective module within two years of the car accident and granted the defendants motion to strike the new portions of the claim.

Key Take-Away Principles

The Fontanilla and Ali decisions reinforce the importance of due diligence in the context of limitation period issues that regularly come up in product liability actions. Despite the Court of Appeal’s statement in Galota that due diligence is but one of a number of factors in determining when a claim ought to have been discovered, Fontanilla and Ali clarified that it is a very important factor to which courts will afford considerable weight. Where there is strong evidence that a claim was discoverable at an earlier date, the court is unlikely to allow plaintiffs to add new defendants or new defect allegations outside of the general two year limitation period.

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1 Fontanilla v. Thermo Cool Mechanical, 2016 ONSC 7023 <http://canlii.ca/t/gvzwk> [Fontanilla]; Ali v. Toyota, 2016 ONSC 5909 <http://canlii.ca/t/gtr5w> [Ali].
2 Galota v. Festival Hall Developments Ltd., 2016 ONCA 585 <http://canlii.ca/t/gsm8b> [Galota].
3 Galota, supra, at para 23.
4 Fontanilla, supra, at para 54.

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Occupier’s Waiver of Liability Invalidated under the Consumer Protection Act

By Suhuyini Abudulai

A recent decision of the Ontario Superior Court of Justice highlights how waivers of liability, which are often present in product liability cases, may be impacted by the statutory protections under consumer protection legislation. In Schnarr v. Blue Mountain Resorts Limited, the court determined a novel legal issue  addressing the intersection of the Consumer Protection Act (Ontario) (the CPA) and the Occupiers’ Liability Act (Ontario) (the OLA) as to the protections afforded to consumers under the CPA and to suppliers under the OLA and how these Acts relate to waivers of liability for recreational activities.1

Background to the Case

Schnarr, who had purchased a season ski pass from Blue Mountain, had a collision on a trail run and sustained injuries. Schnarr initially commenced action against Blue Mountain as a tort claim for breach of the OLA and subsequently amended the action to plead breach of the deemed warranty under the CPA, specifically section 9(1) which provides that a supplier is deemed to warrant that the services it is providing are of a reasonably acceptable quality. Schnarr asked the court to conclude that section 7(1) of the CPA vitiated Blue Mountain’s waiver in its entirety. Section 7(1) prohibits the waiver of a consumer’s substantive and procedural rights under the CPA.

The parties agreed that Schnarr,  Blue Mountain and the ski pass were subject to the following definitions under the CPA: “consumer,” “supplier,” and “consumer agreement.” When completing the agreement with Blue Mountain to purchase the ski pass, Schnarr agreed to a comprehensive waiver that expressly barred him from pursuing any legal action against Blue Mountain, including a waiver of negligence and breach of contract and breach of any statutory duty. A breach of contract would include a breach of the deemed warranty under section 9(1) of the CPA, which is a deemed term of a consumer agreement.

Waiver Partially Severed

The court underwent a thorough analysis of (1) the interplay between the OLA and the CPA, (2) a review of the modern principle of statutory interpretation, (3) a review of legislative intent and legislative history of the CPA and OLA,  and (4) severance in the context of agreements.

The court determined that the Blue Mountain waiver’s reference to breach of contract and “any type of loss or damage” engaged the CPA protections and had the effect of “bleeding into CPA territory”. However, the court did not vitiate the entire waiver and instead read down the waiver as to sever the portion that excluded claims involving substantive and procedural rights under the CPA – the remainder of the waiver remained enforceable. The court found this remedy to be the least disruptive to both parties and to allow for an interpretation of the waiver that was considered to recognize the protections for occupiers under the OLA and for consumers under the CPA.

Key Take-Away Principles

The Schnarr case highlights that (1) occupiers who are also suppliers may be subject to the CPA; and (2) suppliers must carefully consider the wording used when drafting waivers – in this case, the “exceptionally broad” nature of the waiver triggered the application of the CPA. Following the release of the Schnarr decision, a similar finding was reached in another case, Woodhouse v. Snow Valley.2 An appeal of the Schnarr decision was recently filed and our Product Liability and Consumer Protection law teams will be watching the appeal with interest.

Suhuyini Abudulai is a partner in Cassels Brock’s Financial Services Group and the firm’s resident expert on all matters pertaining to the Consumer Protection Act. She is the author of the Annotated Ontario Consumer Protection Act, an invaluable resource for all things related to Consumer Protection law in Ontario.

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1 2017 ONSC 114 (CanLII), <http://canlii.ca/t/gww79> [Schnarr]
2 2017 ONSC 222 (CanLII), <http://canlii.ca/t/gwzb6>

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Regulating Risk: Keeping You Up-To-Date on Product Regulation

By Emily Larose

Here’s a look at what’s new with product regulation and oversight in Canada.

a. Food Labelling Requirements

On December 14, 2016, the Honourable Jane Philpott, Minister of Health, announced amendments to the Food and Drug Regulations regarding the nutrition facts table and list of ingredients on packaged foods.

The amendments are in force as of December 14, 2016. The food colour amendment is effective immediately. However, the food industry has until December 14, 2021, to become fully compliant with the other amendments. During this transition period, packaged products must either fully comply with the former Food and Drug Regulations or the amendments. Partial compliance with both versions of the regulations is prohibited.

The proposed regulatory amendments can be found here. Some of the noteworthy changes are outlined below. Further details can be found on the Cassels Brock Canadian Life Science Law blog.

b. Biosimilar Biologic Drugs

Health Canada has recently released the revised Guidance Document: Information and Submission Requirements for Biosimilar Biologic Drugs. The new Guidance Document, replaces the March 2010 Guidance for Sponsors: Information and Submission Requirements for Subsequent Entry Biologics.

Health Canada has significantly revised and updated the Guidance Document to use key terms that are now consistent with the U.S. Food and Drug Administration and European Medicines Agency. The updated and highly-anticipated Guidance Document also contains new provisions regarding clinical and non-clinical data requirements, labelling requirements, and criteria for selecting reference biologic products. Additionally, the Guidance Document also adds new instructions for satisfying the scientific review requirements of the Biologics and Genetic Therapies Directorate, authorization of indications, and a stance on interchangeability.

The new Guidance document can be found here.

c. Moving Towards Legalization and Regulation of Marijuana For Non-Medicinal Purposes

The Task Force on Cannabis Legalization and Regulation publicly released its report in December outlining its recommendations on the Legalization and Regulation of Cannabis in Canada.

Production, and access to, marijuana for medical purposes is already subject to regulation in Canada. The Task Force was created to advise on the design of a system to legalize, strictly regulate and restrict access to marijuana for non-medicinal purposes.

Among other things, the Task Force recommended:

  • A national minimum age of purchase of 18 years
  • Restrictions on advertising and promotion similar to those applicable to tobacco and strict sanctions on false or misleading promotion (including with respect to therapeutic claims)
  • Regulation of production of cannabis and its derivatives drawing on the practices of the current cannabis for medical purposes system
  • Provincial regulation of both wholesale and retail distribution (with a specific recommendation to avoid co-location of alcohol or tobacco and cannabis sales, where possible).  Notably, the Task Force recommends dedicated storefronts as well as direct-to-consumer sales
  • Maintenance of a separate medical use regime to support patients

A complete copy of the Task Force’s Report can be found here.

d. Consumer Product Regulations

Health Canada has published amendments to the following regulations:

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What We’re Up To

  • Glenn Zakaib and Chris Horkins will be attending the Defence Research Institute’s 2017 Product Liability Conference in Las Vegas, Nevada, on February 8-10, 2017. Cassels Brock is proud to sponsor this year’s conference. Both Glenn and Chris will be speaking at the conference:

    Chris Horkins will be speaking on “Defending Product Liability Claims in Canada: What You and Your Clients Need to Know” at the Young Lawyers’ Breakout Session on February 8; and

    Glenn Zakaib will be chairing the Automotive Special Litigation Group session on February 10.
  • Jason Holowachuk has joined the Cassels Brock Product Liability Team as a partner in the firm’s Calgary office. Jason has experience defending some of the world’s largest manufacturers of medical products and recreational vehicles.
  • The firm’s Canadian Life Science Law Blog, launched in 2016, has been very active. Check it out  for commentary and insights on trends in the Canadian life sciences sector, including timely regulatory updates. Find it here and visit often!

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Editor’s Note

Our colleague, Stefanie Holland, the founder and original driving force behind this newsletter, has returned from maternity leave effective January 19, 2017. As such, this will be my final edition of the newsletter as “Interim Editor” and I will be handing the reins back to Stef for the next issue. It has been a real pleasure bringing you the latest in Canadian product liability and class actions updates over the past several months and I look forward to continue doing so as a contributor under Stef’s editorship once again. - Chris

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