Canada: British Columbia: The New Haven For Class Action Certification?

INTRODUCTION

In a September 17, 2013, decision of the British Columbia Supreme Court, Charlton v. Abbott Laboratories Ltd., the court certified a class action regarding the diet drug Meridia, containing sibutramine hydrochloride monohydrate (sibutramine), against both the brand-name and generic manufacturers and confirmed that the bar for certification remains very low in British Columbia – and may now be the lowest in Canada.

Quebec has historically been perceived as the haven for class actions in Canada due to its low statutory threshold and the lack of an evidentiary requirement for certification. However, while the statutory criteria have remained the same since Quebec enacted its class proceedings legislation, the procedural landscape has evolved in the last few years. Recent decisions have demonstrated a shift to a stricter and more thorough analysis of the proposed class representative's personal claim and involvement in the proceedings. While there have been some recent signs that courts in Quebec have started to take a harder look at certification of class actions (several proposed class actions regarding medicines and medical devices have been denied authorization to proceed in that province), the B.C. courts continue to certify similar claims.

FACTS

Meridia was approved by Health Canada for use as part of a weight-loss regime in late 2000. Abbott distributed and sold Meridia in Canada from 2001 until the withdrawal of the drug from the market in October 2010 after publication of the results from the Sibutramine Cardiovascular Outcome Trial (the SCOUT Study) regarding the long-term effects of sibutramine on the rates of cardiovascular adverse events. Apotex distributed its own generic version of a weight-loss drug containing sibutramine from March to October 2010.

B.C. SUPREME COURT DECISION IN CHARLTON

Johnson J., the chambers judge in Charlton, found that the plaintiffs had adequately pleaded causes of action for breach of the Business Practices and Consumer Protection Act, breach of the Competition Act, in negligence, including a breach of the duty to warn and a duty to not to market or recall the drug, and in waiver of tort (except with respect to the U.S. parent of Abbott Laboratories Ltd.). The chambers judge declined to certify the claims regarding negligent design and negligent manufacture but did not strike those allegations. Although Abbott asserted that the product monograph contained adequate warnings of cardiovascular risks, Johnston J. concluded that the adequacy of the warning is a matter of trial where the evidentiary record will be "more complete".

The chambers judge in Charlton certified the action against both Abbott and Apotex based on substantially the same claims, with little or no material facts pleaded differently, without any significant discussion of whether there was any basis in fact for the various common issues proposed against each of the defendants. The question of entitlement to a disgorgement of revenues from the sale of sibutramine (i.e., waiver of tort) was certified without commenting on the B.C. Court of Appeal's decision in Koubi v. Mazda, which held thata breach of the Business Practices and Consumer Protection Act cannot provide the basis for an action or remedy of restitution founded in waiver of tort. For more on this decision, see our July 2012 Blakes Bulletin on Class Actions: British Columbia Court of Appeal Restricts Waiver of Tort.

PARALLEL DECISIONS IN QUEBEC

Notably, the British Columbia Supreme Court decision in Charlton is inconsistent with previous decisions in Quebec. Authorization of a proposed class action regarding Meridia was denied by the Quebec Superior Court in MacMillian v. Abbott Laboratories, which was upheld by the Quebec Court of Appeal, on the basis that some of the petitioner's allegations were contradicted by his own evidence and the remaining allegations were insufficient to establish a prima facie right or claim. The Quebec courts did not find either the voluntary withdrawal of sibutramine or the results of the SCOUT study to be sufficient evidence of a colour of right.

Further, the B.C. court rejected Abbott's argument that the proposed class definition was fatally flawed, as it did not exclude Quebec residents, and/or that it would be an abuse of process to allow a class action to include Quebec residents notwithstanding the decision in MacMillian. The British Columbia Supreme Court concluded that the Quebec decision was with respect to a different plaintiff and different evidence, and ultimately included Quebec residents within the class definition that was certified. (However, the B.C. Class Proceedings Act requires residents of other provinces to opt in to a B.C. class action).

This is not the first class action to be certified in British Columbia but denied authorization in Quebec. In actions commenced in both provinces regarding children's and infants' over-the-counter cold medicines, certification of the proposed class action was granted by the British Columbia Supreme Court in Wakelam v. Johnson & Johnson, but authorization to institute a class proceeding was denied by the Quebec Superior Court (which was upheld by the Court of Appeal), in Perreault v. McNeil PDI, based on the finding that the petitioner's action was "bereft of any chance of success." The certification of the B.C. action is currently under appeal.

IMPLICATIONS

While courts in Quebec (and in Ontario – see our May 2012 Blakes Bulletin on Class Actions: Court Denies Certification in Pharmaceutical Class Action) appear to be subjecting proposed class proceedings regarding medicines and medical devices to increased scrutiny at the certification stage, these actions continue to be certified in British Columbia. It now appears that British Columbia is the most plaintiff-friendly province for class actions in Canada.

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