Canada: Product Liability e-COMMUNIQUÉ - November 2014

Pruning the Weeds in Class Action Proceedings

By Emily Larose, Stephanie Voudouris

In its 2014 decision in Player v Janssen-Ortho Inc.¹  the British Columbia Supreme Court dismissed a class action claim against two pharmaceutical manufacturer defendants in a pre-certification summary trial. Resolution of substantive issues prior to certification is out of the ordinary in proposed class actions in Canada, especially in light of jurisprudence suggesting judicial reluctance to tackle complex matters at that early stage.  Decisions such as this may signal a growing willingness on the part of Canadian courts to address substantive as well as procedural issues at this early stage.

The Case

The action alleged, among other things, that prescription painkillers (transdermal fentanyl patches) manufactured, marketed and distributed by five drug companies were defectively designed and caused serious harm in ordinary use.

Prior to the certification hearing, two of the defendants (Teva Canada Limited and Sandoz Canada Incorporated) brought applications for a summary trial to dismiss the action against them. Teva and Sandoz argued that the Plaintiffs' claim was over inclusive because they manufactured different types of transdermal fentanyl patches.

The Plaintiffs argued that a summary trial was inappropriate because the class action had not yet been certified. Since the decision would only be binding on the Plaintiffs, other members of the proposed class could pursue the claim thus leading to the kind of duplicate proceedings that class proceedings statutes were enacted to avoid. The Plaintiffs argued that it would be more appropriate and efficient to certify the class and then hear the summary trial so that any decision would be binding on the proposed class as a whole.

The Decision

The Court ruled that a summary trial was appropriate and dismissed the case against both Teva and Sandoz.

While there is precedent in British Columbia of judgment being granted in pre-certification summary trials, previous such cases concerned questions of contract or statutory interpretation. By contrast, Jansen-Ortho Inc. involved many disputed facts, especially those put forward by experts, and a voluminous evidentiary record.

The Court emphasized that the purpose of the summary trial is to expedite the early resolution of cases by allowing parties to put in evidence via affidavits, rather than oral testimony. The court must consider a number of factors to determine whether a summary trial is appropriate. These factors include: the complexity of the matter, the urgency of the matter, the cost of litigation, and whether credibility is a critical factor in the determination of the dispute.

In determining that this case was appropriate for summary trial, the Court noted that:

• The parties had completed witness examinations and cross-examinations;
• Although the materials filed were extensive (in excess of 5000 pages), the issues were straightforward;
• Access to justice concerns expressed by the Supreme Court of Canada indicate that judges should interpret summary trial rules broadly so as to encourage the streamlining of trial proceedings and the recognition that access to justice does not necessarily mean relying on the conventional trial as a means to resolve disputes.

A fourth consideration may also have influenced the Court's decision, although it was not explicitly mentioned: the plaintiffs could still pursue their claims against the three remaining defendants.

It is important to note the Court's express recognition of the practical benefits of pre-certification summary trials. The Court acknowledged that a decision to dismiss the action in a summary trial can only bind the plaintiffs. It also noted, however, that where issues concern the liability of the defendant(s), the dismissal can serve as a catalyst for settlement between other members of the proposed class and the defendant(s), or as an incentive to narrow the issues to be tried. In this regard, the Court says:

Class actions are a powerful tool. They allow an action to proceed where an individual plaintiff would find the cost of an action prohibitive as well as in actions where the research and investigation is not within the ability of a single plaintiff. However, it is not a tool where simply making an allegation against a defendant or group of defendants is sufficient. There must be evidence to warrant the expense of a full trial (para. 207).

Evidence at a Pre-Certification Summary Trial

In most Canadian provinces, including Ontario, a pre-certification class proceeding is treated as an individual action. In the class action context, the Court ruled that evidence from members of the putative class is nonetheless admissible but only for the purpose of determining whether it would be unjust to decide the issues in the application through a summary trial. If evidence from the plaintiffs is not enough to justify a finding of liability, the plaintiffs can point to evidence from proposed class members to show the court why it would be inappropriate to allow the case to proceed via summary trial (i.e., the issues are too complex).

Key Take Away Principle

The Court's decision may signify a trend whereby courts will begin to address complex substantive issues during the preliminary stages of class action proceedings, thus requiring both plaintiffs and defendants to put their best case forward at an early stage. His reasons suggest that pre-certification summary trials may function as gate-keepers for superfluous class actions. In this regard, he expressed the view that "it is not a principle of class action law that weeds should be allowed to ripen and grow, instead of being nipped in the bud."

Footnote

1. 2014 BCSC 1122 (Janssen-Ortho Inc.)

"Beware of... Lawsuit"

By Peter Henein

The law on a party voluntarily assuming risk is pretty well set in Canada – there's even an old Latin maxim that dictates the law on the matter – volenti non fit injuria. The maxim holds that no wrong can be done to a person who consents to the injury.

Source: reddit

Recently, a photograph of a particularly clever warning sign went viral online (see @ThePeterHenein on Twitter). The sign appears to be an extension of the concept of volenti non fit injuria. The sign affixed to a fence warns of the following:

Please do not enter the dangerous area beyond this gate! You quite possibly will get hurt, then you will sue, then a protracted court battle will ensue exhausting your financial resources and you will lose because this sign that warned you will be "Exhibit 1".

This sign's popularity amongst legal practitioners provides an opportunity to reflect on the doctrine of voluntary assumption of risk – which comes up often when defending against product liability claims – and to analyse whether the statements in this sign are accurate. If someone did get hurt and sued the landowner, the legal proceeding may be protracted. Such a case would surely exhaust the parties' financial resources, and the sign would definitely be marked as an exhibit. However, the sign may not have sufficient information to limit the sign poster's liability.

Waiving Liability

Voluntary Assumption of Risk

Voluntary assumption of legal risk, if successfully argued, is a full defence to a negligence claim.²  In order to successfully make out this defence, the defendant must prove that the plaintiff voluntarily, with full knowledge of the nature and extent of the risk, expressly or impliedly agreed to incur such risk.³  In order to do so, the sign waiving liability must be brought to the plaintiff's attention, and the waiver must sufficiently detail the risk the plaintiff is accepting.

In Saari v Sunshine Riding Academy, the Court found that a sign at a riding academy warning "Riders Ride at their Own Risk" did not protect the defendants from liability. There was no evidence that the sign was brought to the attention of the injured. Furthermore, the Court found that even if there was such evidence, it was "doubtful whether the words used are wide enough in their ordinary meaning to cover negligence on the part of the servants of the Riding Academy."⁴

In contrast, the Court found that the defendant occupier was not liable in Galka v Stankiewicz. In this case, two individuals went to an archery range managed by the City of Toronto ("the City"). At the front of the range, the City posted a sign outlining a set of rules for the archery range and warning archers to enter at their own risk.⁵  While one archer was collecting arrows on the field, the other accidentally fired an arrow into his friend's eye. Both archers admittedly read the sign, which expressly prohibited this conduct. The Court found that the sign was "obvious, legible, concise and understandable."⁶  The City was not held liable.

Liability for the Landowner

So let's talk about the warning sign that went all abuzz online...

Although the sign that went viral provides some detail regarding the consequences of going beyond the gate, the sign most pointedly deals with legal ramifications. The sign does not detail the physical danger. Even though the sign is in plain sight, would it persuade a court to absolve the owner from liability? Possibly, but we would argue most likely not. Arguably, the financial pain that results from a long drawn out litigation may be severely damaging to a person's wallet and spirits. However, the sign posts no reference to what will actually cause the injury that could lead to a protracted law suit (horse stampede? unmarked holes? angry chickens?). There is no explanation of what constitutes the alleged danger beyond the gate. Consequently, a court would not find that the person who goes beyond the fence voluntarily assumed the risk.

The landowner may still successfully defend against a suit by someone who hops the fence and sustains an injury. Pursuant to the Ontario Occupiers' Liability Act, an occupier of premises owes a duty of reasonable care to ensure that persons entering the premises are reasonably safe while on the premises.⁷  However, this duty of care does not apply in respect of risks willingly assumed by the person who enters the premises. In such a case, the occupier only owes a duty to the person to not create a danger with the deliberate intent of doing harm or damage to the person and to not have a reckless disregard of the presence of the person or his property.⁸  Because the fence is locked and has a sign that posits the area beyond the fence is dangerous, the landowner would argue that the person going beyond the fence assumed the risks. The duty of care that the land owner would owe a person hopping the fence would be minimal. As long as the owner does not set up traps or other mechanisms designed to cause injury, the landowner would not be liable for any ensuing injuries.

However all is not lost ... while the sign makes a less than optimal waiver, it does do a good job at punishing the person who goes beyond the gate. Section 3 of Ontario's Trespass to Property Act states that entry on premises is prohibited when an occupier posts a notice on an enclosed land indicating the occupier's intention to keep people off the premises.⁹  The sign in question politely but firmly notifies the public that the landowner intends to keep people off the premises; the land is also enclosed by a gate.  Assuming this sign were posted in Ontario, a person going beyond the gate would be guilty of an offence and on conviction would be liable to a fine of not more than $2,000.¹⁰

Beyond the Gate

The image does not provide details of the dangers that lie beyond the gate. If the landowner has created danger with the intent of causing harm or has a reckless disregard of the presence of such a person, such as installing booby traps, a landowner may be held liable to a person who sustains injuries when going beyond the gate. The sign would be marked as exhibit one, but the hurt would be borne by both parties.

Litigation is expensive. If a person went beyond the gate, suffered injuries, and subsequently sued the landowner, the ensuing litigation would be expensive for both parties. If the landowner was not properly insured, then he or she would need to pay for the costs of litigation. Even if the landowner won the suit, the costs award would not cover the entire cost of litigation. In order to avoid the costs of litigation, the suit would most likely settle, and the sign would never make it in as an exhibit.

Fortunately for the landowner here, many trespassers do not know the doctrine of volenti non fit injuria. They do, however, know that law suits can be expensive. While a 'beware of dog' sign may not be a sufficient caution to scare trespassers, an expensive lawsuit is sufficiently terrorizing to keep away most intruders.

Key Take Away Principle

It would be pretty awful if this e-lert explained how expensive litigation was and then did not provide useful (and free) takeaways. If you want to have a legally enforceable sign that limits your liability, be sure to detail what dangers lay behind the sign. Otherwise you will be left with a sign that deters trespassers from going onto your property but does little in the way of limiting your legal liability. Most importantly, don't pull a "Wile E. Coyote" and set up a bunch of spring-loaded booby traps behind the sign. 

The contributions of Meredith Bacal, articling student, in the preparation of this article are gratefully acknowledged.

Footnote

2.Crocker v Sundance Northwest Resorts Ltd., [1988] 1 SCR 1186 at para 34.

3. Stevens v Hoeberg (1972), 29 DLR (3d) 673 (Ont HC).

4. (1967), 65 DLR (2d) 92 (Man QB) at 100.

5. 2010 ONSC 2808, aff'd 2011 ONCA 428.

6. Ibid at para 73. 

7. Occupiers' Liability Act, RSO 1990, c O-2 at s 3(1).

8. Ibid at s 4(1).

9. RSO 1990, c T-21, s 3.

10. Ibid at s 2(1).

Do You Own Your Tissue? Think Again. Court Declares Excised Human Tissue Personal Property

By Stefanie Holland

Is human tissue sampled for the purpose of diagnostic testing personal property? This was the question faced by the Ontario Superior Court of Justice in Piljak Estate v. Abraham.  While this issue has long been disputed in the United States, it has rarely been addressed in Canada until now.

Background

In May 2008, the defendant doctor performed a colonoscopy on Ms. Piljak during which he identified and excised a polyp in the ascending colon. In August 2009, Ms. Piljak underwent a CT scan at Sunnybrook Hospital for unrelated reasons, which revealed lesions in her liver and ascending colon.  A colonoscopy was performed and examination of a tissue sample revealed colorectal cancer, which resulted in Ms. Piljak's death in August 2011.

Ms. Piljak's estate subsequently commenced this action against Ms. Piljak's doctor, alleging that he should have detected the cancerous lesion during the 2008 colonoscopy and in failing to do so, breached the standard of care. The tissue block has been preserved and is in the possession of Sunnybrook Hospital, which is not a party to the proceeding.

The defendants brought a motion pursuant to rule 32.01 for the testing of tissue taken from the deceased plaintiff and in the possession of a non-party. Rule 32.01 permits the inspection of personal property where it appears to be necessary in order to determine an issue in the action and to permit the conducting of tests on samples. Ultimately, while the Court concluded that excised human tissue does constitute personal property, and that the testing was necessary to determine an issue in the action, the defendants made too many procedural errors to be successful in their motion.

Excised Human Tissue Constitutes Personal Property

In light of the fact that the Hospital's pathology department was in possession of the samples and had performed the testing, the Court determined that the Hospital owned the tissue samples. This was based on the fact that the tissue was subject to rights of ownership and constituted personal property to which inspection and testing under rule 32.01 apply.

Testing Is Necessary To Determine An Issue In The Action

The Court further addressed the question of whether the inspection and testing appeared to be necessary for the proper determination of an issue in the proceeding as required by the rule. For the proposed testing to meet this requirement, the moving party only needs to show a "reasonable possibility" that the proposed test will reveal something useful for the trier of fact.

The plaintiffs argued that the defendants had put forth no convincing evidence supporting the necessity of the testing.  However, the defendant's expert, Dr. Vincent, stated that with some early cancers, such as the HNPCC type, variance in the visibility of lesions can cause a missed diagnosis, and for this reason, it may be necessary to test the tissue.

The Court was satisfied that if the tissue established that Ms. Piljak's cancer was of the HNCPP type, that testing might go to the determination of whether the defendant doctor breached the standard of care, thereby fulfilling the requirement under rule 32.01.

Eight Reasons Why The Motion Failed

Despite the fact that the samples were declared personal property, this motion failed for eight reasons:

1. The defendants were requesting a form of relief that is not offered under the rule. The court was being asked to order the plaintiffs to request the doctors to conduct the testing but the rule only permits the court to order an inspection of property and permit the conducting of tests.
2. The defendants provided no evidence that they had retained someone to conduct the testing. The rule presupposes that the person inspecting the property is either a party or an expert retained by a party.
3. The defendants gave no evidence that the doctor they proposed to conduct the testing had the expertise to do so.
4. There was no evidence from the defendants that the doctor they were proposing to conduct the testing would be able to test for the HNPCC type cancer.
5. The defendants put forth no evidence as to when, where or in what manner the testing would be conducted. The rule requires the Court to "specify the time, place and manner of the inspection."
6. The defendants failed to adequately address the issue of prejudice to the plaintiffs, specifically whether, after testing, there will be sufficient tissue left for testing by the plaintiff's expert.
7. The defendants failed to serve the notice of their motion on Sunnybrook Hospital, which  possessed the tissue. The rule requires that the person in possession of the property be given notice.
8. The doctor who the defendants advised would be doing the testing, had not been served with the defendants' motion. Pursuant to the rule, any person who will be affected by the order sought, must be served.

Although Master Dash concluded that the tissue was personal property, his dismissal of the defendants' request to sample it was largely based on technical grounds.  However, the court did leave it open to the defendants to bring a fresh motion requesting the same relief, as long as they improved their position by satisfying the above criteria.

Key Take Away Principle

The significance of this decision is understated due to the Court's focus on the defendants' procedural errors, rather than on the guidance it provides in respect of peoples' rights to control what is done with their personal health data from their bodies. While this issue has long been disputed in the United States, it has rarely been addressed in Canada. This decision slightly shifts the Courts' previous view that such information goes to the personal integrity and autonomy of the individual. It further sheds light on what constitutes property and further, who owns that property.

However, if there is one thing to be learned from this decision, it is that parties and their counsel ought to be mindful of the procedural requirements of rule 32.01 to ensure that any need for testing on excised human tissue samples is not precluded merely by a procedural hiccup.

Even more significant, may be the potential effect of this ruling on stem cell research, the genetic pharmaceutical industry, and the potential for personal health data to become an increasingly valuable and hot commodity. 

Footnote

11.  2014 ONSC 2893 < https://www.canlii.org/en/on/onsc/doc/2014/2014onsc2893/2014onsc2893.html>  

Plaintiffs Locked Out of Recovery for Damages Relating to Poor Product Performance in Mazda Class Action

By Christopher Horkins

The recent decision of the Québec Superior Court in Fortin v. Mazda Canada inc. provides further basis for the growing trend against economic loss based tort claims in Canadian law.¹²  In a judgment delivered on May 20, 2014, the Court dismissed a class action brought against Mazda Canada Inc. ("Mazda"), the Canadian distributor of Mazda vehicles, which arose out of allegations relating to a design defect in the locking mechanism. The Court concluded that issues relating merely to quality of performance or functional deficiencies do not give rise to compensable design defects under statutory implied warranties of fitness.

The plaintiffs alleged that delivering a pressure blow to a specific area on the driver's side door, would cause the door to unlock. Beginning in September 2006, thefts using this technique were reported in British Columbia. As a result, Mazda developed a device to strengthen the door locking mechanism in December 2006 for new vehicles. No action was taken at that time to address the issue in vehicles on the road.

After the issue was reported in a Vancouver news broadcast in February 2007, break-ins to Mazda 3 vehicles increased dramatically and Mazda introduced a service campaign to install the strengthening device on existing vehicles. Mazda treated this issue as a customer satisfaction issue and advised its dealers against widespread publication of the issue in order to avoid spurring on further criminal activity taking advantage of the weakness in the locking mechanism. Approximately 75% of affected vehicles had completed the lock strengthening service by January of 2009, which increased to 82% by the time the common issues trial was heard in the fall of 2013.

The Québec class action was certified by the Court in June 2010 and divided the class into two sub-classes:

1. All natural and legal persons domiciled or residing in Québec, employing fifty (50) employees or less, and who are or were lessees, finance lessees or owner of a 2004, 2005, 2006 or 2007 Mazda 3 vehicle, and who were the victims of a theft or an attack which left one or more dents around the driver's door handle; and
2. All natural and legal persons domiciled or residing in Québec, employing fifty (50) employees or less, and who became lessees, finance lessees or owners of a 2004, 2005, 2006 or 2007 Mazda 3 vehicle, on which a driver's door lock strengthening device was installed after they took possession of the vehicle.

The plaintiffs sought various damages as a result of alleged breaches of implied warranties under Québec's Consumer Protection Act on the basis that the lock issue was a "design defect" causing the loss of use of the vehicle and that Mazda had misrepresented the quality of its vehicles through advertising. With respect to sub-class (1), the plaintiffs sought damages arising from the actual thefts or break-ins, including insurance deductibles assumed and the cost of repairing the dented doors of the vehicles. For sub-class (2), the plaintiffs sought damages for the disturbance and inconvenience of having the locking device installed at the dealership.

Although the Court found that the evidence led by both sides established that the locking mechanism clearly suffered from the weaknesses alleged by the plaintiffs, it also found that this weakness did not give rise to a design defect in breach of the warranties provided for in the Consumer Protection Act and that Mazda had not committed any misrepresentations as to the quality of its vehicles. As the court held, the mere presence of a deficiency, without manifestation of loss of use of the product, or any major inconveniences to the consumer, does not give rise to a breach of the statutory warranty.

In this case, the Court found that the lock performed as it should in its ordinary usage – that is, to lock the door. The warranty did not extend to require that the mechanism prevent a criminal with ill intentions from finding an illegal means to enter the car by force. The lock was found to comply with all applicable federal statutes and industry standards. While clearly there was an issue with respect to poor performance of the locking device, in the absence of any loss of use, the court found there was no design defect sufficient to impose liability under the Consumer Protection Act.

The Court also found that Mazda had not made any misrepresentations in advertising, as it never alleged to be providing a vehicle that was incapable of being broken into and no consumer could reasonably expect their vehicle to be immune from break-in, vandalism or theft. With respect to the claims of sub-class (2), whose vehicles had not been broken into, the Court found the damages claimed were only minor annoyances and were therefore, not compensable.

Key Take Away Principle

Although the decision is currently under appeal, if upheld, the dismissal of the Mazda class action is an important signal of the direction Canadian courts are taking against tort claims based purely in economic loss. Viewed together with Ontario courts' decision in Arora v. Whirlpool Canada LP (which we wrote about in our April Newsletter), the legal landscape now appears to be increasingly hostile to plaintiffs advancing claims based purely on economic loss from non-dangerous goods. The Cassels Brock Product Liability team will be monitoring the appeal closely.

Footote

12. 2014 QCCS 2617 <http://canlii.ca/t/g7dc3> [Mazda].  

1. Glenn Zakaib and Emily Larose attended the DRI Annual General Meeting in San Francisco from October 22 to 24, 2014. 
2. Glenn Zakaib, Emily Larose and Peter J. Henein contributed to "Getting the Deal Through – Product Liability 2014," a reference for product liability law that covers 29 jurisdictions worldwide. Glenn, Emily and Peter answered a select list of questions to complete the Canadian chapter of the publication, which covers topics like civil litigation systems, litigation funding, sources of law, and various other matters. To view their chapter, please click here.
   
   (Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through – Product Liability 2014 (published in July 2014; contributing editors: Harvey L Kaplan, Gregory L Fowler and Simon Castley of Shook, Hardy & Bacon LLP). For further information please visit www.GettingTheDealThrough.com .)

What Our Group Is Up To Now...

1. Glenn Zakaib, Peter J. Henein, Stefanie A. Holland and Christopher Horkins will be attending the DRI Product Liability Conference in Las Vegas on February 3 to 6, 2014.
2. Glenn Zakaib will be the Vice-Chair of the Automotive Special Law Group of the Defense Research Institute (DRI).
3. Peter J. Henein will be chairing the panel discussion on expert evidence and spoliation for the DRI Product Liability International Special Law Group in February 2015.
4. Glenn Zakaib will be participating in planning the Strictly Automotive seminar to be held in Nashville in November 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.