Canada: Cannabis Product Liability Class Actions Come To Canada

Last Updated: February 21 2019
Article by Canadian Class Actions Monitor, Dorothy Charach, Leah Ostler and Brandon Kain

Most Read Contributor in Canada, March 2019

As cannabis legalization moves north of the border, cannabis companies in Canada will inevitably face similar legal issues as they have in the United States, where the decriminalization of cannabis in several jurisdictions has been accompanied by a new set of product liability class actions (see, e.g., Flores v. LivWell, Dist. Ct., Denver County, 2015-CV-33528). While there have been limited cases in Canada on this issue to date, a recent decision of the Nova Scotia Court of Appeal demonstrates the difficulties that defendants may encounter in defending against such claims. The ruling in Downton v Organigram, 2019 NSSC 4 ("Downton"), released on January 18, 2019, marks the first time that a cannabis product liability class action has been certified in Canada.

Brief Background

Organigram Inc. ("Organigram") is a medical cannabis producer with headquarters in Moncton, New Brunswick. In December 2016 and January 2017, Organigram, in conjunction with Health Canada, issued voluntary recalls of a number of its products after some of the products were found to contain traces of pesticides that are not authorized for use on cannabis plants under the Pest Control Products Act, S.C. 2002, c. 28. The plaintiff, Ms. Downton, claimed that she suffered adverse health consequences as a result of consuming the recalled cannabis, and claimed various remedies including general and punitive damages.

The Decision

The Honourable Justice Anne Smith certified several common issues, the first three of which relate to the negligent distribution, marketing, and sale of the recalled cannabis. The other issues relate to breach of contract, breach of the Competition Act, breach of consumer protection legislation, breach of Sale of Goods legislation, and unjust enrichment. Justice Smith's findings in respect of negligence included the following:

A. The pleadings disclose a cause of action on negligent marketing, despite the plaintiffs' failure to plead material facts about the risks versus the benefits

Justice Smith found that the pleadings in Downton were adequate to satisfy this first certification criterion in relation to a negligent distribution, marketing, and sale claim, despite the fact that the plaintiffs did not plead that "the alleged defect in the cannabis outweighed the value of its use". Justice Smith distinguished the case from Martin v Astrazeneca Pharmaceuticals Plc, 2012 ONSC 2744 ("Martin"), in which such a pleading was found to be necessary, as in Downton "[t]he pesticides were unauthorized and contrary to the Access to Cannabis for Medical Purposes Regulations, SOR/2016-230, and should not have been present."1

B. In order to show that there is a workable methodology to determine general causation, there is no need to tie a product to a particular harm

In order to find commonality in relation to negligence-based claims, it is necessary for plaintiffs to demonstrate that there is some basis in fact that a credible methodology exists through which the issue of general causation could be proven on a class-wide basis at trial: Charlton v Abbott Laboratories Ltd., 2015 BCCA 26 ("Charlton"). In Downton, Justice Smith accepted that the test from Charlton applied; however, she found that the plaintiffs had satisfied this test even though they did not define the specific disease or harm allegedly caused by the pesticides.2 The plaintiffs own expert had testified that the risk posed by the pesticides was "indefinable" and that studies assessing the risk to human health by consumption of the pesticides and adverse consequences had "not been conducted to date".3 But Justice Smith noted that "uncertainty around the causal connection between the consumption of these unauthorized pesticides and adverse health consequences cannot be used to Organigram's advantage" and concluded that there was "some evidence by which general causation may be proven that is sufficient for certification".4

C. Despite the many individual issues left to be determined, a class action would still be the preferable procedure

Justice Smith acknowledged Organigram's argument that, in order to establish liability for personal injury, it would be necessary for individual claimants to determine specific causation as well as damages, which would involve a number of individual issues including duration of use of cannabis, the method of consumption, age, metabolism, interactions with other medications, etc. Justice Smith noted that further hearings would be necessary and they will depend on the specific circumstances of the individual. However, she decided that the "plaintiff has shown some basis in fact for its contention that a class proceeding is the preferable procedure", in that the common issues would be a significant component of each member's claim.5

Key Takeaways

  1. Cannabis Product Liability Class Actions Are On Their Way North: Particularly with the upcoming legalization of edible cannabis products in October, cannabis producers should be prepared for the prospect of defending product liability class actions.
  2. Similarities to Medical Product Class Actions: The Downton case suggests that Canadian case law relating to cannabis product liability will develop along similar lines to the existing jurisprudence on medical product class actions, as it cites heavily from decisions in this area.6
  3. A Cautionary Tale for Cannabis Companies: Licensed producers must be aware and adhere to the applicable pesticide regulations and should consider vigilant testing of crops to ensure all safety standards are met and are consistent with brand marketing. Class actions of this nature are by no means limited to medical cannabis producers, and may very well affect the recreational industry as well.

Footnotes

1. Downton, at paras. 105-109

2. Downton, at paras. 200 and 210

3. Downton, at para. 212 and 215

4. Downton, at paras. 214 and 220

5. Downton, at paras. 299-308

6. These decisions include Martin and Charlton, two cases in which McCarthy Tétrault successfully acted as counsel for the defendants in defeating certification.

To view original article, please click here.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions