A decision from the Divisional Court last month confirms that defendants cannot avoid litigating against the best-prepared plaintiff by strategically defending (or not defending) certification motions in different jurisdictions.
The decision, Kirsh v Bristol-Myers Squibb, 2021 ONSC 6190, upheld Justice Morgan's refusal to stay an Ontario class action despite the authorization of a nearly identical action in Quebec. The conclusion was that there is no injustice in certifying a well-prepared action (or refusing to stay it) just because a similar action is certified elsewhere.
This is good for plaintiffs. The decision increases the odds that competition between rival class action firms will result in the best-prepared counsel prosecuting their claim-instead of triggering a race-to-the-bottom in which defendants settle with the least-prepared counsel and secure nationwide liability releases before anyone can cry "opt-out!"
The two proceedings: Kirsh v Bristol-Myers Squibb and Scheer v Bristol-Myers Squibb
Like many class proceedings, these actions have a storied procedural history. Here's what you need to know to understand the Divisional Court's decision:
The Ontario plaintiffs issued their proposed class action claim (Kirsh) in June 2016, alleging negligence, conspiracy, and failure to warn consumers about the side effects of two antipsychotic drugs. There were three sets of defendants, all of which were companies who manufactured and marketed the drugs.
The Quebec plaintiff issued his proposed class action claim (Scheer) in December 2016. It was like the Ontario claim, but missed the conspiracy and failure to warn allegations. The class period was also longer. Then, in September 2018, the Quebec Superior Court let one of the defendants out of the Quebec proceeding, effectively eliminating claims about one of the two products.
The Quebec action was authorized as a national class action first. The Quebec lawyers moved quickly, scheduling an authorization hearing for November 2019. The Ontario lawyers initially scheduled the certification hearing for January 2020, but the hearing wasn't until March.
Meanwhile, two days before the November 2019 authorization hearing, the Quebec team modified their claim, adding a conspiracy allegation and shortening the class period. This made the Quebec and Ontario actions virtually identical.1
The defendants did not oppose the Quebec action, even after the claim was changed. The real fight happened in Ontario.
Justice Morgan calls foul on the race to the bottom
In Ontario, the defendants resisted certification and concurrently moved for a stay. Justice Morgan remarked on the "impressive effort" from the defense in the Ontario action. In contending with the Ontario plaintiffs, defense counsel compiled a vast record, complete with lengthy submissions, multiple expert witnesses, and complex scientific data. A resource-intensive defense.
The defendants' position was that the Ontario action was an abuse of process, as it duplicated the claims in the Quebec action.
"Hang on," one might think, "wasn't the Quebec claim the one that was changed to match Ontario?" Justice Morgan spotted that, too.
In the decision refusing the stay and certifying the Ontario action as a national class action, Justice Morgan recalled a prescient decision from Justice Perell warning that a defendant at liberty to choose between class actions filed in different jurisdictions may engineer a "race-to-the-bottom"-maneuvering to litigate with the "least formidable foe." It can then use the result to fend off rival class actions.2
This is what the well-prepared Ontario plaintiffs argued the defendants were trying to do. After all, the defendants vigorously fought the Ontario proceeding, yet let the virtually identical proceeding in Quebec go undefended.3
Justice Morgan found that the defendants were "undoubtedly trying to benefit from the Scheer plaintiff's mysterious, last-minute decision" to copy the Ontario pleading. This would save them from having to litigate against the plaintiffs who put in "the deep work" required to certify the vigorously contested Ontario action. In brief, Justice Morgan thought the defendants' request for a stay of the Ontario proceeding was an attempt to fight only the "least formidable foe."4
Justice Morgan dismissed the stay motion and certified the class action. The legitimate Ontario action with the "better-crafted" claim did not become an abuse of process just because the Quebec action was authorized first.5
The appeal to the divisional court
The defendants weren't happy with Justice Morgan's decision. They appealed to the Divisional Court, arguing that (1) duplicative proceedings are presumptively an abuse of process; and, (2) Justice Morgan did not properly apply the preferable procedure requirement for class action certification.6
The Divisional Court unanimously dismissed the appeal, finding no errors in principle in Justice Morgan's decision and confirming that:
- Whether a class action is an abuse of process or the preferable procedure is a discretionary question.
- There is no rule or presumption that a duplicative class proceeding is an abuse of process-each case is to be decided on its own facts, and there is no limitation on what the court may consider.
- It is appropriate for the court to protect the interests of class members in having the action pursued by the more formidable foe.
The Divisional Court confirmed that there was no injustice in asking the defendants to defend against both class actions given their conduct: by refusing to oppose the Quebec action, the defendants assumed the risk that the Ontario action would be allowed to proceed. Per the Court, the administration of justice would be served by preventing a "race-to-the-bottom" and refusing to stay the action being prosecuted by counsel who extensively researched the merits of the case and crafted a better claim.
Footnotes
1. At paragraph 119 of his decision, Morgan J lays out the two pleadings side by side, showing that the Quebec claim is, with minor changes, a copy of the Ontario claim. See: Kirsh v Bristol-Myers Squibb, 2020 ONSC 1499, at para 119.
2. Kutlu v Laboratorios Leon Farma, S.A., 2015 ONSC 7117 at para 10.
3. At para 130.
4. At para 133.
6. The defendants also argued that Justice Morgan ignored the principles of comity. The Divisional Court did not make much of this argument.
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