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Shifting fortunes in product liability class actions in Canada

During the relatively short history of class proceedings in Canada, manufacturers of products have found themselves at the receiving end of a significant number of class action claims. To date, the main battleground in respect of these claims has been the certification motion. Overall, the certification case law in Canada has weighed heavily in favour of certifying proposed class proceedings involving product liability claims. However, a few recent and notable dismissals of certification motions by Canadian courts over the past two years signal that a trend may be afoot; query whether the following recent defence wins reflect a reverse swing of the judicial pendulum back towards the centre of the certification arc between plaintiffs and defendants.

In late 2011, the Ontario Superior Court released a decision denying certification in Williams v. Canon Canada Inc., 2011 ONSC 6571. The plaintiffs had moved for certification of a proposed class proceeding on behalf of a class of owners of twenty different models of Canon's PowerShot cameras. The plaintiffs argued that the cameras would show an error message, caused by an alleged defect in their design or manufacture. They argued that this error made the cameras unfit for their intended use.

The Court refused to certify the class action. Of particular note was the court's analysis of the admissibility of the evidence proffered by the plaintiff in an effort to establish the existence of common issues. The first "expert" was a person purporting to have expertise in "consumer product failure". The second was an expert in web analytics and statistics, retained to determine whether the error message affected a large number of consumers based on the level of internet web chatter on the topic.

The defendants challenged the supposed experts on the basis that they were not properly qualified and their evidence did not meet the Canadian test for admissibility of expert evidence. The Court agreed that neither witness was adequately qualified to give evidence on the issues upon which they had opined. The qualifications of both witnesses were largely self-imposed, and they lacked the requisite expertise in the field.

While the court recognized that the evidentiary burden respecting the common issue element on a certification motion is low (all the plaintiff has to do is show "some basis in fact" that an issue raised may be common among the members of the proposed class), this burden must be discharged by relevant and admissible evidence. The court held that without the purported "expert" evidence, there was nothing left to support the plaintiff's claim of a common issue. This decision was subsequently affirmed on appeal by the Ontario Divisional Court [2012 ONSC 3692].

Next, in May 2012, the Ontario Superior Court refused to certify a class action relating to the antipsychotic drug, Seroquel, in Martin v. Astrazeneca Pharmaceuticals PLC [2012 ONSC 2744]. Among other things, the plaintiffs alleged that the drug caused significant health risks to those who used it, and that the defendants had failed to warn class members of these alleged risks, which included significant weight gain, problems with balance, elevated blood sugars, hyperglycaemia, loss of energy, numbness in the extremities, pancreatitis, blindness, etc.

In denying certification, the Court found that plaintiffs had failed to satisfy all five elements of the certification test. Among other things, the court ruled as follows: (1) The plaintiffs' pleading was "seriously deficient" and failed to disclose a cause of action. In the court's view, the pleadings were inconsistent, lacked clarity, failed to provide particulars, lacked material facts, and failed to identify the specific acts undertaken by the defendant which supported their claim; and (2) None of the common issues proposed by the plaintiffs were issues common to the class, the resolution of which would significantly advance the proceeding. This included the "general causation" question of whether Seroquel can cause weight gain and diabetes. The court held that, even if this common issue were resolved in favour of the plaintiffs, the plaintiffs had not provided any evidence to show that a methodology exists whereby general population data (or some other approach) could be used to asses this issue in common and arrive at an answer that would be of any use to the class. Each plaintiff would still have to prove that Seroquel caused his or her weight gain and/or diabetes.

The Ontario Divisional Court dismissed the plaintiffs' appeal of that motion decision [2013 ONSC 1169].

Following on the heels of the Martin motion decision, another judge of the Ontario Superior Court dismissed a motion for certification in the case of Arora v. Whirlpool Canada LP in August, 2012. That case involved an allegation that certain models of front-load washers supplied by Whirlpool failed to self-clean in the manner that allegedly had been represented to consumers. The claim alleged that these washers suffered from a common design defect that they fail to prevent a build-up of mould. However, the claim did not allege that the machines were dangerous, and the plaintiffs did not claim damages for any personal injury or property damage. Rather, the heart of the plaintiffs' claim was that allegedly the washers were shoddy products that were not worth their purchase price, and the plaintiffs claimed reimbursement of their "overpayment" as damages.

In essence, this was a claim for pure economic loss arising from an allegedly shoddy, but non-dangerous, product. The motion judge analyzed the statement of claim and concluded that this claim did not fall within any of the Canadian exceptions permitting a claim for pure economic loss. Therefore, the plaintiff's motion for certification was dismissed.

On appeal, the Ontario Court of Appeal extensively analysed each of the causes of action pleaded by the plaintiffs which the motion judge had found failed to disclose a reasonable cause of action -- claim for breach of warranty, claim for breach of implied conditions of fitness under the Sale of Goods Act, claim of misrepresentation by omission contrary to the Competition Act, and claim for economic loss for negligent design of a non-dangerous consumer product. The Court of Appeal agreed with the motion judge's assessment that the statement of claim failed to disclose a cause of action, and therefore upheld the dismissal of the certification motion [2013 ONCA 658].

Most recently, on January 30 2014 in Wakelam v. Wyeth Consumer Health Care, [2014 BCCA 36] the British Columbia Court of Appeal reversed a certification order in a proposed class action relating to children's cough and cold medicine. In 2008, Health Canada had reversed a long-standing policy that had permitted the sale of certain non-prescription cough and cold medicines for use by children. Manufacturers of such medicines had already voluntarily withdrawn such products from the market for use in children under the age of 2, but Health Canada now required them to re-label the medicines to instruct consumers that they should not be used for children under 6. The plaintiff alleged that she had purchased this type of medicine over a number of years, but she did not allege that she had given the medicine to her child or that her child had suffered any injury.

The crux of the plaintiff's claim was that in marketing the medicines for use in children under age 6, the manufacturers had engaged in "deceptive acts and/or practices" contrary to provisions of the Business Practices and Consumer Protection Act ("BPA") and the federal Competition Act. As damages, the plaintiffs sought reimbursement for their "waste of money" on the medications, as well as disgorgement of any benefits received by the defendants as a result of their alleged contraventions of those statutory duties. The motion judge granted certification, but this order was reversed by the BCCA. In brief, the BCCA determined that the primary causes of action pleaded, and the relief claimed, by the plaintiffs did not disclose a cause of action. The court held that the BPA is an exhaustive code regulating consumer transactions, and that restitutionary remedies are not available under the BPA. Similarly, the Competition Act did not contemplate the restitutionary remedies sought by the plaintiffs in this action.

The BCCA regarded the only causes of action left in the pleading as effectively "de minimis", and exercised its discretion to set aside the certification order, without prejudice to the plaintiff to reapply to seek re-certification of what remained of the action.

Conclusion

Given the absence of a common issue-predominance requirement for certification in Canada, coupled with the low evidentiary threshold that has been applied to certification motions to date, the number of product liability class action cases launched in Canada has been proliferating. However, the recent dismissals of certification motions in product liability class actions demonstrates that, contrary to the perception that has evolved among many plaintiffs' counsel in Canada, certification is not a foregone conclusion in product liability class action proceedings. Moreover, these cases may suggest that a movement is afoot towards a more robust application by Canadian courts of the test for certification, complete with a disciplined application of evidentiary rules regarding admissibility of expert evidence in a way which many on the defence side have long thought is the approach that accords with the legislative intent of Canadian class proceedings legislation.