Canada Certifies Diet Drug Litigation Class
On September 13, 2000, the Honorable Peter A. Cumming, of the Ontario Superior Court of Justice certified a diet-drug litigation class on behalf of all persons in Canada who ingested Redux and/or Ponderal (the Canadian form of Pondimin). Sheila Wilson v. Servier Canada, Inc. and S.A. Biofarma, Court File No. 98-CV-158832. The court certified the plaintiffs’ claim that Ponderal and Redux are inherently defective products and certified the claims as a class proceeding in accordance with Section 5 of Ontario’s Class Proceedings Act, Chapter 6, 1992.
The Canadian class representative plaintiff, Sheila Wilson, has been diagnosed with primary pulmonary hypertension (“PPH”) and has already provided testimony in a hearing de bene essence as a result of her severely deteriorating health. Plaintiffs are represented by Joel Rochon, Vincent Genova and Douglas Lennox of the Rochon Genova firm in Toronto. The defendants are Servier Canada, Inc., a Canadian corporation which distributed Ponderal and Redux in Canada and Biofarma, S.A., the parent corporation of Servier, a corporation organized under the laws of the Republic of France.
The French defendant, Biofarma, opposed the class certification on the grounds that Ontario was a forum non conveniens and on the basis that Article 15 of France’s Code Civil immunized it from suit abroad. The court rejected these defenses on the grounds that:
The claim alleges facts that, if proven, establish a tort or torts having been committed in Ontario by the defendants. The allegations of fact, if proven, establish a real and substantial connection with Ontario in respect to the tort alleged in the cause of action pleaded. The evidence to this point in time establishes that but for Biofarma, the diet drugs in question would not be marketed in Canada.
Class Certification Decision, ¶14.
Forum Non Conveniens
Biofarma also unsuccessfully contended that Ontario was an inappropriate forum for the adjudication of plaintiff’s claim against it. Biofarma argued that its employees and hence its key witnesses all resided in France. The court rejected this argument on the grounds that, “the record suggests that corporate officers of Biofarma and its affiliate Les Laboratoires Servier travel regularly to the United States and Canada. Order, ¶ 14.
Article 15 of France’s Civil Code
Biofarma also unsuccessfully contended that Article 15 of France’s Code Civil precludes actions abroad because French courts have construed the article to mean that a French citizen “shall have the right” to have a claim adjudicated by a French court. Order, ¶ 26. The court disagreed:
Article 15 of the French Code Civil flies in the face of the principles of comity as discussed by LaForest J. in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 [“Morguard”]. See also Hunt v. T&N plc, [1993] 4 S.C.R. 289. It is also an affront to the due process of the courts outside of France. If the subject matter of this action has a real and substantial connection to Ontario, there is no reason why an Ontario court should stay this proceeding so that it can be heard in France. It would be unfair to deprive the representative plaintiff and the putative class members of the right to have this matter heard in Ontario simply because Article 15 of the French Civil Code would prevent the enforcement of an Ontario judgment against Biofarma in France. When it properly has jurisdiction, an Ontario court should not refuse to hear a case because France refuses to accede to the accepted norms of international law and, in particular, the principle of comity.
Order at ¶ 28. The court continued:
The defendants further argue that the Ontario action should be stayed because, should the plaintiff be successful in Ontario, the plaintiff would have to relitigate in France. In my view, that is not a factor with which this court should concern itself. It is for the plaintiffs to weigh the advantages and disadvantages of commencing an action in Ontario knowing that it may not be enforced in France. Moreover, as it seems as though not all of Biofarma’s assets are located in France, should the plaintiff be successful, it may be possible to recover upon a judgment outside of France.
In my view, a ‘blocking statute’ like Article 15 of the French Code Civil has no place in the contemporary, interconnected world of globalization and global trade, which depends upon mutual recognition and respect for settled international nouns, including the principle of comity.
American courts will not adhere blindly to the directive of such a blocking statute. See for example Societe Nationale Industrielle Aerospatiale et al v. United States District Court for Southern District of Iowa (1987), 482 U.S. 522 at 544.
An assertion of jurisdiction by this Court will require Biofarma to litigate in a foreign court. This will necessitate bringing witnesses and documents to Ontario and may result in costs for translation. However, as Servier would remain in the action as a defendant even if the action were to be stayed as against Biofarma, presumably all the relevant scientific and medical witnesses and documents in France would have to come to Ontario in any event.
The class members are Canadian residents. The Claim alleges injuries and damages from the ingestion of Ponderal and Redux in Canada. There are several thousand putative class members, some of whom will be in ill health and many of whom will have only modest means. In such circumstances it is not easy to establish that another forum is clearly more appropriate than the one chosen by the plaintiff. See Ontario New Home Warranty Program v. General Electric Co. (1998), 36 O.R. (3d) 787 (Gen. Div.); Connelly v. R.T.Z. Corp. plc, (1997] 4 All ER 335, (1997] 3 W.L.R. 373 (H.L.).
France does not have class proceedings legislation. To require that the class members travel to France to present individual claims in protracted, expensive and extremely complex litigation would effectively deny them access to justice. When a stay would lead to a denial of justice to the plaintiff, a stay will not be granted. Lubbe et a!. v. Cape plc, [2000] H.L.J. 42 (20 July, 2000) at para. 26 per Lord Bingham of Cornhill. The plaintiffs have a very strong interest in obtaining a resolution of their claims in an Ontario court. There would be a very significant loss of juridical advantage if they were not permitted to proceed with their action against Biofarma in Canada.
Ontario has an interest in adjudicating claims brought by its residents and in facilitating the resolution of the claims of other Canadian residents in a manner that meets the underlying policy objectives of the CPA. The action at hand will continue against Servier in all events. Canadians should not be required to bring litigation in France against one defendant when litigation is proceeding in Ontario against another defendant — in particular, when the latter is the subsidiary of the former, and the evidence required for the two actions will largely be the same. The defendants invite a multiplicity of proceedings through this motion. See Jannock Corp. v. RT Tamblyn & Partners Ltd (1975), 8 O.R. (2d) 622, 58 D.L.R.(3d) 678 (C.A.) leave to appeal to Supreme Court of Canada refused [1975] 1 S.C.R. xiii, 8 O.R. (2d) 622n.
In my view, and II so find after considering all the factors, this court’s jurisdiction over Biofarma is not unduly burdensome and is in accord with accepted norms of fairness and justice. It has not been established that France is a more appropriate forum. It has not been established that Ontario is not a convenient forum.
Order, ¶¶ 29-36.
Causes of Action
Plaintiff Wilson’s claim alleged negligence, failure to warn, and breach of warranty on the part of defendants, allegations which suffice in the court’s opinion to state a claim. Order, ¶¶ 47-52.
Identifiable Class
Pursuant to Section 5(1)(b), the Court accepted the proposed class definition as sufficient to provide an identifiable class. The proposed and certified class consists of:
All persons resident in Canada (excluding Quebec) who were prescribed and ingested the diet drugs marketed under the brand name Ponderal (generic name: fenfluramine) and/or Redux (generic name: dexfenfluramine), these being diet drugs designed, developed, fabricated, manufactured, imported, distributed, marketed, sold or otherwise placed into the stream of commerce in Canada by Servier Canada Inc. and/or Biofarma S.A.; and
All persons including, but not limited to, executors, administrators, personal representatives, spouses and relatives who on account of a relationship to any one or more of those persons described in the above class, have a derivative claim for damages resulting from the treatment with Ponderal and/or Redux.
Order at ¶ 54.
Nationwide Class Certification
The defendants moved to disallow the certification of a national class on the basis that the certification would be unconstitutional and should be limited to a class of Ontario residents, assertions rejected by the Canadian Court. Instead, the Court noted that the Ontario class proceedings act is “procedural and remedial in nature. There is nothing in the CPA to prevent non-residents from being included in an Ontario class proceeding subject to constitutional requirements being met. On its face, the CPA authorizes the formation of process unlimited by the territorial boundaries of Ontario.” Order at ¶ 63.
The Court further summarized the supporting Canadian authority on the issue of nationwide classes as follows:
I prefer to restate this view of the law as follows. Morguard and Hunt stand for the proposition that if there is a real and substantial connection between the subject matter of the action and Ontario, then the Ontario court has jurisdiction with respect to the litigation and can apply Ontario’s procedural law. Ontario may not necessarily apply its substantive law since there must be a determination of the choice of law that applies. In cases where Ontario has properly assumed jurisdiction, other jurisdictions on the basis of the principle of comity should recognize the Ontario judgment. (In my view, this analysis does not involve any extra-territorial application of Ontario law, and Morguard and Hunt do not stand for the proposition that Ontario law should be applied extra-territorially.)
In determining procedurally whether non-Ontario residents are to be included within an Ontario class action, a court must be guided by the requirements of order and fairness: see Hunt at 326.
The Court continued:
More than one province can have a real and substantial connection to the subject matter of a law suit while only one could be the more appropriate forum: see “Constitutional Limits,” supra at 190. The questions of. whether a court can assert jurisdiction and whether the court should exercise jurisdiction are conceptually distinct: see Tolofson v. Jensen, (1994] 120 D.L.R. (4th) 289 (S.C.C.), rev’g [1992] 89 D.L.R. (4th) 129 (B.C.C.A.) [“Tolofson”]. Professor J.G. Castel in his book Canadian Conflict of Laws (4th ed.) (Toronto: Butterworths, 1997) at 55 states that the test for determining whether a real and substantial connection exists is not demanding or rigid. The court needs to find only a real and substantial connection, not the most real and substantial connection, to assume jurisdiction.
This approach is efficacious in extending the policy objectives underlying the CPA for the benefit of non-residents. If there are common issues for all Canadian claimants, this approach facilitates access to justice and judicial efficiency, and tends to inhibit potentially wrongful behaviour. This is to the advantage of all Canadians and to Canada as a federal state. This procedural flexibility serves in the nature of oil in the institutional and jurisdictional machinery of Canadian federalism. Courts in Australia and the United States, both federal states, have addressed similar issues in like manner. See generally Femcare Ltd. v. Bright, [2000] FCA 512 (19 April 2000) (Australia); Shutts, supra.
Mass torts and defective products do not respect provincial boundaries. Complex and costly litigation is not viable for individual claimants. The procedural latitude of the CPA recognizes the authority of all provinces and the rights of their individual residents. If a non-resident of Ontario wishes to commence an action in another province, that person can opt out of the Ontario action. If a class action is commenced and certified in either British Columbia or Quebec, that certified class proceeding will take precedence for the residents of that province.
Commonality of Issues
The Court found numerous questions of both fact and law to be common to the class:
1. Whether Ponderal and/or Redux can cause primary pulmonary hypertension (PPH), valvular heart disease or valvular regurgitation;
2. Whether Ponderal and/or Redux are defective or unfit for the purpose for which they were intended as designed, developed, fabricated, manufactured, sold, imported, distributed, marketed, or otherwise placed into the stream of commerce in Canada by one or both of the defendants;
3. Whether the defendants knowingly, recklessly, or negligently breached a duty to warn or materially misrepresented any of the risks of harm from Ponderal or Redux;
4. Whether Biofarma is responsible in law for the acts of Servier in respect of the sale and marketing of Ponderal and Redux in Canada;
5. Whether the defendants negligently misrepresented the safety of the drugs after having received information as to the potential of the drugs to cause serious health effects;
6. Whether class members are entitled to special damages for medical costs incurred in the screening, diagnosis and treatment of diseases related to Ponderal and Redux;
7. Whether class members are entitled to equitable relief whereby they are reimbursed for the purchase price of Ponderal or Redux; and
8. Whether the class members are entitled to aggravated or punitive damages.
Order, at ¶ 107.
Superiority of Class Action Proceedings
The Court buttressed its class certification decision with findings that a class action was superior to individual litigation:
In my view, the policy objectives underlying the CPA will be furthered if this action is certified as a class proceeding. Access to justice is extended to persons who may have been injured by a defective product. There would be a very significant cost to any claimant pursuing an individual claim given the tremendous complexities of evidence and issues, the extensive scientific and medical evidence and discoveries, and the protracted nature of the litigation: see Bendall at para. 50. But for a class proceeding, the defendants (if responsible) would in all probability be effectively isolated from the individual claims.
Judicial economy and efficiency will be achieved if the common issues arc resolved in a single proceeding. It is only by spreading and sharing the cost through the scale efficiencies of a class action that members will have an opportunity to resolve their claims. Moreover, by resolving common issues through a single proceeding, the danger of producing inconsistent results through a multiplicity of trials is avoided: see Abdool v. Anaheim Management Ltd. (1995), 21 O.R. (3d) 453 at 472, 473 [“Abdool”].
Finally, the policy objective of behaviour modification is fostered through a class proceeding. If a drug is defective and liability attaches to a manufacturer or seller, a significant incidental result is that the pharmaceutical industry is more likely to take greater care in the development and testing of new products to ensure their safety before marketing them. The thalidomide catastrophe is illustrative of the public interest in ensuring safe drugs. The CPA’s goal has been described as inhibiting “misconduct by those who might ignore their obligations to the public”: see Abdool, supra at 472. The CPA serves to assist in regulating the pharmaceutical industry for an important public policy objective through class proceedings commenced in the private sector.
Order at ¶¶ 124-126.
Medical Monitoring
The Court rejected defendants assertion that “a claim cannot be advanced for medical expenses incurred to detect possible injury or damage when, in the result, it is determined not to have a reason.” Order at ¶ 129. Instead, the Court preserved the issue for later adjudication and accepted the dispute as another common issue to be determined in the class proceeding:
In my view, there is a common issue as to whether a subrogated claim can be maintained for the cost of medical screening conducted to determine whether persons who ingested either Ponderal or Redux did not contract any of the allegedly associated diseases. If it is proven that exposure to a toxic substance significantly increases the risk of contracting a serious disease it is arguable that persons exposed to that toxic substance — even if medical screening ultimately determines that they have not contracted the associated disease — should be compensated for the cost of medical screening made necessary by their exposure. (It has been noted that Health Canada’s advisory issued September 15, 1997 recommended that persons who had taken either drug should consult with their physician immediately.)
Order at ¶ 133.
Class Notice
The Court considered a proposal from American notice expert, Todd Hilsee, of Hilsoft Notifications in Pennsylvania, who proposed that an expenditure of $410,800 be used to disseminate a properly targeted notice would provide notice to approximately 77% of class members. However, the court found that “notice on a more modest scale than that proposed by plaintiffs’ counsel is appropriate.” Order at ¶¶ 145-148.
Judge Cumming’s order is a very significant decision, likely to significantly further class action jurisprudence in Canada, where class action jurisprudence is rapidly developing, often complementary to American decisions.