Canadian Product Liability Defence - Common Class Action Defence Strategies

Gordon McKee

Many global companies with operations or affiliates in Canada, or which sell products that are ultimately used by Canadian residents, will be aware that the most prominent form of product liability litigation in Canada is the class proceeding. Class actions involving product liability claims (both personal injury and, albeit less often, economic loss claims) have frequently been certified (or “authorised” in Quebec), and pursued on behalf of a class that includes all users of the product who reside in some or all of the provinces and territories of Canada (unless the user takes steps to opt out of the class). Where the named plaintiffs have sought to certify claims involving multiple products with different designs, they have had more difficulty identifying common issues and getting the action certified. Consumer claims for economic losses have also been more difficult to certify for a variety of reasons, including the absence of a factual basis in the pleading to sustain the claim under the applicable law or legislation. Nonetheless, opposing class certification has been difficult, and commonly used defence strategies have been shifting to focus more on the merits of the claims than procedural opposition.

More commonly perhaps than before, defence lawyers and judges are paying closer attention to the wording of the proposed common issues that will be tried (before individual issues in the class members’ claims). Common issues must be factual or legal issues that are common to the claims of class members, and the resolution of which will significantly advance their individual claims. Because of the frequency with which product liability class actions are being certified, cases are proceeding towards a resolution on the merits, and the wording of the common issues can affect the outcome. For example, in the common law provinces, absent a statutory cause of action (that often requires privity of contract), product liability claims are generally brought in negligence. Frequently in the past, common issues certified in those cases included language more akin to a breach of express or implied warranty claim, asking whether the product had a defect or was defective/unfit for purpose. Common issues in a negligence claim, if any, should instead focus on the conduct of the defendant at the relevant time – whether it exercised reasonable care in the design, manufacture or warnings with respect to the product, without the benefit of hindsight. Where the product has been recalled, this difference in the wording of the common issues can have a significant impact on the outcome of the case.

Summary judgment (or summary trial in some provinces) is becoming a more common feature of the class action landscape in this area, and can be requested both before and after the class certification question is resolved, as a means of expeditiously ending the case. Summary dismissal has been granted in two product liability class actions before the certification hearing, on the questions of whether there was negligence in the design of the product and whether general causation could be established, respectively.

Bifurcation of discovery and trial is another strategy that is getting more consideration, and is more commonly employed in the common law provinces, as a means of getting to the merits of a dispositive issue more economically and efficiently, before incurring what may be needless expense on other issues.  By definition, common and individual issues resolution is bifurcated in class actions in Canada. However, the courts have in some cases bifurcated the discovery and trial of the common issues alone, allowing one common issue to proceed through discovery and trial before others. For example, common issues related to disgorgement remedies and punitive damages have been deferred until after issues of liability have been resolved. Requests may be made in the future to have discovery and trial on a dispositive issue first, where that cannot be resolved on summary judgment.

Decertification is a strategy frequently considered in class actions because of the low evidentiary threshold for the initial certification decision. All that is needed at certification is “some basis in fact” - some credible, plausible and admissible evidence of a common issue that it is preferable to resolve in a class action. The court will not weigh conflicting evidence at the certification stage. However, after discovery and/or exchange of expert reports for trial, it may become apparent that the issues that were thought to be common are in fact not common or not capable of common resolution, and a decertification motion may become advisable.

Finally, trials are becoming more common in product liability class actions, with two lengthy common issues trials having been conducted in Ontario and Quebec respectively, involving a medical device and a pharmaceutical medicine, with defence verdicts in each case. While many cases settle, and settlement amounts in Canada are relatively modest in comparison to comparable cases in the United States, trial may be the advisable approach if the class’s settlement demands are excessive, or if the merits of the defence are strong and it is important for the defendant to discourage future class actions of little merit being brought against the company. In many cases, the downside risk of defending a case through a common issues trial will be less significant than it might appear because, even if common issues are resolved in favour of the class, many individual issues will remain to be resolved before any money has to be paid out, and few class members will have experienced loss or feel it is appropriate to pursue a claim through to a monetary award.

While the battlefield has shifted in product liability class actions, and is trending away from lengthy and expensive battles over class certification, there remains much in common in the defence of product liability class actions, with increasing emphasis on finding a means to litigate the merits of the key common issues in the case efficiently and effectively, and to a successful defence outcome.

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