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Class Actions (Ont) - Certification (2). Palmer v. Teva Canada Limited
In Palmer v. Teva Canada Limited (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal against a lower court dismissal of a class action certification motion:A. Governing legal principles regarding certification
[26] Section 5(1) of the Class Proceedings Act, 1992 sets out five statutory criteria that must be established for a claim to be certified as a class action: (a) the pleadings must disclose a cause of action; (b) there must be an identifiable class; (c) there must be common issues; (d) the class action must be the preferable procedure; and (e) the proposed representative plaintiff must be appropriate. For the first element, the court must ask whether it is plain and obvious that no claim exists, assuming the facts alleged in the pleadings are true: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 25. For all the other elements, the representative plaintiff must establish some basis in fact that the requirement is met: Hollick, at para. 25.
[27] The certification motion is not meant to test the merits of the action – its focus is on the form of the action. The question is not whether the claim is likely to succeed but whether the suit is appropriately brought as a class action: Hollick, at para. 16; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 102. . Palmer v. Teva Canada Limited
In Palmer v. Teva Canada Limited (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal against a lower court dismissal of a class action certification motion.
In a class action for contaminated drugs, the court considered the "some basis in fact" standard of proof applicable for finding the s.5(1)(b-e) certification elements as being met:(1) Some Basis in Fact
[104] The class representatives in a class action must show “some basis in fact” for each of the certification requirements set out in s. 5(1)(b) through (e) of the Class Proceedings Act, 1992: Hollick, at para. 25. While the “some basis in fact” test is a low evidentiary standard, and a court should not resolve conflicting facts and evidence, the court retains a gatekeeping function and certification will be denied if there is an insufficient evidentiary basis for the facts to establish the existence of common issues: Pro-Sys Consultants, at para. 103.
[105] The appellants state that no deference is owed to the motion judge’s assessment of the common issues or preferable procedure criterion because he engaged in an impermissible comparative evaluation of the evidence. The appellants contend the motion judge erred by not following the legal parameters of the “some basis in fact” principle when evaluating the common issues and preferable procedure criteria because he veered into weighing evidence and determining the merits of the claim rather than the lower threshold of looking for some plausible evidence to support proceeding by way of class action.
[106] I disagree. The motion judge clearly understood the task before him and correctly applied the “some basis in fact” principle, as he explained at para. 88 of his reasons:This conclusion about no basis in fact for a causal relationship between valsartan and cancer is not based on favouring the defendants’ experts over the plaintiffs’ and my conclusion is not meant to and does not resolve any battle of the experts. On the certification motion, both parties agreed that from an epidemiological perspective, an association – and in this case, the contemporary statistical evidence was modest in favour of a statistically significant relationship between valsartan and cancer – does not establish general causation. I repeat my legal conclusion is that at this moment in scientific time, there is no basis in fact for concluding that NDMA and NDEA cause cancer. [107] While the motion judge found no basis in fact for the proposition that NDMA and NDEA cause cancer, he did find some basis in fact for the appellants’ allegation that NDMA and NDEA cause an increased risk for developing cancer. This finding accorded with the actual claim. Indeed, as was noted in many places in the reasons below and not contested before this court, the appellants’ claim is not based on NDMA and NDEA having caused cancer, but instead causing an increased risk of cancer. Their proposed common issues make this plain at questions 2, 3, and 4 as follows:Did the Valsartan Drugs contain nitrosamine impurities above the acceptable intake limits for NDMA and/or NDEA, as defined by the FDA?
Do NDMA and/or NDEA cause harm to human cells on a microscopic or molecular level (also known as genotoxicity) if ingested? If so, is an injury to human cells beyond de minimus?
Do the Valsartan Drugs, used as indicated, cause or contribute to an increased cancer risk? [108] The appellants have failed to show that the finding of the motion judge that there was no basis in fact at this point that NDMA and NDEA cause cancer was palpably wrong. Even if it was, it was certainly not an overriding error because this question is beside the point when the claim, as it is framed here, is about increased risk of cancer and the motion judge found that there was some basis in fact for that proposition.
[109] As I stated above, psychological injuries from the shock and stress caused by being notified of this increased risk of cancer also fail at s. 5(1)(a) of the Class Proceedings Act, 1992. Since I agree with the motion judge that leave to amend the pleadings should not be granted, I explain below why the claim as it relates to psychological injury would also fail on the common issue criterion. . David v. Loblaw Companies Limited [general]
In David v. Loblaw Companies Limited (Div Court, 2024) the Divisional Court considered (and dismissed) an appeal of a case conference order that 'settled' terms of a larger class action certification order, here grounded in Competition Act law.
Here, the court canvasses basics of class action 'certification':[13] Subsection 5(1) of the CPA states that a court shall certify a class proceeding if:(a) the pleadings or the notice of application discloses a cause of action;
(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
(c) the claims or defences of the class members raise common issues;
(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and
(e) there is a representative plaintiff or defendant who,
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and
(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members. [14] In Bowman v. Ontario, 2022 ONCA 477, 162 O.R. (3d) 561, at para. 25, Brown J.A. stated that the following general principles govern the certification of a class proceeding:The CPA should be construed generously in a way that gives full effect to the benefits foreseen by the drafters (citations omitted);
The onus is on the representative plaintiff to show why the certification criteria have been met;
The certification stage is decidedly not meant to be a test of the merits of the action. The certification stage focuses on the form of the action. The question is not whether the claim is likely to succeed but whether the suit is appropriately prosecuted as a class action (citations omitted);
The plaintiff must show “some basis in fact” for each of the certification criteria, other than the requirement that the pleadings disclose a cause of action (citations omitted);
In assessing whether the representative plaintiff has met s. 5(1)(a)’s criterion, the court must ask whether, taking the pleaded facts to be provable and true, it is “plain and obvious” that the pleading discloses no reasonable cause of action (or cause of action supportable at law), or the claim has no reasonable prospect of success…. While the approach must be generous and err on the side of permitting a novel but arguable claim to proceed, at the same time a claim will not survive an application to strike simply because it is novel. If a court would not recognize a novel claim when the facts as pleaded are taken to be true, the claim is plainly doomed to fail and should be struck. [Citations omitted.] . Price v. Lundbeck
In Price v. Lundbeck (Div Court, 2023) the Divisional Court considered (and dismissed) an appeal of a denial of a class action certification, here in a tort ('duty to warn') pharmaceutical case:[2] For the reasons set out below, this appeal is dismissed. The Class Proceedings Judge applied the correct legal principles, and his expertise, and denied certification.
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[19] The Class Proceedings Judge employed the legal principles for certification, including that there was no preliminary review of the merits of the claim. The plaintiffs only had to show “some basis in fact” for each of the certification criteria other than the requirement that the pleadings disclose a cause of action. And “some basis in fact” is a low evidentiary standard. The court could not resolve conflicting facts and evidence at the certification stage or opine on the merits of the plaintiffs’ claim.
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[20] The Class Proceedings Judge noted the court’s important gate-keeping function, as underscored by the Supreme Court of Canada in Pro‑Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477.
[21] In Pro-Sys, at para. 103, the Supreme Court emphasized “the importance of certification as a meaningful screening device.” Further, the Court held, at para. 104, that there is “limited utility in attempting to define “some basis in fact” in the abstract. Each case must be decided on its own facts. There must be sufficient facts to satisfy the [judge] that the conditions for certification have been met to a degree that should allow the matter to proceed on a class basis without foundering at the merits stage”.
[22] The Class Proceedings Judge reviewed the applicable law on the commonality requirement, which had been approved of in the first Divisional Court decision. Among other principles, to meet the common issue criterion, the proposed issue had to be a “substantial ingredient” of each class member’s class and not be semantically manufactured by overgeneralizing.
[23] As he cited from Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184, at para. 29: “It would not serve the ends of either fairness or efficiency to certify an action on the basis of issues that are common only when stated in the most general terms. Inevitably such an action would ultimately break down into individual proceedings.”
[24] The Class Proceedings Judge considered the first step of the proposed common issue: “Is or may Celexa® be teratogenic?” He found a lack of the needed commonality. The requirement that the proposed common issue advance the litigation in a meaningful way was not met. He found that even if the proposed common issue that Celexa® “is or may be” teratogenic was decided in the plaintiffs’ favour, no class member’s case would be advanced because each claim, to be successful, would have to show that it caused the specific congenital malformation experienced in that instance.
[25] The Class Proceedings Judge considered other pharmaceutical cases relied on by the plaintiffs, but in those cases, the courts narrowed the common issue to a specific defect before certifying: Bartram (Litigation guardian of) v. GlaxoSmithKline Inc., 2012 BCSC 1804, aff’d 2013 BCCA 462, Miller v. Merck Frosst Canada Ltd., 2013 BCSC 544, aff’d, 2015 BCCA 353, leave to appeal refused, [2015] S.C.C.A. No. 431. He found that the option of narrowing the issue was not available to the court. There were hundreds of potential congenital malformations. The proposed common issue seized on superficial commonality, as cautioned against in Rumley.
[26] The Class Proceedings Judge also considered the second step of the proposed common issue, regarding the duty to warn, in view of the leading case of Hollis v. Dow Corning Corp., 1995 CanLII 55 (SCC), [1995] 4 S.C.R. 634 and other authorities including Adam v. Ledesma-Cadhit, 2021 ONCA 828, leave to appeal refused, [2022] S.C.C.A. No. 13. He followed Hollis, under which a duty to warn must arise from specific risks, which must also be material. In turn, the risk is relevant to the other issues surrounding the duty to warn, including whether a defendant ought to have reasonably foreseen that the plaintiff might suffer a loss, the question of what warning would be found sufficient, and the question of whether or not the plaintiff would have declined the drug.
[27] The Class Proceedings Judge found as follows, paras. 155, 159-60:There are hundreds of congenital malformations, some of which might be material and others which may not. The patient receiving a general warning of teratogenicity from a doctor would have no basis to assess the specific risk and make an informed decision as to whether to take Celexa® to help protect both the mother and the baby from potential risks arising from depression, or to choose not to do so. This informed consent is the raison d’être of the duty to warn, and it could not be effected under the [second step in the proposed common issue].
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“Teratogenicity” is not the harm suffered, but instead a term that relates to the possibility of hundreds of congenital malformations, only some of which (if any) might have been reasonably foreseeable. If it were found that the defendants ought to have known that citalopram is a teratogen because it can cause clubfoot, it may not have been the case that the defendants ought to have known (or known at the same time) that citalopram is a teratogen because it can cause craniosynostosis. The etiologies and evolving epidemiological data differ for each congenital malformation.
The reasonable foreseeability of any particular congenital malformation would require analysis of the etiology for each such malformation, which will vary. Not every congenital malformation would be, or could have been, reasonably foreseeable based on the etiology and epidemiological studies available at a particular time. Consequently, there could be no commonality under the proposed terms of the [second step in the proposed common issue]. [28] The Class Proceedings Judge concluded that to establish a duty to warn, there would need to be a specific material risk. In contrast, the duty to warn step of the proposed common issue was based on general causation – whether Celexa® “is or may be teratogenic”. He found that the duty to warn step could not stand on its own terms, separate from the first step.
[29] The Class Proceedings Judge therefore concluded that the plaintiffs had not met the low threshold to show some basis in fact that either step was a common issue that should be certified under s. 5(1)(c) of the Act. Although this was sufficient to dismiss the certification motion, he went on to consider the other issues.
[30] On the preferrable procedure requirement in s. 5(1)(d) of the Act, the Class Proceedings Judge stated the applicable legal principles, including as set out by Strathy C.J.O. in Amyotrophic Lateral Sclerosis Society of Essex County v. Windsor (City), 2015 ONCA 572, 387 D.L.R. (4th) 603. At para. 62, Strathy C.J.O. noted that “it is not enough for the plaintiffs to establish that there is no other procedure which is preferable to a class proceeding. The court must also be satisfied that a class proceeding would be fair, efficient and manageable.”
[31] The Class Proceedings Judge followed the Supreme Court of Canada decision in Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158. In Hollick, at paras. 29-31, McLachlin C.J. held that even though the Act requires only that a class action be the preferrable procedure for the resolution of the common issues, the question of preferability “must take into account the importance of the common issues in relation to the claims as a whole”.
[32] As with the claim in Hollick, the Class Proceedings Judge found that even if the proposed common issues were found to advance the litigation (which he did not find), any such advance would be peripheral and minor. The individual issues would overwhelm any benefit. He also considered the proposed litigation plan, concluding as follows, at para. 211:The present case lacks a workable way forward. It will break down into potentially thousands of individual trials, all with every liability and damages issue to be proven, including general causation of the particular congenital malformation, since the class does not purport to certify such an issue. . Robertson v. Ontario
In Robertson v. Ontario (Ont CA, 2023) the Court of Appeal endorses and summarizes the motion judge's class certification approach:(1) Motion Judge’s Identification of the Governing Principles
[5] The focus of the motion judge’s analysis was on whether the Claims satisfied the “cause of action” requirement in s. 5(1)(a) of the Class Proceedings Act, 1992, S. O. 1992, c. 6 (the “CPA”). Namely, he sought to determine whether, assuming the facts alleged to be true, it is plain and obvious that the Claims cannot possibly succeed and are doomed to fail.
[6] To make this determination, the motion judge observed that the claim must be read generously: Taylor v. Canada (Attorney General), 2012 ONCA 479, 111 O.R. (3d) 161, at para. 120. This generous approach, the motion judge found, is particularly appropriate because, as noted by the Supreme Court, “the law is fluid, evolving over time so that actions that yesterday were deemed hopeless may tomorrow succeed”: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 21.
[7] In short, the motion judge proceeded on the basis that the test for striking a statement of claim at the pleadings stage is a stringent one with a difficult burden for defendants to meet. . Robertson v. Ontario
In Robertson v. Ontario (Ont CA, 2023) the Court of Appeal considered the standard of review for CPA s.5(1)(a) ['Certification'] ("the pleadings or the notice of application discloses a cause of action") appeals:(1) Standard of Review
[29] To determine whether a pleading in a proposed class action meets the cause of action requirement in s. 5(1)(a) of the CPA, the motion judge must determine whether it is plain and obvious that the impugned claims cannot possibly succeed. As previously noted, the motion judge, under this test, was required to accept the factual pleadings as proven and to read the claim generously. In addition, the test requires that a claim not be dismissed simply because it asserts a novel cause of action: Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420, at para. 14; Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at p. 980.
[30] The motion judge’s decision that a claim fails to disclose a reasonable “cause of action” is a determination of law reviewable on a standard of correctness: Darmar Farms Inc. v. Syngenta Canada Inc., 2019 ONCA 789, 148 O.R. (3d) 115, at para. 30, leave to appeal refused, [2019] S.C.C.A. No. 409; Leroux v. Ontario, 2023 ONCA 314, 481 D.L.R. (4th) 502, (“Leroux 2023”), at paras. 38-39.
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