mccarthy tétrault llp / mccarthy.ca presented by frank mclaughlin november 4, 2014 summary judgment...

McCarthy Tétrault LLP / mccarthy.ca

Presented by Frank McLaughlin

November 4, 2014

Summary Judgment and the Pre-Certification Defence of Pharmaceutical Class Actions


Outline

¬ The Life Cycle of a Class Action

¬ The Common Issues Trial

¬ Current Landscape for Class Certification: Microsoft Trilogy - SCC

¬ Historical Aversion to Pre-certification Summary Judgment: Seroquel Case- OSCJ

¬ Changing Tides: The Courts’ Renewed Focus on Proportionality

¬ Hryniak - SCC

¬ Marcotte – SCC

¬ Janssen v. Player – BCSC

¬ Strategic Considerations

¬ Conclusion


Life Cycle of a Class Action

Pleadings and Delivery of Certification Motion Records

Preliminary Motions (if any)

Certification Motion

Appeal of Certification Motion (if any)

Document Production and Discoveries

Common Issues Trial

Appeal of Common Issues Trial (if any)

Individual Trials/Assessments of Individual Claims


The Common Issues Trial¬ Andersen v. St. Jude Medical Inc., 2012 ONSC 3660

¬ One of the few product liability class actions to proceed to a common issues trial (product at issue was a prosthetic heart valve)

¬ 18 month trial (over a period from February 2010- September 2011)¬ 9 common issues covering issues of liability and remedy¬ 138 days of testimony from 40 witnesses¬ Including 38 expert witnesses from 14 different disciplines in science

and medicine¬ 2,293 documents filed as exhibits (many of which were hundreds of

pages long)¬ 8 days of closing submissions¬ Over 2000 pages of written submissions¬ 137-page judgment (594 paragraphs)

¬ Outcome: action dismissed (plaintiffs lost)


Current Landscape for Class Action Certification: Microsoft Trilogy (2013)(SCC)

¬ Class action defendants face an increasingly lower bar to class certification

¬ The Supreme Court of Canada revisited the standard of proof required for certification in the Microsoft Trilogy

¬ (See Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 (“Microsoft”); Sun-Rype Products Ltd. v. Archer Daniels Midland Co., 2013 SCC 58; Infineon Technologies AG v. Option consommateurs, 2013 SCC 59)


Microsoft Trilogy Cont’d

¬ Standard of Proof for Certification¬ Cause of Action requirement:

“a plaintiff satisfies this requirement unless, assuming all facts pleaded to be true, it is plain and obvious that the plaintiff’s claim cannot succeed” (at para. 63)

¬ All other certification criteria:“… the class representative must show some basis in fact for each of the certification requirements set out in… the Act, other than the requirement that the pleadings disclose a cause of action” (at para. 99, quoting from Hollick).


“some basis in fact” is not a merits test“The Hollick standard of proof asks not whether there is some basis in fact for the claim itself, but rather whether there is some basis in fact which establishes each of the individual certification requirements” (at para. 100).

¬ The merits of the action will not be assessed at the certification stage

¬ Certification is not the appropriate stage for resolving conflicts between experts

¬ Not required to show “some basis in fact” that the acts alleged actually occurred. The evidence at this stage goes to whether these questions are common to all class members/ can be determined on a class-wide basis

¬ Practical Significance: more class actions likely to be certified; more difficult to weed out unmeritorious actions early in the proceedings


Historical Aversion to Pre-certification Summary Judgment¬ Exemplified by preliminary decisions in Seroquel case

(Martin v. AstraZeneca Pharmaceuticals, 2009 CanLII 49327 (Ont. S.C.J.), aff’d. 2009 CanLII 68476 (Ont. S.C.J. [Div. Ct.])

¬ Plaintiffs brought an action alleging negligent design, manufacure, failure to warn of risks and conspiracy to conceal

¬ Two causation issues:

¬ General Causation – whether Seroquel can have the alleged harmful consequences (common issue)

¬ Specific Causation – whether Seroquel caused such harm to individual class members

¬ Defendants brought a motion for summary judgment on specific causation with respect to the two representative plaintiffs: evidence established that Seroquel did not harm either of them


Seroquel cont’d

¬ Issue: whether the defendants should be permitted to move for summary judgment before the hearing of the plaintiffs’ motion for certification

¬ Defendants relied on the Court’s authority to make appropriate orders to ensure the fair and expeditious determination of the issues

(Class Proceedings Act s. 12)

¬ Pre-certification summary judgment motions are not barred as a matter of law. The order in which summary judgment and certification motions are to be heard is a matter of the court’s discretion

¬ However, the Ontario court held that the law is “settled” that certification should normally be the first step


Seroquel Cont’d

¬ Court reflected on the observations of Winkler J. in two previous cases:

“As a matter of principle, the certification motion ought to be the first procedural matter to be heard and determined” Attis v. Canada (Minister of Health) (2005), 75 O.R. (3d) 302 (S.C.J.)

Certification motions should “normally be given priority over other motions” Baxter v. Canada Attorney General, [2005] O.J. No. 2165 (S.C.J.)


Seroquel Cont’d

¬ Winkler’s Rationale:¬ Binding effect on the class members of the determination of

the common issues¬ Fluidity in the class definition and the common issues¬ 90 day timeframe under the Class Proceedings Act indicates

intention that certification motion proceed first¬ “deliberate omission” of the preliminary merits test that was

recommended by the Law Reform Commission in its Report on Class Actions


Discretion Retained by the Courts

“That said, however, there are circumstances where it is useful, indeed in some cases necessary, that preliminary motions be heard in advance of the certification motion. A motion for summary judgment may be brought prior to the certification motion” (Winkler J in Attis)

“… It may be appropriate to make an exception where the determination of a preliminary motion prior to the certification motion would clearly benefit all parties or would further the objective of judicial efficiency, such as in relation to a motion for…summary judgment under Rule 20. Such motions may have a positive effect of narrowing the issues, focusing the case and moving the litigation forward.” (Winkler J in Baxter)


Seroquel Cont’d

Pre-certification summary judgment considered appropriate where :

¬ Moving party raises discrete issues of law that potentially affect the claims of all class members (although not binding, likely to have the practical effect of abandonment of claims, early settlement, or narrowing the issues)


Seroquel cont’d

¬ The Court rejected the defendants request to hear its summary judgment motion prior to certification because it¬ Attacked the factual merits of the plaintiffs’ claims¬ Would not be binding on potential class members¬ Would not benefit all parties¬ Would not legally prevent the appointment of

substitute representative plaintiffs


Seroquel Cont’d

¬ Defendants argued that because many if not all of the class members’ claims would be just as vulnerable to the question at issue, the summary judgment motion would serve the purpose of judicial economy by deterring further claims

¬ The Court rejected this argument because the Defendants could not preclude the possibility of successive summary judgment motions against substitute representative plaintiffs


Seroquel (Div. Ct.)

¬ Affirmed by the Divisional Court:

“ [Q]uestions of causation affecting the claims of the plaintiffs and other class members are best left to the end of the case, if and after certification and a decision on the common issues in favour of the class”

Suggests that questions of causation (even issues of causation which may be common to the class) are not appropriate for determination on summary judgment

¬ May mean that a case for which causation can never be proven would be required to proceed through expensive certification motion and subsequent costly common issues trial.


Existing Landscape in Ontario

¬ Pre-certification preliminary motions are the exception not the rule

¬ Pre-certification summary judgment motions limited to questions of law common to all class members

¬ Summary judgment not appropriate where it would cause delay and expense, or for questions of fact that may require expert evidence


Changing Tides: The Courts’ Renewed Focus on Proportionality

¬ Rule 20 (Summary Judgment Motions) – amended in 2010

¬ Supreme Court of Canada Decisions:

¬ Hryniak v. Mauldin, 2014 SCC 7

¬ Bank of Montreal v. Marcotte, 2014 SCC 55

¬ Application in British Columbia:

¬ Player v. Janssen-Ortho Inc., 2014 BCSC 1122


Hryniak (2014) (SCC)

“Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case. The balance between procedure and access struck by our justice system must come to reflect modern reality and recognize that new models of adjudication can be fair and just.

Summary judgment motions provide one such example…”


Hryniak cont’d

¬ Protracted trials with unnecessary expense and delay can prevent the fair and just resolution of disputes

¬ Conventional trials no longer reflect modern realities

¬ Principle of proportionality underlies the rules of the court which involve discretion

¬ Requires simplified and proportionate procedures

¬ Impacts the role of counsel and judges


Hryniak – Interpretation of the amended Rule 20¬ Based on the recommendations of the Osborne

Report¬ Grants judges new fact-finding powers on summary

judgment, including the power to weigh evidence and hear oral evidence

¬ Result: Evolution of summary judgment¬ from a highly restricted tool used to weed out only

the most clearly unmeritorious claims or defenses¬ To a legitimate alternative means for adjudicating

and resolving legal disputes


Hryniak – Interpretation of the amended Rule 20 cont’dThe 2010 Amendments codified the proportionality principle:

“genuine issue for trial” versus

“genuine issue requiring a trial”

“The question is whether the added expense and delay of fact finding at trial is necessary to a fair process and just adjudication”

Means that a trial is no longer the default procedure


Hryniak – Interpretation of the amended Rule 20¬ ONCA: New powers can only be exercised at trial

unless a motion judge can achieve a “full appreciation” of the evidence and issues required on summary judgment

¬ Cases requiring factual findings based on conflicting evidence and an expensive record are not fit for determination on summary judgment

¬ SCC rejects this interpretation


Hryniak cont’d

¬ Fact-finding powers are presumptively available and may be exercised unless it is in the interest of justice for them to be exercised only at a trial

¬ Test:

“There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result”

“… the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute”


Hryniak cont’d

¬ Roadmap:

1. Is there a genuine issue requiring a trial based only on the evidence before the judge, without using the new fact-finding powers

2. If so, can the need for a trial be avoided by using new powers

3. If so, the judge has the discretion to use the new powers as long as it would not work against the interests of justice (i.e. as long as it will lead to a fair and just result and serve the goals of proportionality)


Hryniak cont’d

¬ Summary judgment appropriate where no reason to believe that better evidence would be available at trial

¬ Motions judges have broad powers to manage the procedure on summary judgment motions and should look to the summary trial procedure in B.C. (which was not adopted in the 2010 amendments) as a model

¬ In this case, motion was complex and expensive, but judge’s discretion to grant summary judgment upheld


The Question:

¬ Will these principles be applied to consideration of pre-certification summary judgment motions in class actions context where courts have favored deferring any assessment of the merits until after certification?


Marcotte (2014) (SCC)

¬ Imports the “cultural shift” in focus on proportionality into the class action context

¬ 3 appeals on the merits of 3 class actions involving credit card charges which allegedly violated consumer protection legislation

¬ Issue: whether the representative plaintiff had standing against all of the defendant banks (even though only had a personal claim against some)


Marcotte cont’d

¬ Court overturns previous case law (Agropur) on the basis that denying standing conflicted with the principle of proportionality

¬ Citing previous decision (Marcotte v. Longueuil, 2009 SCC 43), which recognized that the “public service” element of the civil justice system necessitates proportionality in the conduct of proceedings

¬ Stands for the proposition that judges have an obligation to take a proportional approach to managing the conduct of class actions


Player v. Janssen-Ortho (2014) (BCSC)

¬ Class action involving the drug fentanyl, a prescription opioid delivered via transdermal patches

¬ Plaintiffs alleged that patches cause fatal respiratory depression from ordinary use

¬ Alleged negligent design and failure to warn¬ Two kinds of patches:

¬ “matrix” drug-in adhesive patch (manufactured by defendants Teva and Sandoz)

¬ “reservoir” style patch with rate controlling membrane (manufactured by the other defendants)


Player cont’d

¬ Teva and Sandoz moved for a summary trial of the claims related to their “matrix”-style patches

¬ Evidence with respect to the two representative plaintiffs particularly (specific causation – like Seroquel)

¬ Court also heard conflicting expert evidence on the risks inherent in the use of transdermal fentanyl, the availability of other drugs as a substitute, the availability of a safer design as well as on whether the defendants adequately warned of the risks


Player cont’d

¬ Test: cannot grant judgment in summary trial where the “judge is unable to find the facts necessary to determine the issues, or is of the opinion that it would be unjust to decide the issues summarily”

¬ Held: Judgment granted in favour of Teva and Sandoz

¬ Plaintiffs argued that a summary trial is not appropriate pre-certification of a class action

¬ The status of the matter as an “action with ambition” is not itself a factor that would render it unjust to issue judgment


Player cont’d

¬ Like Seroquel, focus still on deciding issues “common” to the class

“In cases where the application concerns the defendant’s liability to the class as a whole, the concern about a replacement plaintiff is practically, if not legally, alleviated (citing Seroquel)

¬ However, Court takes a broader approach to what is “common”¬ Court heard fact evidence specific to the two representative plaintiffs

and broader expert evidence (fact evidence regarding other class members ruled inadmissible hearsay)

¬ Court accepted the argument that was rejected in Seroquel that even though a decision is not legally binding on a class, it would practically deter other claimants from litigating the same issues

¬ Therefore, concern about the judgment not “binding” other class members should not be determinative


Player cont’d

¬ In contrast to Seroquel, the court did not restrict itself to questions of law

¬ The court in this case was required to make findings of fact concerning pharmaceutical design and drug safety (complex issues)

¬ 5000 pages of materials reviewed¬ Conflicting expert opinion evidence weighed¬ The Court notes that this is a shift from the previous cases where

summary trials were allowed pre-certification (which all concerned questions of contract of statutory interpretation)


Player cont’d¬ The court made determinations of the following issues at the summary

trial:¬ Whether fentanyl was more likely than not a cause of Mr. Player’s death¬ The medical utility of the fentanyl patches¬ The risks associated with use of fentanyl patches¬ Whether such risks were known in the medical community at the relevant time¬ Whether there is any known safer alternative design or treatment¬ Whether the defendants’ patches complied with regulatory safety standards¬ Whether the patches were negligently designed¬ Whether the warning provided to consumers was clear, accurate, and

understandable¬ Whether the defendants misrepresented their products to consumers¬ Whether the defendants breached the Competition Act and other statutes,

and whether the plaintiffs suffered any loss arises out of any breach¬ Whether the defendants owed the class members a fiduciary duty¬ Whether the defendants are strictly liable to the plaintiffs


Player cont’d

¬ In doing so the court was required to address the following evidentiary issues:

¬ Issues related to the admissibility and reliability of certain reports (hearsay)¬ The weight to be given to certain documentary evidence¬ What matters fall within the expertise of each of the expert witnesses¬ Whether the expert witnesses had a reliable factual basis for their opinions¬ The credibility of expert evidence and the weight to assign to the opinions of

competing experts¬ The relevance and correct interpretation (based on expert opinion) of various

scientific studies


Player cont’d – policy considerations

Expressly relies on Hryniak in support of the view that where the courts can find the necessary facts, it is appropriate to use the summary process pre-certification

“One probably unintended consequence of class proceedings statutes has been the transformation of certification proceedings from preliminary step to battleground; in some senses, the certification proceeding is the trial … That being the case, I view pre-trial interlocutory applications in an appropriate case as potentially streamlining an increasingly cumbersome process, particularly in cases where the pleadings are lacking in merit, yet may meet the low threshold for certification” (Quoted from Consumers’ Assn. of Canada)

“It is not a principle of class action law that weeds should be allowed to ripen and grow, instead of being nipped in the bud” (Quoted from Kowch)


Player cont’d – Pharmaceutical-specific policy reasons¬ A pharmaceutical product liability class action calls into question

the safety of a product

¬ Post-certification notices alleging that a product is unsafe are likely to alarm current patients and prescribing physicians

¬ If the claim has no merit and little or no evidence to support it, the consequences for patients can be severe

¬ The cost of defending through a certification hearing, and then through a common issues trial if certified, are enormous.

¬ These factors militate in favour of early determination of the merits in appropriate cases


Strategic Considerations

¬ Hryniak, Marcotte, and Player all caution against abusive use of summary processes

¬ Consider whether questions at issue will have the practical effect of deterring litigation by other class members

¬ Potential unintended consequence of admitting that certain issues are “common” for the purpose of certification should summary judgment fail to dispose of the entire litigation


Conclusion¬ The SCC has simultaneously lowered the bar for class certification but

also pronounced that cases must be resolved by the most efficient, cost effective means that can do justice for the parties.

¬ Summary judgment historically considered inappropriate before certification in most cases, especially in pharmaceutical cases

¬ These recent developments in the case law call for a re-evaluation of the availability and scope of pre-certification dispositive motions on the merits. Class certification motions and common issues trials should not be the default procedure

¬ Likely will fall to defendants in these cases to drive this development into pharmaceutical class actions to ensure their interests in avoiding unnecessary cost and distraction and obtaining just and efficient resolutions are properly recognized and addressed


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mccarthy tétrault llp / mccarthy.ca presented by frank mclaughlin november 4, 2014 summary judgment...

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