SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: Herbert Bruce Heron v. Guidant Corporation, Guidant Sales Corporation, Guidant Canada Corporation, and Cardiac Pacemakers, Inc.
BEFORE: Justice F. Kiteley
COUNSEL: John A. Campion and Paul J. Martin, solicitors for the Defendants/Appellants
Won J. Kim and Victoria Paris, solicitors for the Plaintiff/Respondent
E N D O R S E M E N T
1This is a motion by the defendants for leave to appeal the decision of Cullity J.1 dated June 8, 2007 whereby he granted the plaintiff’s motion to substitute Lambert and Ibbitson as representative plaintiffs in the proposed class action. For the reasons below, the motion is dismissed.
Background:
2The defendants design, manufacture and market therapeutic medical devices, namely pacemakers and defibrillators. In 2005, 3 actions were commenced under the Class Proceedings Act2 in which the plaintiffs claimed damages resulting from defects in the defibrillators. In this action commenced by Heron, (referred to as the Pacemaker action) claims were made in respect of pacemakers and defibrillators. The existing plaintiff (Heron) had been implanted with a defibrillator.
3The actions in which the claims were confined to defibrillators have been consolidated. After a carriage motion had been instituted in connection with the consolidated action (the Defibrillator action) and the Pacemaker action, it was agreed that leave would be sought to amend the statement of claim to restrict the claims in the latter action to pacemakers, to add Gerald Lambert and Elsa Ibbitson as plaintiffs in the Pacemaker action, to remove Heron as the plaintiff in that action and to add him as a plaintiff in the Defibrillator action. Lambert had been implanted with a pacemaker. Ibbitson seeks to assert a derivative Family Law Act claim.
4An unopposed order was made amending the Defibrillator claim to add Heron.
Decision from Which Leave to Appeal is Sought:
5Cullity J. ordered the substitution of Lambert and Ibbitson for Heron as plaintiffs in the Pacemaker action. In coming to that conclusion, he addressed the concern raised by the defendants as to the limitation period. He observed that there was no suggestion that the individual claims of Lambert and Ibbitson in respect of pacemakers were statute barred. The limitations issue arose from the effect of section 28 of the CPA that caused time to cease to run against class members on August 22, 2005 when the Heron action was commenced. The defendants had argued that the substitution would deprive them of the defence of limitation period. They also argued that Heron had been a mere placeholder or token representative with respect to the proposed pacemaker class because he had only ever had a tenable claim as it related to the defibrillator product.
6Relying on Mazzuca3 the motion judge noted that the scope of the discretion conferred by rule 5.04(2) was narrow: the plaintiff had the onus of establishing that the defendants would not suffer non-compensable prejudice if the substitution was permitted, and, in addition, the plaintiff had to demonstrate the existence of special circumstances that would justify such an order. The motion judge concluded that there was no prejudice to the defendants and that the requirement of special circumstances had been satisfied.
Leave to Appeal:
7The moving parties seek leave under both 62.02(4)(a) and (b) in order to address the following questions:
Does the fact that this action is a putative class action allow the special circumstances criterion set out in Mazzuca to be automatically met without regard to individual facts or circumstances?
What is the appropriate analysis and balance in the contest between the Limitations Act (a substantive Act) and the Class Proceedings Act (a procedural Act)?
How does (and in this case, did) the plaintiff meet the onus for an order for substitution of the plaintiffs Lambert and Ibbitson; and did the motion judge properly consider the onus on the plaintiff to show no non-compensable prejudice and special circumstances (Mazzuca)?
Is the principle that a putative plaintiff in a class proceeding must have a cause of action against the defendant named as set out in Ragoonanan and Hughes v. Sunbeam applicable when the putative plaintiff sues a defendant on substantially differentiated products only one of which that plaintiff had purchased?
8Between his factum and his oral submissions, Mr. Campion argued that the motion judge erred in the following respects:
Paragraph 9: he erred in his conclusion that the consequences to the defendants vis-à-vis the limitations defence were speculative.
Paragraphs 10 and 11: he erred in his conclusion that a class proceeding (pending certification and at the hearing of certification motions) constituted special circumstances. In so doing, it is argued that the motion judge failed to consider Ragoonanan and he failed to apply the correct onus.
Paragraph 15: he erred in his conclusion that the plaintiff could assert claims in respect of devices that are described generically in the pleading notwithstanding the uncontroverted evidence that the products and patients are differentiated.
Paragraphs 17 and 18: he erred in relying on Guiliano when it is distinguishable.
Paragraph 21: he erred in his reliance on Logan and his conclusion that “claims in respect of pacemakers and defibrillators may well be more efficiently pursued in separate proceedings”. It is submitted that that conclusion is irrelevant and therefore an error.
Paragraph 9: he erred in his conclusion that the order sought was “a merely procedural matter” which did not deal with the loss of a substantive right in respect of a possible limitations defence.
Paragraphs 7 and 12: he erred in failing to find that Heron had been a mere placeholder or token representative plaintiff with respect to the proposed pacemaker class because he had only ever had a tenable claim as it related to the defibrillator product.
9Mr. Campion argued that this was a matter of first instance because courts in Ontario have not addressed a situation where a proposed representative plaintiff seeks to sue in respect of multiple fundamentally different products of the same defendants’ manufacture notwithstanding that the plaintiff may only have purchased one of the products.
10Counsel for the plaintiff took the position that the order is fully consistent with, and correctly premised on, settled law respecting the substitution of representative plaintiffs in class proceedings and that the decision does not raise unsettled issues of public importance relevant to the development of the law or the administration of justice and for those reasons, leave should be refused.
Rule 62.02(4)(a) Conflicting Decisions
11I begin by reviewing the decisions said to be in conflict. Mr. Campion relies on Ragoonanan and on Hughes. But others are relevant to the development of the principles. Hence, I begin chronologically with the cases in which defendants had brought motions to dismiss in class proceedings.
12In Stone4, the plaintiff brought a toxic tort action on behalf of a proposed class. The motion judge dismissed the action because of the limitation period contained in the Public Authorities Protection Act5. The Court of Appeal dismissed the plaintiff’s appeal and at paragraph 10 held as follows:
Where a representative plaintiff, for reasons personal to that plaintiff, is definitively shown as having no claim because of the expiry of a limitation period, he or she cannot be said to be a member of the proposed class. The continuation of the action in those circumstances would be inconsistent with the clear legislative requirement that the representative plaintiff be anchored in the proceeding as a class member, not simply a nominee with no stake in the potential outcome. (emphasis added)
13In Ragoonanan6 the plaintiff sued cigarette manufacturers after her home was destroyed and her daughter and brother were killed by a fire caused by an unextinguished cigarette. The issue was whether the representative plaintiff had to have a cause of action against all defendants. Relying on Stone (and other decisions) Cumming J. concluded that it was not sufficient in a class proceeding for the pleading to disclose a reasonable cause of action by the representative plaintiff against only one defendant. At para 56 he held:
Until there is a plaintiff who has such a cause of action, it is entirely speculative as to whether there is anyone with such a claim. A defendant should not be made subject to a speculative claim which presumes that one or more unknown persons possibly has a cause of action. It would be wrong to put a defendant to the expense of the litigation process if there is no reasonable cause of action against that defendant on the face of the pleading.
14Cumming J. granted the motion dismissing the claim against the two cigarette manufacturers whose product was not involved on the basis that the statement of claim did not disclose a cause of action against them.
15In Hughes7 the representative plaintiff brought an action against manufacturers of smoke alarms and against the organization that set the safety standards and approved the product as safe. Cumming J. granted the defendants’ motion and dismissed the action on the basis that the statement of claim failed to disclose a reasonable cause of action. One of the issues was whether the representative plaintiff could sue defendants who were not alleged to have caused the injuries. The Court of Appeal allowed the appeal in part. It held that the motion judge was correct to dismiss the action against corporations from which the plaintiff had never purchased an alarm, was correct to dismiss the action for pure economic loss against the safety standards organization, but was incorrect in striking the claim against the manufacturer from whom the alarm had been purchased by the representative plaintiff simply because damages were limited to economic loss. Relying on Stone, on Boulanger8, and on Ragoonanan, the Court held that if the representative plaintiff does not have a cause of action against a named defendant, the claim against that defendant will be struck out.
16I turn now to the two cases relied on by the moving parties where the court dealt with substitution of a plaintiff. Mazzuca9 was not a class proceeding. A fire in 1993 damaged the neighbour’s business. In June 1998, the action by the neighbour was commenced for damages to inventory and for loss of income. During the examination for discovery in 1999, it was learned that the proper principal claimant should have been the corporation not the individual. In February 2000, the individual plaintiff brought a motion to substitute the corporation. The motion judge allowed the substitution. The Court of Appeal dismissed the appeal and articulated this principle:
The established principles concerning rules 26.01 and 5.04(2) confirm the continuing importance, as a base consideration, of the issue of actual prejudice in determining applications to amend pleadings, including those designed to add, delete, or substitute parties, after the expiry of a limitation period. The centrality of this issue is also confirmed by the express language of rules 26.10 and 5.04(2) in their current form. Both the related jurisprudence and the rules themselves thus underscore a simple, common sense proposition: that a party to litigation is not to be taken by surprise or prejudiced in non-compensable ways by late, material amendments after the expiry of a limitation period. If such surprise or actual prejudice is demonstrated on the record, an amendment generally will be denied.
At the same time, proof of the absence of prejudice will not guarantee an amendment. Rather, when a change of parties is sought after the expiry of a limitation period, the circumstances of all affected parties should be examined to determine, on the facts of the individual case, whether sufficient special circumstances are present to support the requested amendment. In those cases where leave is sought to add, delete or substitute a new party, the examination of special circumstances involves consideration of the knowledge of both the moving party and her agents at the time of the commencement of the proceedings regarding the proper parties to be named and of the opposing party in relation to the nature of the true claim intended to be advanced.
17In Guiliano10 there were four proposed class actions against insurers where, following accidents in which the vehicles were damaged beyond repair, the insurer took title to the salvage and paid the actual cash value less the deductible allegedly contrary to a statutory condition. In three of the actions, the plaintiffs had no cause of action: two because no deductible had been subtracted and in the third because the plaintiff was not a party to the insurance contract. In dealing with motions by defendants to dismiss the actions and motions by the plaintiffs to add or substitute plaintiffs, Haines J. considered rule 5.04(2), the reasons for decision in Logan11, Mazzuca, Hughes, Stone, and other decisions. Cullity J. noted that the submissions before him were not materially different from those made in Guiliano and he quoted with approval at paragraph 18 from 4 paragraphs by Haines J. where he focused on the nature of class proceedings and concluded that special circumstances existed to permit the substitution of a plaintiff because otherwise many claims may have been lost to a limitation defence.
18Although not relied on by Mr. Campion, Logan12 was referred to by Mr. Kim. In 1999, a class action was commenced against the federal government on behalf of persons implanted with temporomandibular joint implants (TMJ implants) for damages for alleged regulatory negligence for wrongful approval and ongoing failure to warn with respect to the devices. The original plaintiff had also commenced an individual action against the government for some of the same claims and, when told that she could not be plaintiff in both actions, she brought a pre-certification motion to withdraw as representative plaintiff and to substitute two other representative plaintiffs. Winkler J. (as he then was) allowed the substitution. He dealt with the two issues raised by the defendants: that the new plaintiffs were not members of the original class because they had TMJ implants from different manufacturers than the original plaintiff and therefore the class was being increased by the substitution to the prejudice of the appellant; and the suspension or tolling of the limitation period under s. 28 of the CPA for all class members does not occur until the class is certified, so that by substituting new representative plaintiffs nunc pro tunc, the limitation period was also being potentially extended to the prejudice of the defendant.
19The Court of Appeal dismissed the appeal and held that the motion judge was correct in finding that the appellant would suffer no prejudice by the substitution of plaintiffs in respect of the limitation period, first because of the operation of s. 28(1) of the CPA, and second, because the appellant could plead any limitation defence in its statement of defence. The Court also agreed that the motion judge was correct in his conclusion that he was not obliged by the structure of the CPA and the class proceeding procedure to order that Logan discontinue the original action and to then require the substituted plaintiffs to commence a new action.
20The Court of Appeal also held that the motion judge had made no error on the issue of the expanded class. The Court noted in para. 26 that the motion judge had the discretion under rule 5.04(2) and under s. 12 of the CPA to substitute representative plaintiffs:
In order to determine whether it was appropriate to substitute the original plaintiff with the new proposed plaintiffs, the motion judge was required to address the potential prejudice concerns raised by the appellant and mandated by rule 5.04(2). He therefore was required to determine, based on the statement of claim, whether the new plaintiffs were already members of the putative class. The motion judge concluded that the class represented in the Logan proceeding included recipients of TMJ devices of all manufacturers because the action was not against the individual manufacturers but against the appellant as regulator of the devices. . . .
21Cullity J. did not specifically refer to Ragoonanan while he did indirectly refer to Hughes. However, I do not agree with Mr. Campion that the decision by Cullity J. is in conflict with or inconsistent with those authorities. The motion judge relied on Guiliano and observed that the submissions there were not materially different. The authorities indicate that the motion judge had three issues to consider: prejudice, special circumstances and whether the representative plaintiff was anchored in the proceeding as a class member. He considered all of those factors.
22I agree with Mr. Kim that the decision of Cullity J. is consistent with settled law respecting the substitution of representative plaintiffs in class proceedings.
23After submissions, Mr. Campion sent to me a copy of reasons for decision released November 30, 2007 in the Punit case13 that he said represents another inconsistent decision. The proposed representative plaintiff brought an action on behalf of all holders of Wawanesa insurance policies in Canada (except Quebec) whose motor vehicles were involved in accidents or otherwise damaged and were repaired with non-original equipment manufacturer’s parts (“non-OEM parts”), allegedly contrary to the insurance policy. As a result of a motor vehicle accident in 1999, the plaintiff’s vehicle was repaired and allegedly a non-OEM hood panel was installed. In September 2006, it was discovered that the replacement hood panel was an original part. The defendant brought a motion to dismiss on the basis that there was no genuine issue for trial. The motion judge agreed on the basis that it would be inappropriate to consider as a plaintiff for certification purposes one who could not meet the essential test. I do not agree with Mr. Campion that this represents another decision with which Cullity J. is in conflict. The motion judge was not asked to consider the substitution of a representative plaintiff.
Rule 62.02(4(b) Reason to Doubt the Correctness of the Decision:
24I turn now to whether there is good reason to doubt the correctness of the decision. Before considering the errors advanced by Mr. Campion, I digress to deal with a finding of fact made by the motion judge.
25The evidence before Cullity J. was that pacemakers and defibrillators are completely different products. Defibrillators are indicated for the treatment of ventricular tachycardia, a condition in which the heart beats more than 100 times per minute. Pacemakers are designed only to treat bradycardia which occurs when the heart’s signal rate is too slow. That distinction is not challenged by the plaintiff. However, as the motion judge pointed out in paragraphs 13 to 15, the statement of claim alleges that defibrillators and pacemakers are devices implanted in patients for the common purpose of alleviating the effects of damage to the electrical channels in the heart. The same particulars of negligence are attributed to defibrillators and to pacemakers. This finding of “common purpose” informed his analysis.
26As indicated in paragraph 8 above, Mr. Campion argued that Cullity J. erred in finding in paragraph 9 that the prejudice was only speculative. Mr. Campion noted that in Ragoonanan and in Hughes, the courts struck out the claims against the other defendants despite the fact that this might prejudice the putative class members who did (or might) have claims against those defendants. He noted that the effect of the order dismissing those actions was to extinguish those claims that became statute-barred between the commencement of each action and the date of the court’s decision. I do not agree that that was an error given the finding of fact as to common purpose.
27Next, Mr. Campion argued that in paragraphs 10 and 11, the motion judge erred in concluding that a class proceeding constituted special circumstances. The motion judge concluded that class proceedings constitute special circumstances not simply because they are class proceedings but because of the “policies, structure and objectives of the CPA”. That conclusion was open to him. That does not constitute error.
28Mr. Campion argued that the motion judge erred in paragraph 15 in his reference to devices that are generically described and in relying on Olsen14. He submitted that the motion judge failed to recognize that the liberal approach to “equivalence” among differing products is not consistent with Ontario law, and he failed to recognize that, in any event, pacemakers and defibrillators are not “equivalent” products.
29It is clear that the jurisprudence in British Columbia differs in a number of ways from that of Ontario. Based on different wording in the statute, it is not a requirement that a representative plaintiff have a cause of action against each defendant.15 Furthermore, the Ontario Court of Appeal in Hughes at paragraph 17 considered a series of British Columbia cases and specifically preferred the reasoning in the Ontario cases of Boulanger16 and Ragoonanan. In paragraph 15, in the context of dealing with differentiated products, Cullity J. relied on Boulanger and on Olsen. I do not accept that the reference to Olsen is an error. Ontario courts are approaching representative plaintiffs differently than British Columbia courts. However the reliance on the reference to generic products is not an error, given the specifics of the pleading in this case. Furthermore, Cullity J. did not conclude that pacemakers and defibrillators were “equivalent” products. As indicated above, the commonality rested in the pleading that defibrillators and pacemakers are devices implanted for the common purpose of alleviating the effects of damage to the electrical channels in the heart.
30Mr. Campion asserted that the motion judge erred in relying on Guiliano when it was distinguishable. As indicated above, I agree with the motion judge in his application of Guiliano to the motion before him.
31In his reply submissions, Mr. Campion asserted that the motion judge erred in paragraph 21 in his reliance on Logan and his conclusion that “claims in respect of pacemakers and defibrillators may well be more efficiently pursued in separate proceedings”. I am not persuaded that reliance on Logan was an error. Indeed to the contrary. Furthermore, the conclusion that the proceedings dealing with the devices might be more efficiently pursued in separate proceedings was open to him as the case management judge.
32Next, Mr. Campion argued that Cullity J. erred by characterizing the order sought by Heron as a merely procedural matter which did not deal with the loss of a substantive right in respect of a possible limitations defence. In his factum, Mr. Campion wrongly made reference to paragraph 9 of the reasons. The only reference to a “merely procedural matter” is found in paragraph 11 where Cullity J. referred to the reasons in Young17 where the Court of Appeal dealt with an appeal from the defendants from an order of Nordheimer J. in which he consolidated two class action proceedings and allowed the original plaintiffs to be substituted by Boulanger in the consolidated action. In considering whether the order was final or interlocutory, at para. 9, Goudge J.A. held as follows:
The order appealed from disposes of no substantive rights as between the appellants and the respondents. This is not the same as removing parties from an ordinary lawsuit. Mr. Young and Mr. Policicchio remain members of the proposed class and all of the substantive rights to relief they may have against the appellants continue to exist. Correspondingly, the appellants have lost no substantive defences with respect to these individuals or any other members of the proposed class as a result of this order. The order deals with a merely procedural matter, namely who will be proposed as the representative of the class when, in due course, a certification motion is brought. It does not deal with any substantive merits of the action, as it must in order to be a final order. See Sun Life Assurance Co. v. York Ridge Developments Ltd. (1998), 28 C.P.C. (4th) 16 at 20 (Ont. C.A.).
33That applies equally here where the relief sought is the substitution of the representative plaintiff rather than a motion under rule 21.01. I am not persuaded that the motion judge erred.
34The last issue arises from Mr. Campion’s submission that Heron was a mere placeholder or token plaintiff. It was known when the statement of claim was issued that he had been implanted with a defibrillator and consequently the decision to install him as the representative plaintiff must be taken to have been deliberate and informed, albeit in good faith. The motion judge dealt with Mr. Campion’s submission that Heron never had standing in two ways. First, he pointed out that that might have been relevant on a motion pursuant to rule 21.01(1)(b) but no such motion was brought. Second, because of the pleading of common purpose, he left open the prospect in paragraph 15 that Heron could have represented those with pacemakers as well. I am not persuaded that his conclusion was an error given the finding of fact as to common purpose.
35In the end result, as the Court of Appeal pointed out in para. 26 of Logan18, the motion judge had a discretion to exercise. Just because the appellants disagree with his decision does not mean that he erred in the exercise of that discretion.
Rule 62.02(4)(a) and (b) Desirability that Leave be Granted/ Matters of such Importance that Leave be Granted:
36The moving parties have failed to satisfy me that there are conflicting decisions or that there is good reason to doubt the correctness of the order in question. Had I been satisfied, I would not have been persuaded that it is desirable to grant leave or that the appeal involves matters of such importance that leave should be granted. The circumstances are unique in that the motion judge was dealing with circumstances in which a carriage motion led to an agreement to consolidate actions and to the motion for an order to substitute the representative plaintiff.
37In his reply submissions, Mr. Campion raised the issue that Ibbitson had been added as a representative plaintiff with a derivative Family Law Act claim although no such claim had been raised by Heron. There is no mention of that issue by the motion judge, nor did it appear in either factum. I decline to deal with it.
38ORDER TO GO AS FOLLOWS:
The motion for leave to appeal is dismissed.
If counsel are unable to agree by January 21st, 2008 as to costs, they will make written submissions (not exceeding three pages plus an outline of costs) on this timetable: Mr. Kim by January 30th; Mr. Campion by February 7th; reply, if any, by February 14th.
Kiteley J.
DATE: January 10, 2008
Footnotes
- Heron v. Guidant Corp. [2007] O.J. No. 3823
- S.O. 1992, c. 6 (CPA)
- Mazzuca v. Silver Creek Pharmacy Ltd. (2001) 2001 8620 (ON CA), 56 O.R. (3d) 768 (C.A.)
- Stone v. Wellington (County) Board of Education (1999) 1999 1886 (ON CA), 29 C.P.C. (4th) 320 (C.A.)
- R.S.O. 1990, c. P.38
- Ragoonanan Estate v. Imperial Tobacco Canada Ltd. (2000) 2000 22719 (ON SC), 51 O.R. (3d) 603 (S.C.J.)
- Hughes v. Sunbeam Corp. (Canada) Ltd. (2002) 2002 45051 (ON CA), 219 D.L.R. (4th) 467 (O.C.A.)
- Boulanger v. Johnson & Johnson Corp. [2002] O.J. No. 1075 (Ont. S.C.J.); leave to appeal granted [2002] O.J. 2135
- FN 3
- Guiliano v. Allstate Insurance Co. (2003) 2003 64297 (ON SC), 66 O.R. (3d) 238 (S.C.J.)
- Logan v. Canada (Minister of Health), [2003] O.J. No. 418 (S.C.J.)
- Logan v. Canada (Minister of Health), 2004 184 (ON CA), [2004] O.J. No. 2769 (C.A.)
- Punit v. Wawanesa Mutual Insurance Company, O.S.C.; C. Campbell J.
- Olsen v. Behr Process Corp., 2003 BCSC 429, [2003] B.C.J. No. 627 (B.C.S.C.)
- MacKinnon v. National Money Mart Co. [2004] B.C.J. No. 176 (S.C.) aff’d on other grounds 2004 BCCA 472, [2004] B.C.J. No. 1960 C.A.
- FN 8
- Young v. Janssen-Ortho Inc., 2003 16347 (ON CA), [2003] O.J. No. 773 C.A.
- FN 12