Tiboni et al. v. Merck Frosst Canada Ltd. et al. [Indexed as: Tiboni v. Merck Frosst Canada Ltd.]

97 O.R. (3d) 125

Ontario Superior Court of Justice,

Divisional Court,

Carnwath, Perkins and Swinton JJ.

September 8, 2009

Professions -- Barristers and solicitors -- Conflict of interest -- Plaintiffs bringing proposed class action alleging negligence in manufacture and sale of drug in Canada -- Plaintiffs intending to be represented on certification motion by lawyer who was federal Minister of Health when drug was approved -- Motion judge not erring in disqualifying lawyer from acting for plaintiffs on basis of rule 6.05(5) of Law Society's Rules of Professional Conduct. [page126]

The plaintiffs in a proposed class proceeding claimed damages or a disgorgement of profits because of the defendant's alleged negligence in the manufacture and sale of the drug Vioxx in Canada. The plaintiffs wished to have AR represent them in the certification motion. When Vioxx was approved for sale, AR was the federal Minister of Health and responsible for Health Canada. A motion by the defendant to disqualify AR was granted. The motion judge relied on rule 6.05(5) of the Rules of Professional Conduct of the Law Society of Upper Canada, which states that "A lawyer who has left public office shall not act for a client in connection with any matter for which the lawyer had substantial responsibility before leaving public office." The plaintiffs appealed.

Held, the appeal should be dismissed.

It was unnecessary to decide whether ministerial responsibility automatically equates with substantial responsibility. The decision of the motion judge was not based only on the fact that AR had formal responsibility for Health Canada during the approval and marketing of Vioxx. Rather, his decision was grounded on concerns about possible private and public conflicts of interest. The decision to disqualify AR was a reasonable one. The motion judge reasonably concluded that the activities of Health Canada concerning the approval and regulation of Vioxx during the time that AR was Minister of Health would be subject to close examination during the proceeding. Therefore, in light of the wording of rule 6.05(5) and the policy underlying it, AR should not act for the plaintiffs in this proceeding.

APPEAL from an order disqualifying a lawyer from acting for the plaintiffs.

Cases referred to Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, [2003] S.C.J. No. 50, 2003 SCC 45, 231 D.L.R. (4th) 1, 309 N.R. 201, [2004] 2 W.W.R. 1, J.E. 2003-1819, 19 B.C.L.R. (4th) 195, 7 Admin. L.R. (4th) 1, [2004] 1 C.N.L.R. 342, 40 C.P.C. (5th) 1, distd Other cases referred to Chapters Inc. v. Davies, Ward & Beck LLP (2001), 2001 24189 (ON CA), 52 O.R. (3d) 566, [2001] O.J. No. 206, 141 O.A.C. 380, 10 B.L.R. (3d) 104, 102 A.C.W.S. (3d) 812 (C.A.); MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, [1990] S.C.J. No. 41, 77 D.L.R. (4th) 249, 121 N.R. 1, [1991] 1 W.W.R. 705, J.E. 91-85, 70 Man. R. (2d) 241, 48 C.P.C. (2d) 113, 24 A.C.W.S. (3d) 553; Skye Properties Ltd. v. Wu, 2003 75374 (ON SCDC), [2003] O.J. No. 3481, 43 C.P.C. (5th) 118, 134 A.C.W.S. (3d) 161 (Div. Ct.); Tiboni v. Merck Frosst Canada Ltd. (2008), 2008 6872 (ON SC), 89 O.R. (3d) 439, [2008] O.J. No. 704, 54 C.P.C. (6th) 366 (S.C.J.) Statutes referred to Food and Drugs Act, R.S.C. 1985, c. F-27 Rules and regulations referred to Food and Drug Regulations, C.R.C., c. 870, s. C.08.002 Authorities referred to American Bar Association, ABA Model Rules of Professional Conduct, rule 1.11 Law Society of Upper Canada, Rules of Professional Conduct, rule 6.05(5)

L. David Roebuck and David Stratas, for plaintiffs (appellants). Clifford Cole and Nicholas Kluge, for defendants (respondents). [page127]

The judgment of the court was delivered by

SWINTON J.: -- Overview

[1] The appellants, plaintiffs in a proposed class proceeding, appeal with leave from the decision of Cullity J. dated February 26, 2008 [(2008) 2008 6872 (ON SC), 89 O.R. (3d) 439, [2008] O.J. No. 704 (S.C.J.)] in which he ordered that the Honourable Allan M. Rock, Q.C., was disqualified from participation or involvement in this proceeding.

[2] At issue in this appeal is the application of rule 6.05(5) of the Rules of Professional Conduct of the Law Society of Upper Canada, which provides:

6.05(5) A lawyer who has left public office shall not act for a client in connection with any matter for which the lawyer had substantial responsibility before leaving public office.

Background

[3] The plaintiffs claim general and punitive damages from the Merck defendants, or a disgorgement of revenues, because of Merck's alleged negligence in the manufacture and sale of the drug Vioxx in Canada.

[4] According to the Second Amended Fresh Statement of Claim, Vioxx was approved for sale in Canada on or about October 25, 1999. Among the allegations of negligence against Merck is a failure to disclose information to Health Canada relating to increased cardiovascular risks associated with Vioxx and failure to conform with applicable disclosure and reporting requirements under the Food and Drugs Act, R.S.C. 1985, c. F-27 and the regulations thereunder.

[5] The certification motion was scheduled to be heard in February 2008. When the plaintiffs' factum was served on Merck in late January, it was signed by Harvey Strosberg on his own behalf and on behalf of Mr. Rock. It was the intention that Mr. Rock would represent the plaintiffs in the certification motion.

[6] Mr. Rock was the federal Minister of Health and responsible for Health Canada from June 11, 1997 until February 15, 2002. During that period, Merck was engaged in communications with Health Canada for the purpose of obtaining a notice of compliance that would authorize the marketing and distribution of Vioxx in Canada. It obtained the necessary approval while Mr. Rock was Minister.

[7] The applicable provisions of the Food and Drug Regulations, C.R.C., c. 870, s. C.08.002 set out the requirements for approval of a new drug: [page128]

C.08.002(1) No person shall sell or advertise a new drug unless (a) the manufacturer of the new drug has filed with the Minister a new drug submission or an abbreviated new drug submission relating to the new drug that is satisfactory to the Minister; (b) the Minister has issued, pursuant to section C.08.004, a notice of compliance to the manufacturer of the new drug in respect of the new drug submission or abbreviated new drug submission; . . . . . (d) the manufacturer of the new drug has submitted to the Minister specimens of the final version of any labels, including package inserts, product brochures and file cards, intended for use in connection with the new drug, and a statement setting out the proposed date on which those labels will first be used.

(2) A new drug submission shall contain sufficient information and material to enable the Minister to assess the safety and effectiveness of the new drug, including the following . . .

[8] The defendants brought a motion seeking to have Mr. Rock and the firm of Sutts Strosberg LLP disqualified from acting in this proceeding.

[9] Mr. Rock filed an affidavit in response, stating that he had no knowledge of Merck's application for approval of Vioxx while he was Minister of Health, and he had no involvement with the application. He also deposed that there were confidentiality screens in place to ensure that the Minister and his staff had no involvement in the process for regulatory approval of pharmaceutical and other products. This evidence was not contradicted.

The Decision of the Motions Judge

[10] The motions judge rejected an argument that Mr. Rock was disqualified because of an alleged conflict of interest arising from his possible possession of confidential information. However, he accepted the argument that Mr. Rock was disqualified because of a more general disqualification based on rule 6.05(5) of the Rules of Professional Conduct, quoted above.

[11] Given that a minister in charge of a governmental department is accountable to Parliament and to the public for the activities of that department, the motions judge held that this was "the ultimate -- and, a fortiori, a 'substantial' responsibility for the purpose of rule 6.05(5)" (Reasons, at para. 33).

[12] The motions judge went on to apply the test of the reasonable and informed person, stating [at para. 34]:

A reasonable and informed person might well have an apprehension that a former Minister of the Crown, who was retained in a matter in which the conduct of his department during his period of office may be in question, could have divided loyalties to an extent that they would interfere with his [page129] ability to make decisions objectively and exclusively in the interest of his present clients. He also stated that he would not accept any purported waiver of such conflict on behalf of the putative members of the proposed class.

[13] As well, he held that to allow Mr. Rock to act would result in a public interest conflict [at para. 35]:

Even apart from any perception of divided loyalties, I believe that rule 6.05(5) reflects a policy that public confidence in the integrity of governmental institutions and the courts would suffer if the former holders of public officers [sic] were permitted to represent parties in private litigation over matters for which the officers had previously had a substantial public responsibility. This would be a public interest conflict in the sense used in the cases I have mentioned above and, as such, could not be waived.

[14] Given the pleadings with respect to Merck's lack of proper disclosure to Health Canada and breaches of a duty owed to it, the motions judge concluded that communications between the defendants and Health Canada will be in issue, and the conduct of Health Canada officials will be subject to close scrutiny. In his view [at para. 36]:

In these circumstances, rule 6.05(5) requires that, as the former head of the department with a responsibility to the public during the relevant period, Mr. Rock should not now be permitted to represent private interests that may require him to adopt an adversarial position towards Health Canada.

[15] As well, he was informed that officials of Health Canada would probably be called as witnesses for the defence. This led the motions judge to state (at para. 36):

. . . it would, in my opinion, be invidious, and inconsistent with the pubic interest reflected in rule 6.05(5), for a former Minister to be able to challenge the evidence of such persons, and to cross-examine them with respect to matters that occurred in the department while he was in charge of its affairs and responsible to Parliament for its conduct.

The Standard of Review

[16] The motions judge's decision required him to interpret rule 6.05(5) and apply it to the circumstances of this case. An appeal court should interfere only if he applied the wrong legal standard or based his conclusions on irrelevant factors, or he made a palpable and overriding error in his consideration of the evidence (Chapters Inc. v. Davies, Ward & Beck LLP (2001), 2001 24189 (ON CA), 52 O.R. (3d) 566, [2001] O.J. No. 206 (C.A.), at para. 43; Skye Properties Ltd. v. Wu, 2003 75374 (ON SCDC), [2003] O.J. No. 3481, 43 C.P.C. (5th) 118 (Div. Ct.), at para. 16). [page130]

Analysis

[17] A court has inherent jurisdiction to disqualify counsel on the grounds of conflict of interest. In determining whether to disqualify counsel, the court may consider a code of professional conduct as an expression of public policy (MacDonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235, [1990] S.C.J. No. 41, at para. 18).

[18] The appellants submit that the motions judge erred in law in his application of rule 6.05(5), because he adopted a "status-based" approach -- that is, he equated "substantial responsibility" in the rule with ministerial responsibility. In particular, they point to para. 33 of his reasons, quoted above. Rather than focus on formal responsibility, they argue, he should have made an inquiry as to whether there was substantial personal involvement by Mr. Rock in the Vioxx decision.

[19] It is not necessary to decide, for purposes of this appeal, whether ministerial responsibility automatically equates with substantial responsibility. The decision of the motions judge was not based only on the fact that Mr. Rock had formal responsibility for Health Canada during the approval and marketing of Vioxx, as the appellants have suggested. Instead, his decision was grounded on concerns about possible private and public conflicts of interest, given Mr. Rock's responsibility for Health Canada and the issues arising in this litigation.

[20] The appellants relied on a dictionary definition of "substantial" and "responsibility" to mean "the ability to act independently and make decisions of real importance". I do not find those definitions helpful, as the same dictionary includes a definition of responsibility to mean the act of being responsible for.

[21] The appellants also relied on cases decided under the ABA Model Rule 1.11 [ABA Model Rules of Professional Conduct] entitled "Special Conflicts of Interest for Former and Current Government Officers and Employees". That rule deals with the situation of a lawyer who has formerly served as a public officer or as an employee of the government and prohibits him or her from representing a client in connection with a matter in which "the lawyer participated personally and substantially as a public officer or employee", unless the government agency gives its informed consent.

[22] The cases decided under that rule do not assist in this appeal, given the difference in wording between the ABA Model Rule and rule 6.05(5). The latter does not refer to personal and substantial participation, but rather to "substantial responsibility".

[23] The appellants also submit that the motions judge failed to apply the standard of a reasonable and informed person. I [page131] reject this submission. The motions judge concluded that a "reasonable and informed person" could have an apprehension of divided loyalty that could interfere with the former minister's representation of his present clients. He also concluded that there was a public conflict of interest as well: public confidence in the administration of justice and the integrity of governmental institutions could suffer if Mr. Rock were to act for the plaintiffs in this case. His decision was consistent with the approach of the Supreme Court of Canada in MacDonald Estate, above, which focuses on the possibility of a conflict of interest, not the probability (at paras. 42 and 44).

[24] The motions judge made no error in the legal principles he applied. Given the facts, his decision to disqualify Mr. Rock was a reasonable one. At the material times in issue in this proceeding, Mr. Rock was the most senior representative of the Government of Canada responsible for the approval, marketing, safety and effectiveness of drugs in Canada. He was responsible and accountable to Parliament and to the public for the activities of Health Canada. The motions judge reasonably concluded that the activities of Health Canada concerning the approval and regulation of Vioxx during the time that Mr. Rock was Minister of Health will be the subject of close examination during this proceeding. Therefore, in light of the wording of rule 6.05(5) and the policy underlying it, Mr. Rock should not act for the plaintiffs in this proceeding.

[25] The appellants submit that the motions judge's decision is inconsistent with the decision of the Supreme Court of Canada in Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259, [2003] S.C.J. No. 50. That case involved allegations of potential bias against a justice of the Supreme Court of Canada, who, 17 years earlier, had some supervisory and administrative involvement in matters that ultimately came before him as a member of a panel of the Supreme Court. The court determined that there was no reasonable apprehension of bias.

[26] That case is distinguishable. It focused on the issue of reasonable apprehension of bias by a judge and was decided in the context of a strong presumption of judicial impartiality. In this appeal, the case turns on the wording of rule 6.05(5) and the facts of this particular case.

[27] The appellants also argue that the motions judge erred in failing to dismiss the defendants' motion on the basis that it was brought for tactical reasons. I see no merit to this argument. The defendants brought this motion quickly after learning of Mr. Rock's involvement in the proceeding when his name appeared on the factum for the motion for certification. [page132]

[28] Given that counsel for the appellants indicated that they were representing the plaintiffs on this appeal, the parties did not pursue the argument that the solicitors, Mr. Rock and Sutts Strosberg LLP, had no standing to appear on the motion for leave to appeal and the appeal.

[29] The appeal is dismissed. Costs to the respondents are fixed at $7,500, payable within 30 days.

Appeal dismissed.