CITATION: Robinson v. Medtronic, Inc., 2010 ONSC 1987
DIVISIONAL COURT FILE NO.: 90/10
DATE: 20100407
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
SHERRY MARIE ROBINSON, GREGORY ROBINSON HORNING, DAN AUSTEN AND GLENDA AUSTEN
Plaintiffs/Moving Parties
– and –
MEDTRONIC, INC. AND MEDTRONIC OF CANADA LTD.
Defendants/Respondents
James C. Orr, Victoria Paris and
Alexa Sulzenko
for the Plaintiffs/Moving Parties
Patrick J. O’Kelly, Danielle K. Royal and Samaneh Hosseini
for the Defendants/Responding Parties
HEARD: March 25, 2010
DAMBROT J.:
[1] The plaintiffs bring this motion for leave to appeal to the Divisional Court from the certification decision of Perell J. dated October 20, 2009, refusing to certify class members’ entitlement to punitive damages as a common issue and bifurcating common issues relating to the quantification and apportionment of any accounting or disgorgement for a claim based on waiver of tort from the other common issues in the case.
[2] The motion was heard with a similar motion for leave to appeal in a second class action brought against the same defendants, and raising one of the same two issues.
BACKGROUND
[3] Medtronic is a multi-national corporation that supplies Implantable Cardioverter Defibrillator (“ICD”) systems to individuals. These systems consist of a pulse generator (the ICD) and one or more leads. A lead is a complex insulated wire that connects the defibrillator to the heart muscle.
[4] The defendant developed the Sprint Fidelis Leads as part of a race among cardiac device companies to develop smaller and more flexible leads. Shortly after the Leads went to market, failures began to be reported. The leads were prone to fracture, which could result in wrong information about how the heart is functioning being communicated to the ICD, which in turn could deliver a massive shock where none was needed. When a lead malfunctions in this way, it puts the patient at serious risk of injury, including death. The United States Food and Drug Administration recalled the Leads on October 15, 2007.
[5] This action was commenced in 2007. The motion judge certified the action as a class proceeding on October 20, 2009. There are approximately 6000 class members, who are elderly, vulnerable and in poor health. The motions judge certified claims of negligence and waiver of tort on behalf of all persons in Canada implanted with one or more Leads. The subrogated claims of the Provincial Health Insurers were also certified.
[6] The motions judge found that negligence, waiver of tort, the costs of administration and pre-judgment interest raised common issues of fact or law. He refused to certify the following common issue with respect to punitive damages:
(xiv) Should one or both of the Defendants pay punitive damages to the Class?
[7] The motions judge also ordered that the two common issues relating to the quantification and allocation of the waiver of tort damages, rather than the entitlement to them, should be bifurcated for the purposes of discovery and the common issues trial. These two common issues are:
(xi) If an election or elections [to elect disgorgement of Medtronic’s gains instead of damages for negligence or conspiracy] may be made, what is the amount and how is it to be allocated?
(xii) If an election or elections may be made, what share, if any is the OHIP or other provincial health insurer’s entitlement?
ANALYSIS
Punitive Damages
[8] The motions judge acknowledged that the question of whether a defendant’s conduct justifies an award of punitive damages has been accepted as a common issue in an “impressive” list of cases. Despite this, he expressed the view that “the correct position is that punitive damages only sometimes have the commonality necessary for a common issue.” He then concluded that this case was not a case where entitlement and quantification of punitive damages may be a common issue because the entitlement to and quantification of punitive damages requires a quantification of the compensatory damages and an appreciation of the extent of the harm caused by the defendant’s misconduct, if proven. Therefore, he said, the pre-conditions to determining liability for punitive damages will not be satisfied until after individual assessments of causation and damages.
[9] He came to this result based on his reading of the judgment of Binnie J. in Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595. He reasoned:
170 It follows from Justice Binnie's remarks that an assessment of punitive damages requires an appreciation of: (a) the degree of misconduct; (b) the amount of harm caused; (c) the availability of other remedies; (d) the quantification of compensatory damages; and (e) the adequacy of compensatory damages to achieve the objectives or retribution, deterrence, and denunciation. These factors must be known to ensure that punitive damages are rational and to ensure that the amount of punitive damages is not greater than necessary to accomplish their purposes.
171 In order to rationally determine whether punitive damages should be awarded and to determine the quantum of them, the court needs to know the quantum of compensation that will be awarded. Earlier in his judgment, at para. 74, Justice Binnie stated: "[T]he governing rule for quantum is proportionality. The overall award, that is to say compensatory damages plus punitive damages plus any other punishment related to the same misconduct, should be rationally related to the objectives for which the punitive damages are awarded (retribution, deterrence and denunciation)." Later in his judgment, at para. 100, he stated: "The rationality test applies both to the question of whether an award of punitive damages should be made at all, as well as to the question of quantum."
172 In the case at bar, the common issues associated with negligence and with conspiracy (assuming that the conspiracy questions eventually are certified) will not be dispositive of Medtronic's liability because proof of causation and proof of damages will depend on individual trials that will follow the common issues trial. Whether Medtronic caused any harm and the amount of it will not be known until the individual issues are determined.
173 I appreciate that if the court determines at the common issues trial that Medtronic breached its duty of care or committed wrongful acts that the Plaintiffs would be well on their way to proving the torts of negligence and conspiracy; however, some of the Class Members might not succeed in proving that the negligence or conspiratorial conduct caused them injury.
[10] The motions judge then proceeded to examine some of the other cases in which the issue of punitive damages was certified. He distinguished some of those cases on the basis that in those cases, the courts had a means to determine the compensatory damages. He acknowledged, however, that not all of the cases were distinguishable.
[11] Finally, the motions judge commented that he saw no unfairness in his conclusion on this issue. Class members will not be denied access to justice.
[12] While I find no fault with the motion judge’s understanding of the underlying principles in Whiten v. Pilot Insurance Co., his decision to refuse to certify having regard to those principles is clearly at odds with many other judgments, and brings about an unfortunate result. Although the motion judge sees no denial of access to justice resulting from his decision, it is certainly debatable that a denial of justice is an inevitable outcome. If the 6000 elderly plaintiffs who are in poor health wish to pursue a claim for punitive damages, they will be obliged, after the common issues trial, after the waiver of tort quantification, and after the trials or hearings of individual issues, to then pursue 6000 individual trials or hearings to determine their entitlement to, and to quantify punitive damages, an issue which largely focuses on alleged misconduct by the plaintiffs that is common to all defendants.
[13] In my view, there is good reason to doubt the motion judge’s conclusion on this issue. A compelling argument can be made that while it may be appropriate to assess the quantum of punitive damages following an assessment of compensatory damages, a prima facie entitlement to punitive damages can still be certified as a common issue. (See Boulanger v. Johnson & Johnson Corp., [2007] O.J. No. 179 (S.C.J.) at para. 48, leave refused [2007] O.J. No. 1991; Heward v. Eli Lilly & Co., [2007] O.J. No. 404 (S.C.J.), appeal dismissed, (2008), 2008 32303 (ON SCDC), 91 O.R. (3d) 691 (Div. Ct.); Peter v. Medtronic Inc., [2007] O.J. No. 4828 (S.C.J.) at para. 105, leave refused 2008 22910 (ON SCDC), [2008] O.J. No. 1916; and Andersen v. St. Jude Medical Inc., 2010 ONSC 77, [2010] O.J. No. 8. (S.C.J.).) The motion judge expressed the view that the approach taken in these cases was wrong. In a subsequent decision in Robinson v. Rochester Financial Ltd., 2010 ONSC 463, [2010] O.J. No. 187 (S.C.J.) at paras. 56-61, leave refused 2010 ONSC 1899, Lax. J. specifically considered the decision of the motion judge in this case, but preferred to adopt the approach in Boulanger, Heward, Peter and Andersen.
[14] Accordingly, I conclude that there are conflicting decisions on this issue and that it is desirable that leave to appeal be granted. I am further of the view that there appears to be good reason to doubt the correctness of the order in question, and the matter is of sufficient importance, having regard to its precedential nature, that leave to appeal should be granted.
Bifurcation
[15] In his determination of the bifurcation issue, the motions judge acknowledged that as a general rule a multiplicity of proceedings should be avoided as much as possible. Nonetheless, he found that this was one of the extraordinary and rare cases where it would be fair and just to bifurcate. He found that it would be more efficient to determine the entitlement to waiver of tort first, because findings at the entitlement stage could influence the quantification of disgorgement, and that a disproportionate amount of energy and resources would be required to address the quantification and allocation of the waiver of tort damages. He was also concerned that the defendants would be required to disclose confidential and commercially sensitive business and financial information which would cause them serious prejudice.
[16] Once again, he candidly acknowledged that there are numerous decisions in conflict with his decision to bifurcate common issues related to the amount of the disgorgement. In each of these decisions, the court has held that it is appropriate to certify both entitlement to and the amount of a disgorgement under a waiver of tort claim as a common issue without any suggestion that the issues should be tried separately. Several of these class proceedings involved defective implantable heart devices, where the facts were similar to those in this case.
[17] In addition, there is much to be said for the plaintiffs’ position that the decision of the motion judge once again will result in a multiplicity of proceedings and increase the procedural complexity of the action. I do not propose to rehearse the argument made by the plaintiffs in this regard. It is sufficient to say that the apparent effect of the decision to bifurcate on the length and complexity of this action leads me to the conclusion that there is good reason to doubt its correctness. I am also of the view that this decision has far-reaching implications for the law regarding class proceedings in Ontario.
[18] Accordingly, I conclude that there are conflicting decisions on this issue and that it is desirable that leave to appeal be granted. I am further of the view that there appears to be good reason to doubt the correctness of the order in question, and the matter is of sufficient importance, having regard to its precedential nature, that leave to appeal should be granted.
DISPOSITION
[19] Leave to appeal is granted on both issues. The plaintiffs will have 15 days from the release of this decision to serve and file brief written submissions respecting costs. The defendants will have 15 days from receipt of those submissions to serve and file brief responding submissions.
[20] Having regard to the age and health of the plaintiffs, I order that the hearing of this appeal be expedited.
M. DAMBROT J.
RELEASED:
CITATION: Robinson v. Medtronic, Inc., 2010 ONSC 1987
DIVISIONAL COURT FILE NO.: 90/10
DATE: 20100407
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N :
SHERRY MARIE ROBINSON, GREGORY ROBINSON HORNING, DAN AUSTEN AND GLENDA AUSTEN
Plaintiffs/Moving Parties
– and –
MEDTRONIC, INC. AND MEDTRONIC OF CANADA LTD.
Defendants/Respondents
REASONS FOR JUDGMENT
DAMBROT J.
RELEASED: April 7, 2010