ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GIOVANNI SPINA, JOHN SPINA DRUGS LTD., ROMEO VANDENBURG and ROMEO VANDENBURG DRUG COMPANY LTD.
Plaintiffs
– and –
SHOPPERS DRUG MART INC. and SHOPPERS DRUG MART (LONDON) LIMITED
Defendants
Odette Soriano for the Plaintiffs
Shawn Irving and Lia Bruschetta
Proceeding under the Class Proceedings Act, 1992
HEARD: November 28, 2014
PERELL, J.
REASONS FOR DECISION
Background
1This is a certified class action. See Spina v. Shoppers Drug Mart Inc. 2013 ONSC 4675. The Plaintiffs, Giovanni Spina, John Spina Drugs Ltd., Romeo Vanderburg, and Romeo Vandenburg Drug Company Ltd., who are franchisees of the Defendant Shoppers Drug Mart Inc. (“Shoppers”), bring a motion to finalize the Discovery Plan for the run up to the common issues trial.
2The parties had come to terms about the Discovery Plan, except for a dispute about the production from Shoppers of several categories of documents alleged to be relevant to the common issues certified for the professional allowance claim by a sub-class of Ontario-based Class Members.
3Under the proposed Discovery Plan, Shoppers has agreed to generate reports from its accounting system providing information about the professional allowances, but the Plaintiffs want more than the reports. In particular, they want the source documents behind the reports.
The Common Issues
4The Ontario sub-class alleges that Shoppers has wrongfully taken their professional allowances and been unjustly enriched. The certified common issues for their professional allowance claim are as follows:
a. Did the Defendants, or either of them, breach their contractual obligations under the 2002 and 2010 Associate Agreements, their statutory obligations under section 3 of the AWA and/or their common law duty of good faith to the Professional Allowance Class Members by retaining Professional Allowances and failing to remit Professional Allowances that relate to direct patient care services (as defined in both the Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23, R.R.O. 1990, Reg. 935, s. 2(1) and the Ontario Drug Benefit Act, R.S.O. 1990, c. O.10, O. Reg. 201/96, s. 1(8)) that were performed by the Professional Allowance Class Members to the Professional Allowance Class Members?
b. Were the Defendants, or either of them, unjustly enriched by retaining the Professional Allowances they received that relate to the direct patient care services (as defined in both the Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23, R.R.O. 1990, reg. 935, s. 2(1) and the Ontario Drug Benefit Act, R.S.O. 1990, c. O.10, O. Reg. 201/96, s. 1(8)) that were performed by the Professional Allowance Class Members?
c. If the answer to (a) or (b) is yes, what is the amount that the Defendants received for professional allowances?
d. If the answer to (a) or (b) is yes, what is the amount that the Defendants expended at the central office level for direct patient care?
5It should be noted that questions (c) and (d) were designed to quantify the amount of professional allowanced received by Shoppers and how much Shoppers expended on professional allowance expenditures.
6But it also should be noted that neither as a part of the common issues trial nor as part of the action generally is there a claim that Shoppers did not collect the correct amount of professional allowances, which in effect are charged to drug manufacturers by agreement between the drug manufacturer and Shoppers. It also should be noted that the matter of professional allowances is regulated by the provincial government, which has detailed reporting requirements and which prescribes statutory limits. And, it should be noted that an essential component of the commonality of the Class Members’ professional allowance claim was the aspect that Shoppers would have the financial and accounting information to determine the amount of the professional allowances and that, thus, it would be not be necessary for the purposes of the common issues trial to obtain information from each Class Member or to undertake individual assessments of each Class Member’s part of the unjust enrichment claim.
The Document Requests
7The Plaintiffs ask that the Discovery Plan require that Shoppers produce the following list of categories of documents, which, as will be seen, largely consist of source documents that would verify the accuracy of Shopper’s reports about its collection of professional allowances.
SDM’s invoices to generic drug manufacturers for Professional Allowances (para. 54-55 of the Statement of Defence);
Invoices / receipts and other documents regarding all professional allowances charged by and received by SDM during the class period (para. 64 of the Statement of Defence), including any additional reporting or documents sent by SDM to manufacturers in order to satisfy any reporting obligations manufacturers had with respect to professional allowances. [SDM has agreed to produce reports from its accounting system which it alleges demonstrate the amount of professional allowances received by SDM during the class period].
Reports received during class period from Associates regarding time and total amounts expended at each store for specified direct patient care activities (para. 71 of the Statement of Defence) and the reasonableness tests and analyses conducted by SDM with respect to these reports, and any documentation establishing the basis upon which SDM estimated the direct patient care activities of Associates who failed to deliver any reports;
[Expenditure] Documents regarding all direct patient care services SDM performed at the store level between 2005 (before professional allowances were introduced) to 2013 (para. 73 and 75 of Statement of Defence);
Copies of the calculations performed in respect of the “lawful agreements”; (para. 83 of the Statement of Defence);
Documents regarding the payment of Professional Allowances from each generic drug manufacturer or the credit provided to SDM from the manufacturer as referred to in para. 83 of the Statement of Defence. [SDM has agreed to produce reports from its accounting system which it alleges will demonstrate the amount of professional allowances paid by manufacturers].
To quantify the amount of allowances SDM received: data and calculations that support the amounts SDM received from generic drug manufacturers as Professional Allowances; and,
To calculate Professional Allowances by store: periodic reports detailing the quantity, molecules and the manufacturer of the generic drugs dispensed by each Associate and periodic reports detailing which drugs were paid under public and private drug plans.
8Shoppers has already agreed to produce, among other things: (1) contemporaneously prepared reports delivered to the Ontario Ministry of Health and Long-Term Care during the professional allowances reporting period (2006 – 2010), in which senior executives certified the aggregate amount of professional allowances received and amounts expended on direct patient care activities; (2) reports from its accounting system that demonstrate the amount of professional allowances received by Shoppers and (3) documents regarding the amount that Shoppers expended at head office in respect of direct patient care activities.
9Not surprisingly, the Plaintiffs submit that the requested documents are all relevant to the common issues and producing them would not offend the proportionality principle. Not surprisingly, Shoppers takes the categorically opposite position.
Analysis
10In my opinion, the categorical position of both parties is problematic because it ignores three factors that may refine a proportionality assessment for any given case.
11The first factor is that as a concept, proportionality is contextual and a party’s need (not wants) for the production of a document may depend upon what other documents or reports have been or will be produced.
12The second factor, which is related to the first, is that proportionality may be a fluid or dynamic concept and the party’s need (not wants) for a document may properly have to wait until after the production of other documents or other information is made available.
13The third factor is that in a given case, the proportionality concept may involve sampling, and sampling may or may not mean a statistically accurate sample. In other words, sometimes a few example documents may be sufficient, while in another case, the selection of examples may have to satisfy scientific standards about sampling.
14In their factum, the Plaintiffs submitted that Shoppers production of reports without the source documents was unsatisfactory because it would mean that: (a) the Plaintiffs would have to accept Shoppers’ work product at face value without the ability to check whether the reports are sound or without the ability of the Plaintiffs to propose alternative theories; and (b) Shoppers would be able to make selective disclosure and fail to disclose relevant documents, which is not proper. (The Plaintiffs relied on AlarmForce Industries v. CAA South Central Ontario [2008] O.J. No. 2202 (Master)).
15I disagree with this submission in the circumstances of the immediate case. In a given case, and the immediate case may be an example, there may be no reason to second guess a party’s disclosure work product by requiring the production of all of the source documents or even a sample of them. I repeat that this action is not a case about Shoppers’ calculating or possibly miscalculating professional allowances; it is a case about Shoppers’ keeping for itself what it calculated and reported to the government regulator as professional allowances.
16Further, in instances, and once again, the case at bar may be an instant, where samples or sampling are sufficient disclosure, it cannot be said that the party providing the samples is engaged in selective disclosure or evading its disclosure obligation. Rather, it is honouring the proportionality principle which is designed in part to make litigation manageable and to make access to justice available.
Application
17Applying those ideas about proportionality to the circumstances of the immediate case, it is my opinion that the Plaintiffs’ request for the production of documents needs to be analyzed keeping in mind that the Plaintiffs have not yet received and reviewed the documents and most importantly that the Plaintiffs have not received and reviewed the reports that Shoppers has agreed to provide. At this juncture, assuming the relevance of the various categories of documents sought, it is speculative that that the Plaintiffs need these documents.
18In the circumstances of the immediate case, adding the predominate factor of relevancy to the mix and keeping the above ideas about proportionality in mind, the Plaintiffs’ requests for the production of documents can be classified as follows: (1) proper request, because the documents are relevant and production would not offend the proportionality principle; (2) improper request, because the documents are irrelevant to the common issues trial or because the production of the documents would offend the proportionality principle; (3) disproportionate request, because a sample of the documents would be sufficient; and (4) premature request, because it remains to be determined whether the document is relevant or, if relevant, whether its production is disproportionate.
19Applying this classification scheme to the eight categories of documents requested by the Plaintiffs, I conclude that:
document requests 3, 5, and 7 are improper
document requests 2, 4, and 8 are premature
document requests 1 and 6 shall be satisfied by Shoppers providing a representative sample of the documents requested
20The Discovery Plan should be finalized accordingly.
Costs
21If the parties cannot agree about the matter of costs for this motion, which I am inclined to make in the cause, they may make submissions in writing beginning with Shoppers’ submissions within 20 days from the release of these Reasons for Decision followed by the Plaintiffs’ submissions within a further 20 days.
Perell, J.
Released: December 1, 2014