ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-14-516761CP

DATE: 20151117

BETWEEN:

CARLEEN KUTLU, PAIGE TOWLE and REBEKAH THOMAS

Plaintiffs

– and –

LABORATORIOS LEON FARMA, S.A., CHEMO IBERICA, S.A. and APOTEX INC.

Defendants

Won J. Kim and Megan B. McPhee for the Plaintiffs

Mark R. Frederick and Elizabeth K. Ackman for Laboratorios Leon Farma, S.A.

Kenneth Alexander for Paul Battaglia and Trilogy Class Action Services

David Spence for Apotex Inc.

HEARD: November 12, 2015

PERELL, J.

REASONS FOR DECISION

[1] This is another unfortunate interlocutory motion in what was a proposed class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6.

[2] The action is against Laboratorios Leon Farma, S.A. and Chemo Iberica, S.A. The moving parties are Carleen Kutlu, Paige Towle, and Rebekah Thomas, who are the Plaintiffs and who, until recently, were the proposed Representative Plaintiffs.

[3] This unfortunate motion is the sequel to the order that I made on September 28, 2015 (See: Kutlu v. Laboratorios Leon Farma, S.A., 2015 ONSC 5976.). The Plaintiffs now seek, among other things, a mandatory injunction with respect to the activities of Trilogy Class Action Services, the administrator appointed by Associate Chief Justice Rooke in Kohler v. Laboratorios Leon Farma, S.A., an action in Alberta, over which this court obviously has no jurisdiction. The Plaintiffs also seek a restrictive injunction against Merchant Law Group, the Class Counsel in the Alberta Action, over whom this court also has no jurisdiction, and against Laboratorios Leon Farma, S.A., the Defendant in both the Ontario Action and the Alberta Action, over which the court does have some jurisdiction.

[4] At the time of the hearing of this motion for an injunction, I made an endorsement dismissing it with reasons to follow. The endorsement is set out below, and these are my Reasons for Decision to explain the endorsement.

[5] The endorsement stated:

This is a motion for interlocutory relief concerning the conduct of an Ontario action that was discontinued as a class action to be continued as a joinder of claims. The Ontario class action was discontinued, as such, because of a certified class action in Alberta for which there is an ongoing opt-out process and a pending settlement approval. Save for directing the Administrator in the Alberta action to give notice of any opt-out revocations, which the Administrator does not oppose doing, for written reasons to follow, I dismiss the motion without costs. ….

[6] To understand the reason that I made the September Order and the reason why I dismissed the Plaintiffs’ November injunction motion, it is necessary to appreciate that for reasons that are associated with Canada’s constitutional framework, there is no mechanism to co-ordinate rival national class actions against a defendant.

[7] Because there is no national system to avoid a multiplicity of class actions, it is, not infrequently, the situation that there may be more than one national class action brought by a plaintiff in one province on behalf of class members in that province and on behalf of class members in all the other provinces. Although somewhat rarer, there is also the prospect that putative class members may opt out of a national class action and commence individual actions of their own, and, thus, a defendant may be confronted with a multiplicity of proceedings in more than one province about the same alleged wrongdoing.

[8] A multiplicity of proceedings is problematic because it is inefficient in terms of judicial economy, and there is the prospect of the embarrassment of inconsistent outcomes.

[9] And, there are other rarely-spoken-of embarrassments. There are sometimes carriage fights and stay motions as putative class counsel fight to secure carriage of the national class action for entrepreneurial gain and to sustain the economic viability of the class action to provide access to justice for the class members.

[10] Much worse than carriage fights, which ultimately may serve the best interests of class members, where there are rival national class actions, there is the unseemly prospect that the defendant may be able to engineer a sort of reverse auction and settle the certification motion or the class action with the least formidable foe or the lowest bidder. The defendant then can rely on the releases in one class action to fend off a rival national class action.

[11] In practice, the internecine warfare among rival national class actions is often avoided by the lawyers forming a consortium and agreeing that one proposed class action will proceed and the others will formally or informally be stayed to be revived as necessary.

[12] The Ontario case at bar, Kutlu v. Laboratorios Leon Farma, S.A., was commenced in November 2014 as a proposed national class action. The action was brought on behalf by women who were prescribed Alysena 28. It is alleged that the manufacturers assembled the wrong mix of active and placebo pills with the result that there were unwanted pregnancies some of which were aborted and some of which saw the birth of children with serious disabilities and some of which caused physical and mental harm to the birthmothers.

[13] The Plaintiffs, Mesdames Kutlu, Towle, and Thomas and approximately 70 other women had signed retainer agreements with Kim Orr, the proposed Class Counsel for the proposed Ontario national class action. The group of 70 putative Class Members had substantial claims, and the proposed class action was designed to focus on their claims but to include all Canadian women who were consumers of Alysena 28 as Class Members.

[14] At the time that the Kutlu Action was commenced in Ontario, a rival national class action, the Kohler Action, had already been commenced in Alberta by Merchant Law Group. The Alberta Action proceeded faster than the Ontario Action. I understand that approximately 3,000 Canadian women are Class Members of the Alberta Action.

[15] There were discussions between Kim Orr and Merchant Law Group to co-operate and co-ordinate the actions, but those discussions proved futile, and a certification hearing proceeded in Alberta ahead of the Ontario Action.

[16] Without bringing a stay motion, Kim Orr attended at the hearing in Alberta to oppose the certification of the Kohler Action. Kim Orr’s efforts to arrest the Kohler Action failed, and in June 2015, Associate Chief Justice Rooke certified the Kohler Action. More precisely on June 15, 2015, he ordered that the class action be certified as a multi-jurisdictional class action on behalf of all women who had been prescribed and had ingested Alysena™ 28 purchased in Canada between November 19, 2012 and April 15, 2013, and the biological fathers of children born to such women.

[17] On August 28, 2015, in the Alberta Action a Notice of Multi-Jurisdictional Class Action Certification was given to Class Members, and they were permitted to opt-out by October 27, 2015. Subsequently, the parties in the Kohler Action signed a Settlement Agreement. The parties agreed to expand the Class to include all women who had been prescribed Alesse™ but were instead dispensed and ingested Alysena™ 28 during the same period, and the biological fathers of children born to such women.

[18] While all this activity was going on in Alberta, an internal carriage fight occurred in the Ontario Action among Kim Orr and the lawyers from Thunder Bay who had partnered with it to advance the Ontario Action. The circumstances are described in my Reasons for Decision for my September Order (Kutlu v. Laboratorios Leon Farma, S.A., supra) and need not be repeated here.

[19] What for present purposes is important to note is that in the circumstances of resolving the carriage fight amongst the lawyers in Ontario, I discontinued the Ontario Action as a proposed class action and I allowed the Ontario Action to be reformulated as a joinder of claims for those putative Class Members who might wish to opt-out of the Alberta Action.

[20] In my opinion, the circumstances were urgent for the putative Class Members because of the pending opt-out deadline in Alberta. Protecting the interests of the putative Class Members is a matter of concern for the court, and here was an opportunity for the putative Class Members to have a meaningful choice of whether or not to opt-out from the Alberta Action. If the putative Class Members were satisfied with the Settlement Agreement in the Alberta Action, then they needed to do nothing, but if they wished to opt-out, the putative class members needed to know that there was an “opt-in” joinder action in Ontario.

[21] Here, it may be noted that an opt-in action has the advantage of not requiring certification, and the action enjoys some of the benefits of judicial economy and the avoidance of a multiplicity of proceedings. And more to the point, there were 72 putative Class Members of both the Ontario and Alberta Actions who had retainer agreements with Kim Orr and who were going to opt-out of the Alberta Action. I, therefore, ordered that the proposed class action in Ontario be discontinued as a class action, the discontinuance to take effect 90 days after the putative Class Members received a court-approved notice of the discontinuance in accordance with a court approved notice plan.

[22] I ordered that the discontinuance of the Ontario Action as a class action would be without prejudice to the right of Mesdames Kutlu, Towle and Thomas to have their action revived as a class action in the event that the settlement in the Kohler Action was not approved by the Alberta Court. In the meantime, the Kutlu Action would continue as a case managed normal action with a joinder of claims.

[23] I pause here to say that the Ontario Court had no intention to interfere with the Alberta Action. The putative Class Members of the Ontario Action always had the right to opt-out of the Alberta Action but with the certification of the Alberta Action, they did not need the choice of opting out to an uncertified Ontario Action.

[24] Returning to the narrative, what happened next was somewhat foreseen and somewhat unforeseen. In my September Order, I had directed that Kim Orr obtain new retainer agreements from its 72 clients, and 62 clients signed new retainers.

[25] On behalf of these 62 clients, in two letters to Trinity Class Action Services, Kim Orr delivered opt-out notices in the Alberta Action. Ten clients did not sign new retainers and did not opt-out of the Alberta Action.

[26] Meanwhile, on October 9, 2015, Associate Chief Justice Rooke certified an expanded definition of the Class in the Alberta action, extended the opt-out period to November 30, 2015 and allowed Class Members who had previously opted out to revoke their opt-outs and be given an opportunity to participate in the claims process. Associate Chief Justice Rooke set December 1, 2015 as the date for the hearing to determine whether to approve the Settlement.

[27] I do not know what prompted Associate Chief Justice Rooke to provide Class Members who had already opted out with an opportunity to revoke their opt-outs, but the implementation of that part of his order has been the source of grief, bad optics, and acrimony between the law firms acting for the parties in the Ontario Action.

[28] The source of the grief is that Paul Battaglia, the president of Trilogy Class Action Services, in pursuance of compliance with the order of the Alberta Court, vetted the letter to Class Members with the Merchant Law Group and with the lawyers for Laboratorios Leon Farma, S.A. Indeed, the letter was actually drafted by Casey Churko of the Merchant Law Group and discussed with Anna Casemore of Miller Thomson, which is acting for Laboratorios Leon Farma, S.A.

[29] What emerged was the following letter [my emphasis added]:

Dear Sir/Madam

Re: Kohler, et al. v. Laboratorios Leon Farma, S.A. Court File No. 1303 13736

We are writing this letter pursuant to paragraph 7(f) of the Order of Justice J.D. Rooke (Alberta Court of Queen’s Bench), dated October 9, 2015.

The purpose of this letter is to provide you with the enclosed Notice of Class Action Certification & Settlement Re: AlysenaTM 28 sold in Canada. Please review this Notice carefully, as it affects your legal rights.

We received the enclosed Opt-Out Form. If you were unaware that this Opt-Out Form was being submitted on your behalf, please contact Trilogy Class Action Services immediately by e-mail at opt@alysena28classaction.com or by telephone at 1-866-329-7153.

Alternatively, if you were aware that this Opt-Out Form had been submitted on your behalf, please consider the following:

• You may revoke your opt out before November 30, 2015 and participate in the Claims Administration Process that will be established by the enclosed Settlement Agreement, if it is approved by the Court at the hearing in Edmonton, Alberta on December 1, 2015. If the Settlement Agreement is approved on that date, you may make a claim for Compensatory Payments (beginning on January 1st, 2016) as described in pages 6-10 of the Settlement Agreement.

• If you do not revoke your opt out, you will not be included in the class action and will not be able to make a claim for Compensatory Payments pursuant to the Settlement Agreement.

You may revoke your opt out by sending a written statement of your intention to do so by e-email, fax, or mail to Trilogy Class Action Services Canada at: …

[30] Save for the sentences that I have emphasized in bold, this letter is unobjectionable. I also see little harm and some good in providing putative Class Members a right to revoke their opt-out notices, particularly if there has been some change in the certification order or in the terms of a proposed settlement as was the situation in Alberta. But, in my opinion, the emphasized passage is offensive, because it suggests to the recipient of the letter that his or her lawyer was acting without instructions or improperly in delivering the enclosed opt-out notice.

[31] Further, in the now-known circumstances of the drafting of this letter, there is the smell of ambulance chasing by the Merchant Law Group to preserve the class size of the Alberta Action and to defeat its rival Kim Orr. And for any defendant to have a substantive role in the opt-out process has bad optics.

[32] On the motion before me, the Merchant Law Group did not show this court the courtesy or the respect of attending on the motion, and I was advised that the firm was disputing it had been properly served.

[33] Mr. Battaglia, along with his lawyer, did attend, as did Miller Thomson LLP, the lawyers for Laboratorios Leon Farma, S.A.

[34] The latter argued that the offensive sentences were necessary because there was some doubt that Kim Orr’s clients had obtained independent legal advice before signing their new retainers and, therefore, it might well have been the case that the opt-out notices were unauthorized. It was, however, none of the Administrator’s or most particularly none of Laboratorios Leon Farma, S.A.’s lawyer’s business to enforce my order of September 28, 2015, and it is certainly not the role of the defendant in a class proceeding to be the champion for the protection of the putative Class Members, be they in Ontario or Alberta.

[35] I find the suggestion that Kim Orr was acting without instructions and that Laboratorios Leon Farma, S.A. was just ensuring compliance with my September 28, 2015 Order a weak excuse when all that was necessary was an apology for some unfortunate language in a letter that was authorized to be sent by the court in Alberta.

[36] What then to be done in the circumstances of this case?

[37] The fact of the matter is that there is nothing wrong in providing Class Members with an opportunity to revoke an opt-out decision, and more to the point, no harm was actually caused by the offensive language because none of Kim Orr’s clients have exercised their right to revoke. No real damage has been done, and in these circumstances, there is no reason for this court to make a mandatory or a restrictive injunction.

[38] It is for these reasons that I dismissed the injunction motion without costs.

Perell, J.

Released: November 17, 2015

COURT FILE NO.: CV-14-516761CP

DATE: 20151117

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

CARLEEN KUTLU, PAIGE TOWLE and REBEKAH THOMAS

Plaintiffs

– and –

LABORATORIOS LEON FARMA, S.A., CHEMO IBERICA, S.A. and APOTEX INC.

Defendants

REASONS FOR DECISION

PERELL J.

Released: November 17, 2015