Court File and Parties

Court File No.: CV-11-420115 Date: 2019-05-01 Ontario Superior Court of Justice

Between:

APOTEX INC. Plaintiff Harry Radomski, Nando De Luca, and Jerry Topolski, for the Plaintiff

– and –

ELI LILLY AND COMPANY, ELI LILLY KINSALE LIMITED, LILLY DEL CARIBE, INC., LILLY S.A., ELI LILLY EXPORT S.A., AND ELI LILLY CANADA INC. Defendants Marc Richard, Richard Dearden, and Anthony G. Creber for the Defendants

Heard at Toronto: April 30, 2019

F.L. MYERS J.

Trial Management Directions and Endorsement

Background

[1] A bifurcated trial of liability issues in this action is scheduled to commence on May 21, 2019 for ten days. After a case conference on April 25, 2019, the court gave directions for final trial preparations dated April 26, 2019 (reported at 2019 ONSC 2643).

[2] The directions included the requirement for affidavits to be delivered on set dates to stand as the parties’ evidence-in-chief at trial. An issue has arisen as to how the process is to work in light of uncertainty as to the final identities of the witnesses to be called by the plaintiff.

[3] In addition, the parties agreed upon terms for the late addition of a party defendant. The court was not prepared to make the order on the terms sought because it included a term that was not consistent with the trial proceeding in the very near future.

[4] The court therefore convened a case conference to deal with the two outstanding issues.

[5] Having heard counsel on the two outstanding issues, despite many steps taken by counsel to ready this case for trial, for the reasons discussed below, in my view this case is not ready for trial. There is a significant risk that the trial will extend beyond the time allotted. Neither the parties nor the witnesses are known with certainty yet. There are too many moving parts and too many procedural issues still being pursued to conclude that there is a strong likelihood that this trial can be completed in the time available. Therefore, I have reluctantly determined that I must adjourn the trial. The trial date is therefore vacated on the terms set out at the end of this endorsement.

Trial Management

[6] The judiciary and the bar recognize that trial management efforts are required to enable a fixed date trial system to succeed. Trials cannot take more than their allotted time without interfering with time allotted to others. On December 13, 2018, I invited the parties to agree upon a protocol for an electronic trial. That did not meet with their favour. Since that time, there have been several case conferences aimed at completing outstanding matters and commencing trial management for a paper-based trial with evidence-in-chief by affidavits. In addition, Stinson J. spent the better part of a day preparing and then two half-days holding a pre-trial conference aimed at resolution. This case has not suffered a lack of judicial time and attention. It has had more than its fair share of judicial resources to encourage trial readiness.

[7] In Saleh v. Nebel, 2018 ONSC 452, Associate Chief Justice Marrocco, for the Divisional Court, wrote about the recognized importance of pre-trial management:

[132] The court is not alone in recognizing the importance of pretrial planning. The Advocates’ Society published, in June 2015, its Best Practices for Civil Trials. The Advocates’ Society is a recognized and respected voice of advocates within the justice system.

[133] In the introduction, the Advocates’ Society makes the following statement:

“By publishing these Best Practices for Civil Trials, the Society strives to promote a culture in which civil disputes are resolved more frequently, whether by trial or otherwise, in a more accessible, proportionate and cost-effective manner without compromising fairness.”

[134] This statement echoes the declaration of the Supreme Court of Canada in its unanimous judgement in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 2:

“Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case.”

[135] The Advocates’ Society’s Best Practices for Civil Trials represents an attempt by the bar to introduce into each trial practices that are proportional to what is at stake. The judge conducting the pretrial management conference was trying to do the same thing.

[136] At the pretrial conference the judge ordered the following:

• the production of the complete medical records for the plaintiff within 10 days after service of his order;
• a review by both counsel of witness lists with a view to completing the trial within 10 days rather than the 10-13 days originally anticipated. The trial judge noted that if the trial was going to take longer than 10 days it would have to be rescheduled;
• an exchange of updated medical reports after further updated medical examinations by the defendant;
• the plaintiff to provide updated financial reports;
• the accounting experts to confer and clarify the differences in their reports;
• the preparation of jury questions for the start of trial;
• the preparation of will-say statements for non-party lay witnesses; and
• the preparation of a joint document brief (10 copies).

[137] These are routine orders, designed to ensure the parties were ready for a fast-approaching trial.

[138] Although not necessary for my decision, I note that these types of orders are anticipated in the portion of the Advocates’ Society’s Best Practices dealing with Trial Planning and Management. Specifically, Best Practice 7 as follows:

• Best Practice 7: “Counsel should discuss trial planning and strive to reach agreement on procedural issues well in advance of the first day of trial. Where there is disagreement, counsel should take all reasonable steps to ensure that it is resolved prior to trial, whether through case management, at the pretrial conference or at the trial management conference. Pretrial and in trial motions should be minimized.”

[139] The Advocates’ Society elaborates upon this Best Practice in Commentaries 7.1 and 7.3:

• Commentary 7.1 “Parties should strive to agree on the following matters well in advance of the first day of trial… Agreed Statements of Fact; Joint Document Books… issues relating to expert testimony, including the qualification, admissibility and scope of expert evidence….
• Commentary 7.3: … “Counsel should agree on the authenticity and admissibility of as many documents as possible. Disagreements with regard to these issues should be addressed prior to the trial.… Counsel should not refuse to admit the authenticity of documents that are not in dispute, as disputes surrounding authenticity often result in the unnecessary utilization of resources.”

[8] Although not quoted by the Associate Chief Justice, Commentary 7.1 of the Best Practices includes striving for agreement on the “[n]umber of witnesses and witness coordination, including language and form of testimony and translation”.

[9] The parties may or may not place primacy on issues of efficiency, affordability, or proportionality in their dealings with each other. However, when it comes to utilizing the scarce resources of the court, public policy, supported by the bar, requires careful case management to protect and enhance access to justice without sacrificing trial fairness. As discussed below, both of these goals are at risk if the trial proceeds at this time.

The Issue of Witnesses

[10] Apotex asserts that it is entitled to judgment for an accounting for profits and tracing against all of the Eli Lilly entities that participated in the fabrication and sale in Canada of the drug product in issue in this proceeding. Although the upcoming trial is for liability only and not damages, Apotex has taken the position that it must obtain judgment against all of the entities against whom it seeks damages so that it needs to have the parties present and establish its cause of action against each if it can. It does not want to be met at the damages trial with a defence that it failed to obtain judgment for liability or that it is too late to pursue a participant in the chain of commerce.

[11] Eli Lilly asserts that there is no basis at all for Apotex to add its foreign affiliates as parties. As a matter of law, it submits that there can be no tracing remedy available for Apotex against any party unless Apotex establishes that the party committed tortious misconduct under the Trade-marks Act, RSC 1985, c T-13. There is no possibility of liability for tracing or profits available in this case, Eli Lilly says, because Apotex concedes that it has no evidence of tortious misconduct against the foreign subsidiaries. Ely Lilly also seems to also believe that Apotex may be using this issue to gain access to sensitive competitive information like its marketing plans and profit structure. Eli Lilly has been reluctant to readily share its information concerning these subsidiaries.

[12] Examinations for discovery were therefore slow and detailed as Apotex sought information about the internal workings of the Eli Lilly conglomerate. Some information that was provided initially seems to have been contradicted by later information. I do not believe that Eli Lilly has disclosed a clear path from the purchase of raw materials through to the retailing of the relevant drug product despite detailed discovery processes.

[13] With encouragement from the court, the parties turned their minds to creating an agreed statement of facts to deal with structural issues concerning Eli Lilly’s chain of commerce. While Eli Lilly was reluctant to share this information, it could not really be controversial evidence because it is solely and exclusively within Eli Lilly’s knowledge.

[14] Despite many months of efforts, the parties have yet to agree on an agreed statement of facts. As a result, Apotex has named over 20 possible witnesses from the Lilly side whom it says it may need to call as witnesses at the trial to provide non-controversial facts – including, for example, facts that may be recited in Eli Lilly’s 10-K forms which it has allegedly not been prepared to admit as yet.

[15] At the case conference on April 25, 2019, it appeared that the agreed statement of facts was nearly completed and that once the chain of commerce facts were agreed upon, there would be no need for Apotex to call the 20-plus witnesses whom it had listed out of an abundance of caution.

[16] If the agreed statement of facts is not completed, there are many arguments to be held about the witnesses listed by Apotex. Eli Lilly advises that some are former employees not current employees; some are foreign outside directors whom it does not control; and some are employed by foreign subsidiaries who are parties but who, Eli Lilly says, have not attorned to the jurisdiction as yet and therefore cannot be compelled to attend the trial. I will have more to say about this issue below. The most significant point to me in a trial management capacity however, is that there is nowhere near enough trial time for hearing the evidence of 20-plus witnesses and any necessary motions concerning their compellability.

[17] In my trial management directions, Apotex was required to deliver its affidavits by May 3, 2019. Eli Lilly has identified its three possible fact witnesses plus its expert but it will not commit to call any of them until it sees Apotex’s case against it on May 3, 2019. Therefore Eli Lilly was directed to identify its witnesses by May 7, 2019 and to provide its affidavits for those witnesses by May 13, 2019.

[18] After the release of my trial management directions, counsel for Apotex inquired as to how it was supposed to deal with the circumstance if Eli Lilly decides not to call one of the three fact witnesses whom it has indicated it might call if Apotex then decides to call him or her under Rule 53.07 (Calling Adverse Party as Witness) of the Rules of Civil Procedure.

[19] The only way I can see to get through this problem is to add a date for Apotex to determine to call witnesses whom Eli Lilly elects not to call. This pushes up to within a week of the trial. But I am not adjourning the trial based on defendants’ reluctance to expose its witnesses. That would give incentive to defendants to stall if so inclined.

[20] As discussions continued in the case conference, issues around the proposed agreed statement of facts re-emerged. Eli Lilly denies that it has stalled agreeing and says that Apotex wants it to agree to facts that are not true. This suggests that agreement may not be as close as once thought. In addition, Apotex advised that even if the agreed statement of facts was finalized it may still wish to call up to three of the witnesses on its list of 20-plus names. Despite explicit requests, Apotex was not willing to name the three witnesses whom it intends to call until the agreed statement of facts is finalized.

[21] In addition, Eli Lilly wants to know if it will receive will-say statements for the three witnesses whom Apotex proposes to call from the list of 20-plus potential witnesses. Apotex advises that as the 20-plus names are all Eli Lilly people, it will be cross-examining them under Rule 53.07(5) of the Rules of Civil Procedure and therefore it is not required to provide will-say statements for them. This also re-ignites the issue of precisely who the witnesses are and whether they are compellable under Rule 53.07(1) of the Rules of Civil Procedure.

[22] I am not criticizing the positions adopted by either side. These are very sophisticated parties with a lengthy history and possibly many different levels of issues at play. But it is apparent to me that with all the point and counter-point still at play, there is no certainty at all whether there will be an agreed statement of facts; whether Apotex will want to call 3, 10, 15, or 24 witnesses; whether any of those witnesses are compellable under Rule 53.07 of the Rules of Civil Procedure; and, if not, how they will be subpoenaed from abroad in time; and how all this can be reasonably likely to be resolved in the time available.

[23] Apotex is the plaintiff and is dominus litis (in charge of its litigation). It has chosen to pursue the chain of commerce defendants and has put forward over 20 possible witnesses to prove points that it insists it wants to prove in face of Eli Lilly’s reluctance to assist (or Apotex would say – obstruction). But, even if Eli Lilly is obstructing, Apotex still has to identify all of its witnesses-in-chief to get on to a trial. Right now there are up to three whom it will not name and upwards of 20 who may still be required. Without witnesses being known, trial times cannot be reasonably estimated.

[24] I cannot force the parties to agree on facts. Therefore, the trial schedule must at least consider the possibility that there will be no agreement. That possibility blows through the time available. Moreover, there is not enough time before trial to wait and see and determine compellability issues. While I could require Apotex to shed witnesses or consider excluding some of its proposed issues, in this case, with these parties, taking such steps just to force the trial into the ten days available would not be fair in my view. Both efficiency and fairness compel an adjournment of the trial.

[25] The trial management must therefore continue until all the components are in place to allow the trial to be properly scheduled to assure that it can be held within the time available.

Adding a Party

[26] By order dated June 20, 2018, on consent, Apotex was granted leave to amend its statement of claim to add new foreign Eli Lilly parties related to the chain of commerce arguments. The following was a term of the order:

[27] In essence, Eli Lilly consented to add two foreign affiliates who are part of the chain of commerce to allow Apotex to advance its arguments but without any admissions on its part.

[28] Under Rule 17 of the Rules of Civil Procedure, a foreign party who is added as a defendant in an action has the opportunity to contest the jurisdiction of the court. At common law, a party who accepts the jurisdiction of the court by participating in the proceedings is said to “attorn” and thereby loses the ability to contest the court’s jurisdiction. Rule 17.06 of the Rules of Civil Procedure allows a foreign defendant to contest the court’s jurisdiction prior to pleading without attorning. However, if a defendant pleads, participates in the action, or attends court (other than under Rule 17.06) it is likely to be found to have attorned and lost its ability to contest the court’s jurisdiction. All of this happens very early in the proceeding so that by the time of trial there are no jurisdiction issues remaining to be resolved. It would be the height of inefficiency to put parties through the cost and delay of a full proceeding only to then decide that the court lacked jurisdiction over the defendant from the outset.

[29] The order adding foreign defendants preserved the foreign defendants’ rights. That is, I accepted the parties’ agreement that the order adding the parties was not a determination of the court’s jurisdiction. The foreign defendants retained their ability therefore to move under Rule 17.06 of the Rules of Civil Procedure to contest the court’s jurisdiction if so minded. They never brought the motion. Rather, since that time, the added defendants have defended, engaged in examinations for discovery, and have been represented at numerous hearings.

[30] During the case conference on April 25, 2019, as I alluded to above, counsel for Eli Lilly raised the possibility that some of the foreign defendants may argue that the court has no jurisdiction over them and that they have not attorned to the jurisdiction of the court both as a substantive defence to the claim and to defend against being required to produce witnesses under Rule 53.07 of the Rules of Civil Procedure. I suggested that this did not seem like a very fruitful position in light of the events of the past year (i.e. attornment).

[31] But, on April 25, 2019, in addition to the trial management conference, the court also heard a motion by Apotex to add another foreign party defendant - Eli Lilly S.A. (“ELSA”). This company is alleged to be the predecessor owner or operator of the business operated by the defendant Eli Lilly Kinsale Limited in Ireland. At the hearing, counsel advised that they had reached an agreement on an order to add ELSA. I invited counsel to forward a draft order to me once the terms were formalized.

[32] On April 26, 2019, the parties forwarded a draft order that included the same reservation of rights term as the order of last June set out above. I declined to sign the order and required that the issue be dealt with at a case conference.

[33] At the resulting case conference, I told counsel that the issues of jurisdiction and attornment are not issues for trial. The order that I had granted previously was made a year ago. Trial was not imminent then. Eli Lilly’s counsel advised that they only consent to add foreign subsidiaries on the basis that they know that there is no cause of action against them so they must preserve all of their rights. I do not see how that necessarily follows. Regardless, that is the price of their consent.

[34] Once again, I would not adjourn a trial based on a position adopted by the defendant that may lack substance. But, once again, Apotex is dominus litis. It cannot be heard to say that it is ready for trial while, at the same time, insisting upon adding a party and leaving too little time to deal with the issue of jurisdiction. Eli Lilly may be correct on the merits or not. A trial managed trial cannot disintegrate into a debate over whether witnesses from Ireland are properly compellable under Rule 53.07 of the Rules of Civil Procedure based on a reservation of rights as to whether a party has been properly added or whether the court has jurisdiction over the party.

[35] Apotex brought the motion to add a party at the last minute. Doing so undermined its claim of trial readiness.

Outcome

[36] As noted above and many times previously, these are sophisticated litigants. No stone has gone unturned in this proceeding. Many procedural rabbit holes have been dug and pursued. The court’s desire to have parties stick to the merits or to engage in efficient and proportionate litigation processes is not going to deflect these parties from their well-established ways.

[37] However, these parties’ rights do not include prejudicing the rights of other litigants who are waiting for their fixed date trials. The June 2019 Toronto Civil Trial Sittings commence the week after this trial is scheduled to end. The trial judge is needed elsewhere for others.

[38] A fixed date trial system cannot succeed if parties are not held to their fixed dates and estimates. Counsel are specifically required to certify trial readiness under Rule 50.08(3) of the Rules of Civil Procedure for this reason. Counsel initially sought the ten days that were fixed for trial. While unexpected things can happen that extend a trial despite best laid plans, where scheduling efforts disclose a significant risk that the trial will extend beyond the time allotted, the trial should not be allowed to proceed. Generally, a fixed date trial should only proceed where the trial management judge concludes that there is a strong likelihood that the trial will be completed in the time available. These tests are not met where neither the parties nor the witnesses are known with certainty a month before the trial is set to commence.

[39] To allow the trial to proceed would not be a fair allocation of the court’s resources. I agree with Justice Stratas in Fabrikant v Canada, 2018 FCA 224 at para 25, where he observed:

Most certainly there is a resource issue, even at the best of times ... And the best of times is not now. The legal complement of the Court has fallen behind Canada’s population growth. Sprawling, multifarious cases with complexity as great as this Court has ever seen now vie for space in an already full, difficult docket. ... the resource issue remains pressing, impairing litigants’ access to timely justice.

[40] Efficient resource allocation requires ensuring that cases are ready for trial and do not have unresolved issues that foreseeably will extend the trial into time already reserved for others.

[41] A plaintiff who is faced with a reluctant defendant can insist on all of its rights. But if doing so affects the likely trial time or readiness, the plaintiff has choices to make. Apotex is entitled to take all of the positions that it has adopted. But the result is that it has chosen to take steps that undermine its claim to trial readiness.

[42] The trial is adjourned to a date to be fixed at a case conference. The trial may take more or less than ten days once it is ready to go.

[43] With the concurrence of the Civil Team Leader Mr. Justice Firestone, I direct that a new trial date is to be fixed when all of the parties are known with certainty and all of the evidence-in-chief and other trial aids ordered in the directions dated April 26, 2019 are finalized. If a motion is required to deal with adding ELSA and the court’s jurisdiction under Rule 17.06 of the Rules of Civil Procedure, I grant the parties leave under Rule 48.04(1) of the Rules of Civil Procedure and my initial case management directions to bring a motion before the Master to determine this issue.

[44] The time limits for delivery of evidence-in-chief contained in the direction dated April 26, 2019 are maintained. Apotex will have until May 30, 2019 to provide the names of all remaining witnesses whom it intends to call at the trial. For the possible witnesses listed on Apotex’s list of 20-plus names (which I understand is contained in its pre-trial memorandum) Apotex will, at the same time, provide a brief statement identifying the precise fact or facts that it intends to prove through each witness. If Apotex decides to use Rule 53.07 of the Rules of Civil Procedure to call any of the three fact witnesses whom Eli Lilly has indicated it is already considering calling, no will-say is required.

[45] If the parties agree on an agreed statement of facts prior to the trial, witnesses may be removed from the trial schedule despite the prior delivery of affidavits or will-says. No witnesses may be added after the dates for the delivery of affidavits and will-says set out in the directions of April 26, 2019 and this endorsement except with leave obtained at a case conference or leave of the trial judge.

[46] Counsel are to arrange an in-person case conference with me in June, 2019, once they knew with certainty all of the parties and have in hand all of the evidence-in-chief to be led at the trial.

F.L. MYERS J.