Court File and Parties

COURT FILE NO.: CV-21-00003704-00CP DATE: 2023-10-26

SUPERIOR COURT OF JUSTICE – ONTARIO 7755 Hurontario Street, Brampton ON L6W 4T6

RE: COLLEEN UNDERHILL, ANGELO PAOLOZZI, and LINDA PAOLOZZI, Representative Plaintiffs

AND: MEDTRONIC CANADA, MEDTRONIC PLC, COVIDIEN CANADA, ULC, COVIDIEN LLC, and SOFRADIM PRODUCTION, Defendants

BEFORE: The Honourable Justice Ranjan Agarwal

COUNSEL: Jill McCartney, Bridget Moran, and Jordyn Liebman, for the Representative Plaintiffs Email: jill.mccartney@siskinds.com, bridget.moran@siskinds.com and jordyn.liebman@siskinds.com

Grant Worden and Adrienne Oake, for the Defendants Email: gworden@torys.com and aoake@torys.com

HEARD: October 11, 2023, in person

ENDORSEMENT

INTRODUCTION

[1] The representative plaintiffs Colleen Underhill, Angelo Paolozzi, and Linda Paolozzi move for approval to discontinue this class action under section 29(1) of the Class Proceedings Act, 1992, SO 1992, c 6. The defendants Medtronic Canada and Covidien Canada ULC (which have since amalgamated into Medtronic Canada ULC), Medtronic PLC, Covidien LLC, and Sofradim Production argue that the motion should be adjourned indefinitely.

[2] At first blush, it seems strange that Medtronic, which seemingly benefits from a discontinuance, opposes this motion. But Medtronic’s request is really for a multijurisdictional sequencing order. Medtronic argues that if this court approves discontinuance of the representative plaintiffs’ claim, its application to stay an overlapping class action in British Columbia will be impaired.

[3] The representative plaintiffs respond that Medtronic is being histrionic—they don’t want to continue this lawsuit, and shouldn’t be forced to do so, especially where the class members’ substantive claims are being prosecuted in the overlapping B.C. action and the representative plaintiffs will consent to an order to pay Medtronic’s partial indemnity costs.

[4] Underlying each parties’ positions is a strategic calculation. The representative plaintiffs believe that the 2020 amendments to the CPA will make it harder or take longer to certify this action as a class proceeding in Ontario. Medtronic seemingly hopes for the same outcome.

[5] In the usual course, a plaintiff shouldn’t be compelled to continue litigating an action. But this isn’t the usual course—here, the plaintiffs seek to represent the interests of a class and, in doing so, they’ve assumed the burden of prosecuting this claim for the absent class members. There’s a significant risk of limitations prejudice to those class members if this court discontinues this proceeding before final disposition of Medtronic’s application in B.C. For that reason, I endorse an order adjourning this motion indefinitely.

[6] Further, given that this proceeding and the B.C. proceeding are multijurisdictional class actions, I endorse orders under the Canadian Judicial Protocol for the Management of MultiJurisdictional Class Actions and the Provision of Class Action Notice:

(a) I may speak with the case management judge appointed in the overlapping B.C. action;

(b) I may direct that a joint case management hearing be held with the judge in the overlapping B.C. action, if they agree;

(c) the judge in the overlapping B.C. action may participate in the representative plaintiffs’ motion for approval to discontinue this proceeding, to the extent permitted by and in accordance with the Rules of Civil Procedure and Supreme Court Civil Rules; and

(d) the judge in the overlapping B.C. action and I may communicate to determine the most efficient process for the consideration of any motions, after receiving any input the parties may provide, and making any necessary decision on the appropriateness of any communication.

[7] To the extent that the judge in the overlapping B.C. action agrees that I may participate in Medtronic’s application for a stay of proceeding, this approach may allow our courts to continue to develop a procedure “akin to and perhaps better than the MDL procedure (multiple district litigation) used by American states”. See Winder v Marriott Int’l Inc., 2019 ONSC 5766, at para 157.

BACKGROUND

[8] The representative plaintiffs started this class action in October 2021. They allege that Medtronic designed, manufactured, and sold defective surgical stapler products (devices used to remove, cut through, or create connections in tissue during surgeries). The representative plaintiffs seek to represent a class of “similarly situated” individuals in Canada.

[9] Under section 28(1) of the CPA, the limitation period applicable to the causes of action asserted in this claim has been suspended in favour of class members. It resumes running if this proceeding is discontinued with approval of the court (CPA, s 28(1)(h)).

[10] Just before the time limit for mandatory dismissal for delay under section 29.1 of the CPA, the parties filed a timetable for service of the representative plaintiffs’ certification motion record.

[11] Class Counsel also represent the plaintiff Brian Kostiuk, who started an action[^1] against Medtronic in British Columbia shortly after after the representative plaintiffs filed their timetable. Kostiuk’s action is on behalf of a “national class” making the same allegations about Medtronic’s surgical stapler products. The parties agree that the two proceedings are “overlapping”, in that they involve the “same or similar causes of action and the same or affiliated defendants” (CPA, s 1.1).

[12] The representative plaintiffs then advised Medtronic that they intended to discontinue this proceeding. A proceeding under the CPA may be discontinued only with the approval of the court, on such terms as the court considers appropriate (CPA, s 29(1)).

[13] The representative plaintiffs don’t intend to start a fresh class action against Medtronic in Ontario. They consent to the discontinuance being made “with prejudice”.[^2] Class Counsel advises that it has no instructions to start a fresh claim against Medtronic in Ontario, and undertakes not to do so. That said, both parties agree that nothing stops another person, or another lawyer, from starting a fresh claim.

[14] The representative plaintiffs want to discontinue this proceeding for two reasons. First, “British Columbia’s costs rules…will eliminate the need for the plaintiff in the BC Action to obtain litigation funding” (affidavit of James Boyd, sworn June 13, 2023). Ontario has a “loser pays” system, where the unsuccessful party partially indemnifies the winning party for its legal costs. See 1465778 Ontario Inc. v 1122077 Ontario Ltd., 2006 CanLII 35819, at para 26 (Ont CA). In B.C., costs are prohibited on an application for certification. See Class Proceedings Act, s 37(1) (BC).

[15] Second, “the 2020 amendments to the certification test in the Ontario CPA have not yet been fully tested…prosecuting the claim in British Columbia will avoid the complexity and potential for delay associated with the new law” (Boyd’s affidavit). In 2020, Ontario amended the CPA to add superiority and predominance as criteria for certification:

5. (1.1) In the case of a motion under section 2, a class proceeding is the preferable procedure for the resolution of common issues under clause (1)(d) only if, at a minimum,

(a) it is superior to all reasonably available means of determining the entitlement of the class members to relief or addressing the impugned conduct of the defendant, including, as applicable, a quasi-judicial or administrative proceeding, the case management of individual claims in a civil proceeding, or any remedial scheme or program outside of a proceeding; and

(b) the questions of fact or law common to the class members predominate over any questions affecting only individual class members.

[16] No court has yet to interpret or apply section 5(1.1) on a contested motion for certification. There’s some obiter commentary that the amendment may only reflect the current jurisprudence. See Woods v University of Ottawa, 2021 ONSC 5720, at fn 11; McGee v Farazli, 2022 ONSC 4105, at para 14. Alternatively, there’s some obiter commentary that it’s a material change. See Coles v FCA Canada Inc., 2022 ONSC 5575, at para 163ff. Michael Eizenga and Michael Peerless argue that Ontario’s certification test “has been made more rigorous”, meaning that Ontario is the only jurisdiction to “have a preferable procedure test this strict”. See “Class Actions: From Case #1 to the 2020 Amendment in Ontario”, 40 Adv J No 4, 21-25.[^3]

[17] There’s no dispute that the representative plaintiffs are making a strategic decision: they believe that the test for certification in B.C. is more likely to result in their claim being certified there. So too Medtronic: it’s counting on it being harder to certify this class’s claims in Ontario because of the 2020 amendments.

[18] Medtronic has applied for a stay or dismissal of Kostiuk’s action, either in whole, or of the claims of all proposed class members living in Ontario. Medtronic argues that Kostiuk’s action is an abuse of process or, alternatively, that Ontario is the more convenient forum for the adjudication of Ontario class members’ claims. No case management judge has been appointed yet.

[19] Medtronic consents to the application of the CBA Protocols. The representative plaintiffs take no position on that issue.

LEGAL FRAMEWORK

[20] For court approval of a discontinuance, the central issue for determination is whether the class members may be harmed by the discontinuance of the class proceeding. To grant a dismissal, the court must be satisfied that:

• the interests of the class won’t be prejudiced • the proceeding wasn’t started for an improper purpose • if necessary, there’s a viable replacement party so that class members aren’t prejudiced • the defendant won’t be prejudiced

See Davidson v Stableview Asset Management Inc., 2022 ONSC 895, at paras 8-10; Sollen v. Boehringer Ingelheim (Canada) Ltd., 2008 ONCA 803, at para 3.

[21] In deciding whether to grant an adjournment, the court must consider several factors:

• the evidence and strength of the evidence of the reason for the adjournment request • the history of the matter including deliberate delay or misuse of the court process • the prejudice to the party resisting the adjournment and the consequences to the requesting party of refusing the request

See Toronto-Dominion Bank v Hylton, 2010 ONCA 752, at para 36-38; Ariston Realty Corp. v Elcarim Inc., 2007 CanLII 13360, at para 34 (Ont Sup Ct).

[22] In Dunham v Syngenta AG, 2023 ONSC 872, similar issues were litigated before Justice Morgan. There were overlapping class actions in B.C. and Ontario. The defendants applied to stay the B.C. action on jurisdiction grounds. The representative plaintiff moved to discontinue the Ontario action. In that case, the representative plaintiff had health problems, and preferred to be a class member in the B.C. action rather than a representative plaintiff in the Ontario action. The same lawyer represented both plaintiffs.

[23] Justice Morgan identified several concerns, some of which were raised on this motion: was the representative plaintiff (or his lawyers) forum-shopping for a “tactical advantage”? is there a risk that other class members could restart the class action in Ontario if the B.C. court assumed jurisdiction? how does the B.C. court compare itself for the forum non conveniens analysis if the Ontario action is discontinued? can the court compel an unwilling plaintiff to continue to litigate in Ontario? See Dunham, at paras 12-17.

ANALYSIS AND DISPOSITION

1. Prejudice

[24] The parties’ arguments revolve around two issues: (a) prejudice to the class members; and (b) Class Counsel’s motives (i.e., improper purpose). At a more macro level, the representative plaintiffs effectively argue that judicial comity requires this court to follow Dunham. See R v Sullivan, 2022 SCC 19, at para 75.

[25] The representative plaintiffs say that there’s no prejudice to class members because their claims will be addressed in Kostiuk’s action. Indeed, there may be a benefit to class members since Kostiuk doesn’t need to get litigation funding and avoids the uncertainty caused by the 2020 amendments to the CPA.

[26] Medtronic responds that there’s, in fact, prejudice to the absent class members because of the nature of its case in B.C. It argues that the entire B.C. claim should be stayed because that claim is an abuse of process. But it’s also arguing that the Ontario class members’ claims should be stayed under B.C.’s Court Jurisdiction and Proceedings Transfer Act, SBC 2003, c 28, s 11, because their request for certification “should be assessed by the Ontario Court” under the “new standard” for certification in the CPA. If the Ontario action was already discontinued and Medtronic were wholly or partially successful in its application for a stay in British Columbia, then some or all of the absent class members would be up against a limitations clock. The parties concede, for this argument, that Kostiuk’s action continues the suspension of any limitation period for now (Class Proceedings Act, s 39(1) (BC)). But if the Kostiuk action is stayed, in whole or in part, it’s arguable that the limitation period resumes running immediately.[^4]

[27] The potential prejudice can be illustrated this way. The class members’ claims have been suspended since this class action was started. If Medtronic’s application in B.C. is granted and I’ve approved discontinuance of this class action before then, the limitation period might resume running as soon as the order in B.C. is made. As a result, there may be class members whose claims are at risk of being statute-barred immediately.

[28] The likelihood that class members could retain a lawyer, seek advice, and give instructions to issue a claim that day or even within days is small. In fact, I expect that the risk of missing a limitation period is so acute that class members (and, perhaps, enterprising lawyers) might start an Ontario claim to toll the limitation period sometime after discontinuance is approved here but before a stay is issued in B.C. That will have been a Pyrrhic victory for judicial economy and efficiency.

[29] The representative plaintiffs reply that all of this shouldn’t be the court’s concern. The limitations prejudice can be mitigated by Class Counsel informing class members of these developments or through terms imposed by the B.C. judge if they stay the action (for example, suspending the operation of the order so class members can be informed). They rely on Winter v C.R. Bard Inc., 2020 ONSC 3532, where the representative plaintiffs settled their individual claims, and then sought approval for discontinuance of the class action in Ontario. There were overlapping class actions in Saskatchewan and B.C. Justice Perell wasn’t concerned about prejudice to the absent class members because they had “alternatives”, such as individual claims and the overlapping actions.

[30] The representative plaintiffs focus on Justice Perell’s statement—“Putative Class Members have no absolute entitlement to a class proceeding”—to argue that the risk of limitations prejudice isn’t grounds to deny approval of a discontinuance. The representative plaintiffs misconstrue this case—Justice Perell identified the running of the limitation period as potentially prejudicial but mitigated by the available alternatives. Unlike here, there wasn’t an active attempt in the other proceedings to restart the limitation period.

[31] In my view, the risk to absent class members is simply too great. Through no fault of their own, they may be fatally prejudiced by an order approving the discontinuance before disposition of Medtronic’s stay application. In contrast, an adjournment of the representative plaintiffs’ motion continues the suspension of the limitation period, and preserves the status quo.

[32] I don’t depart from Justice Morgan’s reasoned and considered decision in Dunham. But, on the facts, the two cases are different. Justice Morgan faced a binary choice: approve the discontinuance, or not. He wasn’t asked to adjourn the motion until disposition of the defendants’ jurisdiction application in B.C. The issue of limitations prejudice to class members wasn’t raised before him.

2. Improper Purpose

[33] Medtronic urges me to find that Class Counsel (and, as a result, the representative plaintiffs) acted improperly. It argues that the representative plaintiffs’ conduct disentitles them to a discontinuance altogether but, at the very least, supports an adjournment.

[34] The representative plaintiffs, who live in Ontario and New Brunswick, started this class action in October 2021. The parties filed a timetable with the court around a week before the time limit for mandatory dismissal. Less than three weeks later, Kostiuk started an overlapping action in B.C. Then, less than one month before the time limit for filing their motion record for certification, the representative plaintiffs stated their intention to discontinue this action.

[35] From this sequence of events, Medtronic says that the inferences to be drawn here are clear:

• Class Counsel was seeking out class members to sue Medtronic • in B.C., they need a resident of B.C. to be a plaintiff (Class Proceedings Act, s 2(1) (BC)) • they had class members from Ontario and New Brunswick, so they started a class action here first (Ontario doesn’t impose a residence requirement on representative plaintiffs) • Class Counsel used the ensuing publicity around the action to find a B.C. class member • once Kostiuk retained them, Class Counsel started an action in B.C., and the representative plaintiffs applied for discontinuance

[36] Medtronic asks me to find that the representative plaintiffs never intended to prosecute this claim in Ontario. They were merely a vanguard, holding the line until reinforcements arrived. Medtronic points to the doctrine of abuse of process as applied in class actions. The doctrine has been used to prevent overlapping class actions, whether they’re started in the same jurisdiction or multiple jurisdictions. See Englund v Pfizer Canada Inc., 2007 SKCA 62, at paras 34-36; Fantov v Canada Bread Co., Ltd., 2019 BCCA 447, at para 71-72; Hafichuk-Walkin v BCE Inc., 2016 MBCA 32, at para 57; DALI 675 Pension Fund v SNC Lavalin, 2019 ONSC 6512, at para 17.

[37] Under this doctrine, the parties don’t have to be the same—Ontario and B.C. courts have recognized it may be abusive for the “same law firm” to start overlapping class actions “for no good reason” (that said, the lawyers’ identity isn’t determinative). See DALI, at para 17; and Hafichuk-Walkin, at para 57.

[38] The representative plaintiffs don’t shy from these facts, though they disagree with Medtronic’s characterization of the events as improper. In their telling, there’s nothing illegitimate about Class Counsel acting for two different plaintiffs, in two different jurisdictions, with overlapping claims, and for one of those plaintiffs to make a strategic decision as here. It’s not illegitimate for a representative plaintiff, as the case develops, to make a tactical decision based on changed facts “on the ground”. Here, Class Counsel wasn’t retained by Kostiuk when the Ontario action was started. Then it was. That development led the representative plaintiffs to decide to throw their lot in with him, rather than litigate in Ontario. They add that any prejudice to Medtronic is mitigated by a costs order, like in Dunham.

[39] I agree with the representative plaintiffs. Medtronic’s argument goes too far in merging the identity of Class Counsel and their clients. It’s the representative plaintiffs asking for a discontinuance, not Class Counsel. The representative plaintiffs disclose they got advice about costs, delay, and predominance. In light of that legal advice, and given Kostiuk’s instructions to start a claim in B.C., they decided to discontinue here in Ontario.

[40] Provided that the absent class members aren’t prejudiced, there’s nothing improper in discontinuing a class action. The existence of overlapping class actions (whether they are friendly or competitive) results from the system we have in Canada where there’s no national court with jurisdiction over multijurisdictional class actions. As lawyers and law firms (on both sides of the practice) get called to the bar and open offices in other provinces, it’s unsurprising that they and their clients would seek to take tactical advantage of the different class action regimes that have emerged.

3. The Class Action Judicial Protocols

[41] As this case shows, the management of multijurisdictional class actions continues to spawn litigation, even though there’s a tool that can readily solve the problem.

[42] In 2018, the CBA passed a resolution adopting a revised Canadian Judicial Protocol for the Management of MultiJurisdictional Class Actions and the Provision of Class Action Notice. Canadian courts have responded to this initiative by adopting the CBA Protocols as part of the rules of court. See, e.g., B.C. Supreme Court, Practice Direction Number PD-55, Canadian Judicial Protocol for the Management of MultiJurisdictional Class Actions and the Provision of Class Action Notice, effective July 1, 2019; and Ontario, Superior Court of Justice, Consolidated Provincial Practice Direction, effective July 1, 2014, amended June 21, 2021.[^5]

[43] Under the CBA Protocols, the parties may agree or the court may order that:

• their case management judge can speak to other judges managing overlapping class actions • a joint case management hearing be held with the other judge(s) • the judge may communicate with the other judge(s) • the other judge(s) may participate in a pre-certification motion

[44] The CBA Protocols aim to “prevent and deal” with the challenges caused by overlapping class actions in different provinces, while maintaining judicial independence. See Varnai v Janssen Inc., 2019 QCCS 5090, at para 44; Wong v Marriott Int’l Inc., 2020 BCSC 55, at para 21.

[45] Despite the promise of the CBA Protocols, it’s hardly been used outside of settlement approvals:

• in Forster v Monsanto Co., 2020 BCSC 1376, the defendants relied on the CBA Protocols to argue that the application judge in that case should communicate with the other judges in overlapping actions about the defendants’ pre-certification abuse of process motions—the plaintiffs didn’t oppose the request, but the court invited further submissions before invoking the CBA Protocols • in Kawasaki Kishen Kasha Ltd v Option consommateurs, 2021 QCCS 4944, the plaintiffs opposed the defendants’ request that the judges in allegedly overlapping class actions in Quebec, B.C., and Ontario communicate under the CBA Protocols—the Quebec court declined to do so because, in its view, the actions weren’t overlapping

[46] In Winder, Justice Perell summarized the experience in that proceeding. There, the defendants brought stay or carriage motions in the five overlapping class actions against them. The parties consented to the application of the CBA Protocols. The courts in B.C., Alberta, Ontario, Quebec, and Nova Scotia held a joint case management conference to schedule simultaneous hearings of Marriott’s motions. By the hearing, the parties settled, and the courts made orders (independently) staying all but the Ontario action.

[47] Here, there are two reasons to invoke the CBA Protocols. First, the outcome of one motion will necessarily change the contour of the other. The motions should be decided on their facts and the law rather than on which motion went first. To that end, they should be heard together. Second, at the motion hearing, there was discussion of B.C. procedural law. To the extent that law matters to the Ontario case, it would be better if those arguments were made in the context of a fully briefed application, with all of the necessary evidence and law.

[48] I’ve endorsed an order that the judge in Kostiuk’s action be allowed to participate in the representative plaintiffs’ motion for approval to discontinue this action. Of course, that judge will have to decide whether to accept this invitation and whether to allow me to participate in Medtronic’s application to stay Kostiuk’s action. To the extent that they do so, Winder provides us with a template on how to proceed.

CONCLUSION

[49] For the reasons discussed above, the representative plaintiffs’ motion is adjourned indefinitely. The parties can contact my judicial assistant aleisha.salim@ontario.ca to schedule a case conference as necessary.

[50] The costs of this hearing are costs in the cause of the motion.

Justice Agarwal

COURT FILE NO.: CV-21-00003704-00CP DATE: 2023-10-26

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

COLLEEN UNDERHILL, ANGELO PAOLOZZI, and LINDA PAOLOZZI Plaintiffs

• and -

MEDTRONIC CANADA, MEDTRONIC PLC, COVIDIEN CANADA, ULC, COVIDIEN LLC, and SOFRADIM PRODUCTION Defendants

ENDORSEMENT

Agarwal J.

Released: October 26, 2023

[^1]: In Ontario, under the CPA, a reference to a proceeding includes a plaintiff’s class action, whether or not it has been certified as a class proceeding (s 1(2)). In B.C., a class proceeding is a proceeding certified as a class proceeding (Class Proceedings Act, RSBC 1996, c 50, s 1).

[^2]: A discontinuance, unlike a dismissal, does not result in a preclusion unless the order giving leave to discontinue or a consent filed by the parties provides otherwise. See Rules of Civil Procedure, r 23.04(1); Simanic v Ross, 2004 CanLII 66337, at para 34 (Ont Sup Ct).

[^3]: But even these learned authors, who have been litigating class actions since the inception of the CPA, don’t pretend to predict how the amendments will be interpreted or applied, or whether it will practically affect which class actions are certified: “How exactly the addition of the superiority and predominance requirements will affect the class actions landscape is yet to be determined.”

[^4]: Though a stay of proceeding is not one of the enumerated bases for the limitation period to resume running under the Class Proceedings Act, 39(1) (BC), the statute only tolls the limitation period for causes of action asserted in “a proceeding that is certified as a class proceeding under this Act” (emphasis added). The CPA tolls the limitation period for causes of action asserted in “a proceeding under this Act” (s 28(1)).

[^5]: Under rule 1.07(1) of the Rules of Civil Procedure, a practice direction is a direction or notice “for the purpose of governing, subject to [the Rules of Civil Procedure], the practice for proceedings.”