In Palmer v. Teva Canada Limited, the Ontario Court of Appeal upheld the lower court’s decision to deny certification of a proposed product liability class action seeking damages for the alleged increased risk of being diagnosed with cancer in the future as a result of exposure to impurities detected in certain pharmaceutical products.

Background

In 2018 and 2019, Health Canada recalled the drug valsartan, generally used to treat high blood pressure, after finding the presence of N-nitrosodimethylamine and N-nitrosodiethylamine (collectively, “nitrosamines”) above regulated limits in the drugs. The plaintiffs alleged that nitrosamines are toxic carcinogens and sought to certify a class action consisting of all persons who were prescribed and ingested the defendants’ valsartan products. The defendants had subcontracted the manufacture and supply of valsartan’s active ingredients to a company in China, and the plaintiffs alleged that the active ingredients contained nitrosamines, which wrongly exposed the putative class to an increased risk of developing cancer.

The plaintiffs asserted several claims against the defendants, including for negligence/product liability, toxic battery, unjust enrichment, as well as breach of competition laws and various provincial consumer protection statutes. The plaintiffs sought damages for medical services and monitoring, refunds for the amounts paid for the drug as well as psychological harm damages and punitive damages. Notably, the plaintiffs sought compensation for the potential increased risk of being diagnosed with cancer in the future, as opposed to damages for personal injury related to a cancer diagnosis.

Ontario Superior Court Refuses to Certify Proposed Action

The motion judge dismissed the plaintiffs’ certification motion, finding that the plaintiffs failed to plead a viable cause of action in negligence. Finding it “a baffling and fatal feature” that the plaintiffs did not pursue any claims for anyone actually physically injured by the manifested cancer, the motion judge emphasized that “the law provides remedies for concrete injuries not abstract or speculative ones.”

Regarding the plaintiffs’ claims for mental distress over the alleged increased risk of cancer, the motion judge found that such distress was similarly non-compensable as it was no more than “present anxiety occasioned by the risk of future physical or psychological harm.”

The motion judge also dismissed as doomed to fail the plaintiffs’ claims for toxic battery, unjust enrichment, as well as breach of competition laws and various provincial consumer protection statutes.

Although there was some basis in fact for the propositions that nitrosamines cause or contribute to an increased risk of cancer and that some class members experienced psychological distress upon learning that they had been ingesting valsartan contaminated with nitrosamines, the motion judge held that the plaintiffs failed to satisfy the commonality and preferability criteria for certification required by s. 5(1)(c) and s. 5(1)(d) of the Class Proceedings Act, 1992 (the “CPA”).

The plaintiffs appealed, asserting that the motion judge erred in holding that (i) the pleadings disclosed no viable cause of action and (ii) that the proposed action did not meet the common issues and/or preferable procedure criteria.

The Decision of the Court of Appeal

The Court of Appeal (the “Court”) dismissed the plaintiffs’ appeal and held that the motion judge did not err in dismissing and declining to certify the plaintiffs’ claims.

Pleadings disclosed no viable cause of action

The Court confirmed that there can be no viable cause of action in negligence without actual damage. Drawing on the Supreme Court of Canada’s decision in 1688782 Ontario Inc. v. Maple Leaf Foods Inc. and Atlantic Lottery Corporation v. Babstock, the Court reiterated that there is no liability “in the air” and no right to be free from the prospect of damages. The Court held that, in this case, the bodily injuries claimed had “not materialized and may never materialize”.

The plaintiffs’ claims for psychological harm over the alleged risk of cancer were also not viable. Based on the pleadings, the Court held that the plaintiffs failed to demonstrate that their mental injuries “rise above the anxieties and fears commonly experienced from time to time by people living together in society.” Even if the injuries pleaded met the threshold for recoverable damages, the Court held that they would have foundered on the person of “ordinary fortitude” standard. The plaintiffs pleaded that shock came from reading the recall announcement, but the Court agreed with the motion judge’s assessment that the notices seemed intended to assuage concern, and that the recall would not cause a person of reasonable fortitude to sustain a psychological injury at the level compensable in tort.

Without any viable negligence claim for physical or psychological harm, the Court held that the damages sought were purely economic and not viable because such damages are only recoverable in limited circumstances (i.e., where the product poses an imminent risk of physical harm). In this case, the Court held the plaintiffs’ pleading did not address the imminence of the physical harm arising from ingesting valsartan contaminated with nitrosamines. Where there is no present injury, the Court stated that allowing damages for pure economic loss in the nature of medical monitoring and medical services costs would be contrary to the principle that there is no liability for negligence “in the air”.

The Court also concluded that the motion judge did not err in declining to certify the plaintiffs’ remaining claims, including for the tort of battery, breach of consumer protection laws, breach of competition laws, and unjust enrichment.

Commonality and preferability

The Court found that the motion judge correctly applied the “some basis in fact” principles for the common issues criterion under s. 5(1)(c) of the CPA, and did not err in finding that the plaintiffs failed to satisfy the common issues criterion.

The Court confirmed that to demonstrate a minimal evidentiary foundation for the proposed common issues plaintiffs must show that (i) there is “some basis in fact” that the proposed common issues actually exist, and (ii) they are common across the class. Although there was some basis in fact that nitrosamines cause an increased risk of developing cancer, there was no basis in fact that the alleged psychological injury from being notified of this increased risk was a common issue. At most, the evidence showed only a minority of the proposed class suffered mental distress that might be compensable. The Court also agreed with the motion judge’s finding that claims for psychological harm are often individual and that “the hard work remains for individual issues trials and the common issues trial is of marginal utility.”

Having disposed of the appeal on the cause of action and commonality criteria, the Court declined to address the preferable procedure criterion.

Key Takeaways

• The decision highlights the increased willingness of courts to exercise their gatekeeping function and adopt a more rigorous analysis at certification, particularly when scrutinizing the causes of action advanced and the evidentiary basis to support the allegations raised.
• The decision exposes the problems with claims based on product recalls based on mere “risks” of harm and reinforces how product liability class actions with no basis for any actual loss may not necessarily be certified.
• The decision confirms that plaintiffs must show some minimal evidentiary foundation to satisfy the commonality criterion at certification – there must be some basis in fact that the issue actually exists for each putative class member before an Ontario court will certify the claim.

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