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Oy, Canada!

By James M. Beck and Mark Herrmann

As we've said before, we don't do Canadian law here. We posted once on that subject, about a year ago, and we were quick to confess our ignorance.

But we were startled by what we heard about Canadian class action law at the ACI conference in New York City last month. One speaker said that, to date, no Canadian court has ever denied a motion to certify a class in a drug or device case. The accompanying course materials tell us that, in the past, "Class actions involving breast implants, diet drugs, pain medications, gastrointestinal medications, antipsychotics, cholesterol reducing drugs, pacemaker leads, tainted blood, TMJ implants, heart valves, and defibrillators, have all been certified in Canada."

As you would anticipate in this environment, these types of claims are becoming increasingly popular. The course materials go on to tell us that, "In the past two years, pharmaceutical and medical class actions that await a certification hearing have been commenced in Canada with respect to an ever widening range of medications and medical devices including ICD and pacemaker leads, pain medications, anti-inflammatories, children?s cold medications, purgatives, a variety of contraceptive products, more antipsychotics, bisphosphonates, antibiotics, medications for irritable bowel syndrome and restless leg syndrome, epilepsy medication, and diabetes medication."

That raises our question: How should a drug or device company respond to a consumer complaint about a product liability issue in Canada?

In the United States, responding to a consumer complaint is pretty easy: If the consumer may have a point, you engage in a discussion with the consumer, perhaps agreeing to pay what that particular complaint is worth. But if the consumer is a nutcase, you reject the claim, because the claim has no value. Respectable plaintiff's counsel wouldn't agree to file a lawsuit, and there's basically no chance that a court would certify a class, so you're on pretty safe ground.

If, in Canada, all putative classes to date have been certified, that changes the calculus. Any consumer complaint basically threatens the possibility of a certified class action. That's a tough environment in which to operate.

We actually asked a Canadian lawyer how Canadians handle these issues, and we didn't find much comfort there. We were told, first, that Canadians are generally less litigious than Americans. That might be true, but we suspect that opportunistic Canadian plaintiffs' lawyers, guaranteed that their putative classes will be certified, will be overcoming their historical reticence pretty quickly.

We were told, second, that Canadian plaintiffs often misplead their cases, messing up the Canadian "waiver of tort" doctrine or otherwise pleading themselves out of a claim. Again, we're not getting that warm and fuzzy feeling. Surely, over time, plaintiffs' lawyers will figure out how to plead their claims correctly, and then the deluge will begin.

We understand that there are a fair number of Canadian drug and device cases now approaching trial. Although most American class actions settle before trial (because defendants generally prefer not to run even a small chance of a huge loss), we hope that some Canadian company will stand firm. Perhaps an industry victory at trial will convince courts that these cases should not routinely be certified, or will show plaintiffs' counsel that these cases are not without substantial risk.

Otherwise, we suspect that the class action litigation environment in Canada will soon begin to resemble that of its southern neighbor.

Oy vey, Canada.

Full post as published by Drug and Device Law on January 05, 2009 (boomark / email).