Product liability litigation: year in review

In 2022, courts in Ontario rejected plaintiffs’ attempts to assert novel claims relating to future risks, and historical claims relating to pure economic loss. At the same time, Québec courts continued to permit claims under the Consumer Protection Act to proceed to seek punitive damages even where compensatory damages were unavailable.

Below we discuss these recent developments and highlight some key takeaways for 2023 and beyond.

More than a risk of harm required: Court finds novel theory of liability “baffling”

In Palmer v. Teva¹, the Ontario Superior Court of Justice rejected a proposed national class action premised on the risk of future harms.

The proposed class included all persons in Canada who had been prescribed the defendants’ valsartan products, a drug used in the treatment of hypertension. The plaintiffs alleged that the products were contaminated with potentially carcinogenic chemicals. However, there was no claim that these contaminants actually caused anyone to develop cancer. Instead, the claim was framed around a possibility that class members could develop cancer in the future. The plaintiffs sought to recover damages for psychiatric injuries, cost of past and future medical services, and the reimbursement costs of their medication.

Noting that the framing of the case was “baffling”, the motion judge refused to certify it. He held that there was no evidence of any compensable harm to support a negligence claim, and anxiety about a possible future physical or psychological harm was not compensable.

The plaintiffs alternatively claimed that by exposing the class to the potentially carcinogenic contaminants, the defendants had committed a battery—a tortious interference with a plaintiff’s bodily autonomy. Unlike negligence, battery does not require a plaintiff to prove any direct losses from the defendants’ actions. This claim was also rejected, partly because, as pleaded, it was not actually a proper battery claim. Critical elements of the tort of battery were missing, such as the requirement that the defendants act intentionally to harm the plaintiffs (not the case for a product ingested willingly), and that the resulting harm be more than de minimis.

Recalls may be preferable to economic loss claims

In Coles v. FCA Canada Inc.², the Ontario Superior Court of Justice found that due to a clarification in the law and the plaintiffs’ delay, the proposed class action was not the preferable procedure to obtain access to justice, behavior modification, or judicial economy.

Coles was one of six proposed national class actions brought by a consortium of class counsel relating to certain airbags designed and manufactured by a third party and used by major automobile manufacturers. Much had changed by the time of the Coles certification motion: the manufacturer had filed for bankruptcy and the actions against them had been stayed; three of the six proposed national class actions had been settled on the basis that affected customers would be compensated for the replacement value of their airbags and additional economic loss; and the sole remaining defendant in Coles (Chrysler) had implemented an airbag recall campaign affecting hundreds of thousands of vehicles in Canada which provided replacements free of charge but no compensation for economic loss.

The Court observed that two 2020 decisions of the Supreme Court of Canada³ which post-dated the three settlements clarified that “tort law leaves pure economic losses to be addressed by the law of contract”, with the result that claims for economic loss beyond the replacement cost were not recoverable. Noting that the Coles action had “dawdled” in relation to the other proceedings and that the earlier resolutions turned out to be “overachievements” in light of the SCC’s clarification, the Court found the defendant’s recall program to be preferable to the proposed class action because it would fully compensate the proposed class members and would be implemented more quickly than a common issues trial.

Plaintiffs favour claims under Québec’s Consumer Protection Act, not the Civil Code

In Québec, manufacturers continue to face the risk of product liability claims based on the Consumer Protection Act (CPA), particularly in cases involving allegations that manufacturers breached their duties under the CPA by failing to warn consumers, failing to disclose an important fact, or misleading consumers. Plaintiffs prefer to bring claims under the CPA rather than the Civil Code because it allows punitive damages awards even in the absence of harm or compensatory damages. This is particularly attractive for plaintiffs in the context of class proceedings, as it eliminates the need to prove damages and causation, which are inherently individual issues, making these proposed class actions easier to authorize.

In Arial c. Apple Canada inc.⁴, the Québec Superior Court recently authorized a class action relating to allegations that the use of certain smartphones was associated with certain dangers. The Court noted that plaintiffs had failed to allege that they suffered from any injury caused by the so-called dangers and therefore, the plaintiffs’ safety defect cause of action pursuant to the Civil Code (which requires plaintiffs to allege fault, injury and causation) was untenable. Nevertheless, the Court authorized the cause of action based on the CPA on the grounds that, under this statute, plaintiffs could still claim punitive damages—even if compensatory damages could not be claimed.

The potential scope of application of the CPA remains a topic of interest. In 2019, the Québec Court of Appeal ruled in Brousseau et al. v. Abbott Laboratories Co.⁵ that the sale of prescription medications by a pharmacist is not a consumer contract governed by the CPA. Earlier this year, the same Court decided that the determination of whether the CPA applies to the sale of veterinary prescription medication could only be made at trial with full consideration of the evidence, and therefore authorized the class proceeding to move forward⁶.