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Case Name:
Setterington v. Merck
Frosst Canada Ltd.
PROCEEDING UNDER
the Class Proceedings Act, 1992
Between
Carol Setterington, Jacqueline Wright, Errol Wright,
Jeanette Lewis, Wayne Lewis, James Venables, Mary Jane
McNicholl, Joseph Valius, Grace Di Caro, Sam Spina,
Robert Tiboni, William James Ruck and Violet Aline
Ruck, plaintiffs, and
Merck Frosst Canada Ltd., Merck Frosst Canada & Co.
and Merck & Co., Inc., defendants
[2006] O.J. No. 376
Court File No. 04-CV-45435CP
Ontario Superior Court of Justice
W.K. Winkler J.
Heard: January 26, 2006.
Judgment: February 2, 2006.
(28 paras.)
Civil procedure — Parties — Class or representative
actions — Representation of — Carriage motion by class action
plaintiffs for order staying other proposed class action involving same
class and relating to same drug and prohibiting any other class action
relating to the drug from being started in Ontario allowed — Class
Proceedings Act, ss. 12, 13.
Carriage motion by class action plaintiffs for order staying another
proposed class action involving same class and relating to same drug and
prohibiting any other class action relating to the drug from being started
in Ontario — The plaintiffs' action (the Setterington action) already
included several previously consolidated actions and defined the class as
all person who were prescribed and ingested the drug — Counsel in the
Setterington action entered into an agreement with 19 other law firms
across Canada to represent and pursue claims of class members, including third
party payors such as OHIP and other insurers — Counsel in the
Setterington action had been contacted by 6,600 putative class members
— The other action was an international class action (the Walsh
action) which was similar to Setterington except that it did not include a
subrogated OHIP action or third party payor claim and joined the federal
government as defendant — Counsel in the Walsh action acted as
counsel in a proposed securities law class action against the defendants
— The actions were commenced within days of each other and neither
had yet been certified — HELD: Motion allowed — Counsel in the
Setterington action were granted carriage of the proceedings — There
was little to choose between the proposed representative plaintiffs —
It was permissible for the Setterington action not to name the federal
government if counsel believed there was insufficient information to posit
a sustainable claim — It was not appropriate for the court to embark
on an analysis of which claim, as set out in the statements of claim, was
more likely to succeed — Inclusion of the OHIP claim observed an
obligation imposed by all plaintiffs in Ontario — Inclusion of the
third party payors brought efficiency to the proceeding — Counsel in
the Setterington action had a vast wealth of experience in class action
litigation and certification proceedings in particular — Counsel in
the Setterington action included many pre-eminent class action counsel from
across Canada with extensive experience at every court level —
Counsel in the Setterington action had significant combined resources and a
better ability to communicate with large numbers of putative class members
— The securities law class action the Walsh counsel were involved in
could, if successful, seriously jeopardize the recovery of claims in the
proceedings at issue — Counsel in the Walsh action were in a direct
conflict of interest.
Statutes, Regulations and Rules Cited:
Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 12, s. 13
Courts of Justice Act, R.S.O. 1990, c. 43, s. 138
Food and Drugs Act, R.S.C. 1985, c. F-27,
Health Insurance Act, R.S.O. 1990, c. H.6, s. 31(1)
Counsel:
Harvey T. Strosberg, Q.C., Michael J. Peerless and Paul Miller, for the
Plaintiffs
Caroline Zayid, for the Defendants
Evatt Merchant, Casey Churko, for the Merchant Group
W.K. WINKLER J.:—
The Nature of the Motion
¶ 1
The plaintiffs in this action (the "Setterington action") bring a
motion before this Court to obtain orders in relation to the carriage of eight
intended class proceedings commenced in Ontario against Merck Frosst Canada Ltd.
and related companies ("Merck"). The subject matter of the
lawsuits involves problems alleged to be associated with a painkiller
marketed commercially as "Vioxx". Merck is said to have
manufactured, marketed, distributed and sold Vioxx in Canada.
¶ 2
By Order of Hockin J. six of the actions were consolidated into the
Setterington action and they go forward as that single action with an
amalgamated counsel team. Another action commenced on behalf of a putative
class of "third party payors", more specifically various public
and private insurers and union and employers' drug benefit plans, has been
stayed on consent and will be included as a sub-class in the Setterington
action. Counsel in that action have joined the team of counsel prosecuting
the Setterington action. These actions are but a fraction of the litigation
that has been commenced elsewhere in Canada
and in the United States
relating to the same subject matter.
¶ 3
The proposed representative plaintiffs in the Setterington action will be
seeking certification under the Class Proceedings Act, 1992 , S.O. 1992, c.
6, for a class described in the Fresh as Amended Statement of Claim as
"all persons in Canada, including their estates, other than residents
of Quebec, who were prescribed and who ingested Vioxx".
¶ 4
Counsel for the representative plaintiffs in the Setterington action have
entered into an agreement with other Canadian law firms from across the
country to represent and pursue the claims of class members against the
defendants. This group is comprised of some nineteen law firms across Canada,
including counsel for the third party payor sub-class. A "Steering
Committee" of seven counsel has been appointed from this group of
firms to direct the conduct of the lawsuit and to appear as counsel in the
proceedings.
¶ 5
The orders regarding carriage are necessary because another intended class
proceeding has been commenced in Ontario
by Daniel Walsh and others against Merck (the "Walsh action"),
with the Saskatchewan
law firm, the Merchant Law Group as counsel. The proposed class in the
Walsh action is an international class of persons who have purchased, been
prescribed or ingested Vioxx purchased in Canada. This is substantially
similar to the class described in the Setterington action. The essence of
the Walsh action is the same as the Setterington action with three
exceptions: in Walsh the plaintiffs do not bring suit on behalf of OHIP in
the form of a subrogated action; the Walsh action does not contain a claim
on behalf of third party payors; and, in Walsh the plaintiffs join as a
defendant Her Majesty the Queen as represented by the Minister of Health
for Canada and the Attorney General of Canada ("Federal
Government").
¶ 6
The plaintiffs in the Setterington action are seeking a stay of the Walsh
action, a declaration that no other class action may be commenced in
Ontario relating to Vioxx, and costs of this carriage motion. The Walsh plaintiffs
respond by saying that both actions ought to be permitted to proceed to
certification and the "winner" given carriage after the
certification is argued. In the alternative they propose that it be
ordered, if the national consortium of law firms is given carriage, that
their counsel, the Merchant Law Group, be permitted to participate in the
consortium of law firms in the conduct of the proposed national class
proceeding.
Factual Background
¶ 7
Vioxx is a Cyclooxgenase-2 (Cox-2) specific inhibitor in the class of drugs
known as non-steroidal anti-inflammatory drugs. By Notice of Compliance
dated October 25, 1999, Vioxx was first approved for use in Canada
as a Schedule "F" Drug under the Food and Drugs Act, R.S.C. 1985,
c. F-27. It was approved for acute and chronic treatment of the signs and
symptoms of osteoarthritis, as well as for the relief of pain in adults and
for the treatment of primary dysmenorrhoeal (menstrual) pain.
¶ 8
On September 30, 2004, Merck announced a worldwide voluntary withdrawal of
Vioxx, effective immediately due to concerns of an increased risk of
cardiovascular events, including heart attack and strokes from use of the
drug. It was following the withdrawal of Vioxx and its removal from the
market that the plethora of lawsuits was brought against Merck, including
the instant proceedings giving rise to the motion in issue.
Law and Analysis
¶ 9
It is not uncommon to have two or more class proceedings commenced with
respect to the same subject matter, seeking certification for similar
classes which either overlap significantly or are identical. In these
situations, if acceptable to the representative plaintiffs, counsel for
different representative plaintiffs often agree to work together thus
sharing the burden and cost of the litigation and the remuneration if
successful. They also share the risk if unsuccessful. However, as in this
case, if an agreement to work together towards a common goal cannot be
reached, a proposed representative plaintiff in one action may bring a
carriage motion to stay all other class proceedings relating to the same
subject matter. In this instance the Setterington plaintiffs bring such a
motion.
¶ 10
The CPA confers upon a court a broad discretion to case manage the
proceedings before it and in furtherance of this objective, the specific
jurisdiction to determine a carriage motion is found in ss. 12 and 13 of
the Act:
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12.
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The court, on the motion of a party or class member, may make any order
it considers appropriate respecting the conduct of a class proceeding to
ensure its fair and expeditious determination and, for the purpose, may
impose such terms on the parties as it considers appropriate.
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13.
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The court, on its own initiative or on the motion of a party or class
member, may stay any proceeding related to the class proceeding before
it, on such terms as it considers appropriate.
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¶ 11
In addition, s. 138 of the Courts of Justice Act, R.S.O. 1990 c. 43, provides
that "as far as possible, multiplicity of legal proceedings shall be
avoided." This is particularly germane with respect to class actions
in that most carriage motions, as is the case here, will involve multiple
proceedings by essentially the same class against the same defendant for
the same relief. For the purposes of the application of this principle on a
practical basis in class proceedings, it is not necessary that the multiple
proceedings mirror each other in every respect. Rather, the court will look
to the essence of the proceedings and the similarities between them to
determine whether permitting two or more to proceed would offend the
prohibition against multiplicity.
¶ 12
It cannot be ignored that in seeking a stay of one class proceeding in
favour of another, the proposed representative plaintiff seeking the stay
is asking the court to rule that the putative class will be better served
if he or she is permitted to prosecute the action. An inherent element in
such a request is an affirmation that the counsel chosen by the moving
party is similarly better suited to prosecute the action than the counsel
of choice in the other action or actions. In fact, in many cases, there may
be little difference between the proposed representative plaintiffs and the
moving party will be relying upon the skill and experience of his or her
chosen counsel and their resources as the distinguishing feature militating
in favour of his or her action being permitted to go forward in preference
to all other actions.
¶ 13
Cumming J. addressed a number of the issues arising in carriage motions in
Vitapharm Canada Ltd. v. F. Hoffman-LaRoche Ltd. (2000), 4 C.P.C. (5th) 169
(Ont. S.C.J.). He held that a court faced with a carriage motion in respect
of multiple class proceedings should consider the best interests of the
putative class members, the objectives of the CPA and fairness to the
defendants in its determination. (See also Ricardo v. Air Transat A.T. Inc.
(2002), 21 C.P.C. (5th) 297 (Ont. S.C.J.) and Gorecki v. Canada (Attorney-Genera)
(2004), 47 C.P.C. (5th) 151 (Ont. S.C.J.))
¶ 14
On this motion, there is little to choose between the proposed
representative plaintiffs. There is no indication that either named group
is superior to the other in respect of its ability to represent the
putative class. I note, however, that the Walsh action only names two
actual representative plaintiffs and leaves the identities of the remainder
to the imagination in that they are identified merely as "John Does".
This is not a practice that can be reconciled with the requirements of the
CPA with respect to representative plaintiffs and, accordingly, for the
purposes of this motion I am only considering the attributes of the actual
named plaintiffs.
¶ 15
Given the relative similarity between the proposed representative
plaintiffs, a determination based on the factors enunciated by Cumming J.
in Vitapharm must of necessity turn on analysis of the claims advanced and
the attributes of the competing counsel.
Nature and Scope of the Causes of Action Advanced
¶ 16
Counsel for both plaintiff groups concede that the claims advanced in the
competing actions are in essence product liability claims. The two actions
differ, as stated above, in three material respects. Firstly, the Walsh
action adds as a defendant the Federal Government. Secondly, Setterington
includes a subrogated claim on behalf of OHIP. Thirdly, the Setterington
action contains the claim for third party payors whereas the Walsh action
does not.
¶ 17
The Walsh plaintiffs assert that their claim is superior and better serves
the interest of the putative class in that they have named the Federal
Government as a defendant while at the same time avoiding the
"conflict" inherent in the Setterington action of an included
subrogated OHIP claim. I cannot accede to these arguments.
¶ 18
Setterington counsel contend that the choice to name defendants in a class
action is one that should be left to the proposed representative plaintiffs
acting on the advice of experienced counsel. I agree. When the court is
asked to choose between proceedings, the analysis must be qualitative
rather than quantitative. The mere inclusion of a multitude of defendants
is not sufficient to provide a basis for the preference of one action over
another. At this stage of the proceeding, the Setterington plaintiffs
assert, based on the advice of their counsel, that there is insufficient
information to posit a sustainable claim against the Federal Government.
That is a permissible exercise of judgment within the purview of a proposed
representative plaintiff. Indeed, as held by the Supreme Court of Canada in
Rumley v.British Columbia,
[2001] 3 S.C.R. 184 (S.C.C.), plaintiffs are entitled to restrict the
claims in a class proceeding to make it more amenable to certification.
(See Rumley, para. 30; See also Pearson v. Inco, [2005] O.J. No. 4918 (Ont.
C.A.)).
¶ 19
In this case, the Setterington plaintiffs provided a sufficient explanation
for their decision not to include the Federal Government as a defendant at
this stage of the proceeding. The purpose of a carriage motion is not to
parse the action finely or overly analyze it for purposes of comparison but
rather to scrutinize each for any glaring deficiencies. Here there are different
theories underlying the causes of action in the two competing Statements of
Claim and each plaintiff group urge that their approach is to be preferred.
However, on a carriage motion it is inappropriate for the Court to embark
upon an analysis as to which claim is most likely to succeed unless one is
"fanciful or frivolous", to adopt the words of Rady J. in
Gorecki. Contrary to the submissions of the Walsh plaintiffs, I see none of
these defects in the Setterington action.
¶ 20
Similarly, the alleged "conflict" regarding the inclusion of the
subrogated OHIP claim by the Setterington plaintiffs is not a defect at all
but rather the proper observance of an obligation imposed on all plaintiffs
in Ontario under the Health Insurance Act, R.S.O. 1990, c. H.6, s. 31(1).
Indeed, by its failure to include the subrogated OHIP claim, the Walsh
action is defective. In any event, as in most Ontario
class proceedings, the plaintiffs' counsel are retained by OHIP to protect
its interests which, as held by the Supreme Court of Canada in Ledingham v.
Ontario
(Hospital Services Commission), [1975] 1 S.C.R. 332 (S.C.C.), are
subordinate in priority to the rights of individual plaintiffs.
¶ 21
The third difference in the two actions, the inclusion of the third party
payors as a subclass, enures to the benefit of the Setterington action
because of efficiency this brings to the proceeding.
The Counsel Factors
¶ 22
The factors pertinent to the decision regarding choice of counsel, in the
context of the Vitapharm approach focusing on the interests of the putative
class, the objectives of the act and fairness to the defendants, include
the degree of preparation in support of advancing the action and the
relative experience and resources of counsel. In this regard, if one of the
actions was significantly more advanced than the other, it would be
construed as an advantage both in the efficiencies that would be lost and
potential unfairness to the defendants should the other action be selected.
This is not a factor here. Both the Setterington and the Walsh actions were
commenced within days of each other. In terms of preparation both counsel
groups are roughly equal at this stage. They have consulted experts and
have established liaison with counsel in similar litigation in the United States.
¶ 23
Turning then to the resources and experience of counsel, the Walsh
plaintiffs advanced the argument that the court should consider a Vioxx
based class proceeding being conducted by the Merchant Group in
Saskatchewan as a prevailing factor in the experience of counsel analysis.
The certification motion in that proceeding has been argued and is
currently under reserve. The Walsh plaintiffs contend that this gives the
Merchant Group a decided advantage that augurs in favour of them taking
carriage of the Ontario
action. While this means logically that the Merchant Group has argued one
more Vioxx specific certification motion than the Setterington counsel group
at this stage, to give it greater consideration than that would be to
ignore the vast wealth of experience of the Setterington counsel group in
class action litigation generally and certification proceedings in
particular. The counsel group on the Setterington action is comprised of
many pre-eminent class action counsel from across Canada. They have extensive
experience at every court level involving certification of class
proceedings that is not matched by the Merchant Group, regardless of its
experience in general litigation.
¶ 24
Indeed, the public perception of the experience of the Setterington counsel
group is also evident in the fact that the Setterington counsel team has
been contacted by some 6,600 putative class members. There is no evidence
in this respect relating to the Walsh action. It ought not to be ignored as
well that the ability to communicate with large numbers of putative class
members speaks to the relative resources of counsel. The Setterington
counsel team consists of 19 law firms from nine provinces across Canada.
Eight of these firms are located in Ontario
where this action will be based. Their combined resources, financial and
otherwise, and breadth of experience are significant. This is in stark
contrast to the Merchant group which has no office in Ontario and has not
provided any evidence that the senior counsel of the group, who are not
called to the bar in Ontario, are entitled to practice in Ontario under the
current Law Society by-laws. This is not intended to detract from the
laudable initiatives of the governing bodies of the legal profession to
encourage mobility among lawyers with the consequent economies that can be
generated for clients. However, there are practical realities to class
action litigation that augur in favour of having at least some of the
counsel for the plaintiffs based in the jurisdiction where the litigation
is to be conducted.
¶ 25
Another issue arose during the course of the motion that has an impact on
its disposition. Counsel for the Setterington plaintiffs brought to the
attention of the court a Statement of Claim filed in another intended class
proceeding involving Merck as a defendant. In that action, the Merchant
Group is acting as counsel for a putative class of plaintiffs that includes
employees, shareholders, mutual funds, brokerage firms, venture capital
firms, pension funds, insurance companies and the Canada Pension Plan,
amongst others, seeking damages for losses in share values allegedly caused
by Merck's misrepresentations. The loss claimed is $26 billion. If this
claim were successful in whole or in part it could seriously jeopardize the
recovery of the claims of the putative class members in the instant
proceedings. In my view this securities lawsuit commenced and prosecuted by
the Merchant Group brings them into direct conflict with the interests of
the putative class proposed in the Setterington or Walsh actions and would,
in itself, be a sufficient basis to preclude the Merchant Group from acting
as counsel for that class.
¶ 26
That the existence of the securities litigation was not brought to the
attention of the court causes me additional concern. There has been some
confusion generally between the concept of onus of proof and that of disclosure
in the context of a carriage motion. It is incumbent on representative
plaintiffs and their counsel seeking orders of the nature sought here to
make full disclosure to the court of all factors that could logically
impact on the determination of the motion. As with most matters conducted
under the CPA, the court is required to consider first and foremost the
interests of the silent class members. On a carriage motion, much as in the
case of a settlement approval hearing, there is a requirement of utmost
good faith on the part of counsel to forego reliance on the adversarial
system as a fact-finding mechanism and place all material facts which can
have any bearing on the issues before the court, whether these may be
against their interests or not. It would be to ignore the reality of class
proceedings to disregard the fact that counsel granted carriage of a class
proceeding stand to reap a substantial fee if successful. Accordingly,
there must be a concomitant obligation to ensure full and frank disclosure
of all material facts because the protection of the interests of the silent
class members, in those circumstances, demands no less. This precept was
stated by this Court in McCarthy v. Canadian Red Cross Society (2001), 8
C.P.C. (5th) 349 (Ont. S.C.J.) at para. 21 in the context of a settlement
approval but it is equally apposite here:
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21 ... a class proceeding by its very nature involves the issuance of
orders or judgments that affect persons who are not before the Court.
These absent class members are dependent on the Court to protect their
interests. In order to do so, the Court must have all of the available
information that has some bearing on the issues, whether favourable or
unfavourable to the moving party. It is the obligation of counsel to
provide that information in a manner that is consonant with the duty to
make full and frank disclosure. Moreover, that information must be
provided in a manner that is not misleading or even potentially
misleading. In most class proceedings, voluminous records develop as a
consequence of the complexity of the litigation. The Court is not
equipped, nor should it be required, to engage in a forensic
investigation into the material or to mine the record to inform itself.
Counsel must direct the Court to all relevant information that would
impact on the Court's determination.
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¶ 27
I cannot accede to the alternative submission of the Walsh plaintiffs that
an order should go mandating that their counsel be included in the Setterington
counsel group. Apart from the conflict issue identified above, there is
clear animosity between the two counsel groups, precipitated no doubt by
the inclusion of "scandalous" statements in the Walsh plaintiffs'
materials relating to various members of the Setterington counsel team.
Although these passages were withdrawn at the beginning of the hearing of
this matter, the lingering effects are such that it would not be in the
best interests of the class going forward to order the groups to work together.
Conclusion and Disposition
¶ 28
For the foregoing reasons I am of the view that it would be more
advantageous for the class to have the Setterington action proceed with its
counsel group prosecuting that action. This would be consistent with the
goals of the CPA and, in consideration of the progress of the proceedings,
does not in any way present any unfairness to the defendants.
An order will go granting carriage
to the Setterington counsel group, staying the Walsh action and precluding
commencement of any other class proceedings relating to this claim. In all
of the circumstances I am not inclined to make any order as to costs which
is the usual course in carriage motions.
W.K. WINKLER J.
QL UPDATE: 20060207
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