Written By Tom Feore and Ashley Paterson

In the recent decision of Palmer v Teva Canada Ltd., Justice Perell of the Ontario Superior Court dismissed the plaintiff's motion to certify a class action against manufacturers of the anti-hypertensive drug valsartan. The plaintiffs alleged that the defendant's valsartan products were negligently manufactured because they contained carcinogenic impurities.

Emphasizing that the plaintiffs had neither pleaded nor provided any basis in fact for actual compensable harm, Justice Perell concluded that the plaintiffs failed to satisfy the cause of action, common issues and preferable procedure requirements. The Palmer decision aligns with the recent trend of Canadian courts to refuse to certify class proceedings for want of compensable harm.¹

This decision notably applies the Supreme Court's 2020 decision in Atlantic Lottery Corp Inc. v Babstock and concludes that, just as an increased risk of harm is not legally compensable, mental distress associated with an increased feeling of risk is similarly not a compensable psychiatric injury. More generally, the decision emphasizes the requirement that plaintiffs demonstrate some evidence of compensable harm, and clarifies what is—and is not—evidence of general causation.

Background

In Palmer, the plaintiff sought to certify a class of all persons who had been prescribed the defendants' valsartan products. The plaintiff alleged that the defendants' valsartan products, all of which were made with active ingredients sourced from a single manufacturer in China, contained potentially carcinogenic impurities: specifically, the compounds N-nitrosodimethylamine (NDMA) and N-nitrosodiethylamine (NDEA). The action followed a series of voluntary recalls precipitated by a Health Canada advisory which announced that NDMA had been found in the impugned products. The advisory further noted that NDMA is also found in some foods and drinking water and is not expected to cause harm when ingested at very low levels.

Alleging that the defendants wrongly exposed the putative class members to an increased risk of developing cancer, the plaintiffs brought claims in negligence, strict liability, toxic battery and unjust enrichment; as well as under the Competition Act, the Civil Code of Quebec and the consumer protection statutes of various provinces. The plaintiffs sought to recover for psychiatric injury, the cost of past and future medical services and medication purchase costs. The plaintiffs also sought punitive damages. As Justice Perell found "baffling," however, the plaintiff did not seek to recover for bodily harm on behalf of putative class members actually diagnosed with cancer.

The Decision

On the scientific evidence before him, Justice Perell accepted that the plaintiffs had shown some basis in fact for the proposition that exposure to NDMA and NDEA in the impugned valsartan products "very modestly" increased the risk of being diagnosed with cancer. There was some evidence of a "theoretical underpinning" as to how these compounds might be carcinogens. However, as would prove fatal to the claim, there was no basis in fact for the proposition that NDMA or NDEA actually cause cancer.

Further, the plaintiff conceded that the applicable epidemiological literature did not presently show any association between NDMA or NDEA and cancer in humans. Even if it had, Justice Perell held, this would not be sufficient: "[i]t is an axiom of epidemiology that statistical association does not equate to proof of a causative relationship."

As indicated above, the plaintiff did not pursue any claims for anyone actually physically injured by manifested cancer; claiming instead for prospective future medical monitoring costs. However, since "valsartan with its contaminants did not cause any immediate harm nor pose an imminent threat of harm" to the putative class members, this head of damages was not recoverable: as Justice Perell concluded, any medical monitoring costs arising from a mere risk of experiencing cancer are not recoverable.

Similarly, while there was some basis in fact to conclude that some class members had experienced psychological harm, this "harm" was not compensable. Since it was no more than "present anxiety occasioned by the risk of future physical or psychological harm," it was inherently non-compensable at law, just as the risk of future physical or psychological harm is inherently non-compensable.

Refusing to certify the plaintiff's loss-based causes of action for the above reasons, this left only the plaintiff's battery claim, which would not require proof of compensable loss. This claim too, however, was plainly and obviously doomed to fail. Opining that "the Plaintiffs' gambit is to label their claim as a battery when it is genuinely a negligence claim," Justice Perell concluded that it was "plain and obvious" that the defendants did not "willfully or recklessly intend to harm patients"; in part because the valsartan was ingested consensually. Even if the plaintiff's battery claim had properly alleged this, however, Justice Perell would still have refused to certify the claim on the basis of the common issues and preferable procedure criteria because there was no evidence that ingestion caused anything more than de minimis harm.

Takeaway

According to Justice Perell, the Palmer case exemplifies "the problems that sometimes occurs [sic] when there is a knee-jerk reaction to a recall notice." His conclusion and reasons illustrate that class proceedings with no basis for any actual loss on consumers' part will not become certifiable simply because Health Canada has issued a recall notice.

The Palmer case serves as a reminder that putative class plaintiffs cannot circumvent the requirement of actual, non-de minimis harm by alleging present anxiety regarding the risk of future disease, nor future medical monitoring costs related to that risk. Nor can putative class plaintiffs do so by bringing such actions as battery claims: although battery does not require proof of actual loss, engaging the machinery of class proceedings is nonetheless not preferable if there is no more than a de minimis harm.

¹ See, for example, Maginnis and Magnaye v FCA Canada et al., 2020 ONSC 5462; MacKinnon v Volkswagen, 2021 ONSC 5941; Setoguchi v Uber B.V., 2021 ABQB 18.

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