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Ontario Court Rejects Collective Liability Theory

In Gebien v. Apotex Inc., 2023 ONSC 6792, the Ontario Superior Court has partly dismissed, and partly granted, a motion to advance a major opioids class action to the next stage of certification. The Court rejected a theory that proposed collective liability for the entire opioids industry on the basis of a few alleged examples of wrongdoing from certain industry participants, making the decision in Gebien important to high-litigation-risk industries generally.

The plaintiff sought to certify a class of Canadians who were prescribed opioids manufactured, marketed, or distributed after January 1, 1996, and who suffered Opioid Use Disorder. He advanced claims for breaches of the Competition Act, negligence, negligent misrepresentation, and fraudulent misrepresentation against two groups of defendants: those that “manufactured” opioids (the “Manufacturers”), and those that “distributed” them (the “Distributors”). The defendants included most major pharmaceutical companies operating in Canada.

The plaintiff’s collective liability theory was that the defendants were liable for each other’s wrongs because they all acted in furtherance of a “common design” to broaden the market for opioids.

  1. “Common Design” to Expand the Market for Opioids

The plaintiff claimed that defendants broadened by market for opioids by advancing a “New Narrative” that exaggerated the benefits of opioids and did not adequately warn of their risks. This New Narrative then caused opioid sales to increase, which in turn caused class members who would not otherwise have been prescribed opioids to receive them.

The defendants advanced this New Narrative by developing marketing campaigns to influence the prescription behaviour of healthcare providers, including by making misleading statements or omissions in product monographs, marketing materials, and media. The defendants “reacted to the success of the New Narrative by shifting their business models and business practices to manufacture, distribute and sell more Opioids, in order to profit from the expanded opioid market that the New Narrative had created,” according to the plaintiff (para. 276).

The plaintiff specified a few statements and omissions that a few defendants allegedly made, or did not make in support of this New Narrative. For most defendants, he did not allege any statements or omissions at all.

The plaintiff argued that he did not need to point to specific statements and omissions made by each and every defendant; each defendant would be jointly liable for the statements and omissions he did allege, because every defendant shared the same objective, or “common design,” to expand the market for opioids. Framed this way, the plaintiff’s claim resembled a civil conspiracy claim, except without an actual agreement to manipulate the market for opioids. Instead of alleging an agreement, the plaintiff made vague assertions that the defendants acted to share market data and demand estimates with one another.

  1. “Common Design” Rejected

The Court rejected the plaintiff’s “common design” theory, and held that there could be no joint liability for defendants in these circumstances. The certification judge relied on the decision of Justice Gascon in Jensen v. Samsung Elec. Co. Ltd., which confirmed that there is no joint liability among defendants who unilaterally (i.e., without agreement) “adopt similar or identical business practices or pricing, as a result of rational and profit-maximizing strategies based on observations of market trends and activities of competitors” (para. 279). The certification judge held that “a market policy resulting from conscious parallelism, if conducted without collusion, does not constitute a conspiracy or offence or common-design joint liability” (para. 280).

Furthermore, the certification judge held that even if the conduct alleged could be the basis of a common design, a common design pleading requires defendants to be pursuing an unlawful object, and “there is nothing per se unlawful” in having the object to expand the market of a lawful but potentially dangerous good such as a pharmaceutical product (para. 286).

In short, liability for each defendant would need to be established individually.



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