Cannabis Product Liability Class Actions Come to Canada

As cannabis legalization moves north of the border, cannabis companies in Canada will inevitably face similar legal issues as they have in the United States, where the decriminalization of cannabis in several jurisdictions has been accompanied by a new set of product liability class actions (see, e.g., Flores v. LivWell, Dist. Ct., Denver County, 2015-CV-33528). While there have been limited cases in Canada on this issue to date, a recent decision of the Nova Scotia Court of Appeal demonstrates the difficulties that defendants may encounter in defending against such claims. The ruling in Downton v Organigram, 2019 NSSC 4 ("Downton"), released on January 18, 2019, marks the first time that a cannabis product liability class action has been certified in Canada.

Brief Background

Organigram Inc. ("Organigram") is a medical cannabis producer with headquarters in Moncton, New Brunswick. In December 2016 and January 2017, Organigram, in conjunction with Health Canada, issued voluntary recalls of a number of its products after some of the products were found to contain traces of pesticides that are not authorized for use on cannabis plants under the Pest Control Products Act, S.C. 2002, c. 28. The plaintiff, Ms. Downton, claimed that she suffered adverse health consequences as a result of consuming the recalled cannabis, and claimed various remedies including general and punitive damages.

The Decision

The Honourable Justice Anne Smith certified several common issues, the first three of which relate to the negligent distribution, marketing, and sale of the recalled cannabis. The other issues relate to breach of contract, breach of the Competition Act, breach of consumer protection legislation, breach of Sale of Goods legislation, and unjust enrichment. Justice Smith’s findings in respect of negligence included the following:

A. The pleadings disclose a cause of action on negligent marketing, despite the plaintiffs’ failure to plead material facts about the risks versus the benefits

Justice Smith found that the pleadings in Downton were adequate to satisfy this first certification criterion in relation to a negligent distribution, marketing, and sale claim, despite the fact that the plaintiffs did not plead that “the alleged defect in the cannabis outweighed the value of its use”. Justice Smith distinguished the case from Martin v Astrazeneca Pharmaceuticals Plc, 2012 ONSC 2744 ("Martin"), in which such a pleading was found to be necessary, as in Downton “[t]he pesticides were unauthorized and contrary to the Access to Cannabis for Medical Purposes Regulations, SOR/2016-230, and should not have been present.”[1]

B. In order to show that there is a workable methodology to determine general causation, there is no need to tie a product to a particular harm

In order to find commonality in relation to negligence-based claims, it is necessary for plaintiffs to demonstrate that there is some basis in fact that a credible methodology exists through which the issue of general causation could be proven on a class-wide basis at trial: Charlton v Abbott Laboratories Ltd., 2015 BCCA 26 ("Charlton"). In Downton, Justice Smith accepted that the test from Charlton applied; however, she found that the plaintiffs had satisfied this test even though they did not define the specific disease or harm allegedly caused by the pesticides.[2] The plaintiffs own expert had testified that the risk posed by the pesticides was “indefinable” and that studies assessing the risk to human health by consumption of the pesticides and adverse consequences had “not been conducted to date”.[3] But Justice Smith noted that “uncertainty around the causal connection between the consumption of these unauthorized pesticides and adverse health consequences cannot be used to Organigram’s advantage” and concluded that there was “some evidence by which general causation may be proven that is sufficient for certification”.[4]

C. Despite the many individual issues left to be determined, a class action would still be the preferable procedure

Justice Smith acknowledged Organigram’s argument that, in order to establish liability for personal injury, it would be necessary for individual claimants to determine specific causation as well as damages, which would involve a number of individual issues including duration of use of cannabis, the method of consumption, age, metabolism, interactions with other medications, etc. Justice Smith noted that further hearings would be necessary and they will depend on the specific circumstances of the individual. However, she decided that the “plaintiff has shown some basis in fact for its contention that a class proceeding is the preferable procedure”, in that the common issues would be a significant component of each member’s claim.[5]

Key Takeaways

  1. Cannabis Product Liability Class Actions Are On Their Way North: Particularly with the upcoming legalization of edible cannabis products in October, cannabis producers should be prepared for the prospect of defending product liability class actions.

  2. Similarities to Medical Product Class Actions: The Downton case suggests that Canadian case law relating to cannabis product liability will develop along similar lines to the existing jurisprudence on medical product class actions, as it cites heavily from decisions in this area.[6]

  3. A Cautionary Tale for Cannabis Companies: Licensed producers must be aware and adhere to the applicable pesticide regulations and should consider vigilant testing of crops to ensure all safety standards are met and are consistent with brand marketing. Class actions of this nature are by no means limited to medical cannabis producers, and may very well affect the recreational industry as well.

 

 

[1]Downton, at paras. 105-109

[2]Downton, at paras. 200 and 210

[3]Downton, at para. 212 and 215

[4]Downton, at paras. 214 and 220

[5]Downton, at paras. 299-308

[6] These decisions include Martin and Charlton, two cases in which McCarthy Tétrault successfully acted as counsel for the defendants in defeating certification.

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