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The tobacco decision: Mega trials and the limits of class actions?

Author(s): Deborah Glendinning, Craig Lockwood

Dec 9, 2015

One of the most significant decisions of the past year has the potential to change the way class actions in Canada are argued and adjudicated. On May 27, 2015, the Québec Superior Court rendered judgment in two of the largest class actions in Canadian history. The proceedings were commenced in 1998 on behalf of two disparate classes of smokers and former smokers. With a total class membership in excess of 1 million Québec residents, each of whom was alleged to suffer from either a smoking-related disease or a tobacco-related addiction, the two actions sought collective recovery from the three Canadian tobacco manufacturers for alleged civil faults arising from conduct dating back to 1950.

Notably, the action sought recovery of “moral damages” (akin to damages for “pain and suffering” in common law jurisdictions) in an amount exceeding $15 billion, as well as punitive damages, solely on the basis of a common issues trial (and to the exclusion of any subsequent individual trials). The plaintiffs did not tender evidence on their own behalf or on behalf of a single member of either class. Rather, plaintiffs’ counsel relied exclusively on expert evidence and certain statutory mechanisms that they claimed were sufficient to provide the court with a reasonable basis to make class-wide determinations of fault, causation and injury in respect of each and every class member.

Questions Raised in Landmark Ruling

Although the trial judge ultimately dismissed most of the allegations advanced against the three defendant tobacco manufacturers, he concluded that there was a class-wide fault in respect of the defendants’ failure to adequately inform of product risks (a finding that is now under appeal to the Québec Court of Appeal). Accordingly, he awarded in excess of $15 billion in aggregated moral and punitive damages. Although he also ordered provisional execution of a portion of the total award, in the amount of $1 billion – payable within 60 days of judgment – this latter order was subsequently overturned by the Québec Court of Appeal.

The case represents a landmark ruling, not only by virtue of its unprecedented scope but also as a result of the novel legal questions raised. It is the first product liability class proceeding in Canadian history in which compensatory damages were awarded in the aggregate on the basis of a common issues trial and in the absence of class member evidence. Accordingly, it may presage the use in future of class actions procedures and related statutory mechanisms – including those contemplated by provincial consumer protection legislation – to impose liability and damages on defendants in a context where the plaintiff class members are effectively sheltered from individual scrutiny.

As the courts have repeatedly affirmed, class actions are intended to be purely procedural mechanisms that bring together commonly situated individuals who share a legal interest. They are not intended to alter the parties’ fundamental legal rights, nor expose parties to liability that would not otherwise exist in the context of an individual action. If the courts permit issues such as causation and injury – which have traditionally been characterized as inherently “individualistic,” particularly in the product liability context – to be addressed in the aggregate, how will they ensure that the fundamental principles of procedural fairness and access to justice are preserved for class action defendants? Moreover, if this “aggregated” approach is indeed going to be applied going forward, will the courts adopt a more stringent approach to certification of class proceedings to ensure that “commonality” across the class truly exists in all material respects?

Alternatively, the courts may ultimately consider this judgment an opportunity to reiterate and reaffirm the purely procedural nature of the class actions regime, with a view to highlighting the potential hazards of aggregating differently situated class members with disparate claims. The decision is under appeal, and it is likely that many of these questions will be addressed by the appellate court in 2016 and beyond as the proceedings continue to unfold.

Note: Osler acts for Imperial Tobacco Canada Ltd.