Droit canadien de la responsabilité du fait des produitshttps://www.stikeman.com/fr-ca/rss/droit-canadien-responsabilite-produits?utm_source=prodlia-list-fr&utm_medium=email&utm_campaign=prodliabilityDroit canadien de la responsabilité du fait des produitsfr-CA{1E4D226B-AD50-43F4-8BD7-89628BAB0A9E}https://www.stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/la-cour-de-l-ontario-rejette-un-recours-collectif-autorise-en-matiere-de-publicite-mensongereDroit canadien des actions collectivesDroit canadien de la responsabilité du fait des produitsLa Cour de l'Ontario rejette un recours collectif autorisé en matière de publicité mensongère<p><strong>Dans l'affaire <a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onsc/doc/2022/2022onsc2396/2022onsc2396.html?autocompleteStr=rebuck&autocompletePos=6#_ftn4" target="_blank"><em>Rebuck c. Ford Motor Company</em></a>, 2022 ONSC 2396 (Rebuck), la Cour supérieure de justice de l'Ontario a rejeté sur le fond, par voie de jugement sommaire, un recours collectif autorisé. La demande visait l’obtention de dommages-intérêts de 1,5 milliard de dollars dans le cadre d’un recours collectif national se rapportant à des violations alléguées de dispositions sur la publicité trompeuse de la <a rel="noopener noreferrer" href="https://canlii.ca/t/ckj6" target="_blank"><em>Loi sur la concurrence</em></a> et de certaines lois provinciales sur la protection du consommateur. L'affaire démontre que l’autorisation d’un recours ne garantit pas son succès sur le fond, et offre de précieux conseils sur les types de preuves nécessaires pour défendre les recours collectifs en matière de publicité mensongère.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jpt2n"><em>Rebuck v. Ford Motor Company</em></a><em>,</em> 2022 ONSC 2396 (<em>Rebuck</em>), the Ontario Superior Court of Justice dismissed a certified class action on its merits by way of summary judgment. The claim sought $1.5 billion in damages on behalf of a national class with respect to alleged breaches of misleading advertising provisions in the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/7vdv"><em>Competition Act</em></a> and certain provincial consumer protection statutes. The case highlights how success on certification does not guarantee success on the merits, and offers valuable guidance on the types of evidence relevant to defending false advertising class actions. </strong></p> <h2>Background</h2> <p>In 2016, the plaintiff commenced this class action against Ford on behalf of a national class, claiming damages of $1.5 billion for alleged breaches of the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/7vdv"><em>Competition Act</em></a> as well as the consumer protection statutes of several provinces. The core allegation was that Government of Canada-mandated “EnerGuide” labels that were affixed by Ford to windows of its vehicles had misled potential purchasers about the vehicles’ fuel efficiency and that Ford bore legal responsibility for the damages that the plaintiff class allegedly suffered as a consequence.</p> <p>Specifically, the plaintiff argued that although Ford had tested the fuel consumption of its vehicles using the most up-to-date “5-Cycle Test” method, and had subsequently become aware that the fuel consumption figures contained in the EnerGuide labels (which were based, as per Government of Canada requirements at the time, on the older and less accurate “2-Cycle Test” method) were understated, Ford had omitted to disclose this in the EnerGuide labels or to correct the impression allegedly given by the labels in any other way.</p> <h2>Certification Decision (2018)</h2> <p>The plaintiff moved for <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/hwpw9">certification in 2018</a>. Ford opposed certification, arguing that, among other things:</p> <ul> <li><strong>No misrepresentation:</strong> the limited evidence tendered by the plaintiff (i.e., the text on the EnerGuide labels and Ford’s other promotional materials) did not establish that a misrepresentation was made, nor could representations arising from an industry-wide fuel consumption rating system promoted by the federal government (such as EnerGuide) be actionable as misrepresentations;</li> <li><strong>No commonality:</strong> the limited evidence tendered by the plaintiff did not establish common issues between the putative class members<strong>,</strong> given that each consumer in the automobile market approaches promotional materials from their own particular point of view; and</li> <li><strong>No causality:</strong> the plaintiff could not establish a causal connection between the representations made in the EnerGuide labels and the damages allegedly suffered by class members.</li> </ul> <p>The Court nevertheless ruled for the plaintiff and certified the class action on the following grounds:</p> <ul> <li>The representations on the EnerGuide labels were <strong>objectively inaccurate and misleading</strong>, since they were based on the results from the older and less accurate test rather than the newer and more accurate test;</li> <li><strong>Individualized evidence was not required</strong>, given that the alleged misrepresentations that formed the heart of the claim were made in writing within nationally disseminated materials<strong>, </strong>such as the EnerGuide. Case law had affirmed that sufficient commonality could be established on the basis of this evidence where the representations at issue are in written form; and</li> <li>The plaintiff had <strong>adequately pled a causal connection</strong> between the representations and alleged damages by claiming that the alleged misrepresentations concerning fuel consumption had caused buyers and lessees to spend more on fuel than they had anticipated. Notably, unlike common law claims for misrepresentation, the plaintiff was not required to establish actual reliance (i.e., that buyers and lessees of Ford vehicles had actually relied on the content of the EnerGuide labels in deciding to buy or lease those vehicles).</li> </ul> <p>In light of the foregoing, the Court held in favour of the plaintiff and certified six common issues.</p> <h2>The Summary Judgment Motions (2022)</h2> <p>Almost four years after certification was granted, both parties elected to move for summary judgment. The plaintiff brought a motion for summary judgment on three of the six certified common issues:</p> <ul> <li>whether Ford had breached 52 of the <em>Competition Act</em> (i.e., by making a false or misleading representation for the purpose of promoting a product);</li> <li>whether Ford had breached sections 14 and 17 of the <em>Consumer Protection Act, 2002 </em>(Ontario) and parallel provisions of other provincial consumer protection legislation by making false, misleading or deceptive representations; and</li> <li>whether the class members were entitled to damages.</li> </ul> <p>Ford brought a cross-motion to have the entire action dismissed.</p> <p>Notably, during the years that elapsed between the certification motion and the hearing of the summary judgment motions in April 2022, the parties had built a substantial evidentiary record (comprised of filed documents, affidavits and transcripts) upon which the parties and the Court agreed that the common issues could be adjudicated. Furthermore, the parties submitted extensive arguments in support of their positions on the merits, including a 340-page factum prepared by Ford.</p> <h3>The Decision</h3> <p>Based on the record and parties’ submissions, the motion judge ruled in favour of Ford and dismissed the class action in its entirety, with respect both to the <em>Competition Act </em>and to the consumer protection law claims.</p> <h4>Section 52 of the Competition Act</h4> <p>In order to prove a breach of the <em>Competition Act</em>, the plaintiff was required to establish that: Ford had knowingly or recklessly made a false or misleading representation; and the class members had suffered damages as a result.</p> <p>The Court affirmed that s. 52 of the <em>Competition Act</em> only applies where a party <em>makes</em> a representation in issue and does not impose a general duty on a party to disclose information (i.e., information updating or contextualizing a representation previously made). As such, whether Ford had breached s. 52 of the <em>Competition Act </em>would be determined with reference to the specific representations made by Ford in the EnerGuide labels, without consideration of whether Ford ought to have disclosed the matter of the transition between the two test methods to the public.  </p> <p>The Court held that the content of the EnerGuide labels had not constituted a false or misleading representation for two reasons.</p> <p>Firstly, the content of the EnerGuide labels complied with federal government guidelines prescribing its content and the required fuel consumption test method. The Court held that compliance with such guidelines cannot fairly or reasonably amount to a breach of federal competition law. In other words, the legislature should not be held to have criminalized or otherwise impugned its own EnerGuide labels. The motion judge noted that to find otherwise would violate an established principle of statutory interpretation: the presumption of consistency. This principle affirms that where federal statutes can be interpreted so as not to interfere with one another, that interpretation is to be preferred. Interestingly, in this case he applied that principle to a purported conflict between a statute and the federal guidelines underlying the EnerGuide program – holding that, since Ford had complied with those guidelines, it could not be held to have breached federal competition law in doing so.</p> <p>Secondly, under s. 52(4) of the <em>Competition Act</em>, a Court must consider “the general impression conveyed by a representation” in determining whether that representation was false or misleading. There was no dispute that each of the statements made in the EnerGuide labels was literally true. Accordingly, the Court held that the alleged misrepresentation was not inherently obvious in the circumstances. The Court noted that in such cases, plaintiffs may often supplement evidence of “general impression” with focus group, survey or expert evidence. However, in this case, while the plaintiff argued that the “general impression” created by the EnerGuide labels was that the fuel consumption estimates represented the median of what drivers could expect to achieve, the plaintiff did not tender any evidence on point beyond an affidavit that he swore concerning how he himself was allegedly misled. As a result, the Court held that there was insufficient evidence of any alleged class-wide expectation of fuel consumption.</p> <h4>Consumer protection legislation</h4> <p>In order to prove a breach of the relevant provincial consumer protection legislation, the plaintiff was once again required to establish that Ford had made a false or misleading representation and that the class members had suffered damages as a result. In contrast to the <em>Competition Act</em> claim, however, the plaintiff was entitled under the consumer protection legislation to argue misrepresentation by non-disclosure. The plaintiff made such an argument in addition to asserting the foregoing “impression” argument that was made under the <em>Competition Act</em>.</p> <p>The Court rejected the plaintiff’s “impression” argument for the same reasons as it did under the <em>Competition Act</em> claim. With respect to the misrepresentation by non-disclosure argument, the Court considered the specific content of the EnerGuide labels and whether the material facts purportedly omitted deceived customers, and thus, required further disclosure. The EnerGuide labels contained two statements (one in block letters) referring consumers to government fuel consumption guides, which themselves made clear that the fuel consumption figures contained in the EnerGuide labels were provided for comparison purposes and not to predict actual fuel consumption.</p> <p>Ford led uncontroverted expert evidence that Google search rankings for the government fuel consumption guides were high and that consumers for whom fuel consumption was important would likely have consulted them. The plaintiff did not lead evidence that despite the EnerGuide label’s references to the guidelines, consumers simply relied on the EnerGuide labels without consulting the guidelines, nor that Ford knew that this was the case. Ultimately, the Court was not persuaded on the evidence that additional disclosure had been required and held that the plaintiff had failed to establish a false or misleading representation by omission.</p> <h4>Damages</h4> <p>Given the motion judge’s findings on the foregoing issues, the damages common issue was also decided in Ford’s favour. The motion judge held that even if the plaintiff had prevailed in establishing liability under the <em>Competition Act</em> and/or the consumer protection legislation, he would likely have failed to establish that damages could be determined on an aggregate basis given a myriad of further hurdles (i.e., the need for individualized assessments, detrimental reliance issues, limitation periods and privity of contract problems).</p> <h2>Key Take-Aways</h2> <p>The decision is an example of a court dismissing a class action by way of summary judgment and on its merits after certification is granted.</p> <p>While class action counsel will want to be on the lookout for a possible appeal, <em>Rebuck </em>highlights:</p> <ul> <li>how success on certification does not guarantee success on the merits of a case, and how summary judgment motions are likely to become more prevalent, especially in light of the amendments to Ontario’s <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/2tv"><em>Class Proceedings Act, 1992</em></a> that require courts to hear dispositive motions and motions that may narrow the issues to be determined in advance of certification (unless ordered that the motion be heard in conjunction with certification);</li> <li>that courts will generally require evidence that the defendants knew or ought to have known that their customers would rely on misleading or deceptive omissions to prove that a representation violates provincial consumer protection legislation;</li> <li>that representations made in compliance with federal guidelines will generally not be found unlawful; and</li> <li>how consumer focus group, survey or expert evidence may be relevant to establishing that a representation made in promotional materials or labels created a “general impression” that was false or misleading, and/or that a defendant ought to have disclosed further information clarifying that representation.</li> </ul>Thu, 27 Oct 2022 18:48:00 Z21-Jul-2022 04:36:00{596B77E6-8350-42EE-B0B1-F56B8FE6BA04}https://www.stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/pas-de-perte-indemnisable-pas-de-certification-la-cour-divisionnaire-de-l-ontario-convient-que-les-demandeurs-doivent-demontrer-un-fondementDanielle K. Royalhttps://www.stikeman.com/fr-ca/equipe/r/danielle-k-royalAlexandra Urbanskihttps://www.stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesDroit canadien de la responsabilité du fait des produitsActualités - LitigePas de perte indemnisable, pas de certification : la Cour divisionnaire de l’Ontario convient que les demandeurs doivent démontrer un fondement en fait pour leurs recours collectifs<p><strong>Dans sa décision <a href="https://canlii.ca/t/jg5m9"><em>Maginnis v. FCA Canada Inc</em></a><em>.</em>, la Cour divisionnaire de l’Ontario confirme le rejet de la motion en certification des demandeurs contre un fabricant automobile et d’autres défendeurs dans le cadre d’un recours collectif envisagé relativement à un dispositif d’invalidation du système de contrôle des émissions d’un véhicule automobile.  </strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In </strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jg5m9"><strong><em>Maginnis v. FCA Canada Inc</em></strong><strong><em>.</em></strong></a><strong> the Ontario Divisional Court upheld the dismissal of the plaintiffs’ certification motion against an automobile manufacturer and other defendants in a proposed class action relating to an automotive emission defeat device. </strong></p> <p>Apart from reaffirming that plaintiffs must provide evidence, and not just allegations of compensable loss to succeed at certification, the Divisional Court’s decision in this appeal has some direct implications for manufacturers across industries. Specifically, it:</p> <ul> <li>Underscores how a robust recall program may assist to reduce or eliminate compensable harm to consumers that could otherwise support certification; and</li> <li>Reinforces that compensable harm is a “fundamental prerequisite” for class certification in Ontario. A plaintiff’s failure to file evidence of compensable harm can therefore be fatal to a certification motion.</li> </ul> <h2>Background</h2> <p>In early 2017, various American environmental agencies issued violation notices to a large vehicle manufacturer in the U.S. relating to the installation of software “defeat devices” in certain eco-diesel vehicles (the “Subject Vehicles”). Litigation followed shortly thereafter in both the U.S. and Canada.</p> <p>In Canada, the plaintiffs commenced a proposed class action against the following (collectively, the “Defendants”):</p> <ul> <li>the manufacturer of the Subject Vehicles (“FCA”);</li> <li>the designers and suppliers of the emission control devices, and</li> <li>a car dealership that sold a Subject Vehicle to one of the plaintiffs.</li> </ul> <p>The plaintiffs made various claims, including negligent misrepresentation, breach of the <em>Competition Act, </em>breach of the <em>Consumer Protection Act, </em>breach of contract, and unjust enrichment.</p> <p>Prior to the hearing of the certification motion, the U.S. litigation settled and FCA U.S. agreed to recall the Subject Vehicles and repair the emission systems by installing software known as the Approved Emission Modification (“AEM”). FCA U.S. also agreed to pay an amount of money to U.S. owners and lessees if they obtained the AEM, and it provided an extended warranty on the emissions system. FCA Canada began a similar recall program. By the time of the certification decision (discussed below), over two thirds of the Subject Vehicles had been repaired in Canada.</p> <h2>Overview of the Plaintiffs’ Arguments</h2> <p>At certification, the plaintiffs claimed that they had suffered loss because:</p> <ul> <li>they had paid a premium price for an eco-diesel engine, and had instead received a “dirty” diesel engine; and</li> <li>the repair of the eco-diesel engine resulted in reduced fuel economy or vehicle performance.</li> </ul> <h2><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/j9pll" target="_blank">The Certification Decision</a></h2> <p>The Certification Judge <strong>refused to certify</strong> the class proceeding against the Defendants, stating that the plaintiffs provided no basis in fact for any compensable loss.</p> <p>The Certification Judge held that there was no evidence that anyone paid a “premium price” for a Subject Vehicle, and even if they did, the Subject Vehicles would be emissions-compliant post-repair, and could be sold, bought, or traded at a value unaffected by the defeat device. There was also no evidence that the repair of the defeat device resulted in reduced fuel economy or vehicle performance.</p> <p>The Certification Judge did not examine all the factors in the certification test under the <em>Class Proceedings Act </em>(the “<em>CPA</em>”), focusing instead on the preferable procedure criterion under s.5(1)(d), which requires judges to “consider the goals of class proceedings – <strong>access to justice, behaviour modification and judicial economy.” </strong></p> <p>Ultimately, the Certification Judge held that a class proceeding was not a preferable procedure in this case because:</p> <p>[A]bsent compensable harm, there are no access to justice concerns, the defeat device has been (or is being) repaired and thus behaviour has been modified; and certifying this action would not advance any viable lawsuit and would only result in a waste of judicial resources.</p> <h2>The Divisional Court Decision</h2> <p>On appeal, the Divisional Court upheld the ruling of the Certification Judge.</p> <p>The plaintiffs argued that the Certification Judge erred in, among other things: (i) requiring the plaintiffs to prove their loss at the certification stage, (ii) finding that there was no evidence of compensable loss and (iii) finding that a class action would not be a preferable procedure.</p> <p>The Divisional Court disagreed with the plaintiffs’ contention that the Certification Judge had erred. Accordingly, it dismissed the plaintiffs’ appeal.</p> <h3>Proof of loss at certification</h3> <p>The Divisional Court held that the Certification Judge did not require the plaintiffs to prove loss at the certification stage, nor did he enter into an assessment of the merits stage of the case.</p> <p>The Defendants led evidence that the AEM provided through the recall made the emissions device effective without affecting overall fuel economy and vehicle performance. Given this evidence, the Certification Judge required the plaintiffs to provide some evidence of compensable loss to the plaintiffs. The Divisional Court noted this approach is consistent with the case law respecting certification motions. While no evidence is admissible in determining whether the pleadings disclose a reasonable cause of action under s. 5(1)(a) of the CPA<em>, </em>the other paragraphs in s. 5(1) require that the plaintiff show that there is <em>some basis in fact </em>for each requirement. Such an inquiry is not to be an assessment of the merits of the case at the certification stage.</p> <p>The Certification Judge correctly held that there was no basis in fact for the proposition that a class proceeding would be the preferable procedure for resolution of the class proceeding. As the defect in the product had been repaired and there was no evidence of compensable harm, then “there are no access to justice concerns, behaviour modification has been achieved, and proceeding any further in court would be a waste of judicial resources.”</p> <p>The Divisional Court rejected the plaintiffs’ argument that the Certification Judge’s decision was inconsistent with <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="http://canlii.ca/t/j2hbf"><em>Pro-Sys Consultants Ltd. v. Microsoft Corporation</em></a> (“<em>Pro-Sys</em>”) because he had required them to prove actual loss at the certification stage. The Divisional Court recognized that in <em>Pro-Sys,</em> an indirect purchaser action, the Supreme Court was not focused on the issue in this case - namely, whether there was some basis in fact for finding any compensable loss at all had been suffered by the plaintiffs. Rather, it was focused on whether there was some basis in fact to show that loss-related issues were capable of resolution on a common basis.</p> <h3>Evidence of compensable loss</h3> <p>The Divisional Court held that the Certification Judge did not err in finding that there was no evidence of compensable loss. </p> <p>The Certification Judge had found that there was no evidence that anyone paid a premium price for the eco-diesel engine. Even if there had been such evidence, the Certification Judge held that the plaintiffs could not show that there was a difference in value between what they paid and the value of the vehicle when repaired, so as to permit a remedy pursuant to s.18(2) of Ontario’s <em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/54cf8" target="_blank">Consumer Protection Act, 2002</a></em><em>. </em>Moreover, the Certification Judge had found that the plaintiffs provided no evidence that there were changes to fuel economy or performance after the updated AEM.</p> <p>According to the Divisional Court, the plaintiffs had not shown any palpable and overriding error in the Certification Judge’s findings of fact. While the plaintiffs argued that they had pleaded losses such as the need to rent a vehicle during the repair of their own, there was no evidence of any such loss before the Certification Judge to that effect.</p> <h3>Preferable procedure</h3> <p>The Divisional Court held that the Certification Judge did not err in finding that a class action would not be a preferable procedure.</p> <p>Ultimately, the Certification Judge determined that the remedy provided by the repair FCA offered was a remedy that provided access to justice for class members and that a class proceeding would not be a wise use of judicial resources in this case. The Divisional Court held that this finding was consistent with the Supreme Court of Canada’s decision in <em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/j8tcb" target="_blank">Atlantic Lottery Corp. Inc. v. Babstock</a></em> and other cases.</p> <p>The plaintiffs had alleged that the Defendants had engaged in deceitful conduct and misrepresentation, yet they had not been held accountable for that conduct, as there had been no Canadian regulatory proceedings like those in the U.S. In response, the Divisional Court stressed that the purpose of class proceedings is not to punish defendants, but rather provide access to justice for those who have been harmed by the misconduct of a defendant and to achieve behaviour modification. Ultimately, the Divisional Court held that the Certification Judge’s finding that there was no compensable harm because the plaintiffs had been made whole, there had been behaviour modification and a class proceeding would not be a wise use of judicial resources, was entitled to deference.</p>29-Jun-2021 06:22:00{FE851D71-AB4C-41A6-816D-8E25AAE1816F}https://www.stikeman.com/fr-ca/savoir/droit-canadien-responsabilite-produits/actions-collectives-en-responsabilite-du-fait-des-produits-la-cour-de-l-ontario-se-prononce-sur-les-obligations-des-fabricantsDroit canadien de la responsabilité du fait des produitsDroit canadien des actions collectivesActions collectives en responsabilité du fait des produits : la Cour de l’Ontario se prononce sur les obligations des fabricants de produits intrinsèquement dangereux<p><strong>Dans <em>Price </em>c.<em> Smith & Wesson</em>, <a href="https://canlii.ca/t/jd65c">2021 ONSC 114</a> (« <em>Price »</em>), les victimes de la fusillade de masse sur l’avenue Danforth à Toronto en 2018 ont fructueusement défendu leur proposition de recours collectif de 150 millions de dollars pour conception négligente contre la motion en radiation connexe d’un fabricant d’armes de poing.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In <strong><em>Price v. Smith & Wesson</em></strong>, <strong><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/jd65c" target="_blank">2021 ONSC 1114</a></strong><strong> (“<em>Price”</em>) victims of the 2018 Danforth Avenue mass shooting in Toronto successfully defended their proposed $150 million negligent design class action against a handgun manufacturer’s motion to strike</strong>.</strong></p> <strong> </strong> <h2>Key Take-Aways</h2> <ul> <li>For the first time in Canada, a court has recognized a duty of care between a firearms manufacturer and the victims of a shooting.</li> <li>Manufacturers of products that are dangerous in themselves owe a duty of care to those who will come into proximity of those products (and not just the purchasers and/or intended users) and should give careful consideration to ensure that they are taking reasonable precautions.</li> <li>Plaintiffs may be able to sustain claims for negligent design of a product where they identify specific alleged design defects; a substantial likelihood of harm which could be caused by those defects; and that there were safer and economically feasible ways of manufacturing the product.</li> </ul> <h2>Background</h2> <p>The Plaintiffs in <em>Price </em>were victims and the parents of victims of a tragic mass shooting (“Danforth Shooting”), which occurred on the Danforth Avenue in Toronto on July 22, 2018. The Defendant manufactured the stolen semi-automatic handgun (“Handgun”), which was used by the perpetrator of the Danforth Shooting.</p> <p>The Plaintiffs commenced a proposed class action against the Defendant to hold the Defendant liable for the injuries suffered in the Danforth Shooting.</p> <p>The Plaintiffs’ central allegation in this case was negligence. The Plaintiffs alleged that the Defendant, as the designer, manufacturer and distributor of a product intended to be used as a weapon, owed a duty of care to persons who would come into proximity with that product to ensure that the weapon included safety mechanisms sufficient to deter significant and foreseeable harm. The Plaintiffs further alleged that, although the Defendant both developed and patented technology (“Safety Mechanisms”) that could deter unauthorized individuals from using its weapons, it unreasonably elected not to incorporate the Safety Mechanisms into the design of the Handgun. On this basis, the Plaintiffs claimed that the harm inflicted by the Handgun was preventable, and that the Defendant should be held liable as a result.</p> <p>The Plaintiffs’ claim is groundbreaking in Canada, but mirrors a long line of cases brought by victims of shootings against firearms manufacturers in the United States. The prevailing practice among firearms manufacturers in the U.S. has been to move quickly to have the plaintiffs’ claims dismissed on the ground that there is no possible basis on which the victims of a shooting could establish that a manufacturer owes a duty of care to persons injured in the illegal use of its products. In the vast majority of these American cases, the plaintiffs’ claims have failed to survive pre-trial dismissal or summary judgment.</p> <p>In line with the common practice in the United States, the Defendant in <em>Price </em>moved to strike the Plaintiffs’ negligence claim (along with claims for strict liability and public nuisance) and to have the proposed class action dismissed. The Defendant submitted that there was no possible basis for a claim in negligence against it on the basis that the relationship between a firearms manufacturer and a victim of a shooting:</p> <ul> <li>did not fall within any of the established categories of duties of care that have been recognized in the jurisprudence; and</li> <li>did not satisfy a duty of care analysis whereby a new category of duty of care could be recognized.</li> </ul> <p>Furthermore, the Defendant argued that the Plaintiffs’ claim in negligence was doomed to fail because the Plaintiffs did not plead material facts to establish causation. Specifically, the Defendant claimed that the cause of the harm was the independent criminal acts of the perpetrator of the Danforth Shooting, rather than any purported act or omission of the Defendant, and that the Plaintiffs neglected to plead material facts which could establish otherwise.</p> <p>The motion judge ordered that the certification motion for the proposed class action would proceed in two stages: first, a hearing would occur to address the Defendants’ motion to strike the Plaintiffs’ claim and whether the Plaintiffs had properly disclosed a cause of action in their pleading (which overlaps with the first part of the certification test, i.e. whether the pleadings disclose a cause of action). If the Ontario Superior Court of Justice (the “Court”) held in favour of the Plaintiffs, a second hearing would be held in order to address the remaining four certification criteria. On December 3-4, 2020, the first hearing was held.</p> <h2>The Decision</h2> <p>The motion judge dismissed the Defendant’s motion to strike and held that the Plaintiffs’ certification motion will proceed to a second hearing.</p> <h3>The “cause of action” criterion and motions to strike</h3> <p>In order to establish that the claim did not disclose a reasonable cause of action, the Defendant bore the onus of convincing the motion judge that it was plain and obvious that the claim could not succeed:</p> <p style="padding-left: 30px;">In a proposed class proceeding, in determining whether the pleading discloses a cause of action, no evidence is admissible, and the material facts pleaded are accepted as true, unless patently ridiculous or incapable of proof. The pleading is read generously, and <strong>it will be unsatisfactory only if it is plain, obvious, and beyond a reasonable doubt that the plaintiff cannot succeed</strong>. [emphasis added]</p> <p>The motion judge acknowledged that this is a high standard. While a motion to strike a pleading for lack of a reasonable cause of action is an important means for achieving judicial efficiency, the overriding principle, as repeatedly endorsed by the Supreme Court of Canada, is that cases should generally be disposed of on their merits.</p> <p>The motion judge held that it was not plain and obvious that the Plaintiffs’ claim in negligence would not succeed at trial. Interestingly, the motion judge determined that not only did the Plaintiffs’ claim fall within an established category of negligence, the proof was to be found in the seminal 1932 “snail in a bottle of ginger beer” decision of the House of Lords in <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/ca/forep/doc/1932/1932canlii536/1932canlii536.html"><em>Donoghue v. Stevenson</em></a> (“<em>Donoghue</em>”)<em>.</em></p> <h3>The two established categories of duties of care</h3> <p>The motion judge held that the relationship between the firearm manufacturer and the victims of a shooting fell within not one, but two recognized categories of duties of care: (1) products dangerous <em>per se</em>; and (2) general product liability. Both of these categories arose in <em>Donoghue</em> and appear to remain applicable to the manufacture of products nearly a century later.</p> <h4>Products dangerous per se</h4> <p><em>Donoghue </em>acknowledged that a duty of care exists for the manufacturers of goods that are dangerous in and of themselves (<em>per se</em>) to take reasonable precautions to avoid foreseeable harm to proximate parties. In fact, it was this centuries-old duty of care which Lord Atkin analogized in order to establish the general product liability category for which the decision’s legacy is mostly attributed.</p> <p>The Defendant argued that the action must fail because the proximate cause of the harm was the criminal act of the shooter not the alleged negligence of the firearms manufacturer. The motion judge rejected this argument as a basis to strike the claim, holding that although the volition of the perpetrator of the Danforth Shooting clearly contributed to the harm, there appear to have been precautions which the Defendant could have taken to protect against the risk of that volition (i.e. implementing the Safety Mechanisms into the Handgun’s design). The motion judge concluded that there is an established duty of care relationship in the immediate case and it was not plain and obvious that the negligence claim was destined to fail.  </p> <h4>Product liability</h4> <p>The motion judge also held that the relationship between the parties fell within the general product liability duty of care.</p> <p>The motion judge agreed with the Defendant that the Plaintiffs’ claims for negligent manufacture and negligent distribution were deficient, as the Plaintiffs had failed to plead material facts regarding negligence in the manufacturing of the Handgun, or in its distribution. However, the motion judge held that the crux of the negligence claim, being the claim for negligent design, was not doomed to fail.</p> <p>The Plaintiff had pled, inter alia, that the Defendant manufactured a product that was dangerous by its nature, that the Defendant had actual knowledge of a method of manufacturing the product which would prevent foreseeable harm, and that the Defendant had unreasonably decided not to adopt this method and had caused preventable harm. If taken as true, the Court held that these facts could give rise to a successful product liability claim: “a manufacturer does not have the right to manufacture an inherently dangerous article when a method exists of manufacturing the same article without risk of harm.”</p> <p>The Defendant’s arguments regarding negligent design (chiefly, that it had designed the Handgun for use by a police officer only, and that the design was not negligently designed for use by a police officer) spoke to the merits of the Plaintiffs’ claim in negligence and not to whether a legally viable cause of action had been pled. This argument, held the Court, may prove relevant in the risk-utility analysis (of implementing the Safety Measures), which would likely arise later in the litigation, but did not render such a risk-utility analysis obsolete. Rather, it affirmed that such a risk-utility analysis was necessary, and that the negligent design claim should not be struck.</p> <p>It is important to emphasize that in reaching these conclusions, the motion judge was simply making a determination as to whether there were established duties of care in relation to the relationship between the parties and was not making any conclusions as to whether the Defendant had breached those duties. The Plaintiffs had simply established that they should not be denied a day in court – not that they were likely to succeed on that day.</p> <h2>Conclusion</h2> <p><em>Price</em> provides guidance with respect to what must be pled in order to sustain a claim for negligent design, and when it may and may not be appropriate for a defendant to attempt to strike a claim before certification. The decision reinforces the high threshold for a motion to strike and that manufacturers of products that are dangerous in themselves (i.e. handguns) owe a duty of care to parties who will come into proximity of those products, and not just the purchasers and/or intended users of those products. A number of questions naturally arise from this: how are products categorized as being dangerous <em>per se</em> and not dangerous <em>per se</em>? What does it mean to take reasonable precautions in the design of a potentially dangerous <em>per se</em> product? As the proceeding progresses to a second hearing, hopefully <em>Price</em> may offer answers to these questions and more.</p>06-Apr-2021 07:48:00