Publication
TITRE
Canadian Diet Drug Litigation Settled
DATE
2 décembre 2004
EXPERTISE
The Supreme Court of Ontario has recently approved the settlement of the Canadian diet drug class action (Wilson et al. v. Servier et al.). This action, which was commenced in November 1998, involved allegations that the diet drugs Ponderal and Redux caused primary pulmonary hypertension (PPH), a life-threatening condition, and valvular heart disease (VHD). Damages in excess of C$500 million were claimed on behalf of the plaintiff class. The settlement was agreed in principle on the eve of trial in January 2003. The detailed terms and conditions of the settlement were negotiated over the subsequent 18 months. Formal court approval was granted on October 19, 2004. Ogilvy Renault acted for the defendant Servier companies, including Servier Canada, throughout.
The Wilson action is instructive for clients who face or may face significant product liability claims, either by way of class action or individual plaintiff claims, particularly in the pharmaceutical and consumer products industries. Some of the key points may be summarized as follows.
First, the Wilson action was one of the first Ontario pharmaceutical product liability class actions to be certified across Canada (except in Quebec, where separate class actions were launched). Despite the national certification, however, counsel for various individual opt-out plaintiffs, particularly from British Columbia, chose to proceed with their claims. This situation called for the close coordination of defence strategies in a number of different Canadian jurisdictions, involving different rules of evidentiary and documentary discovery.
Second, the Wilson action was launched in the wake of similar U.S. litigation brought against American Home Products (now known as Wyeth), the U.S. distributor of the drugs, and it was apparent from the outset that Canadian plaintiffs' counsel were working in tandem with their counterparts in the U.S. This pattern of "copycat litigation", which we believe will be repeated in future pharmaceutical litigation, raised a number of unusual challenges for defence counsel, including:
- Plaintiff motions seeking leave to have U.S. plaintiffs' counsel give evidence on the state of the U.S. litigation;
- Plaintiff motions for leave to have U.S. plaintiffs' counsel attend discoveries and be awarded legal fees as "advisors" to Canadian counsel;
- Plaintiff motions supported by the affidavits of U.S. plaintiffs' counsel or U.S. experts; and
- Plaintiff motions seeking the production in the Canadian litigation of U.S. documents.
Third, shortly after the Canadian proceedings were launched, a US$3.5 billion settlement of the U.S. litigation was announced. The immediate effect of the U.S. settlement was to heighten the expectations of Canadian plaintiffs' counsel for a similarly lucrative resolution of the Canadian litigation.
Fourth, one of the central arguments advanced by plaintiffs' counsel was that the defendants had misled Canadian regulators with respect to the incidence of adverse drug reactions over the 30-year period during which Ponderal was marketed worldwide and in connection with the regulatory approval of Redux in 1997. Refuting this argument required extensive documentary productions and examinations under oath of federal health department representatives.
Faced with this "perfect storm", the defence strategy from the outset was predicated on the contestation of the claim on as many fronts as possible. The ultimate success of this strategy can perhaps be judged by comparing the Canadian and U.S. settlements.
With the passage of time, it has become increasingly evident that the U.S. settlement is problematic: It does not apply to a significant category of claims (those involving PPH) with respect to which litigation continues.[1] Although the anticipated cost of the U.S. settlement was originally US$3.5 billion, the settlement was not capped, and it is now estimated that the total cost will be in excess of US$16 billion. Nevertheless, a vast number of VHD claimants have chosen to opt out of the settlement entirely and their claims are ongoing. The settlement has also given rise to motions by Wyeth seeking to set aside a number of claims on the basis of fraud.
Fortunately, from the defendants' perspective, the Canadian settlement appears more reasonable:
- In terms of the total amount payable, the Canadian settlement provides for the establishment of a settlement fund of C$25 million. A significant portion of any unpaid settlement funds are refundable to Servier Canada. On the other hand, should the claims payable exceed C$25 million, the settlement provides for the payment of additional settlement funds of up to C$15 million. Thus, the maximum liability of the defendants under the settlement is $40 million;
- The compensation scheme under the Canadian settlement is more refined than its U.S. counterpart, with the result that entitlement to benefits is more carefully defined;
- Because of the cap on the total settlement, the individual benefit amounts payable under the Canadian settlement are significantly less than the benefits provided for by the U.S. settlement;
- Extensive steps have been taken to prevent the likelihood of settlement fraud;
- Finally, the Canadian settlement applies to all Canadian Ponderal and Redux claimants, including opt-outs, and a settlement of the Quebec claims on the same terms is currently being finalized.
Based on this outcome, we expect that the vigorous and successful defence strategy adopted in Wilson will serve as a template for future litigation in this area.
Montréal
Jean G. Bertrand
(514) 847-4401
jbertrand@ogilvyrenault.com
Ottawa
Sally A. Gomery
(613) 780-8604
sgomery@ogilvyrenault.com
Québec
Pierre Déry
(418) 640-5009
pdery@ogilvyrenault.com
Toronto
Dana B. Fuller
(416) 216-4809
dfuller@ogilvyrenault.com
William W. McNamara
(416) 216-3906
wmcnamara@ogilvyrenault.com
Stephen A. Scholtz
(416) 216-4030
sscholtz@ogilvyrenault.com
Penny S. Bonner
(416) 216-6629
pbonner@ogilvyrenault.com
Vancouver
Gregory J. Nash
(604) 806-3856
gnash@ogilvyrenault.com
[1]. Recently, a jury in Beaumont, Texas awarded damages of US$1 billion to a PPH claimant.
The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault or any member of the Firm on the points of law discussed.
Personnes-ressources
Jean G. Bertrand
Montréal
514.847.4401
jbertrand@ogilvyrenault.com
Profil
Sally A. Gomery
Ottawa
613.780.8604
sgomery@ogilvyrenault.com
Profil
Pierre Déry
Québec
418.640.5009
pdery@ogilvyrenault.com
Profil
Dana B. Fuller
Toronto
416.216.4809
dfuller@ogilvyrenault.com
Profil
William W. McNamara
Toronto
416.216.3906
wmcnamara@ogilvyrenault.com
Profil
Penny Bonner
Toronto
416.216.6629
pbonner@ogilvyrenault.com
Profil
