The Cannabis Class Actions: A Procedural Primer on the Canopy / Mettrum & Organigram Lawsuits

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Unless you have been living under a rock you probably are aware that class action lawsuits have been launched against Organigram and Mettrum (as well as Canopy by virtue of the fact that Canopy has since acquired Mettrum) as a result of banned pesticides being discovered on medical cannabis sold by those companies.

What you may not know is what a class proceeding is and how it works.  If you’re interested in a high-level primer on where we are and what comes next in these lawsuits then this post is for you.

How We Got Here

The two lawsuits were both launched in the Supreme Court of Nova Scotia.  The lawyer for the plaintiff in each lawsuit is Raymond F. Wagner.

Since the lawsuits were commenced in Nova Scotia, the Nova Scotia Class Proceedings Act (the “CPA”) applies.  Every province has its own class proceedings legislation and much of the legislation is quite similar from province to province.

The CPA allows “one member of a class of persons” to “commence a proceeding in the court on behalf of the other members of that class.”

The Statements of Claim

The Statements of Claim issued by Mr. Wagner’s firm constitute the commencement of the proceedings.

A Statement of Claim sets out the parties, the facts on which the plaintiff will rely to establish his/her case, the “causes of action” upon which the plaintiff relies and the particulars of damages (i.e. losses) that the plaintiff has suffered.

In simple terms, a “cause of action” is the legal basis on which the plaintiff states that he/she is entitled to judgment.  In the cannabis class actions, the plaintiffs have alleged that the defendants were negligent (in a wide variety of ways), that they breached the terms of their contract with the plaintiffs and that they breached a number of statutory obligations that were owed.  In other words, the plaintiffs are relying on breach of contract, negligence and breach of statutory duty as the causes of action on which their cases are built.

It is important to note that the facts set out in the Statements of Claim are simply allegations until they are proven before a judge at trial.  Statements of Claim do not contain the evidence on which a party will ultimately rely to prove the facts necessary to win its case.

Certification Application

Before the lawsuits can be adjudicated on their merits, the CPA requires the person who commenced the lawsuit to make an interim hearing before the court to “certify” the proceeding as a class proceeding and appoint that person as a representative plaintiff for the class.

The test for certification is set out in section 7 of the CPA and is reproduced at the end of this post.

The certification application is not a procedural formality.  If the defendant is capable of defeating the certification application then the class proceeding dies without the defendant ever having to put forth its side of the story through a Statement of Defence.  Indeed, the CPA provides that a defence does not need to be filed until 45 days after the proceeding has been certified as a class proceeding.

When Will The Defendants Respond Substantively?

You will not see Canopy / Mettrum or Organigram respond to the substance of the allegations that have been made against them any time in the near future.  Their side of story will remain a mystery which will only be revealed in these lawsuits if and when the plaintiffs successfully pass the certification application.  Even if the plaintiffs are successful on certification we may still never hear the defendants’ side of the story because it is open for the defendants to try to settle the case prior to serving a defence.  Indeed, many class actions settle relatively quickly after being certified by the court.

What Happens if Certification Fails?

As you will note from the criteria in section 7 of the CPA (below), certification has nothing to do with the merits of the case.  The Chief Justice of Ontario (who developed a specialty in handling class action cases) once noted that the question for a judge on a certification application is not “will it succeed as a class action?” but rather “can it work as a class action?”

As such, if the court declines to certify the lawsuit as a class proceeding it does not absolve the defendant from liability, it simply means that they cannot be pursued by a class of persons via one consolidated lawsuit.  It would still be open to individuals who purchased the contaminated cannabis to launch their own individual cases against the defendants.

When Can we Expect the Certification Application?

The CPA provides that the certification application is to be heard within 120 days of the commencement of the proceeding.  The Organigram case was commenced on March 3, 2017 and the Canopy /Mettrum case was commenced on March 13, 2017.  However, the CPA also provides that the court has the ability to push that timeline out if it deems it appropriate.  Either way, by the middle of the summer we should have a better idea of when the certification application, which will be hotly contested, will be heard.  Between now and then check back here for more posts about the proceedings.

 

Section 7 of the CPA provides:

 

7 (1) The court shall certify a proceeding as a class proceeding on an application under Section 45 or 6 if, in the opinion of the court,

(a) the pleadings disclose or the notice of application discloses a cause of action;

(b) there is an identifiable class of two or more persons that would be represented by a representative party;

(c) the claims of the class members raise a common issue, whether or not the common issue predominates over issues affecting only individual members;

(d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the dispute; and

(e) there is a representative party who

(i) would fairly and adequately represent the interests of the class,

(ii) has produced a plan for the class proceeding that sets out a workable method of advancing the class proceeding on behalf of the class and of notifying class members of the class proceeding, and

(iii) does not have, with respect to the common issues, an interest that is in conflict with the interests of other class members.

(2) In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the dispute, the court shall consider

(a) whether questions of fact or law common to the class members predominate over any questions affecting only individual members;

(b) whether a significant number of the class members have a valid interest in individually controlling the prosecution of separate proceedings;

(c) whether the class proceeding would involve claims or defences that are or have been the subject of any other proceedings;

(d) whether other means of resolving the claims are less practical or less efficient;

(e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means; and

(f) any other matter the court considers relevant.

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