High stakes litigation
- Subtitle: Cover Story
In the case against drug maker Merck Frosst Canada Ltd., litigation has continued since 2004 over complaints its painkiller Vioxx was causing heart complications.
And in one of the country’s messiest and most drawn-out class action sagas, lawyers battled it out for roughly eight years before finally reaching the final chapter in the case against Servier Canada Inc., the maker of the diet drug Fen-Phen. Litigation in that case involved multiple appeals as well as 65 motions, says Joel Rochon, a partner at Rochon Genova LLP who acts for plaintiffs in many high-profile class actions.
Long and expensive battles in and out of court are typical in class actions, but one case stands out as an exception: Maple Leaf Foods. Just six months after a corporate nightmare that saw 20 people die from tainted meat began, the Toronto-based company appeared to have rid itself of a flurry of lawsuits with claims adding up to hundreds of millions of dollars. A settlement reached in January that has yet to be finalized would see Maple Leaf pay as much as $27 million to victims, as well as their next of kin, who contracted listeriosis in the summer of 2008.
“I think this is the fastest resolution of a case I’ve ever seen,” says Rochon, who calls the Maple Leaf lawsuit a “high-water mark” for dealing with class actions in Canada.
The litigation had the potential to be a mess, he adds. With nine law firms representing victims who numbered in the thousands, the case could easily have degenerated into legal squabbles both among plaintiffs’ lawyers and with Maple Leaf. Instead, a two-day mediation in November in Vancouver before former Alberta Court of Appeal justice Roger Kerans led to what many of the players thought was an agreement in principle. By late January, the parties had reached a proposed settlement awaiting court approval.
To the surprise of many, then, Maple Leaf has managed to mitigate what could have been a fatal crisis for the company. Chief executive officer Michael McCain has received much of the credit, with observers lauding him for making a quick public apology following a recall of Maple Leaf products found to be tainted with the listeria bacteria. The deft response, which involved throwing away the predictable legal advice to avoid making public comments acknowledging responsibility for the outbreak, led editors and broadcasters surveyed by The Canadian Press to vote him the 2008 business newsmaker of the year.
It’s clear, however, that Maple Leaf’s public relations coup was about more than just personality. Instead, the peculiarities of the crisis, including the grave circumstances in which elderly people became sick or died from something as simple as having their lunch, made the company’s response somewhat inevitable, say lawyers who both were involved in and who have observed the case.
John Campion, a senior partner with Fasken Martineau DuMoulin LLP in Toronto, compares the severity of Maple Leaf’s predicament to the infamous shower scene in the movie Psycho as well as to the 2000 tainted-water tragedy in Walkerton, Ont. “Why was that more horrible than many other horror scenes which were much more violent?” he asks, referring to Psycho. “The reason is we all take showers. And the reason why Walkerton was so horrible. . . . [was that] drinking water and dying from it is pretty horrible. All of us do it every day. We in Canada think our water is safe, but this was a worldwide story because of that single fact.”
As a result, Campion, who has defended companies in some of Canada’s highest-profile class actions, says the writing was on the wall for McCain. “I assume they took one look at this mess and they said, ‘We are not going to go through this process. This was a mistake. There were people who died, and they got their money. Everybody else, suck it up.’”
Steve Stieber, who led Maple Leaf’s defence as its external counsel, says the company and its insurers made a decision early on to eschew any moves to fight the case through the usual legal maneuvers, such as challenging certification, tying up the process through battles over which jurisdiction should hear it, or denying liability. “I think we all collectively recognized at a very early stage that at the end of the day settlement was clearly in everybody’s best interest. Clearly, the class gets their [money] quickly. From the defendants’ perspective, the case that sits longer doesn’t get better. It’s not like good wine [where] the longer it takes the better it gets. Our history and our experience have been that cases tend to get worse; cases tend to get more expensive.”