Class Action Certified Against Federal Government As Farmers Seek Damages Arising From 'Mad Cow' Crisis

On September 3, 2008, Madame Justice Joan Lax of the Ontario

Superior Court certified a $10 billion class proceeding brought on

behalf of 115,000 Canadian cattle farmers (excluding those in

Quebec) against the Government of Canada.

The class action was commenced in April 2005 and seeks damages for

economic losses arising from the 2003 closure of international

borders to Canadian cattle and beef products (including a 26-month

ban from the U.S.) immediately following the diagnosis of bovine

spongiform encephalopathy (BSE) or "mad cow disease" in

an Alberta cow. The claim alleges that the Government was negligent

in its regulation of the Canadian cattle industry. In particular,

it alleges that a government monitoring program failed to prevent

potentially infected imported cows from entering the food chain in

Canada. Ridley Inc., a Canadian animal feed manufacturer, and its

Australian parent, were also named as defendants and were alleged

to have been negligent in using ruminant meat and bone meal as a

feed ingredient, notwithstanding the known risk of BSE transmission

associated with such use.1

As against the Government, Justice Lax found that the proposed

class action satisfied all five required elements of the test for

certification.

Justice Lax dealt swiftly with the first prong of the

certification test, finding that the proposed class action

discloses a cause of action. The "plain and obvious" test

used in such a determination is the same test courts use on a Rule

21 motion to strike a claim for failure to disclose a cause of

action. Since the negligence claims against the Government were

previously the subject of a Rule 21 motion, in which both the

Ontario Superior Court and the Court of Appeal refused to strike

those allegations, and the Supreme Court of Canada refused leave to

appeal2. Justice Lax found that the existence of a cause

of action had already...