Class Action Settlement: Are You Protected From Future Claims In Overlapping Class Actions?

• Published date: 07 February 2022
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions
• Law Firm: McCarthy Tétrault LLP
• Author: Canadian Class Actions Monitor, Cassidy Bishop and Kara L. Smyth

Like most corporate commercial litigation, class actions are settled more often than not. Court-approved settlements bind every class member who has not opted out of the proceeding. So what happens when, following settlement, a class member purports to bring a new action concerning the subject matter of the class proceeding? Is the defendant able to quickly and easily put an end to the new action?

Maybe. The Saskatchewan Court of Appeal dealt with those issues in Nelson v Teva Canada Limited, 2021 SKCA 171. The decision serves as a cautionary tale for defendants who believe they are protected by a class action settlement agreement and highlights the importance of release language when there are existing or potential overlapping class actions.

Background

In 2011, a class proceeding concerning the drug "Mirapex" was certified in Ontario: Schick v. Boehringer Ingelheim (Canada) Ltd., 2011 ONSC 1942. The class in Schick was all persons resident in Canada (excluding Quebec) who were prescribed and ingested "Mirapex (generic name: Pramipexole dihydrochloride)" ('30). The representative plaintiff alleged that Mirapex caused compulsive behaviour, such as gambling, eating, and shopping, and that the defendant originator manufacturer was liable. In 2015, Schick settled. Key settlement terms included

• a release of claims against the named defendant'the originator manufacturer; and
• a prohibition from "instituting, continuing, maintaining or asserting, either directly or indirectly, whether in Canada or elsewhere, on their own behalf or on behalf of any class or any other person, any action, suit, cause of action, claim or demand against any Releasee or any other person, corporation or legal entity who may claim contribution or indemnity, or other claims of relief over from any Releasee in respect of any matter related to the Released Claims."

However, the release and bar order did not specifically name generic producers and distributors of the drug as beneficiaries of the settlement.

Meanwhile in 2014, a new proposed class action concerning Mirapex was commenced by Jo-Anne Nelson and Randall Ulrich in Saskatchewan. Nelson initially named the originator manufacturer as a defendant, but the suit against the originator manufacturer was discontinued, leaving only the drug's generic producers and distributors as defendants.

The Decision Below

The generic producers and distributors in Nelson brought a motion to strike the action because the two named representative...