Ghost In The Machine – Pure Economic Loss In The Time Of Recalls

Plaintiffs are, in certain circumstances, able to recover pure economic loss caused by the negligent supply of dangerous products from the manufacturers of those products. 1 As long as the defect poses a "real and substantial danger" to persons or property, the plaintiff may recover for lost profits and for the costs of avoiding the danger posed by the defective products.

Generally, however, these product liability cases arise on the supply of the defective products. Is pure economic loss recoverable in the product liability context when a dangerous good is recalled and no longer supplied precisely because it has been identified as dangerous? In other words, is the absence or spectre of the dangerous good enough to ground liability for the manufacturer? In recent decision of the Ontario Superior Court on a motion to certify a class proceeding, fittingly released on Halloween, Justice Leitch opens the door to this possibility.2

Background

In the summer of 2008, an outbreak of listeriosis, a food-borne illness, was reported in Ontario. In early to mid-August, the outbreak was linked to pre-cooked, ready-to-eat deli meats produced and packaged at a Toronto-area Maple Leaf Foods plant. Upon discovering this link, Maple Leaf Foods promptly issued recalls for all products (dating back to January 2008) that had been produced at the implicated plant and took the further precaution of shutting down the plant itself.

Maple Leaf Foods was the exclusive supplier of 14 core deli meat menu items to franchisees of Mr. Submarine Limited ("Mr. Sub"), a franchisor of quick-service restaurants specializing in deli sandwiches. Two of these 14 core menu products were affected by the Maple Leaf Foods recall and plant shutdown. All affected deli meat inventory was promptly retrieved from Mr. Sub franchisee locations and there is no evidence that any of the affected products were actually supplied to customers or that any customers were harmed by such supply. As a result of the plant shutdown, Maple Leaf Foods was not able to provide the two affected core menu products to Mr. Sub franchisees until October 2008.

Certification Motion

Certification proceedings do not involve an assessment of the merits of a claim. So long as a cause of action is made out in the pleadings, and common issues requirements are met, a class proceeding must be certified pursuant to section 5(1) of the Class Proceedings Act, 1992.3

The representative plaintiff sought to certify a class...