Impact of Government Imposed Product Recalls on Class Actions in Canada

Bill C-36 – Act Regarding the Safety of Consumer Products ("Bill C-36")

With Bill C-361, introduced in the House of Commons by the federal Minister of Health, the Honorable Leona Aglukkaq, the Federal government proposes tougher rules and new enforcement tools to foster consumer product safety.

Imposed Product Recalls

Among other means at its disposal, Health Canada will now have the authority to order the recall of hazardous consumer products2. Currently, it is up to the industry to voluntarily recall products as the government can only suggest the withdrawal of products from the market. Bill C-36 will change that by allowing the Minister to order a manufacturer, importer or seller of a commercial product to recall it "if the Minister believes on reasonable grounds that a consumer product is a danger to human health or safety"3.

Impacts on Class Actions

Chances are that the eventual coming into force of Bill C-36 will result in an increase in motions for authorization to institute a class action. The present advisory addresses certain of the issues that may arise if a class action is filed on the heels of a product recall under the new legislation.

Province of Quebec

In Quebec, petitioners will certainly attempt to plead that the Minister's decision to order a recall is sufficient for petitioner to meet the condition provided for in Article 1003b) of the Code of civil procedure ("C.P.C."), namely that there exists a serious color of right that the recourse will succeed. They may argue the existence of a latent / safety defect should be presumed because a recall was ordered by the government.

Furthermore, Petitioners may also wish to argue that a voluntary product recall constitutes an admission of liability on the part of the seller/manufacturer. In some judgments, the Court has concluded that the question as to whether a product recall constitutes or not an admission of the manufacturer's liability is a common question that can be determine by way of a class action4.

However, Courts will not accept to automatically authorize a class action merely because petitioner has alleged a product recall. Indeed, in all cases, the Court must carefully analyze the legal reasoning proposed by the petitioner in order to determine whether the alleged facts justify the conclusions sought.

For example, in Element v. Philipps Avent ("Phillips")5, the authorization of a class action was refused even though Health Canada had recommended a ban on feeding bottles. The Court ruled that the ban had been issued as a preventive measure only. The use of said products did not create a real and imminent danger for babies. The Court reiterates that a mere fear based on a hypothetical and unproven prejudice does not constitute an indemnifiable prejudice under Quebec civil law. The Court concluded that petitioner had not demonstrated a color of right.

Phillips is good law. A product recall should never lead to a presumption of liability. Products are often recalled in order to prevent potential damages to users. Whether the recall is voluntary or imposed does not change this fact. Indeed, s. 31 of the Act allows the Minister to order a recall based on a "reasonable belief" that a product may constitute a threat to safety. It does not require the occurrence of a prejudice or the certainty that one will occur. From a policy perspective, this makes sense. Consumers will be safer if the government is allowed to act on a reasonable belief and if manufacturers are allowed to take preventive action swiftly without the threat of their actions or compliance being construed as an admission of liability.

Moreover, under Quebec civil law, liability does not exist in the absence of damages. A prejudice must be proven in order to obtain compensatory damages. Petitioners have often tried to be compensated for a fear of developing a disease as a result of exposure to a hazardous product. While a future prejudice is compensable under Article 1611(2) Civil Code of Québec, it can only be indemnified if it is certain. As such, Courts have clearly ruled that the mere fear of developing a sickness or an injury after having been exposed to a hazardous product is not sufficient to obtain damages. In other words, the risk of a prejudice does not entitle a claimant to obtain damages:

"[Translation] Under Quebec civil law, an...