Product Liability Newsletter ' December 2022

• Published date: 22 December 2022
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Product Liability & Safety, Class Actions, Dodd-Frank, Consumer Protection Act
• Law Firm: Cassels
• Author: Ms Stefanie Holland, Christopher Horkins, Jeremy Martin, Jessica Kuredjian, Suhuyini Abudulai, Jason M. Holowachuk, Danielle DiPardo, Meghan Rourke and Robert Sniderman

PRODUCT LIABILITY

SIGNIFICANT LEGAL DEVELOPMENTS IN THE PRODUCT LIABILITY INDUSTRY: A REVIEW

This past year gave rise to significant legal developments in the product liability industry. As 2022 comes to a close, the Cassels Product Liability Group has rounded up the top Canadian product liability decisions of the year (with a bonus three decisions from 2021). From measuring the standard of care when dealing with dangerous products to the detrimental prejudice of failing to resolve a civil action in a timely fashion, here are the most notable judgments to help you stay informed of the latest developments:

1. Spring v Goodyear Canada Inc, 2021 ABCA 182
2. Price v Smith & Wesson Corp, 2021 ONSC 1114
3. Maginnis and Magnaye v FCA Canada et al, 2021 ONSC 3897
4. Rebuck v Ford Motor Company, 2022 ONSC 2396
5. Coles v FCA Canada Inc, 2022 ONSC 5575
6. Palmer v Teva Canada Ltd, 2022 ONSC 4690
7. Ding v Prévost, A Division of Volvo Group Canada Inc, 2022 BCSC 215
8. Sidhu v Hiebert, 2022 BCSC 1024
9. Fazal v ABC Corporation, et al, 2022 ONSC 4358

SPRING V GOODYEAR CANADA INC, 2021 ABCA 182

In 2012, Goodyear issued a recall notice for six types of tires manufactured during a 13-week window at one plant. The representative plaintiff, who had been in an accident, received the recall notice but was not eligible for a replacement as his tires were manufactured before the recall period. He commenced the action and applied for certification alleging the defect affected 51 tires at multiple plants and that Goodyear issued an overly narrow recall.

The case management judge certified the action finding that the pleadings disclosed causes of action, including negligence, a breach of the duty to warn and unjust enrichment. The common issue was identified as the existence of a common defect across a larger range of tires than was covered by the recall.

Goodyear appealed the certification order arguing the case management judge erred on three grounds: (1) concluding there was some basis in fact for the existence of a common defect; (2) imposing a reverse onus on Goodyear to disprove the common defect; and (3) failing to require evidence that the issue respecting the common defect could be answered in common with respect to the entire class. The Court of Appeal found that the judge had not reversed the onus but agreed with Goodyear on grounds 1 and 3.

The central issue on appeal was whether there was "some basis in fact" to show the common issue of a defect in the tires. While the recall suggested a defect in some products, it alone was insufficient to show evidence of a manufacturing defect among the wider range of products covered by the class proceeding. The representative plaintiff also failed to produce any evidence that the tread separation on his or other tires resulted from a defect as opposed to normal wear and tear.

The Court of Appeal also found that the allegations of intentional misconduct should not have been certified, emphasizing that the requirement of "some basis in fact" is even more important where intentional misconduct is alleged. Similarly, the Court found that the plaintiff had not shown a viable claim in unjust enrichment, either supporting a claim for restitution or a claim for disgorgement. Exceptional gain-based remedies such as restitution or disgorgement are not available where simple damages can repair the wrong.

The Court of Appeal set aside the certification order.

PRICE V SMITH & WESSON CORP, 2021 ONSC 1114

The representative plaintiffs (two victims and their families of the mass shooting which took place on Danforth Avenue in Toronto) commenced a class action against Smith & Wesson Corp., the manufacturer of the M&P'40 semi-automatic handgun. This handgun is the most common make of stolen handguns in the United States, and was the handgun used in the mass shooting. The representative plaintiffs claimed $150 million in general and punitive damages for negligence relating to the design, manufacturing and/or distribution of the handgun, and strict liability and public nuisance.

Justice Perell heard the first stage of the certification motion alongside Smith & Wesson's Rule 21 motion to strike out the claim on the basis that it failed to disclose a reasonable cause of action.

Justice Perell found that it was plain and obvious that the claims for public nuisance and strict liability could not succeed because a manufacturer of a product cannot be made liable in nuisance for simply distributing its product in the regular course of business because the product is misused by others. The representative plaintiffs' negligent manufacture and distribution claims were technically deficient because no material facts were pleaded.

The representative plaintiffs' design negligence claim, however, met the first stage of the certification test and was allowed to proceed.

In the claim, the representative plaintiffs allege that Smith & Wesson was negligent in failing to design the handgun with practicable safety measures, including "smart gun" or "authorized user" technology, when such technology would mitigate or eliminate harm to innocent third parties caused by unauthorized use. Smart gun technology is technology with features that allow the weapon to only fire when it is activated by an authorized user. Studies show that guns with authorized user technology reduce accidental shootings, neutralize the impact of gun thefts, and prevent criminal use of weapons by unauthorized persons. Although Smith & Wesson previously entered into an agreement with the United States government and undertook to use smart gun technology in new firearm designs, Smith & Wesson never complied with this undertaking.

Smith & Wesson argued that there is no cause of action in negligence because the relationship between a firearms manufacturer and victim of a shooting does not fall within an established category of duty of care relationships. Further, Smith & Wesson argued that the proximate cause of the Danforth Shooting was not its negligence, but the criminal acts of Mr. Hussain.

Justice Perell reviewed the law for product liability claims and noted that the...