Schwoob v Bayer Inc. 2018 ONSC 166
In the recent decision of Schwoob v Bayer Inc. 2018 ONSC 166, the plaintiffs brought a motion for pre-discovery production of 120 million pages of documents in the possession of the foreign U.S. and German affiliates of the defendant Canadian drug manufacturer. The underlying action had been certified as a class action and the productions being sought were previously produced by the affiliated companies in a parallel U.S. class proceeding. The two affiliates were not defendants in the Canadian class action as the plaintiffs had voluntarily discontinued the action against both companies prior to the certification motion. The requested productions were additional to the 400,000 pages already produced by the defendant Canadian drug manufacturer.
Court’s Decision and Analysis
While the Court rejected an order for blanket production of the documents produced in the U.S. proceedings, the Court found an order for limited production appropriate in the circumstances. In doing so, the Court considered both relevance and proportionality. In assessing proportionality, the Court considered the proportionality factors set out in Rule 29.2.03 (1) and (2), which include concerns of undue time, expense, and prejudice to the defendant producing the documents; the interference with the litigation as a whole, and whether the documents sought are readily available from another source. In addition, the Court rejected an “enterprise liability” approach in the discovery process, whereby knowledge by one foreign affiliate is imputed to other affiliate corporations. Instead, the Court adopted a more nuanced approach, espoused by the British Columbia Supreme Court in relation to a discovery refusals motion in a drug product liability class proceeding dealing with cardiovascular defects in unborn infants, allegedly caused by their mother’s use of the drug.1 In that case, similar to the underlying class action, fitness for use was a key issue in the litigation and, in that context, information about the drug’s safety in relation to its intended use stemming from applications for regulatory approval in other jurisdictions was found to be relevant by the Court.
To establish relevance, the plaintiffs in this motion adduced affidavit evidence by the plaintiffs’ co-lead counsel in the U.S. proceeding, stating that the certified common issues in the action were similar to the allegations and issues in the U.S. proceeding. In response, the defendant challenged the plaintiffs’ argument on the basis that relevance in class proceedings is limited to the issues to be certified and not on the basis of similarities with other litigation in foreign jurisdictions. The defendant also challenged relevance on the basis that the productions sought included productions related to three other drugs which were not at issue in the action, along with other productions related to regulatory and marketing issues argued to be irrelevant to the Canadian proceeding. With respect to proportionality, the plaintiffs argued that the process would not be too onerous for the defendant as these documents had already been prepared for production in the U.S. proceeding. However, the defendant raised proportionality concerns in relation to having to review for privilege, relevance, and compliance with German/European privacy laws requiring them to anonymize personal information contained in 49 million pages from the 120 million pages sought.
While the Court found the defense submissions persuasive, the Court agreed with the plaintiffs that the potential inclusion of irrelevant documents in the production order should not shield the defendant from production of relevant documents. Ultimately, the Court held that there are relevant non-privileged documents, in the control of non-Canadian affiliates that ought to be provided to the plaintiffs, and that would otherwise not be produced by the defendant affiliate.
Defence counsel had proposed that the Court wait until after discoveries to deal with unresolved production issues on a further motion. The Court refused that proposal, and instead addressed defence counsel’s proportionality concerns by limiting the production order, and compelling production of non-privileged relevant documents contained only in an exhibit that was prepared for use at trial in relation to the U.S. class proceeding. The exhibit contained about 2,900 pages of documents which represented less than 1 per cent of the documents sought to be produced through a blanket order for production. The Court found that the concern that such productions contained irrelevant documents was diminished given that it was prepared for use at trial. Proportionality concerns were further minimized by the fact that the documents were already organized and packaged in a 136-page index. The Court found that in “many cases,” the description provided some indication of the content of the documents, which ranged from reports relating to clinical studies and post-market surveillance to documents suggesting apparent interactions with regulatory agencies.
Although plaintiffs’ counsel proposed that they review the entirety of the exhibit for relevance, the Court held that this approach would not resolve the need for a prior review by defence counsel for relevance, privilege, and compliance with privacy laws. Therefore, the Court decided to delay the effect of the production order for 90 days to allow counsel for the defendant to review the documents before their production. The order was made without prejudice to either party’s right to bring further motions with respect to document production.
The takeaway from this case for defendants involved in multi-jurisdictional class actions is that care should be taken to consider the extent and nature of productions in the foreign jurisdiction to ensure that productions, which may ultimately be determined to be relevant in the jurisdiction of the action, are carefully scrutinized to address issues of relevance and privacy. Similarly, defendants should also be attuned to the issues for which the documents of the affiliated and subsidiary companies have been produced in the foreign litigation and be prepared to address why the documents in the foreign proceeding are not relevant in the context of the allegations advanced in the local action.