Canadian Lawyer InHouse

19 CANADIANLAWYERMAG.COM/INHOUSE MAY 2015 heard that a standard 591 ml bottle contains 32 grams of sugar, or about eight teaspoons. The action was aimed at all sales of the product since June 2008. By 2012, drinks such as Vitaminwater were now classifi ed by Health Canada as food, rather than natural health products. As a result, until 2012, the number of grams of sugar did not need to be specifi ed. Instead, the term "cane sugar" without any numerical data, was listed under "non medicinal ingredients," in compliance with the natural health products rules. Vitaminwater argued there was never any deception, since cane sugar was listed as the second ingredient and the calorie totals were also listed on bottles. As well, when compared to the standard 355 ml size for a can of pop, Vitaminwater contained slightly less sugar. Whether something is "healthy" cannot be determined objectively without looking at the characteristics of a specifi c individual, it maintained. Verhoeven agreed, as far as he was able to determine whether there could be com- mon damages for the purposes of a class ac- tion. The argument that all consumers were tricked into paying a "premium price" for the product was rejected. "The proposed class would include individuals who did not rely on any of the representations set out in the plaintiff's claims, who purchased Vitaminwater for reasons that have no connection to the plaintiff's claims, and who would have purchased it in any event," he wrote. Lawrence Theall, a Toronto lawyer and co- author of a legal text on product liability in Canada, says he thinks that proposed class actions, such as the Vitaminwater case, are less likely to succeed in our courts. "If there is a serious outbreak or a product recall, you are going to have a class action every time," says Theall, a partner at Theall Group LLP. But in cases such as Vitaminwater, where a marketing campaign may convince a consumer to choose one product over another, "what are the damages that you suffer?" asks Theall. "My view is that the courts [in Canada] are tending to see some of these actions as nuisance suits." At the same time, he urges companies to review carefully how a product is described In the heat of the moment, is taking responsibility right out of the gate the right approach? BY SHANNON KARI T he more traditional risk of litigation in the area of food products is when something has gone wrong and could result in a health risk to consumers. If there is a widespread recall and any evidence of harm to customers, a class action is almost inevitable and there is signifi cant risk to the company's reputation and its share price. Perhaps the most high profi le example in Canada in recent years was the listeria outbreak in 2008 linked to ready-to-eat foods produced at a Maple Leaf Foods Inc. plant in Ontario. By the end of that year, 20 deaths across fi ve provinces were traced to listeriosis, according to Health Canada. The response by Maple Leaf chief executive Michael McCain was immediate. He apologized to consumers, accepted responsibility, and took action to ensure it never happened again. "This isn't about money, it is about public health," McCain said at an August 2008 news conference. "The last people I am listening to are lawyers and accountants." Within months, the company agreed to pay out up to $27 million in a class action settlement. The company's response and McCain's actions were universally praised. Maple Leaf's reputation in the eyes of the public was not permanently damaged and its share price has climbed steadily and is now three times its value at the time of the listeria outbreak, nearly seven years ago. However, what hasn't changed is the normal corporate response to a product recall. McCain continues to be part of a small club of chief executives who have issued such a public apology. Elizabeth Bowker, co-counsel for Maple Leaf in the class action proceeding, notes that it may be the quickest settlement ever reached in this type of action. The company's response "is still looked at as the gold standard in crisis management," says Bowker, a partner at Stieber Berlach LLP in Toronto. Still, she is not surprised corporate apologies remain an unusual event, because the best response in each situation is fact specifi c. "Once there is any admission of liability, you can't get it back," says Bowker. When advising clients on how to respond after a company has to deal with a problem such as a product recall, "lawyers are cautious and rightfully so," she says. A company's business and litigation strategies may not always be the same, depending on the circumstances. "Ideally they mesh, but that is not always the case," says Bowker. When there is bad news about a company's products in the media, Craig Lockwood, of Osler Hoskin & Harcourt LLP, says it is not uncommon for executives to want to provide an explanation. "The question is, what do you say publicly?" The often-invoked reason that a "matter is before the courts," for not providing any comment, is understandable. "From a purely legal perspective, nothing you say publicly is likely to assist your defence," says Lockwood. Once there is any admission of liability, you can't get it back. ELIZABETH BOWKER, Stieber Berlach LLP '' ''

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