Renvoi: Lex Situs Conflictus

Canadian Conflict of Laws Blawg by Seva Batkin

Muscutt as part of BC’s CJPTA presumptions?

Posted by Seva on July 8, 2008

It’s a good thing I wasn’t deceived by the headnotes to Stanway v. Wyeth Canada Inc., 2008 BCSC 847; this case is much more than a run-of-the-mill application of s. 10 of the CJPTA. If accepted as an accurate statement of law, this decision may stand for two important propositions. First, “harmonization” and “co-ordination”, such as co-ordination of labelling and safety requirements, between an international parent company and a local, but substantially independent subsidiary may be sufficient to establish RaSC. Second, and I think more important and contentious, the eight Muscutt factors (or at least those that the court chooses to consider) may be used to prove a s. 10 presumption.

First, some background. The plaintiff was suing a number of corporate defendants for manufacturing and distributing drugs that allegedly caused her cancer. The defendants were a number of Canadian corporations who actually manufactured and distributed the drugs, and a US parent corporation, which manufactured and distributed these drugs in the US. The evidence was that Canadian operations were generally independent of the US parent. The plaintiff’s main allegation of connection to Canada focused on labelling – in development of which the US parent was involved and had the final say; testing and safety – for which the US parent acted as the main repository of information; and marketing / promotion – which was developed in collaboration with the US parent. Ultimately, she argued that there was a joint enterprise between the US parent and the Canadian defendants.

The US parent tried to refute these allegations by arguing that outside of globally sharing safety information, the Canadian subsidiary operated on its own, with no formal relationship for marketing or promotion. With respect to labelling, it argued that the Canadian subsidiary was free to depart from the global “core” requirements. Ultimately, it argued that the plaintiff could not connect it to any alleged tort committed in BC, neither independently nor as part of a group enterprise.

The trial judge started by stating that jurisdiction simpliciter, codified by the CJPTA, “still depends on the existence of the common law concept of a real and substantial connection.” She specifically noted that the list of RaSC presumptions in s. 10 includes tort committed and a business carried on in BC. However, she then went on to quote the Muscutt’s often cited position that “it is not possible to reduce the real and substantial connection test to a fixed formula”, but the eight factors elucidated by the court are relevant in assessing whether it should assume jurisdiction. Having said this, and without drawing any further connection between the CJPTA and Muscutt, the trial judge simply went on to apply the first five Muscutt factors to the facts of this case.

The analysis of relative unfairness militated in favour of the individual plaintiff rather than the corporate defendant who was engaged in business that “involves an inherent risk of harm to extra-provincial parties”. The key factor, however, was “the connection between the forum and the defendant”. The trial judge found that harmonization and coordination was sufficient:

However, I find that the plaintiff has met the low onus of establishing that the defendants engage in “harmonization” and “coordination” of matters involving core monograph and labelling requirements, the efficacy of the products, and the collecting and sharing of other clinical research or trial information.  Wyeth Pharmaceuticals’ role of a central repository and coordinator for adverse event reporting for all the Wyeth affiliates worldwide demonstrates a sufficient involvement of the US defendants in promoting the efficacy of the drug and its safety.  In my view litigation in this form and jurisdiction is a foreseeable risk of that activity.

These activities were sufficient to establish RaSC and the trial judge found that the US parent had “failed to rebut the presumption in s. 10 of the CJPTA.

Several things which I find to be important about this judgment.

First and foremost, I remain mystified as to the connection between s. 10 of the CJPTA and Muscutt. Section 10 does not by itself create a general presumption of RaSC, however, its various paragraphs do list certain situations where RaSC is presumed to exist. The court in this case has neither indicated what presumption(s) the defendant has failed to rebut, and thus on what presumption(s) the court ultimately relied, nor how the Muscutt factors could be used to bolster or rebut the s. 10 presumptions in general. In my mind, the two seem inherently incompatible. The RaSC categories in s. 10 narrowly refer to types of proceedings, generally concerning subject matter (injuries, contract, property, etc.) physically located in BC. Muscutt, on the other hand, provides a broad set of factors which go far beyond the factual connection of the dispute to the forum and include broad considerations of the fairness of assuming jurisdiction. The latter considerations are what gives rise to the oft-repeated criticism that Muscutt really sets out the forum non conveniens rather than the jurisdiction simpliciter test. Thus, I simply do not see how the Muscutt factors can be used to either establish or rebut a specific s. 10 presumption

Of course, s. 10 expressly states that it does not “limit[] the right of the plaintiff to prove other circumstances that constitute a real and substantial connection between British Columbia and the facts on which a proceeding is based”. Thus, where the situation does not fall within an enumerated s. 10 presumption, the plaintiff is free to try to prove RaSC on other grounds. In doing so, the Muscutt factors, as persuasive as they have been throughout Canadian jurisdictions, are of course relevant. The key point, however, is that the onus in such situation is on the plaintiff to prove the RaSC rather than on the defendant to rebut its existence! Thus, once again, I cannot see how applying the Muscutt factors can lead to a conclusion that the defendant has failed to rebut a s. 10 presumption.

Somewhat parenthetically, I also note that the trial judge’s approach to the integration of Muscutt and s. 10 is likely informed by her two apparently mutually contradictory statements at the outset of the legal analysis, one apparently conflating jurisdiction simpliciter and forum non conveniens principles, and one noting the difference between the two.

Jurisdiction simpliciter requires the court to determine whether it has jurisdiction and whether it should exercise its discretion to decline jurisdiction. The two issues must be considered sequentially. Jurisdiction simpliciter is a threshold issue, and does not involve any discretionary considerations: Harrington at ¶69 and ¶86.

The second aspect of the decision that I found unusual is that the trial judge has only applied the first five Muscutt factors, without any explanation of why she chose to forgo the rest. What’s especially interesting about the remaining three factors is that they may have suggested that there was no RaSC to BC. Whereas the BC courts would likely recognize a U.S. judgments from a similar suit, there was no proof that a U.S. court would recognize a BC judgment against the US parent. The case was international in nature, which lead to greater caution in assuming jurisdiction. From the perspective of comity, the jurisdictional standards of the U.S. forum were not considered. Given the suggestion that jurisdiction simpliciter “does not involve any discretionary considerations”, it is unusual that such clear discretion was exercised to exclude three of the eight factors that the court has accepted as relevant.

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