No Loss, No Negligence: Ontario Court of Appeal Reaffirms that Compensable Loss Remains an Essential Component to Recovery in Negligence

  • June 13, 2024
  • Pavel Sergeyev

Plaintiffs in pharmaceutical class actions typically seek compensation for physical injuries resulting from their ingestion of drug products that are alleged to have been negligently designed and/or manufactured. However, in Palmer v. Teva Canada Limited, 2022 ONSC 4690, aff’d 2024 ONCA 220 (“Palmer”) the Court of Appeal for Ontario recently reaffirmed that the need to plead and prove concrete injury remains an “essential component to recovery” in negligence and that product liability claims cannot generally be sustained based solely on: (a) the potential increased risk of future harm; (b) bare allegations of psychological harm; and/or (c) pure economic losses, such as out-of-pocket costs for medical services and monitoring.[1]

A summary of the Palmer decision and a discussion regarding its implications follows.

Background

The plaintiffs commenced a proposed class action against a group of pharmaceutical drug manufacturers, alleging that the defendants had negligently manufactured certain lots of the anti-hypertension drug valsartan, resulting in certain shipments being contaminated with trace amounts of carcinogens. The core of the plaintiffs’ action was a negligence claim[2] alleging that “the defendants breached their duty of care to the plaintiffs by failing to ensure that the valsartan they produced was free of the contaminants”.[3] However, the plaintiffs did not allege that they or anyone else had been diagnosed with cancer or had otherwise been physically injured as a result of having ingested valsartan. Instead, they sought damages for the following:

  1. “genotoxic injuries”, i.e., changes to their “internal bodily composition at a cellular or molecular level" that resulted in an increased risk of being diagnosed with cancer in the future;[4] 
  2. psychological injuries arising from the “shock and serious and prolonged anxiety, mental distress and worry from fear that consuming the contaminated valsartan has led, or will lead, to adverse health effects at some point in the future”;[5] and
  3. pure economic losses, such as the subrogated costs for medical screening and monitoring to provide early detection of any adverse health effects caused by ingesting valsartan.[6]