Update (June 25, 2024): Bill 12 was not enacted before the British Columbia Legislative Assembly ended its scheduled sittings for 2024. With a provincial election set for October and no further legislative sitting days scheduled, Bill 12 will likely die on the order paper. Before the legislature adjourned, the government placed Bill 12 on hold while convening an online safety action table. It is unclear if a successor to Bill 12 or other cost recovery legislation will be on the legislative agenda in 2025. But British Columbia’s efforts to sue industry in cost-recovery type claims continue without Bill 12. On June 23, 2024, British Columbia filed a proposed national class action on behalf of Canadian governments against manufacturers of perfluoroalkyl and polyfluoroalkyl substances (PFAS), sometimes referred to as “forever chemicals”.
The government of British Columbia has announced its ambition to sue a wide range of companies—including social media operators, vaping product manufacturers, and makers of energy drinks—for costs incurred addressing the alleged public health effects of their alleged mass torts. The government has introduced sweeping cost recovery legislation to that end: the Public Health Accountability and Cost Recovery Act (also known as Bill 12).
More than any other firm in Canada, McCarthy Tétrault LLP is a leader in defending companies sued under this sort of cost recovery legislation.
In 1997, British Columbia was the first province in Canada to enact legislation designed to facilitate aggregated claims to recover past and anticipated future costs incurred due to cigarette smoking. All other provinces followed suit over the years that followed. For decades, McCarthy Tétrault has defended Philip Morris International, its Canadian affiliate, and Altria in the provinces’ claims.
In 2018, British Columbia enacted very similar legislation to target the pharmaceutical industry and the alleged mis-marketing of opioid medicines. Other provinces again followed suit. McCarthy Tétrault was retained by Endo Pharmaceuticals and its Canadian affiliate and separately by Abbott Laboratories to defend the provinces’ claims.
The main effect of the legislation is to give the government the right to sue to recover costs caused or contributed to by a breach of a common law, equitable, or statutory duty or obligation owed to persons in the province. Once the government proves a breach of duty, it gets the benefit of significant presumptions and other advantages on the issues of causation and damages. The legislation operates retroactively without limit, erases limitation periods, nullifies existing settlement agreements, blocks discovery by defendants, permits the use of statistical evidence including sampling, and imposes liability based on market share.
Despite the corporate veil, the legislation also imposes liability on foreign parent and operating companies that concerted in any wrongful conduct with their Canadian affiliates. The legislation also creates liability for directors and officers who did not exercise reasonable diligence.
The new Bill 12 follows the existing model while widening the net of potential defendants, adding to the procedural and substantive advantages enjoyed by the government, and growing the scope of costs that the government can claim. A more detailed description of Bill 12 can be found here.
Provincial cost recovery litigation is enterprise-threatening. Defending it is a significant and costly undertaking. McCarthy Tétrault has a long track record of developing and implementing highly innovative and aggressive defences in this type of litigation, for some of the world’s most sophisticated litigants. More generally, we have vast expertise defending complex product liability and mass and toxic tort litigation across Canada.
If you face or are concerned about potential litigation under British Columbia’s new legislation, we would be glad to discuss potential defence strategies with you.
