Docket: T-1434-14
Citation:
2015 FC 1134
Ottawa, Ontario, October 8, 2015
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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PHARMASCIENCE
INC.
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Plaintiff
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and
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PFIZER CANADA
INC.
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Defendant
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ORDER AND REASONS
[1]
This is an appeal of an order of a Prothonotary
striking certain paragraphs of the Amended Statement of Claim without leave to
amend. The parties agree, and the court concurs, that such an order raises a
question vital to the final issue and is reviewable on the standard of correctness:
Bayer Healthcare AG v Sandoz Canada Inc, 2007 FC 1068 at para 6.
[2]
For the reasons that follow, this appeal is
allowed, with costs.
[3]
The action is a claim by Pharmascience Inc.
[Pharmascience] under section 8 of the Patented Medicines (Notice of
Compliance) Regulations, SOR/93-133 [PMNOC Regulations], for damages
suffered in being prevented from entering the pregabalin market as a
consequence of Pfizer Canada Inc.’s [Pfizer] unsuccessful prohibition
applications pursuant to section 6 of the PMNOC Regulations: T-556-11
and T-185-13.
[4]
On November 17, Pfizer brought a motion seeking,
among other things, to strike paragraphs 35 and 36 of the Amended Statement of
Claim. Those paragraphs read as follows:
35. Therefore, Pfizer’s invocation of
the PM(NOC) Regulations and its commencement of Prohibition Proceeding
#1 and Prohibition Proceeding #2 have resulted in lost sales to Pharmascience
for the Pharmascience Capsules, the Pharmascience 225 Capsules and other,
non-pregabalin products.
36. In addition, during the Exclusionary
Period and the Second Exclusionary Period, Pharmascience lost its opportunity
for significantly enhancing its reputation for introducing new products on the
market in advance of its competitors, thereby increasing the sale of
Pharmascience’ s products. As a result of this lost opportunity, Pharmascience
was prevented from obtaining increased sales and market share for its
non-pregabalin products.
[5]
Pfizer’s motion to strike came before the
Prothonotary on January 29, 2015, and he issued his Order on March 27, 2015.
Although the Prothonotary addressed Pfizer’s request to strike paragraphs 35
and 36 of the Amended Statement of Claim insofar as they related to lost sales
of other products, those paragraphs were not mentioned in the formal Order. On
April 27, 2015, pursuant to Rule 397 of the Federal Courts Rules, the
omission was corrected and an Order issued that “the
allegations in the amended Statement of claim relating to lost sales of other
products in paragraphs 35 and 36 are struck.”
[6]
The test for striking a pleading places a high
burden on the party who submits that the claim is without merit. It must be
plain and obvious that the claim sought to be struck discloses no reasonable
cause of action. The Supreme Court of Canada has said that “if there is a chance that the plaintiff might succeed, then
the plaintiff should not be ‘driven from the judgment seat’:” Hunt v
T&N plc, [1990] 2 S.C.R. 959 at para 36.
[7]
Before the Prothonotary, Pfizer relied on and
cited paragraph 59 of Eli Lilly Canada Inc v Novopharm Limited, 2013 FC
677 [Eli Lilly], in which a Prothonotary refused to grant Teva Canada Limited,
the Defendant/Plaintiff by Counterclaim, leave to amend its Statement of
Defence and Counterclaim after the first phase of a bifurcated action had been
heard and determined in its favour, but before the start of discoveries on the
second phase of the action.
[8]
In the decision under appeal, the Prothonotary
quoted, with favour, large parts of this paragraph, stating:
As was noted by my colleague, Madam Prothonotary
Mireille Tabib in Eli Lilly Canada Inc. v. Novopharm Limited, 2013 FC
677 at para. 59:
[59] The proposed new pleadings
specifically seek compensation for losses suffered by Teva in the section 8
period relating to other products and to its overall market share, losses which
the jurisprudence recognizes as potentially recoverable in a section 8
proceeding (Teva Canada Limited v. Janssen Ortho Inc., 2010 FC 329).
Lilly’s objection to these proposed amendments, with which I agree, is based on
the lack of any particulars as to the other products in relation to which such
losses are claimed or the customers in relation to which Teva’s inability to
offer olanzapine has negatively affected negotiations. Absent such
particulars, Lilly’s defence can only be the vaguest denial. At this point of
the proceedings, where the sole issues for discovery and trial concern the
quantum of the damages, and where all of the relevant facts are, on the face of
the record, within the peculiar knowledge of Teva, allowing amendments that go
only to introducing vague an open-ended heads of damages is not in the interest
of justice. It would only invite a motion for particulars, and absent such
particulars, the scope and subject matter of discoveries cannot adequately be
defined and will likely result in protracted and inefficient discoveries.
Teva’s original pleadings already very generally state a claim for “loss
(including lost sales and market share (...))”. Allowing Teva to amend these
pleadings to specify that this general loss includes losses relating to other
products would serve no useful purpose unless the amendments provide
particulars of the other products at issue and of the material facts upon which
losses of sales or market share in relation to these other products were
suffered in the relevant period and can be attributed to Teva’s inability to
market olanzapine in that period.
In my view these observations apply equally
here. Thus, those three components of lost market share are struck.
[9]
With the greatest of respect, in my view, the
Prothonotary here erred in relying so strongly on this jurisprudence. Eli
Lilly involved an attempt to amend a pleading after liability had been
determined but before the second phase of the trial dealing with quantifying
loss had been commenced. The court observed that “the
question arises as to whether any amendments proposed by Teva that can be said
to go to liability issues rather than to quantification issues should be viewed
as amendments made after trial but before judgment, rather than amendments made
before trial, and to what extent such a distinction should affect the court’s
determination on this motion.” It was held that all amendments going to
liability issues should be considered as amendments made after trial and should
be refused. Importantly for the decision here under appeal, the court also
stated that “because it is impossible for the court to
separate, in many of the proposed amendments, those parts that impermissibly go
to liability issues and those that go to quantification issues, and because
those amendments that could be allowed are insufficiently particularized,
Teva’s proposed pleading cannot be allowed as currently drafted.”
[10]
However, the court granted Teva leave to amend
its claims for losses to the extent that they did not go to an liability issue
and provided they were particularized:
Teva cannot amend its pleadings to reopen,
in any way, the liability phase of the trial that has been held in this matter,
including to allege new causes of action. It may amend to add particulars as
to the losses alleged to have been suffered as a result of the prohibition
proceedings in T-1532-05, but only in the period between February 9, 2006 and
June 6, 2007, as originally pleaded, and only if it provides the particulars of
those losses and sufficient material facts to support the conclusion that the
losses were suffered in the relevant period and are attributable to the
prohibition proceedings. Where Teva intends to plead facts that may be
relevant to the assessment of the amount of those losses, it should provide
sufficient particulars as to the causal relationship between those facts and
the amounts claimed. As presently drafted, the proposed amended pleadings do
not meet these requirements and cannot be filed.
[11]
In the matter under appeal, there is no question
of amending pleadings to affect any earlier stage of the trial. Moreover, the
proposed amendments in Eli Lilly concerned the court because their lack
of particularity could result in inefficient discoveries and further court
proceedings. While that may be a relevant consideration for a court
considering a motion seeking leave to amend, it is not relevant when
considering a motion to strike. The only relevant consideration is whether it
is plain and obvious that the party pleading cannot succeed in the matter
pleaded. Both the Prothonotary whose Order is under appeal and the
Prothonotary in Eli Lilly recognize that losses suffered during the
section 8 period relating to other products and to overall market share, are
losses which the jurisprudence recognizes as potentially recoverable in a
section 8 proceeding. Therefore, Pharmascience’s claim for such losses ought
not to be struck.
[12]
If Pfizer was of the view that it required
additional particulars in order to plead to the impugned paragraphs, then its
course of action should have been to seek them from Pharmascience and, failing
a response, to bring a motion. It must be observed, however, that Pfizer has
had no difficulty pleading to such allegations in the past. Pharmascience
brought to the court’s attention the pleadings in Court File T-1496-13 Teva
Canada Limited v Pfizer Canada Inc, which is also a section 8 proceeding
relating to pregabalin. That action was not put to the Prothonotary whose
Order is under appeal.
[13]
In its Amended Statement of Claim in T-1496-13,
dated May 12, 2014, the Teva claims compensation on “loss
of sales on other products.” In paragraphs 36 and 37, it pleads as
follows:
36. By having been prevented from
selling pregabalin capsules during the Relevant Period, Teva was denied the
opportunity to significantly enhance its reputation for the introduction of new
products in advance of its competitors. But for the delay caused by Pfizer’s
commencement of the Prohibition Applications, Teva would have been the first to
Generic market with pregabalin capsules and would have had a substantial period
of exclusivity, allowing it to gain the majority of the generic market over
time and realize very significant profits as a result. This would have increased
the value of Teva’s business, and would have assisted Teva in leveraging the
sales and profits of other products.
37. The interrelated sales of various
products to Teva’s customers is such that Teva lost sales of other products and
was required to increase customer allowances on other products, neither of
which would have occurred but for Pfizer’s listing of the Patents and
commencement of the Prohibition Applications. This has caused loss and damages
to Teva Canada.
[14]
While not identical to the pleading
Pfizer impugned here, they are similar in nature in that they plead a loss of
sales on other products and are arguably quite general in nature. Pfizer was
able to plead to these allegations in T-1496-13. In paragraph 55 of its Fresh
as Amended Statement of Defence dated November 24, 2014, at para 55(b), it “denies that Teva suffered the losses claimed at paragraphs
36 and 37 of the Amended Statement of Claim which losses are, in any event, not
recoverable in law, speculative, and not casually connected to Pfizer’s
commencement of the ratiopharm Application or the Novopharm Application.”
[15]
I agree with Pfizer that a failure to challenge
the pleading in T-1496-13 is not a bar to its challenge here. However, it does
stand as evidence that it was able to respond to a general pleading of a loss
of sales on other products.
[16]
For these reasons, the appeal is allowed and the
Order of the Prothonotary dated April 27, 2015 is set aside. Pharmascience is
entitled to its costs of this appeal based on the mid-column of Tariff B, but
not, as its sought, its costs on the motion below, in which it was only partly
successful.
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