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Canadian Class Actions Monitor

Quebec Superior Court Grants a Defendant Pre-Trial Discovery of Six Class Members

Posted in Class Actions
Vincent Boutet-Lehouillier

In Martel v. Kia Canada inc., 2017 QCCS 976, the Quebec Superior Court (Justice Chantal Tremblay) ruled on a motion by the defendant to examine class members. The motion was filed by Kia shortly after class counsel stated that they would call six previously unannounced witnesses at trial, all class members. The Court agreed that Kia should be able to examine all six class members on discovery before the case could be set down for trial and clarified the applicable test for pre-trial examinations of class members.

Background

A class action was authorized (certified) against Kia on June 12, 2015 by the Quebec Court of Appeal (reversing the Superior Court). Among the common questions identified by the Quebec Court of Appeal were whether the information regarding maintenance frequency found in the owners’ manuals was false and, if so, whether this was a “false or misleading representation to a consumer” within the meaning of Quebec’s Consumer Protection Act. The petitioner sought to have the sums allegedly paid in excess for additional maintenance be reimbursed. Continue Reading

Plaintiffs Lack Standing to Bring Representative Action to Claim Aboriginal Rights

Posted in Class Actions
Timothy Froese

The British Columbia Supreme Court recently refused to allow the Chief and Council of the Hwlitsum First Nation (“HFN”) to advance a representative action to claim Aboriginal title and rights on behalf of a historic rights-bearing community. In Hwlitsum First Nation v Canada (Attorney General), 2017 BCSC 475, Justice Abrioux held that the representative action could not proceed because the class or collective for whom the representative plaintiffs purported to act was not capable of clear and objective definition.

As we previously noted in the Canadian Class Actions Monitor’s commentary on Araya v Nevsun Resources Ltd, 2016 BCSC 1856, British Columbia does not have a common law class action. Rather, the Class Proceedings Act, RSBC 1996, c 50 (“CPA”), sets up a comprehensive code for class actions in British Columbia. Representative proceedings under Rule 20-3 of the British Columbia Supreme Court Civil Rules are limited to actions in which the plaintiffs allege a common right or seek a common remedy.  One example, noted in Nevsun, is where plaintiffs allege collective rights, such as Aboriginal rights or title.

Background

HFN, as represented by its Chief and Council, commenced an action on behalf of itself and its members seeking declarations of Aboriginal title and rights and compensation. HFN claimed to be the continuation of or successor to the Lamalcha Tribe, and specifically to be comprised of descendants of a prominent historical member of the Lamalcha, Si’nuscutun.  The defendants included the Attorney General of Canada (“Canada”), the City of Vancouver and several First Nations.

HFN had previously applied to the Minister of Indian Affairs and Northern Development to be formed as a new band under s.17(1)(b) of the Indian Act, RSC 1985, c I-15.  At the time of the hearing, that application was being held in abeyance by Aboriginal Affairs and Northern Development Canada.

The Standing Application

HFN claimed Aboriginal title and rights, which are collective rights that must be brought on behalf of an identifiable group that is capable of advancing a claim under s.35 of the Constitution Act, 1982.

Canada, supported by the other defendants, brought an application that challenged HFN’s standing to advance the claim as a representative proceeding under Rule 20-3.

The plaintiffs argued that their standing to bring the representative action was a question of mixed fact and law that should be decided at trial. However, Justice Abrioux applied the reasoning in Campbell v British Columbia (Forest and Range), 2011 BCSC 448, affirmed 2012 BCCA 274, and found that it was appropriate to hear the issue of standing as a preliminary matter.

As in his earlier decision in Nevsun, Justice Abrioux held that British Columbia does not have common law class actions, but has both class proceedings under the CPA and representative proceedings under Rule 20-3.  Furthermore, while representative actions under Rule 20-3 typically use the 3-part test for representative proceedings set out in Hayes v British Columbia Television Broadcasting Systems Ltd (1990), 46 BCLR (2d) 339 (CA), in the case of aboriginal claims, the 4-part test from Western Canadian Shopping Centres v Dutton, 2001 SCC 46, is used:

  1. whether the collective rights-bearers on behalf of whom they purport to act is capable of clear definition;
  2. whether there are issues of law or fact common to all members of the collective so defined;
  3. whether success on the petition means success for the whole collective so defined; and
  4. whether the proposed representatives adequately represents the interests of the collective.

HFN’s principal claims were based on collective rights that could not be advanced by individuals, and a successful challenge to the representative plaintiffs’ standing would “drive the plaintiffs from the judgment seat.” Because of this, Canada was required to establish that it was plain and obvious that the representative plaintiffs did not have standing to advance the collective claims.

The Standing Application Decision

Justice Abrioux applied the Western Canadian Shopping Centres test, and found that the plaintiffs failed to meet the critical first step because the proposed class or collective could not be determined by objective criteria. HFN members could not be identified objectively, including for the following reasons:

  • There was an inherent conflict in the proposed class definition, as the plaintiffs asserted in the Notice of Civil Claim that HFN was synonymous with the Lamalcha, but proposed a class definition that excluded Lamalcha who were not descended from Si’nuscutun.
  • Ancestry alone is not sufficient to establish that a modern collective has a claim to the rights of a historic group.
  • Some members of the proposed class were members of other bands, and may not support HFN’s objectives.
  • There was no evidence of any agreement authorizing the plaintiffs to represent the Lamalcha Tribe.

Significantly, membership in the HFN could not be objectively determined because it could depend entirely upon the exercise of discretion of the Chief and Council:

“With respect, the HFN’s alleged objective criteria for membership are more akin to those of a private members’ club where selection is dependent on the board of directors’ ultimate discretion, rather than on proving membership in a recognized collective with the standing to advance a claim for s.35 rights and remedies.”

As a result, it was plain and obvious that the claim for Aboriginal title and rights could not proceed as a representative action, and was bound to fail. The individual claims of some of the plaintiffs, which were based on discrimination and violations of individual s.2 and s.15 Charter rights, were permitted to proceed following amendments to the Notice of Civil Claim.

Implications

Although the representative action can be suited for actions on behalf of a group claiming collective rights such as Aboriginal title, the first hurdle is establishing that such a group exists and can be defined through objective criteria. This case is an example in which the failure to properly define the collective resulted in the loss of the ability to advance an action to claim those collective rights.

The Often Forgotten Tool: The Decertification Motion

Posted in Class Actions
Brandon Mattalo

It is tempting for lawyers to look at their cases as moving in a straight line, with each phase building towards the next. However, as class proceedings progress, new facts or circumstances may arise that undermine the issues for which the proceeding was certified for in the first place. In such circumstances, Defendant’s counsel should take a step back to analyze whether a motion for decertification is potentially appropriate.

Plaunt: An example of a recent decertification motion

This is exactly what happened in Plaunt v. Renfew Power Generation Inc.[1] In Plaunt, a class of approximately 450 individuals in Ontario who owned property surrounding Round Lake had their action certified against Renfrew Power Generation (“RPG”). The class claimed damages in trespass for water that allegedly encroached on their property. They alleged that the water damage was caused by the operation of the Tramore Dam, owned by the defendant RPG. Continue Reading

Can a conventional action be “converted” into a class action in BC?

Posted in Class Actions
Alexandra Cocks

The answer is yes. On April 6, 2017, in a novel case, the British Columbia Supreme Court held that a conventional or individual action can be converted into a class proceeding by amending the claim to invoke the provisions of the British Columbia Class Proceedings Act.[1] Such orders are discretionary. While the issue is novel in B.C., amendments converting an action to a class proceeding had been permitted in Ontario[2] and Saskatchewan.[3] The case is significant for defendants in litigation who may think they are not at risk for being the target of a class proceeding if an individual claim (or claims) on the same issue has already been commenced.

The dispute between the parties arose from the termination of a casino operation services agreement. Specifically, the plaintiff alleged that the defendant continued to withhold revenues owing to the plaintiff. Continue Reading

Class counsel fees in settlement agreements: the Quebec Superior Court refuses to rubber stamp

Posted in Class Actions
Louis Fouquet

On January 23, 2017 Justice Claudine Roy of the Quebec Superior Court rendered an important decision whereby she refused to approve settlement agreements reached in parallel class actions against financial institutions on the basis that the fees claimed by class counsel, as part of the settlement agreements, were exaggerated. It provides a useful reminder that settlement agreements in class action contexts are not rubber stamped and Courts in Quebec will look carefully at the proportionality of class counsel fees before approving settlements.

This decision was rendered in the context of four parallel class actions, each instituted by Option Consommateurs, against a combination of all major financial institutions in Canada. All four class actions related to alleged infractions to the Consumer Protection Act related to the disclosure and notice of various credit fees, instituted at the same time as the Marcotte and Adams class actions. The class actions were authorized between 2006 and 2007 and different settlement agreements were reached between the parties and already approved by the Court. In this particular situation, five separate agreements were entered into between Options Consommateurs and some of the remaining financial institutions. The parties sought approval from the Court of these settlement agreements. Continue Reading

Flooding Damage Class Action in Manitoba: The Court of Appeal Comments on Common Issues and Preferability in Anderson v Manitoba

Posted in Class Actions
Theodore Stathakos

In Anderson v Manitoba,[1] the Manitoba Court of Appeal overturned a decision that had denied class certification of a nuisance claim on the basis that some of the claims did not contain common issues and that a class proceeding was not the preferable procedure.  In so doing, the Court of Appeal provided guidance regarding the application of the common issues test in nuisance claims, and confirmed the importance of access to justice as a factor in certifying a class action.

Background

The representative plaintiffs in Anderson are members of four First Nations in Manitoba that were affected by flooding in 2011. They allege that the Government of Manitoba’s improper operation of a dam and certain other water control structures diverted excess water onto their lands causing extensive property damage and requiring many to be evacuated from their homes. The plaintiffs framed their claims against Manitoba in nuisance, negligence, breach of treaty rights and breach of fiduciary duty. Continue Reading

Individual Issues Overwhelm Common Issues in a Nuisance Claim

Posted in Class Actions
Patrick Williams

In Baker v. Rendle, 2017 BCCA 72, the British Columbia Court of Appeal upheld the lower court’s decision denying class certification of a nuisance claim. The Court found that a class proceeding was not a preferable procedure because resolving the proposed common issues would not have significantly advanced the action. The Court’s analysis is specific to claims in nuisance, but suggests that nuisance claims are not suitable for certification unless the defendant’s conduct has a near-uniform impact on the class members.

The Rendles obtained a permit to operate a composting business on their farm and thereafter began to import and compost food waste from the surrounding area. Complaints related to the noise and odours generated by the composting operation soon followed. Mr. Baker, who resides on land adjacent to the farm, brought a claim for nuisance. He sought certification as a class proceeding on behalf of other residents in the area. Continue Reading

Uncertain Implications for Global Class Certification: The Ontario Court of Appeal’s Decision in Excalibur Special Opportunities

Posted in Class Actions
Paul DavisBrandon Mattalo

In December 2016, the Ontario Court of Appeal had an opportunity to clarify the requirements for certifying a global class in Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP.[1] In a series of decisions over three levels of court, Ontario judges adopted shifting analyses of the global class issue, and a majority of the Court of Appeal appears to have further complicated the law on this issue by using language which suggests that it applied the conventional test for assumed jurisdiction over an individual action to the separate issue of whether to certify a global class. With a strong dissent, the law is ripe for further development in the future.

American Investors Rely on a Canadian Audit Report about a Chinese Hog Farm

Excalibur Special Opportunities LP (“Excalibur”), a Toronto-based partnership, was one of fifty seven investors in a Nevada corporation that owned and operated hog farms in China. In addition to Excalibur, only one other investor was based in Canada (in British Columbia). The vast majority (50 of 57) of the investors were based in the United States. Excalibur and the other investors allegedly relied on an audit report prepared by a Toronto and Montreal-based accounting firm, Schwarts Levitsky Feldman LLP (“SLF”), when deciding to invest. Continue Reading

A Most Dysfunctional Application

Posted in Class Actions
Alexandre Mireault

The recent decision Baratto v. Merck Canada Inc. presents a rare occasion where the Superior Court of Québec refuses permission to institute a class action lawsuit. The plaintiff, who suffered from depression and erectile dysfunction, claimed his problems were caused by medication produced by the defendant. Based on the Court’s analysis of the facts, the plaintiff could not properly advance the rights of the class he sought to represent, which the Court characterised as poorly defined. The Court also considered the plaintiff’s medical history, which was riddled with alternative possible causes of his problems, and determined that the plaintiff’s claims could not justify the conclusions sought.

Merck developed, produced, sold and distributed two pharmaceutical products targeted by the proposed class action. Propecia was prescribed for the treatment of balding; Proscar was prescribed for the treatment of enlarged prostates and the prevention of urological problems. Both products contain Finasteride, an inhibitor of enzymes.

In October of 2008, Baratto, then 25 years old, received a prescription for Proscar in order to treat his baldness; he claimed to have taken 1.25 mg per day, equivalent to a quarter of a tablet, though he never took Propecia. After a month, Baratto stopped the treatment and self‑diagnosed as suffering from depression and erectile dysfunction. Seeking the cause of his problems, Baratto stumbled upon a website which linked Finasteride to depression and erectile dysfunction. Relying on the conclusions presented on the website, Baratto claimed that the secondary side effects of Finasteride resulted in his psychological and sexual problems.

Baratto sought authorisation to institute a class action for all persons residing in Québec to whom the products Propecia and/or Proscar were prescribed prior to November 18, 2011, and who had taken said products for the treatment of baldness. Baratto claimed that Merck did not adequately advise the proposed class members of the health risks associated with the use of medication containing Finasteride. He pled that Merck should have known the risks associated with the products, but failed in its obligation to undertake adequate clinical tests.

The Court qualified the alleged faults as purely hypothetical. The Court stated that, in spite of the low bar at the authorisation stage, it nonetheless had a responsibility to proceed beyond a superficial analysis of the facts. Particularly, the Court said it could not ignore the uncontradicted evidence relating to the plaintiff’s medical history. While taking Proscar, Baratto had also begun taking Prednisone, a medication known to cause erectile dysfunction. The Court also noted Baratto’s existing psychological problems related to his baldness and stress in his personal and professional life.

The Court concluded that the action sought by Baratto did not satisfy the first criteria required to institute the class action lawsuit, i.e. similarity. An analysis of the evidence of the proposed members of the class could only be done on an individual basis. As a result of the numerous potential causes of depression and erectile dysfunction, the class action would have transformed the Court into an inquest, with facts varying from member to member; the proposed class action therefore would be ill-suited to advance the rights of the members of the class proposed.

Furthermore, the group as defined was both too large and not sufficiently related to Baratto’s own personal case. Baratto had done too little to qualify the group in light of a prejudice suffered, particularly as it was not limited to those, like Baratto, who suffered from depression or erectile dysfunction. The Court refused to redefine the group of its own accord.

The Court also concluded that Baratto failed to show that the facts alleged justified the conclusion sought. The Court declared dubious the proposed causal relation between Merck’s alleged fault and damages purportedly suffered by Baratto. Not only had Baratto never taken Propecia, he also took Proscar in smaller doses that had been suggested by Merck and for reasons other than those for which the product had been conceived. Finally, as a result of the absence of a professional diagnosis of erectile dysfunction, and in light of the numerous potential psychological and medical causes present in the plaintiff’s file, the Court refused to link Baratto’s problems to Propecia or Proscar.

Baratto appealed the Superior Court decision on January 20, 2017; we will monitor the case and keep you posted on the Court of Appeal’s decision.

On Limitations: Alberta Court Reiterates Importance of Reasonable Diligence to Identify Defendants in Class Proceedings

Posted in Class Actions
Michael Shahinian

In Condominium Corporation No 0610078 v Pointe of View Condominiums (Prestwick) Inc (“Condo Corp 0610078”), the Alberta Court of Queen’s Bench (“ABQB”) considered the extent to which a party that suffered damage is required to identify the parties responsible for that damage for the purpose of triggering the commencement of the limitation period in the context of a certified class proceeding.[1]

Background

The representative plaintiffs in Condo Corp 0610078 brought an application to amend their claim to add certain defendants. The certified class action claims $2.7 million in damages for the cost of repairs and remediation resulting from a condominium’s construction deficiencies. Continue Reading