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Canadian Class Actions Monitor

3rd Edition of E-Discovery in Canada now available

Posted in Class Actions

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Susan Wortzman, partner and Director of E-Discovery, and a team of experienced authors the third edition of E-Discovery in Canada. The book covers everything lawyers, in-house counsel and law clerks need to know about conducting e-Discovery, from preservation to proportionality to costs.

Learn from the professionals in Canada and find out how to leverage their know-how for better outcomes for your clients’ in this revised and updated edition. The third edition can be purchased here.

The End of an Era: The Ontario Court of Appeal Confirms (Again) that the Securities Class Action Against Timminco is Out of Time

Posted in Class Actions
Paul Davis

A secondary market class proceeding against Timminco Ltd. has been in legal purgatory since 2012, a victim of the changing jurisprudence governing the limitation period applicable to those claims. In a May 2017 decision (Timminco 2017),[1] the Ontario Court of Appeal decided that the case could not proceed because the plaintiff investor had not commenced his motion for leave to proceed under Ontario’s Securities Act in time.

Timminco 2017 represents the last gasp of the group of proposed class actions in which the courts of Ontario – and ultimately, the Supreme Court of Canada – worked out the governing interpretation of the interplay between Ontario’s Class Proceedings Act, 1992 and Securities Act.

The Solar Panels Announcement

The path to the Ontario Court of Appeal’s decision in Timminco 2017 sheds some light on the development of secondary market class proceedings in Ontario. The substance of the case (which has never been litigated) relates to the issuer’s announcement in March 2007 that it developed a process to produce silicon for solar panels. The company’s share price increased dramatically in response to the disclosure of its financial results for Q4 2007 on March 17, 2008 and continued until November 2008, when it made corrective disclosures concerning its financials. Upon those disclosures, the share price fell precipitously. Continue Reading

A Failed Gamble

Posted in Class Actions
Alexandre Mireault

The recent decision in Ifergan v. Loto-Quebec, 2017 QCCS 1332, presents a rare occasion where the Superior Court of Québec refused permission to institute a class action lawsuit.  The Court determined that even the low standard of “alleging facts that justify the conclusion sought” was not met in this case, and that an overzealous litigant was ill-suited to represent the proposed class, given his past behaviour before the courts.

The Allegations

The Applicant presented an Application for Authorization to Institute a Class Action, in which he claimed that the Respondent Loto-Quebec had misrepresented the likelihood of winning its Super 7 or the Lotto Max lotteries, due to a particular methodology for generating numbers for consumers opting for automated selection, known as “quick-pick”. He alleged that this constituted a fraudulent commercial practice within the meaning of the Consumer Protection Act. The Applicant sought to represent a class defined as, “All persons having purchased from the Respondent or retailers a quick-pick ticket for either the Super 7 or Lotto Max lotteries.”

The Applicant was no stranger to litigation against Loto-Quebec. In 2008, he had personally instituted a claim against Loto-Quebec with regard to the Super 7; in 2009, the Super 7 was replaced by Lotto Max. The Applicant relied on the facts he had gathered during his initial claim in order to present his claim against both lotteries.

The Applicant relied on Loto-Quebec’s expert testimony from the 2008 claim to allege that, for the purposes of a lottery draw, a central computer would create randomized selections of seven numbers, which would then be sold sequentially at various sales points. The selections would be randomized again only after three or four draws. Applicant alleged that the failure to randomize selections after each draw and ensure that all possible seven-digit combinations were available distorted the likelihood of winning, constituting a fraudulent commercial practice within the meaning of the Consumer Protection Act.

Loto-Quebec also relied on its expert from the 2008 claim, who provided testimony to qualify the statements previously made. He stated that his past testimony treated a different set of circumstances, and he affirmed that all possible seven-digit combinations were available to all customers, and that all had an equal chance of winning the jackpot.

Facts Justifying Conclusions Sought

The Court rejected the proposed action with regard to Lotto Max, as the facts presented in the Application related only to the Super 7, and no allegation was made to the effect that both lotteries employed an identical selection method.

The Court sided with the Respondent’s version of the facts regarding the customer’s chances of winning, concluding that the evidence presented did not allow for an inference that the customer was deprived of a fair chance of winning, or that the Respondent had contravened the rules of play advertised in relation to its lotteries. As a result, the Court rejected the proposed action on the basis that the facts alleged in the Application did not justify the conclusions sought.

Action Out of Time

The Respondent alleged that the Application was barred by the limitation period because the Applicant learned about the alleged faults in 2012. With regard to Lotto Max, the Court concluded that action was not out of time given the absence of allegation of fault by the Respondent in his earlier claim. With regard to the Super 7, the Court concluded that the action was out of time since the Applicant knew about the alleged fault. Although the Applicant argued that he was unaware that the facts of which he had knowledge constituted a fault, the Court sided with the Respondent, reaffirming that ignorance of a right of action does not suspend the running of time for the purpose of a limitation period.

Unqualified Representative

The Court also determined that the Applicant was not qualified to represent the proposed class. The Court found that the Applicant’s emotional investment in the matter affected his ability to ensure representation of the defined class.

In 2008, following the rejection of his previous claim against the Respondent, the Applicant had sought leave to appeal; when this was denied, he sought permission to appeal to the Supreme Court of Canada. When it was denied, the Applicant submitted an application for reconsideration of the order refusing leave to appeal. His language in that application was poetic, to put things mildly. When his final application was denied by the Supreme Court, the Applicant drafted an open letter to the Superior Court, in which he further demonstrated an attitude hostile to the courts.

In this context, the Court concluded that given the Applicant’s demeanour and past representations before various courts there was serious doubt as to his ability to respect his duties to the members of the proposed class. Furthermore, the Court called into question the Applicant’s ability to act with the objectivity and perspective necessary to represent the class in its relations and negotiation with Respondent. The Court finally concluded that the fact the limitation period had expired on the Applicant’s cause of action made him unqualified to represent the interests of a class.

Not Quite a No-Hitter: Ontario Superior Court Declines to Strike (Most) Claims Related to Pre-Installed Software

Posted in Class Actions
Breanna Needham

In the recent decision of Bennett v. Lenovo[1] (Bennett), in the Defendant Lenovo’s motion to strike the proposed class action in its entirety, the Ontario Superior Court of Justice declined to strike three of the four causes of action relating to manufacturer installed software loaded onto laptop computers. The Court’s decision demonstrates the difficulty that can arise in pleading motions as the law concerning privacy matters associated with consumer technology products continues to grow and change.

Background

The Plaintiff, a Newfoundland-based lawyer, purchased a Lenovo laptop from an online vendor. After receiving the laptop, he subsequently noticed the Virtual Discovery adware program that was pre-loaded onto the laptop. Continue Reading

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