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Canadian Class Actions Monitor

Three Quebec Court of Appeal justices reiterate that a low threshold is to be applied at the authorization stage; one calls for the legislature to rethink the entire authorization process

Posted in Class Actions
Jean-Philippe Mathieu

In Charles v. Boiron Canada inc., 2016 QCCA 1716, the Quebec Court of Appeal (Justices Bich, Savard and Levesque) again overturned a refusal by the Quebec Superior Court to authorize a class action in a consumer law matter. In brief concurring reasons, Justice Bich wonders whether the authorization process still has any real utility and calls for help from the legislature, in light of recent Supreme Court of Canada precedents.

Background

The case involves a homeopathic product called “Oscillococcinum” (and a version for children called “Oscillo”) marketed as reducing cold symptoms. Although the product is made with 85% sucrose and 15% lactose, studies filed by the respondent manufacturer with Health Canada (which approved the sale of the product) support the positive effects of the product as marketed by the manufacturer. Based on these studies, the Superior Court authorization judge found that the Petitioner could not demonstrate a “prima facie” case of misrepresentation, even if the Petitioner had filed an expert opinion contradicting the studies filed with Health Canada. The Quebec Superior Court (“QCSC”) also concluded that the Petitioner had not demonstrated that she was in a position to represent the class members adequately, noting that basically all the Petitioner had done was to read an article on the internet, consult a lawyer and let the latter manage the case from there on, without communicating with the Respondent to complain or ask questions. Accordingly, the QCSC dismissed the putative class action. Continue Reading

Walter v Western Hockey League: Admissibility of Survey Evidence and Pre-Certification Disclosure Requirements

Posted in Class Actions
Theodore StathakosAnna-Marie Manley

A proposed class action in Alberta raises the issue of whether Western Hockey League (“WHL”) players are employees and should be paid a salary in accordance with employment standards legislation.[1]  Two decisions decided in that proposed class action consider interesting issues regarding the admissibility of certain interview evidence (the “Admissibility Decision”)[2] and the plaintiff’s entitlement to financial disclosure prior to certification (the “Financial Disclosure Decision”).[3]

Background

The proposed representative plaintiff, Lukas Walter, is a former WHL player for the Tri-City Americans. The WHL and its umbrella organization, the Canadian Hockey League (“CHL”) are both named as defendants in the proposed class action, as are the owners of the individual WHL and CHL teams.  Currently, the WHL and CHL consider that their players are student-athletes.  As such, many players receive a stipend rather than a salary.[4] The plaintiff argues that they are legally employees, and that the WHL and CHL teams are in breach of employment standards legislation by not paying their players a salary.

The plaintiff has applied to certify the action in the Alberta Court of Queen’s Bench under the Class Proceedings Act, SA 2003, c C-16.5. Two preliminary decisions were recently released by Justice Hall: the first decision, released on October 20, 2016, relates to the admissibility of affidavit evidence that allegedly included inadmissible opinion, hearsay, or was inadmissible for other reasons.[5]  The second decision, released on October 28, 2016, relates to disclosure of financial materials.[6]

The Admissibility Decision

The admissibility of an affidavit and a declaration were challenged on various grounds, including that they contained inadmissible opinion evidence, hearsay, and did not disclose the source of information relied upon where the affidavit was based on information and belief. In both cases, the evidence included interviews with persons who were, at the time of the interviews, current or former CHL players.

The first affidavit included the affiant’s Master of Arts thesis entitled “A Struggle Against the Odds: Understanding the Lived Experiences of Canadian Hockey League (CHL) Players”.  In the course of preparing her thesis, the first affiant interviewed eleven unidentified CHL players.  However, the Court found that this evidence was inadmissible as being argumentative opinion given by a non-expert.  Further, the Court found that the questions posed to the players in the Master’s thesis demonstrated bias and were inconsistent and unfocused, therefore they could not be deemed to be “survey” questions.

The declaration made by the second witness received more favourable treatment by the Court. The declarant had a Ph.D. in industrial/organizational psychology and had extensive experience studying aspects of wage and hour compliance. His evidence was adduced for the purpose of comparing the similarity of variability between different putative class members. The survey questions were logically structured to allow the expert to opine on the degree of similarity of players’ experiences in the CHL. The issue of anonymity was not determinative; although the identities of the players were unknown to the expert, the Court found that the players’ fear of recrimination was genuine and reasonably based.  As such, even though the interviews were conducted on an anonymous basis, the declaration was held to be admissible.

The Financial Disclosure Decision

Although none of the defendants had pleaded in their Statements of Defence that they could not afford to pay the players as employees, much of their affidavit evidence emphasized this point. The plaintiff brought an application for disclosure of all relevant financial statements before cross-examining on the affidavits because it was anticipated that the request would not be granted in any event. The defendants argued that the application was premature, as the plaintiffs were seeking document discovery prior to Certification. The Court disagreed with the defendants, noting that it “short circuits the necessity for a sham examination on affidavits before the application is brought, and conserves court time and litigation expense.”[7]

The Court found that the defendants, through their filed affidavits, had raised the issue of the league’s financial viability and the effect that paying wages to its players may have on such viability. The Court ordered production of financial statements and tax returns for all WHL teams, all WHL revenue-sharing agreements and other WHL revenue-generating agreements and the source documents for any statistical conclusions made in affidavits. Although the defendants argued that they should not have to produce financial documentation for those WHL teams that had not provided affidavits, the Court found that this would “allow the Defendants to cherry pick which teams provide financial statements and which do not.”[8]

The Ontario Hockey League (“OHL”) was not listed as a defendant; however, affidavits from OHL teams had been filed. The Court ordered production for the OHL teams as well, unless the defendants chose to withdraw those affidavits.[9] Given the parallel proceedings in Ontario, the defendants may strategically choose to withdraw those affidavits.

Conclusion

The first decision in Walter v Western Hockey League supports the proposition that survey evidence can be admissible in class proceedings, even if it contains hearsay and is derived from anonymous survey respondents, provided that the questions are crafted in an impartial manner and are relevant to the issue of commonality between putative class members.  The second decision demonstrates that a defence raised primarily through affidavits may leave the defendant vulnerable to relatively onerous requests for information and documents.

[1]      A parallel class action has been commenced in Ontario against the Ontario Hockey League (OHL). See Berg v Ontario Hockey League, 2016 ONSC 4466.

[2]      Walter v Western Hockey League, 2016 ABQB 588.

[3];     Walter v Western Hockey League, 2016 ABQB 608.

[4]      Ian Mulgrew, “The face of major junior hockey’s class-action wage lawsuit”, Vancouver Sun (21 October 2016) online: Vancouver Sun.

[5]      Walter v Western Hockey League, 2016 ABQB 588.

[6]      Walter v Western Hockey League, 2016 ABQB 608.

[7]      Walter v Western Hockey League, 2016 ABQB 608 at para 15.

[8]      Ibid at para 17.

[9]      Ibid at para 20

Victory for a Healthcare Company in the First Pharmaceutical Product Liability Class Action Trial in Canada

Posted in Certification, Class Actions
Andrée-Anne LabbéElisa Clavier

On October 19, 2016, the Superior Court of Québec released the first ever decision of a Canadian Court ruling on the merits of a pharmaceutical product liability common issues trial. In this decision [2016 QCCS 5083], the Plaintiffs were alleging that the healthcare company was responsible for psychiatric reactions experienced by the class members while taking an antibiotic.

The healthcare company retained McCarthy Tétrault LLP after certification of the class action by the Superior Court of Québec.

Justice Suzanne Hardy-Lemieux dismissed the action, concluding that the Plaintiffs had not met their burden of demonstrating that the antibiotic was the cause of the psychiatric reactions suffered by the class members. She stated that in the presence of strong evidence demonstrating the absence of causation, the Court could not base its decision on coincidental events that reveal, at best, low possibilities of causation. More specifically, Justice Hardy-Lemieux concluded that because of the blood-brain barrier protection, there was a minimal possibility that the drug could reach the brain and induce psychiatric reactions. Continue Reading

Araya v. Nevsun Resources Ltd., 2016 BCSC 1856: British Columbia Supreme Court refuses to allow a “common law class action” alleging human rights violations at Eritrean mine

Posted in Class Actions
Robyn GiffordMiranda Lam

In an important decision for Canadian resource companies operating abroad, the British Columbia Supreme Court has permitted claims alleging human rights abuses at a mine in East Africa to proceed to trial. In its decision, the Court considered whether British Columbia’s representative proceeding rule could be used in the context of a “common law class action”. Ultimately, the Court held that the plaintiffs did not satisfy the criteria for the rule because they failed to establish that the unrepresented parties had the same interest . The Court also held that the plaintiffs were improperly attempting to circumvent the residency requirement of the Class Proceedings Act.

Background

The plaintiffs are three Eritrean nationals who are now refugees. In November 2014, they commenced a representative proceeding against Nevsun Resources Ltd., a British Columbia mining company, in connection with the Bisha Mine in Eritrea. They claim that they were forced to work at the mine by the Eritrean state and military, acting pursuant to construction agreements with Nevsun and its Eritrean subsidiary. The plaintiffs are seeking damages on behalf of all Eritreans forced to work at the mine from September 2008 to the present. Their claims are based on alleged breaches of customary international law. Continue Reading

Beaten to the Punch: Ontario Court of Appeal considers carriage motion in Mancinelli v Barrick Gold

Posted in Class Actions

In Ontario, as in other provinces, only one class action may be certified in the same jurisdiction representing the same class in relation to the same claim.[1] Where rival actions exist, the proposed representative plaintiffs must bring a “carriage motion” to determine the action that will proceed on behalf of all class members and the actions that will be stayed or consolidated.

A recent Ontario Court of Appeal decision, Mancinelli v Barrick Gold, 2016 ONCA 571, considers which group of law firms should have carriage over a multi-billion dollar securities class action that, if certified, would become one of the largest in Canadian history.[2] In so doing, the Court discussed a non-exhaustive list of criteria courts should consider in a carriage motion, and included a new consideration: proposed fee arrangements between class counsel and the plaintiff. Continue Reading

Cutting Ties: Supreme Court of Canada lays foundation for judges to roam when managing national class actions

Posted in Class Actions
Michael RosenbergCaroline Zayid

The Supreme Court of Canada recently released its decision in Endean v. British Columbia and the companion case of Parsons v. Ontario: 2016 SCC 42.[1]  The Court’s decision articulates a framework for the superior courts to conduct an extraterritorial hearing in the interest of managing a national class action.  Yet the Court left many thorny issues untouched.  Because this was a case in which personal and subject matter jurisdiction were conceded, there was no need to tackle the difficult questions raised by decisions like Meeking v. Cash Store Inc., 2013 MBCA 81.[2]  We will have to wait for clarity on the circumstances in which deference is owed to the result of a class proceeding in another jurisdiction. Nor was this a case in which the court’s coercive powers were required, as the motion at issue was to proceed on a paper record. Rather, Endean and Parsons are important because they offer a toolkit with which to manage the scale, complexity, and geographic realities of pan-Canadian proceedings.

Background

Concurrent class proceedings were certified in Ontario, B.C., and Quebec in respect of claims by people who contracted Hepatitis C from the Canadian blood supply between January 1, 1986 and July 1, 1990. The B.C. and Quebec proceedings included residents of those provinces, while the Ontario proceeding included all other claimants.  A national settlement was reached on June 15, 1999.  In order to effect this settlement, the governments of the three territories and all of the provinces except British Columbia and Quebec attorned to the jurisdiction of the Ontario courts, and they were included as defendants in the Ontario action. Continue Reading

Think Fee Agreements are Privileged? Think Again: Alberta Court Affirms Privilege Over Fee Agreements More Easily Overcome in Class Proceedings

Posted in Class Actions
Beverly MaSara Albert

In LC v Alberta (“LC”), the Alberta Court of Queen’s Bench considered a defendant’s application for the production of contingency fee agreements.[1]  In his reasons, Graesser J. reinforced that privilege over retainer agreements in a class proceeding is more easily overcome than in other types of proceedings.

 

Relevant Facts

Following certification of the class proceeding in LC, counsel for the representative plaintiff, Mr. Lee (“Lee”), brought an application for advance costs in the amount of $1.7 million.[2]  In response to the advance costs application, the defendant, Her Majesty the Queen (“HMQ”), sought and applied for the production of all contingency fee agreements.[3] Continue Reading

Third time’s the most inefficient: Another call for national class actions reform in McKay v. Air Canada, 2016 BCSC 1671

Posted in Class Actions
Patrick Williams

McKay is one of three potential class actions brought in B.C., Ontario, and Quebec respectively, arising from cargo fees charged by certain airlines. Counsel for the proposed class representative in each action worked co-operatively and focused on the Ontario action, which was certified in Airia Brands v. Air Canada, 2015 ONSC 5352. The Ontario Superior Court subsequently approved a distribution protocol respecting settlement funds. Counsel for the proposed class representative in McKay then sought the B.C. Supreme Court’s approval of a similar distribution order.

The application was heard by Chief Justice Hinkson, who began his reasons for judgment with a review of Canada’s national class actions regime—or lack thereof. Chief Justice Hinkson found that the existence of three parallel actions in B.C., Ontario, and Quebec merely duplicated each other, occupied the time of three courts, and created additional expenses for parties forced to litigate in different provinces. Continue Reading

News from Quebec on Joint Experts: Superior Court says no to an application for the appointment of a single expert regarding the assessment of damages subject to collective recovery in a Class Action

Posted in Class Actions

In Masella v. Toronto-Dominion Bank Financial Group, 2016 QCCS 4450 (“Masella”), the Quebec Superior Court (Justice David Collier) ruled on an application by the class’ representative plaintiff to appoint a joint expert to assess the total amount of compensatory and punitive damages allegedly owed by the defendant following an increase of the variable annual interest rate (VAIR) on the members’ home equity lines of credit (HELOCs). The Court agreed with the defendant and dismissed the application, allowing each party to retain its own expert(s) regarding the calculation of the alleged damages.

Background

The class action was authorized (certified) on January 15, 2016 by the Quebec Court of Appeal (reversing the Superior Court). One of the common questions identified by the Quebec Court of Appeal was whether the alleged damages should be subject to collective recovery, as opposed to individual recovery. The originating application was then filed by the representative plaintiff on April 13, 2016.

On July 29, 2016, an application to appoint a joint expert was filed by the representative plaintiff as a preliminary motion, to be heard during a case management conference where the parties would also argue before the judge regarding the setting of the case protocol (litigation timetable). The application thus came at an early stage of the proceedings: after the originating application had been filed, but before a case protocol had been set by the parties and accepted by the Court.

The application for the appointment of a joint expert was based upon paragraph 158(2) of the new Code of Civil Procedure (“CCP”) in force in Québec since January 1, 2016, which provides that the Court may appoint a joint expert where the parties fail to agree on joint expert evidence.

Counsel for the representative plaintiff argued that the appointment of a joint expert would be in the interest of judicial economy, and that it would help the Court determine whether collective recovery was possible. The conclusions sought by the representative plaintiff were consistent with a judicial culture that is increasingly favourable to the appointment of joint experts in Quebec following the enactment of the new CCP.

Three-Part Test for Appointment of Joint Experts

Interpreting para. 158(2) of the CCP, the Court determined that it can appoint a joint expert “if it considers that joint evidence satisfies the reasonable requirements of the case (the principle of proportionality), and such evidence is conducive to the efficient resolution of the dispute – without, however, jeopardizing the rights of the parties to make their case.”

The Court thus applied a three-pronged test for the appointment of joint experts on the basis of para. 158(2) of the CCP:

  • proportionality,
  • efficiency, and
  • respect for the parties’ rights.

Proportionality is assessed on the basis of what the Court labeled as the reasonable requirements of the case.

Applying the three-pronged test, the Court concluded that the appointment of a joint expert was not warranted under the circumstances. Since it was not clear at this stage that collective recovery was possible or appropriate, and thus that any expertise would be needed at all on the issue, the Court concluded it would not be reasonable nor useful to order the defendant to participate in a joint expertise. Such an appointment would not be consistent with the principle of proportionality, nor conducive to the efficient resolution of the dispute.

Implications

The Masella ruling is significant for the three-pronged test it proposes, which introduces reasonableness as the standard by which proportionality is assessed.

The ruling is also noteworthy for the circumstances in which the three-pronged test is applied, i.e. at an early stage of a class action, when the recovery mode has yet to be determined.

Class Actions against the Government – Key Lessons from the Ontario Superior Court’s decision of Johnson v Ontario, 2016 ONSC 5314

Posted in Class Actions
Brandon Mattalo

On August 23, 2016, Justice Grace released his decision, Johnson v. Ontario,[1] certifying a class of inmates in their action against the Ontario Government. The plaintiff class claims against the Ontario Government for systemic negligence, assault, battery, breaches of fiduciary duty and breaches of sections 7 and 12 of the Canadian Charter of Rights and Freedoms. Johnson is one of a long line of institutional abuse cases certified in Canada and has implications for class actions against governments alleging systemic wrongdoings.

The action arises out of facts reminisce of HBO’s latest series “The Night Of”, a crime drama that explores the institutional issues within the United States’ prison system. Instead of Rikers Island in New York, Johnson deals with the Elgin-Middlesex Detention Centre (“EMDC”) in London, Ontario. The representative plaintiff, Mr. Johnson, alleges that he was subject to threats, assaults, inadequate medical attention and overcrowding while housed at EMDC.

Justice Grace certified the issues of systemic negligence and breaches of ss. 7 and 12 of the Charter, since these issues met all of the requirements of section 5(1) of the Class Proceedings Act (“CPA”).[2]

The decision has two important lessons for class actions brought against government institutions.

Implementations of government policy decisions are justiciable

Generally, policy decisions by a government entity are not justiciable and cannot give rise to a tort liability.[3] However, this limit does not apply when the government has acted irrationally or in bad faith.

In Johnson, the Province argued that the Plaintiffs did not disclose a reasonable cause of action in negligence, since they were ultimately attacking a policy decision regarding the funding of prisons in Ontario. The Court disagreed, and instead found that the pleadings challenged the operational implementation of policies in Ontario, and not the policies themselves.[4]

There is a fine line between a bona fide policy decision, and the implementation of that policy decision. Justice Grace in Johnson referred to a decision of Justice Cory where the distinction was illustrated:

For example, at a high level there may be a policy decision concerning the inspection of lighthouses.  If the policy decision is made that there is such a pressing need to maintain air safety by the construction of additional airport facilities with the result that no funds can be made available for lighthouse inspection, then this would constitute a bona fide exercise of discretion that would be unassailable.  Should then a lighthouse beacon be extinguished as a result of the lack of inspection and a shipwreck ensue no liability can be placed upon the government agency…

On the other hand, if a decision is made to inspect lighthouse facilities the system of inspections must be reasonable and they must be made properly…Thus, once the policy decision to inspect has been made, the Court may review the scheme of inspection to ensure it is reasonable and has been reasonably carried out in light of all the circumstances, including the availability of funds, to determine whether the government agency has met the requisite standard of care.[5]

When bringing an action against the government, careful Plaintiff’s counsel can plead around this issue by ensuring that their claim relates to systemic issues involving the implementation of policy decisions.

Systemic wrongdoings can be common to the class even if individual circumstances of the class vary widely

The core issue the certification stage is whether the class can truly be said to have issues in common. The plaintiffs usually highlight the cohesiveness of the group, while the defendants show how many subdivisions and differences there are between the class members. Section 1(1) of the CPA makes clear that “common but not necessarily identical” issues of fact or law will be sufficient for there to be a certifiable common issue.

In Johnson, the Province argued that the inmates did not have issues in common since all of their experiences would have been different, especially since they were separated into different units within the EMDC, the range of complaints was wide and the time period of the defined class was over three years.

The Court held that while there are some cases where that argument succeeded that there was a “lengthy list of cases at their disposal which have concluded that issues of systemic wrongdoing are common even though the individual circumstances of the class members may have varied widely”.[6] Although the Court agreed that the “permutations and combinations of systemic negligence cases seem almost infinite”, the liability questions in this case were broad ones which raised issues that were common to the class.

This result is consistent with the long line of institutional abuse cases that have been certified in Canada.[7] Johnson follows this authority in confirming that allegations of systemic negligence, even if that negligence may have impacted class members differently, are often suitable for certification.

What does this all mean?

Johnson confirms two important issues in respect of class actions brought against government institutions:

  1. implementations of government policy issues may be justiciable so long as they are pleaded properly; and
  2. systemic wrongdoings can be considered common issues even if individual circumstances of the class vary widely.

[1] Johnson v Ontario, 2016 ONSC 5314 (CanLii) [Johnson].

[2] Class Proceedings Act, 1992, S.O. 1992, c. 6.

[3] R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 72 (CanLII).

[4] Johnson, supra note 1 at paras. 33-35.

[5] Just v. British Columbia, 1989 CanLII 16 (SCC) at 1242-1243.

[6] Johnson, supra note 1 at para. 103.

[7] See e.x. Rumley v. British Columbia, 2001 SCC 69 (CanLII); See also Cloud v. Canada (Attorney General), 2004 CanLII 45444 (ON CA).