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Canadian Class Actions Monitor

British Columbia Court of Appeal upholds the certification of another undisclosed fees case

Posted in Certification, Class Actions
Robyn Gifford

As previously reported, inadequate fee disclosure cases continue to attract class actions in British Columbia, with the weight of authority favouring certification. In the recently released decision of Finkel v. Coast Capital Savings Credit Union, the British Columbia Court of Appeal upheld the certification of another such class action.[1]

Finkel involves undisclosed foreign currency charges. The plaintiff alleges that Coast Capital imposed additional surcharges on members who withdrew foreign currency from their personal accounts through ATMs outside Canada. The plaintiff claims that this additional surcharge breached Coast Capital’s contractual obligations and was a deceptive act or practice, contrary to the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 (“BPCPA”).

The British Columbia Supreme Court certified the claims.[2] On appeal, Coast Capital argued that the certification judge erred in that pleadings do not disclose a cause of action and the evidence does not support a finding that the claim raises common issues or that a class proceeding is the preferable procedure.

The Court rejected Coast Capital’s grounds of appeal. Of particular interest for undisclosed fee cases is the Court’s discussion of damages under s. 171 of the BPCPA. Section 171 requires a plaintiff to show that he or she has suffered loss or damage “due to” a contravention of the BPCPA. In a previous decision, the Court of Appeal held that a plaintiff must plead reliance to properly seek damages under s. 171.[3] In Finkel, however, the plaintiff advanced a much broader interpretation of s. 171, arguing that reliance was not required in every case. Instead, the plaintiff argued that the fact of a contractual breach was sufficient to link a statutory breach to the plaintiff’s loss.

The Court of Appeal held that it was not plain and obvious that such a claim was bound to fail. The Court observed that the proper interpretation of s. 171 has yet to be fully settled (despite prior jurisprudence on this topic).[4] The Court concluded it was at least arguable that a contractual breach can establish a causal link between a breach of the BPCPA and damages for the purposes of s. 171.[5] The Court also rejected Coast Capital’s remaining grounds of appeal, emphasizing the importance of deference when reviewing a certification judge’s assessment of the evidence supporting common issues and preferability.[6]

The Court of Appeal’s decision confirms the trend in favour of certification for undisclosed fees cases. The decision is also significant for its discussion of s. 171 and causation, in that it lowers the pleading standards for damages claimed under the BPCPA. Until the question of the proper interpretation of s. 171 is fully settled, it appears as though plaintiffs need not plead reliance when seeking certification of claims involving inadequate fee disclosure.

[1] 2017 BCCA 361 [Finkel].

[2] 2016 BCSC 561. See our previous blog post on the certification decision here.

[3] Sandhu v. HSBC Finance Mortgages Inc., 2016 BCCA 301 at para. 90.

[4] Finkel at paras. 77, 87.

[5] Finkel at paras. 84-85.

[6] Finkel at paras. 92-94, 104.

The Manitoba Court of Appeal Confirms Stay of One Class Action in Favour of Another on the Same Issue

Posted in Class Actions
Elsbeth Cochrane

Introduction

The question of who should have carriage of a proposed class action is an important one. It determines which plaintiff can define the proposed class, pursue certain claims, and which law firm will represent the lead plaintiff in the proposed class. When faced with multiple claims and proposed classes relating to the same issue, a Court must decide who will have carriage of the matter going forward to certification. The Manitoba Court of Appeal’s recent decision in Thompson et at v Minister of Justice of Manitoba et al (the “Appellate Decision”) provides some indication that courts, when faced with competing potential class actions, may prefer claims with a narrower focus and fewer defendants (and therefore a potentially better chance of being certified).[1]

The Carriage Motion

This proposed class action arose from the provincial and federal governments’ actions in the “60’s scoop”, when Aboriginal children were removed from their families and placed with non-Aboriginal parents. The children subject to these removals now seek damages.

On March 13, 2015 Lynn Thompson, David Chartran, and Laurie-Anne O’Cheek filed what was referred to as a “replacement claim” in their proposed class action (the “Thompson Action”) against Her Majesty the Queen in Right of Manitoba, as Represented by the Minister of Justice of Manitoba and Her Majesty the Queen in Right of Canada, as Represented by the Minister of Indian and Northern Affairs of Canada.[2] The proposed class action was under The Class Proceedings Act.[3] The causes of action included breach of fiduciary duty, negligence, and cultural genocide.[4] The proposed class was:

All Aboriginal persons … who were removed by the Defendants from their families or communities as children, and suffered injuries due to the Defendants’ breach of fiduciary obligations, duty of care and cultural genocide, and their dependants and family members, any other subclasses that this Court finds appropriate.[5]

On April 20, 2016, Priscilla Meeches and Stewart Garnett filed a separate claim (the “Meeches Action”) against the Attorney General of Canada seeking damages for losses similar to those set out in the Thompson Action.[6] The causes of action in the Meeches Action were breach of fiduciary duty and negligence. The sole defendant was the Attorney General. The proposed class in the Meeches Action was:

[A]ll Indian, non-status Indian, and/or Metis children who were taken from (a) their homes on reserves lying within the boundaries of the [Children’s Aid Societies] in Manitoba, or (b) resided within the boundaries of the [Children’s Aid Societies] and had not established residence in a place other than a reserve in Manitoba, at or after September 2, 1966, and were placed in the care of non-Aboriginal foster or adoptive parents who did not raise the children in accordance with the Aboriginal person’s customs, traditions, and practices.

At the carriage motion (the “Motion Decision”) the Motion Judge considered numerous factors and decided that the interests of the putative class and the policy objections of The Class Proceedings Act would be best served by the Meeches Action.[7] In reaching his decision the Motion Judge considered the nature and scope of the causes of action, the theories of the cases, the state of each action, the resource and experience of counsel for each of the plaintiffs, and the prospects of certification.[8] Additionally, he considered the argument that he should allow both actions to proceed to a certification hearing but held that this would needlessly complicate the certification process and would not be in the best interests of the putative class.[9] The Thompson Action was consequentially stayed.[10] The plaintiffs in the Thompson Action appealed the Motion Decision and the stay of their action.

The Manitoba Court of Appeal dismissed the appeal, holding that the motion judge was entitled to deference on a discretionary question like this.[11] In its decision the Court provided further comment on several of the appellant’s arguments. The plaintiffs in the Thompson Action argued that the class in the Meeches Action was too narrow and would exclude members included by the proposed class in the Thompson Action. However, the Court of Appeal deferred to the motion judge, who was alive to this issue. The Court of Appeal stated that exclusion from the class did not mean those individuals would be deprived of access to justice; they would instead have to advance individual claims.

Additionally, the Court of Appeal also deferred to the Motion Judge’s decision that the Meeches Action was more likely to be certified, as it only involved one defendant and because it did not raise the “novel and potentially problematic” claims raised in the Thompson Action.[12] The Meeches Action was also more likely to be certified, according to the Motion Judge, because it relied on pleadings from a similar class action in Ontario.[13] Overall, the factors weighed in favour of the Meeches Action proceeding and in having one action, rather than two, proceed to a certification hearing.

Conclusion

This decision, the first time the Manitoba Court of Appeal considered a carriage motion, confirms the factors a court should consider when determining who should have carriage of a class action.[14] It also confirms that a carriage motion should be heard prior to certification and that courts may be reluctant to allow competing proposed class actions to proceed certification hearings. In considering the best interests of a putative class, the Court may consider what action has the best chance of success at a certification application and may factor into its decision questions of how specifically defined the proposed class is and how successful the proposed claims may be. Ultimately, this decision signals that decisions about which party receives carriage of a matter should be based on a consideration of what is best for the putative class, in consideration of the policy objectives set out in The Class Proceedings Act.

[1] Thompson et at v Minister of Justice of Manitoba et al, 2017 MBCA 71.

[2] Ibid at paras 3-4. The “replacement claim” was filed to correct a service issue. The initial action was filed on April 20, 2009 and was eventually discontinued.

[3] CCSM c C130..

[4] Appellate Decision at para 6.

[5] Ibid at para 5.

[6] Ibid at para 8.

[7] Thompson v Manitoba (Minister of Justice), 2016 MBQB 169 [the “Motion Decision”].

[8] Ibid at para 43.

[9] Appellate decision at para 43.

[10] Motion Decision at para 13.

[11] Appellate Decision at para 42.

[12] Ibid at paras 31, 49.

[13] Ibid at para 50.

[14] Ibid at para 17.

Global Class Actions Gain Traction – Ontario Assumes Jurisdiction over Absent Foreign Claimants

Posted in Class Actions
Charlotte-Anne MalischewskiJoseph Ur

Can individuals who live outside of Canada, who contracted outside of Canada, and who suffered losses outside of Canada, be part of a proposed class without personally consenting to Canadian jurisdiction?

Following the Ontario Court of Appeal’s recent decision in Airia Brands Inc. v. Air Canada, 2017 ONCA 792, the answer is yes.

Background

In short, the Airia Brands case is about a global price-fixing conspiracy claim. The plaintiffs alleged that the defendants, several well-known international airlines, conspired in Canada and throughout the world to fix prices of Airfreight Shipping Services. Leading into certification, the claim involved a putative class made up of members from more than 30 different countries across the world, including so-called absent foreign claimants (“AFCs”). Continue Reading

The Quebec Court of Appeal overturns yet another refusal to authorize a class action; dissenting in part, a judge criticizes the “improvised” approach of class counsel and sends a reminder that normal evidentiary rules will apply at trial

Posted in Class Actions
Jean-Philippe Mathieu

In J.J. v. Oratoire Saint-Joseph du Mont-Royal, 2017 QCCA 1460, the Quebec Court of Appeal (Justices Gagnon, Healy and Marcotte) overturned a refusal by the Quebec Superior Court (Justice Julien Lanctôt) to authorize a class action concerning allegations of sexual abuse by members of a religious congregation. Justice Marcotte partially dissented and would have authorized the class action against only one of the two respondents in light of the absence of any compelling evidence of a link between the St-Joseph Oratory and the alleged victims. Justice Marcotte also sent a strong message to class counsel regarding the evidentiary burden to be applied on the merits and denounced the improvised approach in drafting proceedings.

Background

The class action concerns allegations of sexual abuse committed by members of the Canadian Province of the Congregation of Saint-Croix (the Congregation) in educational institutions, residences, camps and other places situated in Quebec.

The Quebec Superior Court declined to authorize the class action on the basis that none of the conditions of Article 575 of the Quebec Code of Civil Procedure (CCP) had been met. Amongst other things, the Superior Court ruled that the facts presented before it, including approximate lists of alleged victims and tortfeasors, were insufficient to meet the required threshold of Article 575 CCP, namely that the facts alleged appear to justify the conclusions sought. In that regard, the Superior Court accepted the Congregation’s argument that it had been constituted years after the alleged abuse and could therefore not be held liable for the previous congregation’s actions. Moreover, the Superior Court concluded that there existed no allegation establishing a valid evidentiary base in support of the proof of (i) a direct fault by the Congregation and its level of knowledge of the abuse or (ii) a relationship of subordination between the Congregation and its members.

The Decision of the Quebec Court of Appeal (QCCA)

The majority of the QCCA (Justices Gagnon and Healy) held that the Superior Court had erred in its application of Article 575 CCP by failing to appreciate the specific context of the case and the liberal approach that must be applied at the authorization stage of class actions. For the majority, this error “impacted the entire analysis” of the Superior Court (para. 18, our translation). The QCCA majority mentioned that the context included the moral authority of the alleged tortfeasors, their intimate relationship with the alleged victims and the vulnerability of the class members.

The QCCA majority refused to distinguish the petitioner’s particular situation from that of the other class members, rejecting the view adopted by the Superior Court that the class action would turn into a number of mini-trials, and characterized this difficulty as “not critical” (para. 55, our translation). The QCCA majority reiterated that: “[o]nly the demonstration of a “defendable” case is necessary at the authorization stage” (para. 77, our translation). In this context, it held that any argument as to the absence of a link between the alleged tortfeasors and the Congregation, in light of its reorganization as a new legal personality, should be left for the merits.

Similarly, the QCCA held that the Superior Court erred in concluding that the fact that the list of alleged victims had not been verified and that the petitioner had not contacted these victims were grounds not to authorize; this could be dealt with at a later stage. The QCCA also reiterated that an application for authorization that meets all the other criteria of Article 575 CCP cannot be refused based on proportionality principles. The QCCA commented about the importance of being cautious when applying its own judgments rendered prior to the Supreme Court decisions in Vivendi and Infineon.

Finally, the QCCA noted that prescription is not always a mean of defence that ought to be ruled upon at the authorization stage. In the case at hand, the QCCA concluded that the petitioner’s argument that it had been impossible in fact for him to institute legal proceedings earlier was a question of fact that had to be dealt with at a later stage.

Justice Marcotte’s Partial Dissent

While she would also have authorized a class action against the Congregation, Justice Marcotte dissented as to the second respondent, the St-Joseph Oratory, in light of the absence of any compelling evidence of a link between the Congregation, its members and the Oratory:

“[136] I cannot convince myself that merely alleging that the abuse could have taken place at the Oratory is sufficient to engage its responsibility, in the absence of some allegation of fact that could support a direct fault on its part or a fault committed by one of its attendants, or of its knowledge of the abuse suffered by the minor children under the control of the members of the Congregation and a failure to act.

[137] The mere fact that the Oratory is administered by members of the Congregation does not allow for the establishment of some fault on its part towards the victims of the sexual assault committed by members of the Congregation. The Oratory rightly maintains that it is a separate entity with the mission of operating and maintaining this place of worship. Its responsibility cannot be engaged for the actions of members of the Congregation over whom it has no authority.” (our translation)

Moreover, Justice Marcotte heavily criticized class counsel for their “improvised” approach in drafting their application:

“[139] … I think it should be added that it would be desirable for lawyers in this context to take the necessary steps to facilitate the verification of the criteria that may give rise to an application for authorization under section 575 CCP by filing clear and well-structured applications.

[140] In this case, the Application is characterized by its poor drafting, particularly with regard to the alleged misconduct of the respondents in relation to the other minor victims. And what to say of the rather improvised approach of the lawyers, who have filed a list of anonymous victims as Exhibit R-8 when pleading the application for authorization, while acknowledging that they have not checked its content. This seems to have largely contributed to the judge’s decision to refuse the authorization sought.

[141] The difficulties of managing a class action of this magnitude must not be obscured, especially when it is instituted on the basis of an imprecise or incomplete application, and it is also worth noting that once authorized this action will involve the mobilization of significant judicial resources.” (our translation)

Our Comments

Although the QCCA maintains its liberal approach towards authorization of class actions, the dissenting opinion of Justice Marcotte contains helpful comments that could be used in other cases and serve as a reminder that there are limits to the lenient approach. Justice Marcotte also sends a strong warning to class counsel and exerts them to carefully draft the factual allegations contained in applications for authorization.

Significantly, Justice Marcotte insists on the fact that once a class action is authorized, plaintiffs still have to abide by the normal substantive rules governing burden of proof and evidence and that fault, causation and damages must be established with respect to each and every class member. According to Justice Marcotte, this will not be an “easy task” in the case at hand considering, amongst other things, the size of the proposed group” (paras. 142-143, our translation).

Alberta Court of Appeal Highlights an Issue to Watch: Could the Provincial Government Have a Duty to Sue Itself?

Posted in Class Actions
Mia Tritter

Introduction

Legislation often imposes a duty on the government, and the government’s alleged failure to comply with such a duty often leads to legal proceedings. However, what has yet to be determined is whether the government may have an obligation to sue itself for breaching its own statutory duty. In its September 7, 2017 decision regarding the appeal of a certification order, LC v Alberta (2017) (the “Appellate Decision”),[1] the Alberta Court of Appeal hinted that this question may be answered when this class action goes to trial. If the trial court finds that the Government of Alberta (the “Provincial Government”) must sue itself as part of its fiduciary duty, this may become a new avenue for litigation in not only class actions, but other proceedings as well.

Certifying the LC v Alberta Class Proceeding

This class proceeding stems from the alleged failure of the Provincial Government to prepare and file care or service plans for apprehended children who had become the subject of a temporary guardianship order, within the timelines required by legislation.[2] Following a multitude of case management decisions and rulings, the action was certified pursuant to the Class Proceedings Act[3] by Justice Graesser, the case management judge, in LC v Alberta (2016) (the “Certification Decision”).[4]

The representative plaintiffs, LC and her daughter EMP, pleaded several causes of action, one of which alleged that her Majesty the Queen in Right of Alberta (“Alberta”) had a duty to bring a suit against itself for breaching its statutory duties.[5] In its defense, Alberta argued that “no such duty…has ever been recognized by common law or imposed by statute. This claim has no chance of succeeding and ought to be struck.”[6] Justice Graesser found that although the plaintiffs’ argument was novel, Alberta’s failure to sue itself appeared to be a reasonable claim, especially in the context of the government’s fiduciary duty to vulnerable children.[7]

In the Appellate Decision, Alberta challenged this finding, arguing that Alberta’s duty to sue itself was not a legal cause of action in the child protection context.[8] Without deciding whether the Provincial Government has a duty to sue itself, Justice Berger, writing for the Court of Appeal, found that the plaintiffs’ pleadings asserted a general fiduciary obligation, of which the duty to sue oneself was but one example.[9] He went on to explain that the scope of the Provincial Government’s fiduciary duty was a matter to be determined at trial.[10]

Conclusion

It is not unprecedented in Alberta for the Provincial Government to sue itself. Just last year, the Provincial Government filed an application to strike down a clause in the Power Purchase Arrangements introduced by the former Provincial Government in 2000.[11] In that case, the Provincial Government elected to take legal action against the former Provincial Government, whereas LC v Alberta goes one step further, in asking the court to find that the Provincial Government has a positive obligation, not merely the option, to sue itself for breach of a statutory or fiduciary duty. If the trial court establishes that such an obligation exists, this may emerge as a trend in future litigation proceedings, and may fundamentally impact the way in which class actions are conducted in Alberta.

[1] LC v Alberta, 2017 ABCA 284 [Certification Decision].

[2] Ibid at para 2.

[3] SA 2003, c C-16.5.

[4] LC v Alberta, 2016 ABQB 151 [Appellate Decision].

[5] Certification Decision, supra note 1 at para 93.

[6] Ibid at para 165.

[7] Ibid at para 166.

[8] Appellate Decision, supra note 2 at para 18.

[9] Ibid at para 20.

[10] Ibid.

[11] The Power Group at McCarthy Tétrault LLP discussed litigation regarding the Power Purchase Arrangements in Canadian Power – Key Developments in 2016 – Trends to Watch for in 2017.

Walter v Western Hockey League Part 2: Plaintiffs Score on Class Action Certification

Posted in Class Actions
Lan Nguyen

Last year we wrote [1] about the commencement of a class action lawsuit, Walter v Western Hockey League, taken against the Western Hockey League (WHL) and its umbrella organization, the Canadian Hockey League (CHL). This league also includes clubs in the American states of Oregon and Washington. In that post we discussed the admissibility of evidence and pre-certification disclosure in connection to two pre-certification decisions. In this post, we continue the saga with the recent decision [2] of the Alberta Court of Queen’s Bench wherein the representative plaintiffs seek to have their action certified in Alberta under the Class Proceedings Act [3].

The WHL Decision

In the present WHL action, the representative plaintiffs Lukas Walter, Travis McEvoy and Kyle O’Connor (the “Plaintiffs”), were former hockey players of the WHL. The Plaintiffs claim that during the time they played in the WHL, they were employees of the clubs and were therefore entitled to receive minimum wage payments in accordance with minimum wage legislation in the respective Canadian and US jurisdictions.

The various claims made by the Plaintiffs include: breach of employment contract; breach of contractual duties of honesty, good faith and fair dealing; breach of employment standards legislation in Canada and labour law statutes in the US; conspiracy, as well as negligence and unjust enrichment against the Canadian clubs and their owners.

The decision of Justice Hall of the Alberta Court of Queen’s Bench ultimately granted the certification of all the class action claims made against the Canadian Defendants, but did not certify the claims made against the US Defendants.

Comparison to the OHL Decision

A parallel proceeding is currently taking place in Ontario [4] regarding the Ontario Hockey League (OHL), which we wrote about in June of this year [5]. Many of the same matters that Justice Perell of the Ontario Superior Court of Justice considered in the OHL decision were ruled on similarly by Justice Hall. This included the fact that there was an identifiable class, that the claim of the prospective class members gave rise to common issues, and that a class proceeding is the preferable procedure for the fair and efficient resolution of the common issues for the Canadian Defendants [6].

Big Advances: All Causes of Action Certified in WHL Action

The plaintiffs in the OHL proceeding also sought certification of the class action based on various claims similar to the claims brought in the WHL action, such as breach of employment statutes, breach of contract, unjust enrichment, negligence, and conspiracy. However, despite these similarities, Justice Perell in the OHL decision only granted certification for breach of employment statutes and unjust enrichment, stating that certification of the remaining issues would be redundant.

In the WHL decision, Justice Hall was not prepared to follow this lead. He recognized that while redundant causes of action do not promote access to justice or judicial economy, he was not prepared to strike actions which have been properly pled. Therefore, all causes of actions pled against the Canadian Defendants were certified to proceed. Nonetheless, Justice Hall did contemplate that some of the Plaintiffs’ claims may be required to be simplified in the future, or that they may be summarily dismissed later down the road [7].

The test for whether pleadings disclose a cause of action is based on the “plain and obvious test”: that is that the facts as pleaded are assumed to be true and the requirement is satisfied, unless it is ‘plain and obvious’ that the plaintiff’s claim cannot succeed. The remainder of the certification process then follows the question of whether there is “some basis in fact” to establish each of the individual certification requirements [8].

No Certification Against US Defendants

The OHL decision granted the certification of the class action for the Ontario hockey players against the Ontario teams, but did not grant the certification against the US teams. The treatment of the US jurisdictions in the present WHL decision led to a similar conclusion. Justice Hall held that it would be inappropriate for an Alberta court to interpret the law in Washington and Oregon, and the class actions against the US Defendants were not certified. This also meant that Lukas Walter, who only played for the Tri-City Americans in Washington, and not for any of the Canadian WHL teams, was not found to be a representative of the classes. However, McEvoy and O’Connor were still held to be satisfactory representative plaintiffs [9]. Both cases demonstrate the challenges and complexity of combining international class action certifications across different jurisdictions.

Future Implications

The Plaintiffs’ claims in the WHL action included a wide range of issues, from employment standards to conspiracy and negligence. This leaves the door open for further questions regarding the balancing of judicial economy against the interests of an entire class, particularly when considering the important underlying principles of proportionality in Canadian court cases. This includes the encouragement of more simplified pre-trial procedures that are tailored to the needs of the case, in order to increase access to justice and ensure a timely and just adjudication of all claims.

What this might mean for the present Plaintiffs in this class action is that there is still substantial work to be done. Despite their big advances this round, many of their claims may still be at the risk of being dismissed down the road, or at the very least, will likely need to be simplified as they move forward.  Needless to say, for those of us watching from the stands, it will be an interesting saga as this hockey feud heats up.

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

[2] Walter v Western Hockey League, 2017 ABQB 382 (“Walter”).

[3] SA 2003, c C-16.5.

[4] Berg v Canadian Hockey League, 2017 ONSC 2608.

[5] A job to be a hockey player: Ontario Superior Court of Justice certifies a class action to decide whether OHL players are employees entitled to get a minimal wage pay

[6] Walter, supra note 2 at paras 60, 65.

[7] Ibid at para 46.

[8] Ibid at paras 12-13.

[9] Ibid at paras 72, 79.

[10] Hryniak v Mauldin, 2014 SCC 7 at para 28.

Narrowing the Case Before It Begins: Ontario Court Grants Pre-Certification Motions to Strike

Posted in Class Actions
Paul Davis

Earlier this month, the Ontario Superior Court of Justice handed down its decisions in four separate actions in the Fortress cases,[1] serving as a reminder to defendants about a useful tool that can still yield the favourable result of substantially narrowing a class proceeding: the pre-certification motion to strike.

Syndicated Mortgages

Four land development projects in the Greater Toronto Area sought financing by means of syndicated mortgages in which relatively small investors participated. Certain investors commenced class proceedings against a number of participants in the projects. Among the defendants was the trust company involved in the syndication. The investors’ claim, which Justice Perell characterized as a “new genre of class action,” sought mass rescission of the investments in the mortgage, combined with a mass mortgage enforcement action, combined with tort, contract and breach of fiduciary duty claims.[2]

Pre-Certification Motions to Strike

The first hurdle a class proceeding must clear to be certified is that it “discloses a cause of action”.[3] The same test applies under this section as that on a motion to strike – namely, that the class will succeed unless it is “plain and obvious” that the claim fails to disclose a reasonable cause of action.[4] Because the same test is applied on a certification motion, class proceedings judges are typically reluctant to hear motions to strike in advance of certification, particularly where the motion will not dispose of the entire action; and, moreover, certification motions are generally to be the first motion heard in a class proceeding.[5]

Nonetheless, Justice Perell entertained the motions in these proceedings. It seems that the motions were appropriate despite the fact that they would not terminate the proceedings because of the weaknesses in the statements of claim. As Justice Perell described them:

Ms. McDowell’s and Mr. Aversa’s Amended Amended Statement of Claim is 90 pages in length. Its word count is 21,575 words. The pleading contains 214 main paragraphs and a total of 781 paragraphs and sub-paragraphs.

The allegations in the 781 main and sub-paragraphs, however, are sometimes inconsistent one with another. Many of the allegations are unclear. Many of the allegations, be they clear or unclear, are unnecessarily repeated. Some of the allegations properly group the Defendants, but, in other instances, the case against a particular Defendant should be differentiated and not lumped together and the collective allegation is confusing and unclear.

While some of the 781 paragraphs contain properly pleaded allegations, many of the paragraphs combine properly pleaded allegations with improperly pleaded allegations. Others of the 781 paragraphs contain no properly pleaded allegations of material fact. The pleading shows little concern for the reader and the Statement of Claim overall is ill-organized, prolix, and unclear.[6]

Justice Perell applied the well-established law concerning pleadings rules to the statements of claim and ended up substantially narrowing the issues and removing large portions of irrelevant material. Despite the broad rejection of much of the plaintiffs’ allegations, he granted leave to amend the claims. Indeed, he observed that until the plaintiffs had amended the allegations to bring them in line with basic pleadings standards, he was unable to determine whether the plaintiffs had actually made a case against the trustee:

Based on the current state of the pleadings, I am unable to determine the merits of Olympia Trust’s substantive attacks on the Plaintiffs’ claims against them. It remains to be determined whether Fresh as Amended Statements of Claim will survive both technical and substantive attacks. It is for this reason that in granting leave to amend, I do so without prejudice to Olympia Trust’s arguments that the revised pleading also does not pass muster in showing a reasonable cause of action or in pleading the constituent elements of a cause of action.

In other words, it is a puerile exercise to analyze the substantive merits of whether or not the Plaintiffs have properly pleaded and shown a reasonable cause of action in negligence, misrepresentation, or breach of fiduciary duty, and I decline to do so.[7]

Takeaway

The court’s decision in the Fortress cases demonstrates that pre-certification motions to strike remain a tool in the toolbox for defendants in class proceedings. Although defendants often are (and should be) reluctant to pursue those motions given the strong preference to get to certification first, this decision provides a helpful reminder for the court that defendants are entitled to a reasonable statement of claim to which to respond. Even where the motion will not dispose of the entire action, a motion to strike may narrow the issues on which the parties will be required to adduce evidence on the certification motion and reduce the potential exposure of a defendant, thus enhancing the efficiency of the litigation.

[1] McDowell and Aversa v. Fortress Real Capital Inc., 2017 ONSC 4791 [McDowell and Aversa]; McDowell v. Fortress Real Capital Inc., 2017 ONSC 4789; Martino v. Fortress Developments Inc., 2017 ONSC 4790; Madryga v. Fortress Real Capital Inc., 2017 ONSC 4792.

[2] McDowell and Aversa, supra, at paras. 1, 22, 38.

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

[4] R. v. Imperial Tobacco Ltd., 2011 SCC 42.

[5] Cannon v. Funds for Canada Foundation, 2010 ONSC 146.

[6] McDowell and Aversa, supra, at paras. 63-65.

[7] Ibid at paras. 71-72.

Proven or presumed prejudice? The Quebec Court of Appeal clarifies the burden of proof under consumer protection law

Posted in Class Actions

Is a consumer plaintiff required to prove the actual prejudice suffered and its causal link with the alleged violation in order to obtain compensatory damages under Quebec’s Consumer Protection Act (“CPA”)? In recent years, counsel acting for plaintiffs and defendants in class actions tended to have different answers to this question based on different interpretations of the Supreme Court decision in Richard v. Time Inc., 2012 SCC 8 (“Time”). In the recent judgment Videotron c. Union des consommateurs, 2017 QCCA 738, the Quebec Court of Appeal clarifies the issue and the meaning of the “absolute presumption of prejudice” discussed by the Supreme Court in Time.

Background

In 2007, Videotron, a major Internet service provider in Quebec, introduced a new Internet plan providing an unlimited access for a monthly fixed amount. The plan was an enormous success, with about 40,000 customers who subscribed to it.

Soon after its launch, Videotron experienced technical challenges with its new plan. A minority of subscribers were consuming an excessive amount of bandwidth, resulting in a generalized slowdown of the network for all subscribers.

In order to resolve the issue, Videotron imposed a cap on monthly consumption of bandwidth (100 Go) and charged a $1.50 fee for each additional Go consumed by subscribers under the plan. This change was made applicable to existing subscriptions, pursuant to a clause in the contract allowing Videotron to change certain conditions of the plan, as well as new subscriptions. Videotron nonetheless continued to promote its plan as providing an unlimited access.

A class action was filed shortly thereafter, alleging that Videotron could not unilaterally change the conditions of its plan. The plaintiff also alleged that Videotron misrepresented the changes it made to the plan to its existing subscribers.

The class action was authorized (certified in Quebec parlance) in 2011 and, following a trial, a judgment on the merits of the case was rendered in August 2015. Relying extensively on Time, and invoking section 272 of the CPA, the Quebec Superior Court held Videotron liable and used the “presumption of prejudice” arising from the CPA to grant damages to various subclasses. An appeal followed.

Court of Appeal Decision

The Court of Appeal confirmed that Time stands for the principle that when a violation of the CPA is established, a consumer plaintiff may obtain one of the remedies provided by section 272 of the CPA without having to prove an actual prejudice and causation (e.g., that the consumer would not have entered into the contract but for the merchant’s misrepresentation). In other words, the consumer plaintiff then benefits from a “presumption of prejudice”. However, the Court of Appeal clarified that Time draws a distinction between the two subparagraphs of section 272 CPA, with the so-called “presumption of prejudice” applying only to the contractual remedies contemplated in sub-paragraph 1 (performance of the obligation, reduction of the obligation or cancellation of the contract) and not to claims of compensatory damages contemplated by subparagraph 2.

The Court of Appeal held that any claim for compensatory damages under subparagraph 2 of section 272 CPA remains subject to the general rules of Quebec civil law, which require proof of prejudice and causation.

Based on this finding, the Court of Appeal reversed some of the damages awarded by the Superior Court, including those to compensate class members for the loss of a “multiservice rebate”, on the basis that causation between that loss and Videotron’s CPA violation had not been proven.  Citing their earlier decision in Montreal v. Biondi, 2013 QCCA 404, the Court of Appeal mentioned that causation, in the context of a class action, can be proven by a factual presumption, but that it must be a presumption arising out of the evidence, which was not the case here.

Commentary

The Videotron judgment is significant in its clarification of the restricted scope of the “presumption of prejudice” that arises under the s. 272 CPA. Other judgments by the Court of Appeal on the issue would be welcome, however, since a Superior Court judge recently refused in Option Consommateurs c. Meubles Léon, 2013 QCCS 2028 to follow Videotron on the basis that, in his view, the Court of Appeal’s interpretation of the Supreme Court Time decision was incorrect. Stay tuned.

Farmer’s Odyssey: Prolonged Class Action Proceedings Against Saskatchewan Ministry of Agriculture Ends in Summary Dismissal

Posted in Class Actions

In Holland v Saskatchewan (Ministry of Agriculture), 2017 SKQB 172, the Saskatchewan Court of Queen’s Bench dismissed a class action brought by a group of deer and elk farmers against the Saskatchewan Ministry of Agriculture. The class action alleged damages caused by the Ministry’s negligent implementation of a Chronic Wasting Disease monitoring program. The Court of Queen’s Bench concluded that the Ministry had statutory immunity for their actions and granted summary dismissal of the class action. The history of the case leading up to the summary dismissal reveals a legal odyssey lasting 13 years and taking the parties all the way to the Supreme Court of Canada and back.

Background

A group of game farmers (the “Farmers”) refused to register for a federal monitoring program (the “Program”) designed to curtail the spread of Chronic Wasting Disease.  As a result of their refusal, the Saskatchewan Ministry of Agriculture (the “Ministry”) downgraded the Farmers’ livestock to the lowest certification level – “surveillance” status. The market value of the Farmers’ livestock dropped.

The Farmers objected to provisions in the Program that required farmers to indemnify the Ministry for any damages incurred in the course of the monitoring program. The Farmers applied for judicial review of the Program. The indemnification provisions were found to be ultra vires and the court declared that the certification downgrades were invalid.[1]  This placed the Ministry in a legal dilemma. By this point in time, the regulatory environment had changed and the Ministry no longer had the power to undo the certification downgrades. As a result, the Ministry was unable to implement the judicial decree.

The Class Action

The Farmers started a class action against the Ministry to recover the financial damages resulting from the invalid certification downgrades. The Farmers’ statement of claim (the “Claim”) could be broadly summarized as alleging two acts of negligence on the part of the government:

  1. Requiring the Farmers to enter into a broad indemnification agreement with the Ministry as part of the Program; and
  2. Downgrading the herd status of the Farmers who objected to the Program.

The Ministry moved to strike the Claim. The motions judge denied the Ministry’s motion, and the Ministry appealed to the Saskatchewan Court of Appeal.[2]  The Court of Appeal followed Saskatchewan Wheat Pool and concluded that a breach of statutory duty is insufficient on its own to ground a claim of negligence.[3]  The Court of Appeal struck the claims of negligence, and the Farmers appealed to the Supreme Court of Canada.

The Supreme Court allowed the appeal in part.[4]  The Supreme Court struck the Farmers’ claim that the government negligently acted outside the law, but upheld the claim that the government negligently failed to implement a judicial decree.  The Supreme Court explained the distinction between “policy” and “operational” decisions. A “policy” decision occurs when the government decides what acts to perform under a statute.  Policy decisions do not give rise to liability in negligence. An “operational” decision is the manner in which the government implements a policy decision and does open the government up to liability in negligence.  The Ministry’s failure to implement the judicial decree was an “operational” decision, and therefore this aspect of the Claim was not struck.

The Application for Summary Judgment

The Supreme Court’s ruling reduced the Claim to a single allegation. Was the government liable for the Farmers’ damages due to the government’s negligent implementation of a judicial decree? The class proceedings were certified and both parties moved for summary judgment.[5]

The Saskatchewan Court of Queen’s Bench accepted that in principle there exists a tort of negligent implementation of a judicial decree, and that in principle the Ministry was negligent in implementing the judicial decree.  However, the Court of Queen’s Bench was quick to note that the question of negligence was academic. The more important question was whether the Ministry had legal immunity for their actions under The Animal Products Act (the “Act”).[6]

The “Good Faith Shield”

The Ministry was operating under the Act at the time they implemented the Program. In Section 18.1 of the Act, the Ministry is given immunity for actions made in “good faith” with the intention of assisting the game industry.[7]

The Court of Queen’s Bench surveyed the case law relating to similar immunity provisions, or “good faith shields”. In Deren v SaskPower and Saskatchewan Watershed Authority, 2015 SKQB 366, the court enumerated the “badges” of bad faith, and noted that it is possible to act in good faith while committing a tortious or unlawful act. The Court of Queen’s Bench concluded that good faith provisions are remedial, and courts should give them a broad and liberal interpretation. The Court of Queen’s Bench then turned to discuss the badges of bad faith.

There was no evidence that the Ministry acted with the intention of doing harm. While reasonable people could disagree on the best course of action, it would not be reasonable to conclude that the Ministry’s actions were in bad faith. Further, the Ministry was proactive in attempting to avoid the dilemma that resulted from the judicial review. During the application for judicial review, the Ministry had attempted to notify the court that the Ministry no longer had the ability to undo the certification downgrades.

There was no evidence of bad faith and therefore the Ministry had legal immunity. The Court of Queen’s Bench granted the Ministry’s application for summary dismissal. Reflecting on the heroic length of the legal odyssey, the Court of Queen’s Bench remarked that “they had no appetite to award costs.”

[1] 2004 SKQB 478.

[2] 2006 SKQB 99.

[3] 2007 SKCA 18.

[4] [2008] 2 SCR 551.

[5] 2017 SKQB 172.

[6] RSS 1978 (Supp), c A-20.2.

[7] RSS 1978 (Supp), c A-20.2.

Ontario Court of Appeal Affirms Aggregate Damages Appropriate

Posted in Appeals, Case Comments, Class Actions
Simran Choongh

The Ontario Court of Appeal has recently released two related decisions: Trillium Motor World Ltd. v Cassels Brock & Blackwell LLP, 2017 ONCA 544 (“Cassels Decision”) and Trillium Motor World Ltd. v General Motors of Canada Limited, 2017 ONCA 545 (“GM Decision”).

Both are trial decisions relating to class actions arising from General Motors of Canada Limited’s (“GMCL”) 2009 restructuring plan. Though many legal issues are addressed in the two sets of reasons, the focus of this post is the Court’s consideration of the appropriateness of aggregate damages in class action suits in the Cassels Decision.

Background

In 2009, as a result of the global financial crisis, GMCL required a financial bailout from the Canadian government. This required an acceptable restructuring plan.

The issue arose when three of the key players retained Cassels Brock & Blackwell LLP (“Cassels”) for legal advice – Industry Canada, 51 Saturn dealers, and a group representing GMCL dealers across Canada.  Cassels failed to disclose its retainer with Industry Canada to the GMCL dealers, despite the potential adverse legal interests.

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