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Canadian Class Actions Monitor

The Quebec Court of Appeal comments on the Role of Class Action Representative and Interactions with Class Counsel, in the context of Abusive Proceedings

Posted in Appeals, Class Actions
David E. RobergeMichel Gagné

In a judgment issued on February 19, 2018 in the matter of Deraspe v. Zinc Electrolytique du Canada Ltée[1], the Quebec Court of Appeal (Justices Dutil and Roy concurring, with Justice Rancourt dissenting) confirmed the decision of the Superior Court declaring both class representative and counsel to be vexatious litigants and disqualifying them from the case. This led the majority of the Court of Appeal to make interesting comments on the role expected of the representative in the class action context.

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What’s the test? Admissibility of Expert Opinion Evidence in Certification Applications

Posted in Class Actions
Theodore StathakosMia Tritter

The Saskatchewan Court of Queen’s Bench in Stout v. Bayer Inc., 2017 SKQB 329 (“Stout”) confirmed that the same standard for the admissibility of expert evidence applies in class action certification applications as in other proceedings.  Evidence must satisfy the test for admissibility before it will be considered in the context of certification.  As such, the lesser standard of proof associated with the statutory certification requirements does not reduce the threshold of admissibility of expert opinion evidence in certification applications.

Facts in Stout

Stout is a proposed class action concerning the Essure Permanent Birth Control System (“Essure”), a permanent form of female birth control.[1]  The plaintiffs in Stout allege that the defendants are liable under various causes of action for, among other things, the development, testing, manufacture, promotion, distribution and sale of Essure.[2]

In support of an application to certify the action as a class proceeding, one of the representative plaintiffs filed affidavits of two purported expert witnesses. Before the certification application was heard, the defendants sought an order to strike certain paragraphs of the first witness’ affidavit and an order striking the entire affidavit of the second witness.[3]

The defendants challenged the evidence on the basis that it did not meet the threshold requirements for admissibility of expert opinion evidence.[4]  The plaintiff contended that the lesser standard of proof required to establish the requirements for certification – “some basis in fact”-applied to expert evidence.[5]  The issue before the court was whether the affidavits, or portions thereof, were properly admissible in the application to certify the proposed class action.

Admissibility of evidence & standard of proof for certification

For admissibility of expert opinion evidence, the Supreme Court of Canada established a two-part test in R v Mohan, [1994] 2 SCR 9 (“Mohan”), and restated in White Burgess Langille Inman v Abbott and Haliburton Co, 2015 SCC 23 (“White Burgess”).  Expert evidence is admissible when:

(i) the four threshold requirements of admissibility are satisfied and

(ii) the benefits of admitting the evidence outweigh its potential risks.[6]

The four threshold criteria for the admission of expert evidence are (i) relevance, (ii) necessity, (iii) absence of any exclusionary rule and (iv) a properly qualified expert. With respect to the qualification requirement, Justice R.W. Elson in Stout noted that impartiality, independence and absence of bias should be considered.[7]

Relative to the general standard of admissibility, the standard of proof for certification is low. A representative plaintiff only needs to present sufficient evidence to establish “some basis in fact” for each of the certification requirements set out in the section 6(1) of The Class Actions Act.[8]

The two-part test applies in certification proceedings

The court in Stout held that the two-part Mohan test applies equally to evidence adduced in certification applications.[9] Justice R.W. Elson stated, “[w]hile the ‘some basis in fact’ standard of proof is clearly less than balance of probabilities standard, it does not diminish the application of the admissibility requirements, including those applicable to expert opinion evidence.”[10]

Analysis of the affidavits in Stout

The proposed affidavits were sworn by a nutritional epidemiologist[11] with a doctorate in physical activity and nutritional epidemiology[12] and an attorney from the United States[13] with an undergraduate degree in astronomy and physics as well as a law degree.[14]

The first witness deposed that she was asked to provide an expert opinion concerning “pharmacoepidemiology, adverse event reporting systems, and methods for assessing general causation for medical devices and adverse events.”[15] However, in cross-examination, she acknowledged that her training did not extend to the topic on which she opined.[16] Rather, her opinion was based on the review of literature published by experts in the field.[17] As such, the court found that the witness was not qualified to provide expert evidence with respect to the use of Essure, including its efficacy, labelling and potential for harm.[18] Her expertise in one field was not transferable to another by simply acquiring information without any specific training or experience in the subject matter.[19]

The second witness deposed that he was qualified as an expert in the Federal Court of Canada to give evidence on adverse event reporting generally and adverse event reporting systems.[20] However, in cross-examination, he admitted that in forming his opinion, he only considered evidence obtained from the plaintiff, deliberately discounting information that may support an alternative conclusion.[21] Based on this factor alone, the court found that, in addition to the witness’ lack of training in health-related matters, he did not qualify as an expert because he lacked independence in his opinion.[22]

Given that Justice R.W. Elson found that neither of the expert witnesses was properly qualified to give an opinion on the commonality of any of the proposed issues, the court did not proceed to the second part of the test. The court granted the defendants’ application, finding that the contents of the affidavits did not meet the threshold requirement for admissibility of expert evidence.

[1] Stout at para 5.

[2] Ibid at para 4.

[3] Ibid at para 11.

[4] Ibid at para 29.

[5] Ibid at para 30.

[6] White Burgess at paras 19 – 24.

[7] Stout at para 43.

[9] Stout at para 49.

[10] Ibid.

[11] Ibid at para 11.

[12] Ibid at para 14.

[13] Ibid at para 11.

[14] Ibid at para 19.

[15] Ibid at para 13.

[16] Ibid at para 16.

[17] Ibid at para 47.

[18] Ibid at para 51.

[19] Ibid.

[20] Ibid at para 23.

[21] Ibid at para 55.

[22] Ibid.

Federal Court confirms no cost awards granted against Plaintiffs for discontinuance of class proceedings under Rule 334.39(1)

Posted in Class Actions
Lan NguyenLyndsey Delamont

In the recent decision of Dennis v Canada, the Federal Court upheld the principle of the “no-costs” approach for plaintiffs who wish to discontinue an action under Rule 334.39(1) of the Federal Court Rules (the “Rules).

Background

Earlier this spring, farmers in Western Canada started a class proceeding in Manitoba against the Minister of Agriculture and Agri-Food, and the former Canadian Wheat Board (“CWB”) and its successors, (collectively, the “Defendants”). Edward Dennis is the named Plaintiff in the proposed action, which is noted to have impacted over 70,000 farmers in the provinces of Manitoba, Saskatchewan, Alberta and the Peace River District of British Columbia (collectively, the “Plaintiffs”). The claim contends that over $145 million had been withheld from farmers and transferred to a contingency fund by the CWB between the crop years of 2010/2011 and 2011/2012. The Plaintiffs now seek this lost amount, in addition to over $15 million in damages. A Statement of Claim was filed both at the Federal Court and at the Manitoba Court of Queen’s Bench.

The Plaintiffs later sought to discontinue the action in the Federal Court because the eventual successor of the CWB was a private entity and therefore not under the jurisdiction of the Federal Court. This matter has not yet been certified as a class action.

Discontinuance of the Federal Claim

Rule 334.3 requires leave of the Federal Court for discontinuances of class actions. All but one of the Defendants consented to the discontinuance. The CWB opposed and brought an application for the summary dismissal of the class action. In considering the application, Justice Barnes held that Rule 334.3 should be read in light of Rule 165, which states that a plaintiff is entitled, as of right, to discontinue a proceeding without the consent of the opposing side, subject to bearing any resulting costs. [3] In the absence of bad faith or misconduct, there is nothing in the Rules that would authorize the Court to impose a dismissal in substitution for a requested discontinuance. Forcing a plaintiff to proceed with an action they no longer want to prosecute would be a waste of judicial resources. [4]

With respect to costs, both of the parties agreed that the Defendants were entitled to costs in connection with the previous motion to strike, and the Federal Court awarded the Defendants $3,500 inclusive of disbursements. In addition, the Defendants sought further costs of the proceeding between the ranges of $11,415.80 to $161,149.84. Justice Barnes applied Rule 334.39(1) which states that no costs may be awarded against any party to a motion for certification of a class proceeding, unless:

(a)             the conduct of the party unnecessarily lengthened the duration of the proceeding;

(b)             any step in the proceeding by the party was improper, vexatious or unnecessary or was taken through negligence, mistake or excessive caution; or

(c)             exceptional circumstances make it unjust to deprive the successful party of costs. [5]

Justice Barnes also referenced the Federal Court of Appeal decision Campbell v Canada which addressed the reasoning for the “no costs” principle under Rule 334.39(1), which is intended to limit the “role of costs as a disincentive to class action plaintiffs.” [7] Justice Barnes held that, with the exception of the motion to strike and the costs awarded for that motion, all of the other material steps in the current proceeding took place after the Plaintiffs’ motion to certify, and were not improper, abusive, or vexatious. [8] Justice Barnes notes that the Plaintiffs’ reasons in Dennis to only pursue their claim in Manitoba was not futile, but rather a matter of strategy. Therefore, the Defendants were not entitled to any additional cost awards.

Implications

The Federal Court’s decision in Dennis is a reminder that under Rule 334.39(1), barring any of the stated exceptions, there are limited avenues of cost sanctions against plaintiffs who decide to discontinue a Federal class proceeding. However, there may be the potential for costs if steps were taken prior to a plaintiff’s motion to certify, although this may still be limited to a modest amount, as was the case in Dennis.

The principle of a “no-costs” approach exists to encourage class actions as a cost-effective method for classes of plaintiffs to bring their claims. As a result, defendants in class action proceedings should be cognizant of the inherent risks and likely outcome when considering pursuing costs with respect to a plaintiff’s discontinuance. Dennis also highlights the complexity of planning and handling multi-jurisdictional class actions for both plaintiffs and defendants in relation to strategy, resources, and overall cost considerations.

[1] Dennis v Canada, 2017 FC 1011 (CanLII) [Dennis].

[2] Federal Court Rules, SOR/98-106 [Rules].

[3] Dennis, supra note 1 at para 3.

[4] Ibid at para 6.

[5] Rules, supra note 2, R 334.39(1).

[6] Campbell v Canada (Attorney General), 2012 FCA 45 [Campbell].

[7] Dennis, supra note 1 at para 11, citing Campbell at para 44.

[8] Dennis, supra note 1 at para 12.

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
Anna-Marie ManleyMia 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.