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Canadian Class Actions Monitor

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


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]


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]


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.


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.


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.


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.


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.

Continue Reading

Who are the principals of class counsel?

Posted in Case Comments, Class Actions
Paul Blanchard

In a class action, diverging opinions between a class representative and his lawyer can lead to delicate situations, especially when the outcome of the proceeding is at stake. In the recent case of Lépine c. Société canadienne des postes,[1] the Quebec Superior Court had to rule on an application to approve a settlement transaction filed by class counsel, supported by the defendant, but forcefully contested by the class representative.

1.               Background

Michel Lépine (“Lépine”) had bought some service from the Canada Post Corporation (“Canada Post”), consisting of free lifetime Internet access with the purchase of a CD-ROM. A month later, the free internet service was terminated. The same service was then offered to consumers, but at a price of $7.95 or $9.95 per month, depending on the options chosen by the subscribers.

Lépine filed an application for authorization to institute a class action against Canada Post and Cybersurf, the Internet service provider. The authorization was granted by the Quebec Superior Court. Similar proceedings were filed in Ontario and British Columbia, and subsequently settled.

Continue Reading

Douez v. Facebook, Inc.: Supreme Court of Canada decision creates new uncertainty about enforceability of forum selection clauses in consumer contracts

Posted in Class Actions
Alexandra CocksEdmond Chen

In a recent decision that could affect consumer class actions in Canada, the Supreme Court of Canada ruled in Douez v. Facebook, Inc. (“Facebook”) that a forum selection clause contained in Facebook’s Terms of Service was unenforceable when applied to a claim for breach of British Columbia’s privacy legislation. The precedent set by this case creates more uncertainty around how forum selection clauses will be applied by Canadian courts and could give plaintiffs new ammunition to avoid forum selection clauses in pursuing their claims. In allowing the appeal, the Supreme Court of Canada significantly modified the test for validity of forum selection clauses from Z.I. Pompey Industrie v. ECU-Line N.V. (the “Pompey test”).

We have also reported on the implications of this decision on privacy and cyberspace law.


Ms. Douez brought a proposed class action in British Columbia on behalf of more than 1.8 million Facebook users. She alleges that an advertising product called “Sponsored Stories” that was briefly used in 2011 violated section 3(2) of the British Columbia Privacy Act. The advertising used a user’s profile picture and Facebook posts in advertisements on their friends’ “newsfeeds” on the site. Ms. Douez alleges that was done without the user’s consent.

The BC Supreme Court rejected Facebook’s application seeking to enforce the forum selection clause mandating that Facebook users pursue lawsuits exclusively in Northern Californian courts and certified the class action. The BC Court of Appeal reversed that decision and ruled that the forum selection clause was enforceable, effectively ending the class action.

Supreme Court of Canada Decision- introducing public policy considerations into the “strong cause” test

In a narrow 4-3 decision, the Supreme Court of Canada overturned the BC Court of Appeal’s decision and modified the application of the Pompey test for enforceability of forum selection clauses. The Pompey test consists of a two-step analysis:

  1. Can the applicant prove that the clause is “valid, clear and enforceable” under contract law? At this point, the respondent may also raise defences of unconscionability, undue influence or fraud.
  2. If the clause passes step 1, can the respondent show “strong cause” for the court not to enforce the clause?

Although the Court unanimously agreed that the Pompey test remains the correct framework for determining the enforceability of forum selection clauses, the majority modified the traditionally jurisdictional factors to be considered under the second step of the test.

The majority ruled that beyond jurisdictional questions, the court should take into account public policy considerations related to “gross inequality of bargaining power between the parties and the nature of the rights at stake.” The Court sought to balance uncertainty for companies with the ability of consumers to access justice following an infringement of their rights.

  • The majority held there was gross inequality in bargaining power because the Terms of Service were a “consumer contract of adhesion,” where a user must accept all the terms as written, without a right to negotiate, in order to use Facebook. The implication is that all consumer contracts of adhesion will have this weigh against them when determining enforceability of these clauses, regardless of whether the contract was actually unfair or not.
  • Although forum selection clauses in consumer contracts have already been legislated as having limited enforceability in Québec, this increases the risk that they will be found unenforceable across all Canadian jurisdictions.
  • The majority held that due to the “quasi-constitutional” nature of the rights granted by the Privacy Act, Canadian courts are better suited to situate the case within the relevant “social and cultural context” than foreign courts.

Taking these factors into account with jurisdictional issues, the majority ruled that there was strong cause to not enforce the forum selection clause when applied to an action under the Privacy Act. As a result, the BC Supreme Court decision certifying the class action was restored.


The Facebook decision clearly signals that consumer protection and the protection of privacy rights are at the forefront of judicial concerns in Canada. While forum selection clauses remain a good way to ensure certainty in constraining potential legal action, their enforceability is now uncertain and likely be challenged by plaintiffs in consumer claims, especially in cases involving consumer contracts of adhesion or privacy related claims.

With an increasing trend of privacy related class action lawsuits in Canada as consumer data continues to be commodified in untested ways and targeted by hackers, due diligence in assessing privacy risks is even more important for companies offering services in Canada.

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

Posted in Class Actions
Paul DavisOksana Migitko

The Ontario Superior Court of Justice recently certified a case that, as reported by some media, could change Canadian hockey forever.[1] Two representative plaintiffs, Sam Berg, a former Niagara IceDogs forward, and Danial Pachis, a former member of the Oshawa Generals, will be allowed to pursue a lawsuit against the OHL and its clubs[2] alleging that junior hockey players do not get what they are entitled to under the law, namely, minimum wages for their services on the basis that they are employees. The case demonstrates the difficulties of pursuing a cross-border class action where some members of the class reside in Canada and others reside in the United States.

Students or employees?

Berg and Pachis’ case revolves around the “single profound question” of whether junior players are employees of their clubs and, if so, at what moment amateur athletes become professionals.[3] The plaintiffs allege that major junior players are employees because their relationships with their respective teams are identical to those between an employer operating a commercial organization and its staff. The OHL and its teams claim, in contrast, that a player is not an employee but a participant in a multi-faceted development program that focuses on athletes’ sports training, education, and character growth. The clubs’ aim is to provide young players with educational opportunities to choose a right career path both inside and outside of hockey. Continue Reading

3rd Edition of E-Discovery in Canada now available

Posted in Class Actions



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

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