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Feature: Class action chaos

|Written By Bill Rogers
Feature: Class action chaos

Of all the challenges faced by corporate counsel, one is particularly daunting. It’s the nightmare of class action lawsuits. Increasingly, plaintiff lawyers from coast to coast are turning up the heat, and the odds of a corporation getting targeted are good and getting better. But Canada has no national class action clearing centre to deal with the chaos of multiple suits in multiple jurisdictions, and distil them into one action, in one place. That means corporations often find themselves putting out fires across the country.

Brent Munro, who has been corporate counsel with SaskTel in Regina for 22 years, has first-hand experience. It started with a bunch of class actions being launched against Canada’s big cellphone service providers. The nub of the complaint is the allegation that the cellphone “system administration” or “system access” fee is being improperly collected by wireless firms like Rogers, Bell, Telus, and SaskTel. “I can’t comment on what the plaintiffs were thinking,” says Munro, “but essentially the same suit was issued in virtually every province in Canada.”


That introduces practical problems, Munro explains. “OK, I’m sued in Saskatchewan. I’ve got to retain counsel here. I’m sued in Quebec, so I need a lawyer there. And I hope I’m not doing anything there that will somehow negatively affect me in respect of the Saskatchewan proceedings. And in the meantime, we’ve got the same suit hanging out there in places like British Columbia, Alberta, Manitoba, Ontario, Nova Scotia.”


Disposing of an action in one jurisdiction doesn’t necessarily put an end to the problem. “It’s not as if you’re in one court that can bind everybody else,” Munro says. “That’s one of the difficulties for a defendant today. If you get sued in a class action in one jurisdiction and you settle it there, that doesn’t do anything to address your exposure in other jurisdictions.”


Expense is another headache. Corporate counsel can’t simply hide their heads in the sand. “Whether or not the suit has any merit,” says Munro, “you’re looking at engaging external counsel in every jurisdiction. You just can’t afford to ignore the fact that you’ve been sued in another province.”


True, there have been many de facto national class actions, facilitated by co-operation among courts and counsel. Often, these actions crystallize in the Ontario courts, which carry the torch for all class members Canada-wide, binding all of them, except those who choose to opt-out. But on the other hand, the tangled web of overlapping suits remains a real problem, exemplified by the ongoing class actions against Merck, makers of arthritis pill Vioxx. No less than 30 distinct suits — some national in scope, some not — were filed in 2004. It isn’t pretty.


To make matters worse, there is the troublesome issue of whether it’s even legitimate, from a legal point of view, to have a court in one province bind plaintiffs from other provinces. Yes, it’s been done many times — but is it constitutional within the framework of the Canadian federation? The debate on that point is ongoing, and the Supreme Court of Canada has not yet had a test case to determine the answer.


The Uniform Law Conference of Canada (ULCC), founded 90 years ago with the goal of suggesting ways in which legal regimes across Canada can be made more uniform and harmonious, has been grappling with this issue for some time.


Several ideas have been put forward by the ULCC. One option is to appoint a body — perhaps the Federal Court — to act as a national class action clearing centre. This concept is inspired by the American system featuring the U.S. Federal Court’s Judicial Panel on Multi-district Litigation, which funnels multiple class actions into one action, in one court.


Another possibility is to expand the jurisdiction of the Federal Court, allowing it to take carriage of certain types of class actions that have national dimensions.


The ULCC has also developed proposals to improve the existing practice of judges and lawyers co-operating to make de facto national class actions. With respect to choosing a court, various criteria have been suggested: for instance, absent a good reason to the contrary, the first court to certify a class action should take carriage of it. Other factors that might be taken into account would include the alleged basis for liability, and the geographical location of class members, witnesses, and evidence.


As attractive as such ideas might be, the only thing that has actually been done so far — and by all accounts it’s a significant step in the right direction — is the creation of a national registry, known as the National Class Action Database, on the Canadian Bar Association’s web site (www.cba.org/ClassActions).


It’s a voluntary program, endorsed by the Canadian Judicial Council, where lawyers e-mail copies of their originating process and notice of motion for certification, not including affidavits in support. It’s a welcome development.


But the bottom line is that the law around class actions is still far from certain. Donald Bisson, head of Quebec class actions at McCarthy Tétrault LLP in Montreal, points out that “registries change nothing about enforceability of class actions from one province to another, or what we’re supposed to do when there are parallel class actions — can judges stay one action in favour of another?”


As far as case law is concerned, Bisson notes, “We really only have authorities on side issues, from superior courts. There’s no clear direction from a court of appeal, and nothing from the Supreme Court.”


One problem, he says, is that it would be hard for Quebec class members to be bound by a non-Quebec court, simply because legal remedies in Quebec tend to be quite different from the rest of Canada.


It’s inevitable that the Supreme Court will confront these issues, Bisson says. “It may take a few years, but definitely it’s going to come.” He predicts that the top court will rule that national class actions are potentially OK, and that they should be evaluated on a case-by-case basis, having regard to the merits of the lawsuit and the enforceability of relief from one province to another. He adds that there might be provision for some kind of hearing to take place in each province, to make sure the given class action settlement is appropriate. In any event, he says he would be “surprised if the Supreme Court says it’s impossible to have national classes — very surprised.”


Katherine Kay of Stikeman Elliott LLP in Toronto does a lot of class action work, often being retained by corporate counsel to act as “quarterback” when multiple suits crop up. She feels it might be a long wait before the Supreme Court opines on the issue. After all, who is going to be crazy enough to bring a case all the way up?


“Counsel are not particularly keen to have a fight about this if it can be otherwise worked out,” says Kay. “Because from a client’s perspective, it’s really not a good thing to be spending money on — fighting over which province goes first.”


Going forward, she predicts that “we’re going to see more and more class actions. I don’t think it will become debilitating, but it will continue to increase. So inside counsel must anticipate that at some point you’re going to get sued in a class action. And you’re probably not going to get sued in just one class action. You’re probably going to face cases in several different provinces.”

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