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Multi-jurisdictional mess

Legal Report \ Litigation
|Written By Elizabeth Raymer
Multi-jurisdictional mess
Illustration: Jeannie Phan

With no national class litigation regime, managing class proceedings in Canada can get complex.

In October 2016, the Supreme Court of Canada ruled in Endeanv. British Columbia that provincial Superior Court judges may hear motions in multi-jurisdictional class proceedings outside their home provinces. But to the extent that the bar was waiting for a decision from the SCC that might provide some clarity on multi-jurisdictional class actions, Endean failed to provide that.

Today, the class-action litigation bar is still waiting for a case that will have a significant impact on the management of multi-jurisdictional class proceedings; but practitioners see other trends in this sector, such as a low threshold to class certification and conflicting law on litigants’ requirement to show harm.

“I don’t think [Endean] has resulted in a sea change, and I don’t think many people expected it to do so,” says Ranjan Agarwal, litigation partner at Bennett Jones LLP in Toronto, whose practice includes class actions. When the Endean case got up to the SCC, “it was argued on pretty narrow grounds.”

Of the cases that have referred to Endean since that decision was handed down, “in none of them have you seen the courts expanding the powers of class action judges in a significant way,” says Sandra Forbes, partner at Davies Ward Phillips & Vineberg LLP in Toronto, who specializes in dispute resolution and competition litigation, including class actions.

Endean upheld the principle “that class-action legislation should be interpreted broadly and consistent with the purpose of class action, which is to provide access to justice,” she says, and it gave a very broad definition to the inherent jurisdiction of the court.

The Supreme Court “found that even if there was a province that doesn’t have a specific legislative provision that allows a class-action judge to make whatever orders he or she thinks is appropriate for the conduct of the action, that even if you don’t have that statute provision, a judge could find that power within [his or her] inherent jurisdiction.”

A national class action regime

In the United States, complex class action lawsuits are governed by a multi-district litigation system: a federal legal procedure designed to facilitate the processing of cases such as air disaster litigation and complex product liability suits.

In Canada, though, there is no national class litigation regime, a situation one practitioner has described as “a mess.”

“We continue to labour under uncertainty regarding enforcement of national class actions,” says Brad Dixon, the Vancouver-based national co-chairman of the Class Actions Group for Borden Ladner Gervais LLP. “You continue to see parties bringing multiple settlement approval applications in multiple jurisdictions, because if they proceed with a national class action in one jurisdiction, the application may not ‘stick.’” The Endean approach may offer some efficiency, says Dixon, but not a great deal and only under exceptional cases.

So, to the extent that there are multiple class actions across the country, “you have multiple actions, not consolidated ones,” says Eliot Kolers, head of the Litigation & Dispute Resolution Group in the Toronto office of Stikeman Elliott LLP. “They’re not managed by a single judge. Endean doesn’t change that.”

In typical multi-jurisdictional class action litigation, defendants and plaintiffs agree in which province the class action should proceed, and law firms representing the various plaintiffs and defendants across the country will join together in representing the class or defending the action. If British Columbia is chosen as the jurisdiction, for example, then the Ontario and Quebec cases would stay dormant, Kolers explains, with each group of plaintiffs represented by counsel, often at different firms and in their own provinces.

In this scenario, says Kolers, “If there’s something that needs national approval — let’s say one defendant settles — then all three groups of plaintiffs, who are typically working together, will bring settlement approval motions in each of their own jurisdictions to get it approved in all three places before the settlement is implemented.”

A video-link hookup can link courtrooms in multiple provinces, allowing participants to see all courtrooms simultaneously. “One counsel will take the lead, and the other counsel in other provinces will watch on TV. It’s all being done at the same time on the same day.” In the Endean case, the judges heard the motion sitting together, in person, at the conference they all happened to be attending on that day. But, says Kolers, “Until there’s a national multi-district litigation system, a case like Endean is more of a one-off.”

In an article penned for the National Journal of Constitutional Law in 2010, Peter Hogg and Gordon McKee questioned whether national class actions were constitutional. But, says Agarwal, “There may be other models that could be adopted” that may afford more co-operation between counsel and avoid competing class actions, stay motions and carriage motions.

Yves Martineau, partner in the Litigation & Dispute Resolution Group of Stikeman Elliott’s Montreal office, says he has noticed “a great deal of co-operation” among counsel in multi-jurisdictional class action litigation over the past decade or so. “Once litigants choose their venues of preference to go to trial, judges in other provinces will show deference to that choice and, as the Supreme Court has said [in CanadaPost Corp. v. Lépine], they should . . . have faith in fair treatment [by] all provinces.”

In the end, though, “it’s the court that will have the last word” regarding jurisdiction in which to hear the class action, says Martineau.

In 2009’s Lépine case, the courts were “politely lectured” for failing to provide the needed co-operation and more efficient management between the courts, he says. That case involved two class proceedings that gave rise to a situation of lis pendens, as the Quebec proceeding had been commenced before the one in Ontario.

“There was a problem with the courts being maybe over-protective of their own citizens and not fully confident that they will get as good a treatment in the ‘foreign’ or other provincial court,” says Martineau. “Kudos to the courts, starting with the Supreme Court, and lower courts for how [the SCC’s] message was received and applied,” he says, adding that “we’re all the better” for that decision.

Although a new Quebec Code provision, instituted at the beginning of 2016, requires Quebec courts to protect the rights and interests of Quebec residents in multi-jurisdictional class actions when stays of proceedings are requested in Quebec, Martineau says that the provision is simply a “codification” of the principles that were already applied in Quebec courts.

Today, more and more, “you will see courts co-operating between themselves” in multi-jurisdictional class actions, he notes. “Each judge . . . will communicate with judges in charge of a class action” on the same matter, he says. “One judgment will have impact” and litigants in other jurisdictions will generally abide by that judgment.

Agarwal is also noticing a “modification of the rules” when plaintiffs co-operate in class actions. For example, he says, Ontario has a cost regime whereas British Columbia does not, and plaintiffs may decide to bring an action in Ontario but stipulate that it be a no-cost regime, as in B.C.

Uneasy alliance

For defendants’ counsel, Agarwal says, “We’re seeing a lot of co-operation among plaintiffs’ lawyers, and the result is everyone’s come to an uneasy alliance.” But there remain pockets of non-co-operation among plaintiffs’ lawyers, where defendants face class actions on the same issue in more than one common-law province, he says.

“I think now defendants might . . . use the rules of the court and say, ‘I’m going to become a more aggressive party so that my client is only facing one action as opposed to three or four actions.’”

Look for defendants’ counsel asking the court to make rulings “as to how this is going to operate” if plaintiffs aren’t co-operating with each other, he says.

“I think we may be in for a little more aggressive manoeuvering by defendants as time goes on,” with defendants moving on their own to stay actions or moving under s. 6 in Saskatchewan’s Class Actions Act for an order for direction in how to manage the actions, in cases where plaintiffs are not co-operating with each other across jurisdictions.

Other class action litigation issues of concern to defence counsel are not specifically multi-jurisdictional.

 

Low bar to certification

The bar to certification is low, especially in Ontario and British Columbia, say Kolers and others.

“We don’t feel that the plaintiffs are necessarily meeting the evidentiary thresholds that they should be required to meet, in competition cases, for example,” he says. “It sure would be nice to have a [multi-district litigation system] system, but [it] doesn’t seem likely [that] we’ll get one any time soon. What we’re going to see is more of staying motions and procedural fights.”

BLG’s Dixon calls it “a pendulum effect. . . . The certification procedure isn’t intended to be a procedure on the merits, but [there] should be some basis in fact by the claim itself,” he says. “The pendulum is swinging to a lower and lower threshold.”

Requirement to show harm

Godfrey v. Sony Corporation involved an appeal from a B.C. Supreme Court decision allowing certification of a class action on behalf of both direct and indirect purchasers of optical disc drives. In the decision of the British Columbia Court of Appeal, handed down in August, the court decided on several certification matters for class actions that could have wide-ranging effects on competition class actions commenced in Canada.

One finding was that there was no requirement to show harm to all members of a class, taking a broad interpretation of the Supreme Court of Canada’s decision in 2013’s class action trilogy holding that the commonality requirement is satisfied where the plaintiffs present a plausible method to demonstrate that an overcharge reached the indirect purchaser level of the distribution channel, not each individual withinthat level.

There is an outstanding application for leave to appeal to the Supreme Court on some of the issues raised in the case, says Forbes.

“But the debate is what did [then Supreme Court of Canada] Justice Rothstein mean when he said in [Pro‑Sys Consultants Ltd. v. Microsoft Corporation] that the plaintiffs have to show they have a methodology that can prove damages on a class-wide basis?” asks Forbes. In a case where there are various levels of purchasers, both direct and indirect, as are often seen in competition and anti-trust cases, he says, “Do you have to show that harm is passed on to the indirect purchaser level of the class or does the plaintiff have to show some sort of methodology that the trial judge can use at trial [as to] who in this class was harmed and belongs in the class and who wasn’t harmed and shouldn’t belong to the class? What has to be shown at certification?”

It’s a “live legal issue,” says Kolers, as part of the current conflict between British Columbia and Ontario law (B.C. has said that indirect purchasers’ claims are valid, whereas Ontario’s Superior Court has said they are not; the Ontario Court of Appeal has not ruled in its case yet). By purporting to make the conspirators liable for price hikes for everyone, it expands the impact of harm claimed in compensation, he says.

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