Executive Summary: Key Legal and Evidentiary Issues

• Overlap and lis pendens between two proposed class actions concerning fraudulent cryptocurrency and investment ads disseminated on Facebook/Meta.
• Scope and sufficiency of the first national class authorization application (Gauthier/Larouche), including whether it adequately protects Québec residents and meets the “certain evidence” threshold at authorization.
• Attempted “aggressive” voluntary intervention by later applicants (Barrette/Viens) to reopen the authorization hearing, introduce expert evidence, and seek priority for their Québec-only class action.
• Application of the Servier “first-to-file” rule, as softened in Schmidt, to determine whether the later class action could displace the earlier one based on the best interests of putative members.
• Assessment of whether the expert report filed in the later proceeding is necessary or helpful at the authorization stage, and whether its focus on public-figure victims changes the nature of the existing case.
• Consideration of proportionality, delay, prejudice, and proper administration of justice in deciding whether to reopen debates, allow intervention, and suspend the first proceeding.

Background and parties

Johanne Gauthier et Fernand Larouche filed an application in April 2023 (later amended in May 2024) seeking authorization to institute a class action against Facebook Canada Ltd. and Meta Platforms/Facebook Inc. They act on behalf of a proposed national class of individuals across Canada who suffered financial losses after clicking on allegedly fraudulent, false or misleading investment and cryptocurrency advertisements on Facebook and paying money to third-party entities that published those ads. The defendants are alleged to have been negligent in allowing such ads to proliferate, profiting from the ad revenue while failing to implement adequate control measures despite numerous complaints and reported cases.

The legal foundation of the Gauthier/Larouche application rests primarily on provisions of the Québec Consumer Protection Act (Loi sur la protection du consommateur, “LPC”)—articles 219 to 221, 223.1 and 253—dealing with false or misleading advertising and remedies, as well as on provisions of the federal Competition Act (Loi sur la concurrence, “LC”)—articles 52, 52.01 and 53—governing misleading representations and deceptive marketing practices. The plaintiffs seek full reimbursement of losses, compensatory damages for inconvenience, and punitive damages. Although these claims implicate platform conduct and online advertising practices, there are no insurance policy terms or contractual clauses in issue in this particular judgment.

The parallel class action and the proposed interveners

In March 2024, Marie-Claude Barrette and John Viens commenced a separate authorization application in file 500-06-001299-243, also against Facebook Canada Ltd. and Meta Platforms/Facebook Inc. Their application is narrower geographically but broader in terms of types of victims. It proposes two Québec-only subgroups: first, public figures whose reputations were harmed because their names and likenesses were used in fraudulent Facebook ads as hooks for investment or illicit-product schemes (the Barrette Group); and second, Québec residents who were defrauded after investing or purchasing products or services in reliance on such fraudulent Facebook ads that mentioned those public figures (the Viens Group).

Barrette and Viens allege that Meta disseminated false advertisements that misused well-known personalities as bait, thereby both damaging those personalities’ reputations and causing financial loss to investors. They rely on advertising standards under articles 215 and following of the LPC, and on Québec civil liability and personality-rights provisions in the Civil Code of Québec (articles 3, 35, 36(5) and 1457 C.c.Q.). Their claim seeks damages for reputational harm to the public figures, compensation for the financial losses suffered by investors, and punitive damages for all group members.

All parties agreed that there is lis pendens between the Gauthier/Larouche class (in the present file) and the Viens Group in the later file, since both concern victims of fraudulent investment-type schemes on Facebook. However, the Barrette Group—public figures whose identities were misused—is recognized as raising a distinct and independent cause of action.

Procedural history leading to the intervention motion

Counsel for Barrette and Viens was formally advised on 24 April 2024 that the authorization hearing in the Gauthier/Larouche file was set for 6 May 2024. The authorization hearing went ahead on that date before Justice Florence Lucas, without any participation or appearance by Barrette and Viens. Only after the hearing—in late May 2024—did counsel for the later applicants indicate an intention to intervene, contacting the case management judge, the coordinating judge of the class actions chamber, and counsel in the present case.

On 6 June 2024, Barrette and Viens filed in the Gauthier/Larouche file a voluntary intervention and request to suspend the class action, followed by a separate motion seeking suspension of the defendants’ class proceeding. In response, the Court suspended its deliberations in the Gauthier/Larouche authorization matter and also stayed proceedings in the Barrette/Viens file to allow a full hearing of the intervention and suspension issues in February 2025.

The interveners’ objectives and requested conclusions

Through their intervention, Barrette and Viens asked the Court to: admit their intervention; suspend the class action in the Gauthier/Larouche file; allow them to participate in a reopening of the debates surrounding authorization in that file; formally reopen those debates; hear them on their own authorization application and on their designation as representatives in the second file; and finally, determine which class proceeding “best defends the interests of the group.” They sought these conclusions without costs, except in the event of a contestation.

Their core argument was that the Gauthier/Larouche authorization application was excessively broad, imprecise, and national in scope, which they claimed would cause serious case management difficulties. They argued that their own Québec-only application was more complete and more robust, particularly because it was supported by an expert “Fraud Prevention” report that, in their view, detailed the fraud system affecting them and thereby offered a fuller understanding of the fraud mechanisms at play.

Assessment of the existing authorization application

The Court reviewed the Gauthier/Larouche authorization application and found that it set out the essential facts in a concise manner, consistent with the restrained drafting expected at the authorization stage. The plaintiffs recounted their experiences with the fraudulent ads and supported their allegations with concrete evidence, notably including an investigative report broadcast by Société Radio-Canada. That investigative report, as described, documented and contextualised the alleged fraudulent schemes and the platform’s conduct, thereby supplying the “certain evidence” required to cross the minimal evidentiary threshold at authorization.

Justice Lucas considered whether the national scope of the proposed class prejudiced Québec residents. She concluded that the national class, filed in Québec and including Québec members, did not pose any disadvantage to those members. The rights and interests of Québec residents were central to the pleaded facts and evidence, and the legal arguments drew on statutory provisions applicable both in Québec and across Canada. There was no indication that the national character of the class was intended to, or would in practice, subordinate Québec residents’ interests to those of other Canadians.

Limits on aggressive intervention at the authorization stage

The Court then turned to the law on “aggressive” or “conservatory” intervention in class actions. Such intervention, especially at the authorization stage, is rare and depends on judicial discretion. The prevailing approach is liberal but recognizes that the authorization phase is designed to be streamlined and focused. Justice Lucas emphasized that, as a rule, such intervention is inappropriate at authorization and will be allowed only in exceptional circumstances. In this case, no exceptional circumstances were pleaded or proven.

The expert report filed by Barrette and Viens in their own file was principally directed to the story and fraud scheme allegedly affecting Marie-Claude Barrette and other public figures. The Court found this to be a separate and independent debate from the fraud mechanism described in the investigative report underpinning the Gauthier/Larouche case. The expert evidence was therefore not particularly useful to resolving the specific, limited debate before the Court in the present file and risked expanding the scope and complexity of the authorization proceeding in an undesirable way.

Justice Lucas further observed that an expert report is not required at the authorization stage. The class applicants are only required to adduce “some evidence” supporting their allegations, not to meet the preponderance standard that applies at trial on the merits. In the Court’s view, the Gauthier/Larouche applicants had already met this threshold through their existing evidentiary record, including the investigative report.

Proportionality, prejudice, and judicial administration

The Court also weighed the impact of the requested intervention and reopening on the parties and the judicial process. Allowing the intervention would entail reopening the authorization hearing, potentially setting aside existing procedural steps, judgments, and the original hearing held in May 2024. This would cause delay and inconvenience for the parties already engaged in the proceeding and would undermine principles of proportionality and sound administration of justice.

As to the rights of proposed representative John Viens and the members of his putative group, the Court underscored that they are already members of the national Gauthier/Larouche class in the present file. Moreover, their own proceeding in the second file was, at most, subject to possible suspension rather than outright dismissal. Their substantive rights were therefore preserved notwithstanding the refusal of intervention.

In light of these factors, the Court held that the interveners had not shown that their participation was justified or that the existing representatives were unable to provide the Court with the necessary perspective and information to adjudicate the issues in the present authorization application.

Application of the Servier “first-to-file” rule

The interveners were in substance asking the Court to decide which of the two parallel class actions should proceed by engaging in a comparative assessment of which procedure better serves the interests of the putative members—a type of “carriage motion” analysis that Québec courts have explicitly declined to adopt. Instead, Québec applies a version of the “first-to-file” rule articulated and softened in the Schmidt decision, often called the Servier rule.

Under that approach, the first authorization application filed in the court registry is, in principle, heard first, while later applications are held in abeyance and may be heard only if the first is rejected. The priority of the first application can be challenged, but only if the challenger proves that the first action is not prosecuted in the best interests of putative members and that it constitutes an abuse of the Servier rule. The Court of Appeal has made clear that the demonstration must rest on serious deficiencies in the first application itself—such as grave procedural flaws, undue delay, or evidence that counsel are merely occupying the field—and not on a claim that the later application, its representatives, or counsel are “better.”

Justice Lucas applied this framework and found no basis to disturb the priority of the Gauthier/Larouche authorization application. The pleadings and supporting documents in the first file were of acceptable quality, and the applicants had diligently advanced their case, bringing the authorization hearing within a year of filing. There was nothing to suggest that the first application was not being conducted in the best interests of putative members or that counsel were abusing the Servier rule.

Because the conditions to displace the first-filed action were not met, the interveners lacked a sufficient legal interest to seek the priority they were effectively requesting through their intervention. This conclusion undercut the very foundation of their intervention and suspension requests.

Outcome and consequences

Having considered all these elements, the Court concluded that the conditions for voluntary aggressive intervention, displacement of the first-filed class action under the Servier/Schmidt framework, or suspension of the ongoing authorization proceeding were not satisfied. The intervention sought by Barrette and Viens would add complexity and delay without demonstrable benefit to the putative class members, whose interests were already adequately represented in the existing national action.

In its dispositive paragraphs, the Court rejected both the voluntary intervention and the related motion to suspend the class action in the Gauthier/Larouche file, as well as the specific conclusions aimed at securing priority for the Barrette/Viens proceeding. The competing recourses of the Gauthier/Larouche Group and the Viens Group will instead be addressed through a separate motion by the defendants seeking suspension in the second file, or any other appropriate procedure in light of this judgment.

In this judgment, the successful parties are the existing plaintiffs Gauthier and Larouche (supported by the defendants on the issue of intervention and suspension), since the Court refused the intervention and suspension applications brought by Barrette and Viens and ordered that these motions be dismissed with costs against the interveners. No damages or specific monetary amounts were awarded on the merits because the judgment deals solely with procedure at the authorization stage. The only financial order is an award of judicial costs (“frais de justice”) against the unsuccessful interveners, but the exact quantum of those costs is not specified in the decision and therefore cannot be determined from the judgment.