Duplicative class proceedings a no-no

Duplicative class proceedings a no-no
What happens when duplicative class proceedings are filed in the same jurisdiction on behalf of plaintiffs working in concert to advance overlapping claims?

This month, the Supreme Court of British Columbia was faced with parallel claims that were practically a mirror image of each other. The facts alleged and the principal defendants were essentially the same. The plaintiffs, though nominally different, were clearly associated and were represented by the same legal counsel.

In a June 21 decision, the B.C. Supreme Court in Dixon v. Stork Craft Manufacturing Inc. looked beyond the identity of the proposed representative plaintiffs and instead focused on the manoeuverings of class counsel, ultimately finding the action was totally vexatious and an abuse of the court’s process.

On Nov. 24, 2009, a nation-wide recall of baby cribs by Stork Craft sparked the commencement of six very similar proposed class actions against Stork Craft and various retailers in six different provinces across Canada. Each proposed class action was launched by plaintiffs represented by the same law firm, Merchant Law Group LLP.

Merchant agreed to discontinue the class proceedings commenced in all provinces other than British Columbia, and to proceed with case management and certification of the British Columbia action (the Dodd action). However, the firm failed to fully consider all of the implications of such a move, and in particular, its impact on potential limitation periods applying to Ontario class members.

Before the solicitors for the plaintiffs brought the motion to discontinue in Ontario, they discovered there would be prejudice to the Ontario class members if the action was discontinued, since the limitation period would resume running.

Class proceeding legislation is mainly procedural. Limitation periods are matters governed by the jurisdiction in which each class member resides. British Columbia is an opt-in jurisdiction for class proceedings, and limitation periods are suspended in that province only upon the making of a motion for certification. Merchant discovered there would be prejudice to the Ontario class members if the Ontario action was discontinued as their limitation periods might expire in Ontario before certification of the British Columbia proceedings occurred and before those plaintiffs could opt into the British Columbia action.

Nevertheless, counsel to the defendants in the Ontario action sought an order to enforce the agreement to discontinue the Ontario action. Ontario Superior Court Justice Robert J. Smith  declined to grant the motion approving the discontinuance of the Ontario class proceeding without notice to the class members because of the substantial prejudice that would result to all Ontario class members who would be deprived of having the limitation period remain suspended in Ontario. And thus they would potentially lose their ability to participate as an “opt-in” class member in the British Columbia Class proceeding.

On March 7, 2011, the proposed representative plaintiff in the Dodd action in B.C. filed an amended claim purporting to remove himself as the representative plaintiff and substituting Jane Dixon, a new representative plaintiff for the B.C. resident class, and Loretta McFadzean, representing a non-resident class. The defendants in the Dodd action filed an application seeking an order striking the plaintiffs’ amended claim that purported to substitute the representative plaintiffs. B.C. Supreme Court Justice Geoffrey Gaul allowed the defendants’ application and denied the amendments.

In response to the order denying their request to amend their claim, Merchant commenced on Nov. 4, 2011 yet another action in B.C. (the Dixon action). This time with Dixon and McFadzean as proposed representative plaintiffs, the same individuals who were not permitted to become the named plaintiffs in the Dodd action. The Dixon action alleged facts and advanced claims basically identical to those in the Dodd action. The plaintiffs’ stated intention was to consolidate the Dodd and Dixon actions.

In turn, the defendants filed an application seeking a stay of the Dixon action, or in the alternative, an order striking out the entirety of the plaintiffs’ pleadings in the action. The defendants asserted the Dixon action was an improper second attempt to have Dixon and McFadzean added as plaintiffs in the Dodd action.

In Dixon v. Stork Craft, Gaul found that to allow the Dixon action to stand and be consolidated with the Dodd action would unfairly and improperly allow Dixon and McFadzean to obtain the result they initially sought and were denied in the Dodd action. In these circumstances, consolidation would impermissibly and improperly permit the plaintiffs to circumvent the rules governing the adding of parties to an action and the amendment of pleadings, and as a result, it was found to be vexatious and an abuse of the court’s process.

The court’s approach in Dixon v. Stork Craft demonstrates an increasing trend in class proceedings to look beyond the identity of the representative plaintiffs. An abuse of process has traditionally only been found where two actions are brought by the same plaintiff against the same defendant seeking the same relief. Here, although the plaintiffs were nominally different, they were being directed by the same legal counsel and were clearly associated.

Appropriate case management in class proceedings can and should take into account these considerations. In the circumstances, Gaul came to the correct conclusion in staying in the Dixon action.

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