Navigating Uncharted Waters: Multi-Jurisdictional Class Action Proceedings

Article by James M. Newland and Rebecca Case 1

1. INTRODUCTION

   The landscape of class actions in Ontario has changed significantly over the last two years. Having to defend certified class actions that have parallel or concurrent proceedings in other jurisdictions, whether in other provinces or other countries, is an increasing reality for many Ontario defendants. In the last two years, in the decisions of Cloud2 and Pearson3, the Ontario Court of Appeal provided clarification of the test for certification in Ontario, making it clear that certification was intended to be a "low bar". More recently, in Markson4 and Cassano5, the Court of Appeal addressed the preferability analysis, aggregate damages and the procedural tools in the Class Proceedings Act, S.O. 1992, c. 6 (the "Act") intended to deliver efficacy to certified class actions. The effect of these four decisions is to make Ontario arguably one of the easiest jurisdictions in Canada (and the world) in which to obtain certification. As a result, it can be anticipated that more cases will be commenced in Ontario. These cases will likely not be restricted to an Ontario class but, in many cases, will propose to certify a "national" class or possibly even an international class. At the same time, cases previously certified are maturing and approaching trial and the practicalities of the preferability and manageability aspects of certification will be tested. While the recent guidance from the Ontario Court of Appeal has lead to certainty in respect of what will be sought on certification, the maturation of the class action field and the increase in multi-jurisdictional class actions has increased the uncertainties including how certification of and resolution of these cases will be treated in other jurisdictions. Previously uncharted risks must now be managed by Ontario defendants.

   Class action claims have case specific and, to a certain extent, type specific risks. The breadth and variety of class actions mean that all risks cannot be identified and, even where identifiable, solutions to managing these risks are not yet knowable. Nonetheless, through a review of recent decisions in multi-jurisdictional class action litigation, focusing on Ontario, we attempt to identify in this paper a few of the emerging areas of uncertainty and hence risks faced by defendants of multi-jurisdictional class actions.

2. ONE ACTION: MANY FORA

   The obvious challenges raised by multi-jurisdictional class actions are not new. In some circumstances it may be in the interests of defendants to limit multiple proceedings that litigate the same claims. This interest dovetails with one objective of class action litigation, that of judicial economy. One solution is consolidation of similar claims into a single action thereby reducing wasted resources and avoiding duplicative proceedings.

   In the recent decision of the Ontario Superior Court of Justice in Setterington v. Merck Frosst Canada Ltd.6, Merck was facing the prospect of simultaneously defending a multitude of duplicative class actions7. On a carriage motion brought by the national consortium of plaintiffs' counsel that consolidated various actions into a single proceeding, the court provided a strong indication that courts are sensitive to the rationales of efficiency underlying class actions, as well as the interests of fairness to the defendant.

   Winkler J., as he then was, held at para. 11:

   ...with respect to class actions [...] most carriage motions, as is the case here, will involve multiple proceedings by essentially the same class against the same defendant for the same relief. For the purposes of the application of this principle on a practical basis in class proceedings, it is not necessary that the multiple proceedings mirror each other in every respect. Rather, the court will look to the essence of the proceedings and the similarities between them to determine whether permitting two or more to proceed would offend the prohibition against multiplicity.

   Carriage was granted to the national consortium of plaintiffs' counsel, and all other actions in Ontario pertaining to the same subject matter were stayed.

   Even when carriage is not in issue, a court may grant a stay of similar proceedings to ensure judicial economy, avoidance of unnecessary duplication of fact-finding or legal analysis, and the risk of inconsistent findings.8 The timing of a stay motion is important, however, since courts are reluctant to leave plaintiffs potentially without legal recourse in a given province. In the Setterington case, discussed above, counsel for the action that was ultimately stayed in Ontario was also proceeding with a proposed national class action in Saskatchewan. This action was not yet certified. The progress and proceedings in the Saskatchewan action were not given greater consideration by the Court on this carriage motion.

   Recent suits against the drug manufacturer Bayer Inc. highlight the concern about staying proceedings in the jurisdictions before certification. Class proceedings were commenced in British Columbia, Saskatchewan, Manitoba, Ontario and Newfoundland. In order to avoid the cost of defending class proceedings in multiple provinces, Bayer brought motions to stay the proceedings prior to certification in Newfoundland9 and Saskatchewan.10 However, it was unsuccessful because the courts were reluctant to grant such motions without the existence of a certified proceeding in another province that would include the class of plaintiffs from its own province.

   Strategically, this means that one avenue open to defendants to their benefit may be to minimally resist a certification motion in a province of preferred law in order to be successful on motions to stay proceedings in other less favourable jurisdictions. The ability to successfully argue for a stay based on a national class is discussed below in the section on the scope of the class.

3. THE CLASS ACTION LANDSCAPE IN ONTARIO

   Not surprisingly, the most critical stage of any class proceeding for the defendant is the certification motion; not only does certification determine whether the proceeding continues at all, but it also defines the scope of the class seeking relief. Ontario's certification standard is, in many ways, more plaintiff-friendly compared with the Rule 23 Regime in the U.S. Federal Courts11:

   Ontario plaintiffs do not need to establish the principles of numerosity (meaning that the defined class must be sufficiently numerous to warrant class certification), typicality (meaning that the claim of the representative plaintiff must be typical of claims of the other members of the prospective class) or predominance (meaning that the common issues in the action must predominate over the individual ones). [emphasis ours]

   Within Canada, Quebec has traditionally been seen as the most plaintiff-friendly jurisdiction because a plaintiff is only required to establish a prima facie case of harm to succeed on a motion for certification ("authorisation")12. When the change to the Quebec Code of Civil Procedure removed the ability to cross-examine on an affidavit filed on a certification motion13 it was thought that this would open the floodgates for class actions to be certified in Quebec. However, following the recent decision of Options Consommateurs v. Novopharm14, it does not appear that this dire prediction has proven true. Roy J. did not certify the class in Novopharm because of a lack of documentary support for the cause of action (except for one newspaper article). As stated by the Quebec Court of Appeal in Procureur general du Quebec c. Noranda15, in obiter16:

   The decision on authorization (certification) follows particular rules because the legislator gave it a relatively modest role in the class action process. In fact, it only serves to filter demands that would manifestly not satisfy the requirements of article 1003 (translation).

   With the recent decisions in Cloud17, Pearson18, Markson19, and now Cassano20, Ontario is now arguably the most plaintiff friendly jurisdiction in Canada and recent decisions indicate that it is likely to become, if it is not already, the jurisdiction in Canada from which the majority of multijurisdictional class actions emanate.

   In his first decision on class actions since becoming Chief Justice of Ontario, Winkler C.J.O. in Cassano essentially laid out guidelines for the conduct of class proceedings in Ontario.

   The central claim in Cassano is that TD Bank breached its contract with the holders of its Visa credit cards by charging undisclosed and unauthorized fees, in particular a "conversion fee" and an "issuer fee", in respect of foreign currency transactions21.

   Winkler C.J.O. took issue with the lower court's analysis of the preferable procedure criteria and found that it reflected an error of law that required intervention, holding:22

   In my view, this is a case where the common issues trial judge could find, based on a review of the evidence, that it is appropriate to conduct an aggregate assessment of monetary relief under s. 24 of the CPA, as was contemplated by this court in Markson, supra. Alternatively, even if the trial judge were to conclude that an aggregate assessment of damages is inappropriate, the nature of the claim asserted is such that the provisions of the CPA might well be utilized so as to make a class proceeding under the statute the "preferable procedure for the resolution of the class members' claims": see Hollick v. Toronto (City), [2001] 3 S.C.R. 158 at para. 29.

   Continuing on, he held23:

   I am of the view, however, that even if the common issues judge were to determine that it is not appropriate to award aggregate damages in this case, a class action is still the preferable procedure in light of the governing principles that apply to the preferable procedure inquiry under s. 5(1)(d). These principles, which were articulated by the Supreme Court of Canada in Hollick, supra, were summarized...