Dolden Wallace Folick’s Class Action Newsletter – January 2021

January 1, 2021

Dolden Wallace Folick’s Class Action Newsletter – January 2021

Recent Changes in Addressing Multi-Jurisdictional Class Actions in Canada

By Chris Stribopoulos, DWF Toronto, Email: cstribopoulos@dolden.com

Class actions against defendants brought in different provinces and seeking the same relief has proven to be a significant procedural problem. Defendants do not want to fight the same battles in different courts. For years, the class action legislation provided no guidance on how parallel proceedings in other provinces were to be addressed. Ontario, B.C., Alberta and Saskatchewan now have legislation that gives the courts the ability to address multi-jurisdictional class actions.

In Ontario, significant amendments were made to the Ontario Class Proceedings Act (the “Ontario CPA”) on October 1, 2020, one of which included addressing multi-jurisdictional class actions. Pursuant to section 5(6) of the Ontario CPA, if there is another class proceeding in a different jurisdiction that contains the same subject matter, the Ontario court can decide whether the Ontario action should proceed, or if it should be stayed in favour of an action in another jurisdiction. The court’s analysis proceeds on a “preferable” standard such that if the court determines that it is preferable for the Ontario action to be stayed to allow an action in another jurisdiction to proceed, it will do so. Additionally, a party involved in parallel proceedings in other provinces has the right under the Ontario CPA to bring a stay motion.

The new Ontario CPA legislation addressing multi-jurisdictional class actions is similar to the legislation contained in the B.C. Class Proceedings Act. A good example of the application of this legislation is found in the British Columbia decision in Fantov v. Canada Bread Company, Limited. Fantov has been referenced in various subsequent decisions. Fantov involved the allegation of a conspiracy to fix prices of packaged bread. Similar class actions were brought in B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec and in Federal Court.

A Consortium of plaintiffs’ law firms filed class actions in different provinces including the Fantov class action in B.C. and the David v. Canada Bread Company action in Ontario. One law firm, which was not associated with the Consortium, filed a similar class action in B.C. (Asquith v. George Weston Limited) and asked the court to permit it to proceed with that action. The Consortium sought a stay order in B.C.

The B.C. judge hearing the motions awarded carriage to the above-noted law firm in Asquith and stayed the Fantov action as being duplicative and an abuse of process. The Consortium and the defendants appealed.

The B.C. Court of Appeal dismissed the carriage and stay appeals, but without prejudice to the Consortium and the defendants to argue the same issues at the certification motion. The court stated that these issues should be decided at the certification motion and not on a carriage motion. Further, while the Court of Appeal found that the Fantov action should be stayed as it is an abuse of process, it gave the Consortium standing to make all necessary submissions at the certification motion to argue that the David class action should be the preferred vehicle to determine the issues in these class actions.

A similar outcome occurred in the class action brought against Canada Bread Company et al. in Alberta. On November 27, 2020, the Alberta Court of Appeal in Ravvin v. Canada Bread Company upheld the motion judge’s stay of the Ravvin class action in Alberta, which was brought prior to the certification motion. The Alberta Court of Appeal held that determining whether to stay an action prior to the certification motion must be addressed on a case by case basis. The court in Ravvin stayed this action in favour of the proposed national class proceeding in Ontario in David v. Canada Bread Company. The court stated that duplication of actions should be avoided where there is no basis for supporting parallel proceedings in other provinces.

Summary

Several provinces now have multi-jurisdictional legislation that addresses the issue of parallel proceedings brought in different provinces. This legislation is welcomed as it provides some guidance to counsel and will assist them in dealing with multi-jurisdictional proceedings. In Fantov, the court required that the issue of determining multi-jurisdictional issues be determined at the certification motion. In Ravvin, the court held that it could consider stay motions prior to the certification motion, but will address such motions on a case by case basis. Regardless of the approach that a court takes, courts across Canada are fully aware that multiple parallel class actions result in unnecessary costs and burdens on the court system, and will stay an action to avoid duplication.

Can a Class Action be Too Big to Certify?

By Chris Stribopoulos, DWF Toronto, Email: cstribopoulos@dolden.com

One of the features of a class action is that it allows multiple plaintiffs to bring their claims in one action. This simplifies matters as it avoids numerous similar and individual claims being brought against the same defendants that will tie up the court’s resources. It is common to see class actions that, once certified, will include thousands of individuals. At a certification motion, when the judge is evaluating preferability, the judge will consider the extent to which a class proceeding is likely to address judicial economy, access to justice and behavior modification. But, can a class action be too big to certify? This is the question that the B.C. court recently considered in Kett v. Mitsubishi Materials Corporation, and answered affirmatively.

In Kett, the plaintiff, a resident of B.C., purchased a 2009 Honda Civic for his personal use. He alleged that the defendant parts suppliers charged auto manufacturers more than they should have as a result of their failure to carry out proper parts testing. The effect was that the plaintiff, and others like the plaintiff, paid a higher price for their vehicles.

A total of 8.3 million new automobiles were sold in Canada during the class period by the Original Equipment Manufacturers (“OEMs”). There were at least 1,774 models sold in Canada during the class period by the OEMs. These models had different trims, engine types, body styles and wheels. Based on these differences, there were approximately 6,346 different types of vehicles sold in Canada by the OEMs during the class period.

The court conducted a thorough analysis of the proposed common issues, and found that no proper common issues were proposed. Given the number of automobiles, certain of the proposed common issues required an individual analysis on a product-by-product basis, or on a shipment-by-shipment basis, to determine if there was overcharging. This requirement to individually assess all products and shipments led to the conclusion that there can be no common issues for trial.

In dealing with the preferability analysis, the court stated that it is clear that there will not have been an overcharge for all products, or all shipments. As such, the court stated that the “unavoidable structure of this action certainly does not allow for a common analysis for the entire class”. In fact, it was found that individual assessments would be necessary.

The court concluded that the Kett proposed class action “seeks to tie together many potential class actions.” It was noted that the Class Proceedings Act (“CPA”) is designed for cases with a “strong factual and legal bond”, not cases that can be brought by way of several other class actions. Accordingly, attempting to put together several different smaller class actions into one larger class action, would not work.

The court answered its own question by stating that “some class actions are indeed ‘too big to certify’, at least when they are both too large and too fragmented.”

Takeaway

The reasoning in Kett makes sense. The court in Kett stated that a class action can be too big to certify if it is too fragmented. To be clear, it is not simply a “numbers” issue where a court will look only at the number of potential plaintiffs. A court will still conduct the appropriate analysis under the CPA to determine if there are common issues. If a court finds that there are no common issues due to the individual issues that would have to be addressed, as in Kett, then a court could find that the class proceeding is not the preferable proceeding.

Editor
Christine Galea
Tel: 647 798 0614
Email: cgalea@dolden.com

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