Class actions in Canada: 2005 state of the union: growing, expanding, and developing.

Author:McKee, S. Gordon
 
FREE EXCERPT

CLASS proceedings in Canada are a relatively recent development, with exponential growth in the number of cases being brought over the past five years. Quebec was the pioneer, introducing class action legislation in 1978, with Ontario and British Columbia following suit in 1992 and 1996, respectively. Most recently, in 2004, Alberta became the seventh province to enact comprehensive class actions legislation. "Copycat" class actions, based on U.S. proceedings, are common in Canada today, and Canadian plaintiffs' counsel are frequently working with their U.S. counterparts to coordinate their claims. This article reviews the current state of class certification decisions in Canada across a variety of types of claims, as well as cross-border issues of interest to U.S. and multinational companies that do business in Canada, including the permissible scope of cross-border discovery, the enforceability of U.S. class settlements against class members that reside in Canada, and cost awards in Canadian class proceedings.

Overview of Class Actions in Canada

Class actions are permitted in all Canadian provinces, (1) with most having specific class action legislation. (2) While each common law jurisdiction has slightly different criteria, in general an action can be certified as a class action if: (1) the claim asserts a sustainable cause of action, which will be assessed on the pleadings alone; (2) there are two or more persons in the proposed class; (3) the claims of those persons have substantial issues of fact or law in common; (4) it is preferable to resolve the common issues in a class action having regard to the objectives of class proceedings--increased access to justice, judicial economy and behaviour modification; and (5) the proposed representative plaintiff can adequately represent the interests of the class.

In Quebec, the threshold is lower than in the other Canadian provinces. Quebec actions will be allowed to proceed as a class action if: (1) the recourses of the members raise identical, similar, or related questions of law or fact; (2) the facts alleged seem to justify the conclusions sought; (3) the composition of the group makes the application of Article 59 (representative actions) or 67 (joint actions) of the Quebec Civil Code difficult or impractical; and (4) the member of the class to whom the court intends to ascribe the status of representative is in a position to represent the other members of the class adequately. (3) Moreover, recent changes to Quebec's procedural rules make it very difficult for defendants to challenge the veracity of the plaintiffs' factual submissions at the certification hearing. (4)

Where a class action is certified, discovery and a trial of the common issues will be held first, and then a procedure is ordered for resolution of any individual issues (such as specific causation and damages). Court approval is required for settlement of certified class proceedings.

Class Certification

The threshold for class certification in Canadian provinces is generally considered to be lower than in the United States, in large part because there is no predominacy requirement. Predominacy is just one of a number of factors to be considered by the courts. This article discusses some of the trends that are emerging in different substantive areas.

  1. Product Liability and Toxic Torts

    Product liability cases have been successfully certified in a majority of the cases that have reached a class certification hearing in recent years. For example, there have been no successful oppositions to certification of medical products class actions in Ontario since 1994, when the Court refused to certify a class action involving tainted blood products. (5) Not surprisingly, the frequency with which medical products class actions are being commenced across Canada is on the rise, with class actions involving Vioxx and implantable defibrillators being the most recent examples. Other cases involving non-medical products that have been certified include cases involving allegedly defective furnace exhaust systems, housing construction, concrete, heating pipes, aviation emergencies, acupuncture treatment, and fire damage. (6)

    Although fewer in number, certification has been denied in a number of product liability cases, often due to the way the plaintiffs' counsel framed the case or the absence of any. evidence from the plaintiff that would prove class wide loss. (7) Although predominance of common issues is not a requirement, Canadian courts have been persuaded not to certify where there are an abundance of individual issues to be determined in assessing not only causation but other aspects of liability, as well. For example, in Gariepy v. Shell Oil Company, (8) the Court refused certification of a class action involving allegedly defective polybutylene plumbing pipes, the raw ingredient of which was manufactured by Shell and others. The plaintiff sued only the raw material manufacturers and did not include the companies that manufactured the pipe or fittings, or the house builders or plumbers who chose and installed the plumbing components. The Court held that the representative plaintiff had not satisfied the common issue and preferable procedure requirements because of the abundance of individual issues left to be determined. The Court held that the question on a motion for certification is not simply whether there are common issues raised by the claims, but whether the individual issues remaining for determination after the common issues are resolved are sufficiently extensive that the determination of the common issues marks only the commencement, as opposed to the completion, of the liability inquiry.

    To date, the tobacco industry has had some success in opposing class certification. In Caputo v. Imperial Tobacco Ltd., (9) the plaintiffs sought to certify a class that was broadly defined to include all residents of Ontario, both living and deceased, who had ever smoked cigarette products manufactured, marketed, or sold by the defendants. The plaintiffs alleged personal injuries caused by the defendant manufacturers, which necessarily required proof of individual reliance and causation. In denying certification, the motions judge cited the fact that "the only apparent common element in this action is that all of the proposed class members allegedly smoked cigarettes at one time or another." The judge emphasized the critical interdependency of the class definition and the common issues. Absent a properly defined class, it was not appropriate or feasible for the Court to attempt to craft common issues. The motions judge stated that he was not saying a tobacco-related injury class action could never be certified, only that the case before him did not meet the certification criteria.

    Most recently in Ragoonanan v. Imperial Tobacco Ltd., (10) the plaintiffs sought to certify a class of persons in Canada who suffered a loss, or were injured, as a result of a fire which occurred after October 1, 1987. Plaintiffs claimed that the fire was caused by an Imperial brand cigarette igniting upholstered furniture or a mattress, alleging, in essence, that the cigarettes in question should have been made more "fire safe." Although the court accepted that there were common issues in the claims of the proposed class members related to the defendants' duty of care, it refused to certify the class action on the grounds that the proposed class definition was not acceptable, and that it had not been demonstrated that a decision on the common issues would sufficiently advance the proceedings to achieve the objectives of the class proceeding legislation. The court expressly distinguished the case from a "typical products liability case" on the basis of the numerous liability and causation questions that would require individual resolution.

    Plaintiffs are pursuing novel claims in an effort to reduce the number of individual issues in product liability class actions. For example, in Knight v. Imperial Tobacco Canada Ltd.,(11) the plaintiffs claimed that the defendant's marketing of light and mild cigarettes was deceptive because it conveyed a false and misleading message that those cigarettes were less harmful than regular cigarettes, contrary to the provisions of the British Columbia Trade Practices Act ("TPA"). The plaintiff did not seek compensation for personal injuries but rather claimed compensation for the money paid by consumers to purchase the cigarettes in question. The damages claimed were not personal to each class member but rather an aggregate damage award that would be distributed in whole or in part to charitable institutions involved in researching and treating illnesses related to smoking. The Court noted that the characteristics of this proposed class action were unusual. The defendant's main objection to certification was that the allegations of deceptive acts or practices were not complete without the elements of causation and reliance--individual issues which made the case inappropriate for certification. The Court noted that, unlike in Caputo, claims brought under the TPA focused on the defendant and the tendency or effect of the defendant's conduct to deceive, not whether a particular plaintiff was deceived. The Court ultimately certified the action as a class proceeding.

    The recent Ontario decision in Serhan v. Johnson & Johnson, (12) if upheld on appeal, has the potential to become one of the most significant certification decisions in the product liability area. The plaintiffs pleaded that the products in question, blood glucose test strips, were defective and pleaded not only for personal injury damages in negligence but also that there was a constructive trust over the monies obtained by the defendant from selling the products. The Court held that a constructive trust is a remedy rather than a cause of action but went on to find that the plaintiffs had indirectly pleaded facts that could...

To continue reading

FREE SIGN UP