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Focus: Is Quebec or B.C. Canada’s class actions haven?

Focus
|Written By Julius Melnitzer

Two recent decisions have reignited the debate as to whether Quebec or British Columbia is the nation’s class action haven.

Ian Matthews believes Wakelam is a sign that the B.C. appeal court is willing to tackle complex issues of law at the certification stage.

Historically, Quebec has been the reputed haven for Canadian class actions because its certification test is liberal and its legislation doesn’t require any evidence (as opposed to allegations) to support certification. What had changed in recent years, however, was that Quebec courts were undertaking a more thorough analysis of the procedural requirements for certification.

British Columbia rushed in to stake its claim to the haven title in 2013 when the Supreme Court certified Charlton v. Abbott Laboratories Ltd., a class action centred on the diet drug Meridia that had both the brand-name and generic manufacturers as defendants. Earlier, the Quebec Court of Appeal had refused to certify a class action concerning the same drug, essentially holding that the plaintiffs’ allegations were too weak to support a claim.

“Both cases were based on substantially the same claims with very little, if any, material facts that were different and two or three years ago I would have said it was impossible that B.C. would certify what Quebec would not,” says James Sullivan of Blake Cassels & Graydon LLP’s Vancouver office.

Arguably, however, the Supreme Court of Canada settled the debate in favour of Quebec in early 2014 when it released its decision in Vivendi Canada Inc. v. Dell’Aniello. The court held that the threshold Quebeckers must meet to proceed with class actions is lower than in the rest of Canada.

The decision came in the case of a retired Vivendi worker who sought authorization for a class action after a new employer unilaterally amended the company’s private health insurance plan. The Quebec Superior Court refused to authorize the class action, but the Quebec Court of Appeal overturned that decision.

In a principle known as commonality, a condition of bringing class actions in Quebec is that at least one common question must exist that advances every class member’s claim.

The top court ruled that the requirement to advance the resolution of every class member’s claims didn’t mean that the answer to the common question must be identical for each individual or benefit everyone similarly.

The court held that to meet “the commonality requirement of article 1003 (a) of the Quebec Code of Civil Procedure, the applicant must show that an aspect of the case lends itself to a collective decision and that the parties will have resolved a not insignificant portion of the dispute. It is enough that the answer to the question does not give rise to conflicting interests among the members,” wrote André Durocher and Enrico Forlini in Fasken Martineau DuMoulin LLP’s litigation and dispute resolution bulletin. “In short, at the authorization stage, the approach to be taken to the commonality requirement in Quebec civil procedure is a flexible one.”

The top court was also careful to point out that the commonality requirement in the Quebec legislation was broader than the corresponding provisions in Canada’s other class action provinces.

If Vivendi didn’t clinch the haven designation for Quebec by confirming the province’s low certification thresholds, the B.C. Court of Appeal arguably put more distance between the two jurisdictions when it decided Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc. towards the end of January 2014. That was only about two weeks after the top court released Vivendi.

As it turned out, Wakelam was only the fourth case in which the B.C. Court of Appeal overturned a trial judge’s certification of a class action.

Wakelam seems to up the bar a little in B.C., while Vivendi may well lower the bar in Quebec,” says Randy Sutton of Norton Rose Fulbright Canada LLP’s Toronto office.

In Wakelam, the plaintiffs, who hadn’t been injured, claimed a disgorgement of profits based on “unjust enrichment, waiver of tort, and constructive trust” founded on statutory causes of action in their province’s Business Practices and Consumer Protection Act as well as the Competition Act. They argued that in marketing the subject medicine for use by children under the age of six, the defendant manufacturers had engaged in deceptive acts contrary to the B.C. legislation and made false or misleading representations contrary to the Competition Act.

But the Court of Appeal, applying its 2012 decision in Koubi v. Mazda Canada Inc., held that the B.C. law constituted an “exhaustive code regulating consumer transactions” and that nothing in the legislation indicated an intention to add to the statutory remedies by permitting restitution.

Similarly, the Competition Act, which limited recovery to “the loss or damage proved to have been suffered,” was a comprehensive scheme for dealing with anticompetitive and unfair trade practices.

Margaret Waddell of Toronto’s Paliare Roland Rosenberg Rothstein LLP says Wakelam demonstrates the Court of Appeal’s awareness of its gatekeeper function.

“The court may well have thought that the case didn’t have a lot of legs,” she says.

Ian Matthews of Toronto’s Lax O’Sullivan Scott Lisus LLP believes Wakelam is a sign that the B.C. appeal court is willing to tackle complex issues of law at the certification stage.

“It’s always been the case that courts would consider at the certification stage whether a cause of action existed,” he says. “But the Wakelam court had no hesitation about plunging into complicated questions of constitutional paramountcy and causation.”

For his part, Sullivan agrees that Vivendi lowered the bar in Quebec. But he adds that Wakelam didn’t change anything in British Columbia.

“The court’s reasons in Wakelam are more fulsome than they were in Koubi, but the law hasn’t changed,” he says. “The fact remains that since 2007, the B.C. Court of Appeal has not overturned a single certification on the basis of class action procedural issues, such as the existence of common issues or the manageability of the litigation.”

Indeed, there have been only four reversals overall, including Wakelam. The three other reversals occurred in a competition case where the court found that indirect purchasers weren’t appropriate defendants, an aboriginal law matter where the decision was that the group involved didn’t have standing to sue, and a consumer protection lawsuit denied certification because its facts didn’t fit within the court’s interpretation of the relevant legislation.

Sullivan believes two factors account for the low standard for certification in British Columbia.

“We have a bench that is favourably disposed to class actions as a means of access to justice, that regards certification as a purely procedural matter, and that does not have enough experience with class action trials to know how unwieldy and unmanageable they can be,” he says.

“So part of the issue is the maturation process.”

The second factor, says Sullivan, is the “entrepreneurial and aggressive” nature of the plaintiffs’ bar in British Columbia.

Otherwise, there’s no automatic right in that province to cross-examine plaintiffs on their affidavits and courts are reluctant to order the production of medical records before certification.

“B.C. has a more streamlined approach whereas the Quebec courts will look more closely into such things as the nature of the representative plaintiff and his or her suitability to represent the class,” says Sutton.

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