Focus On - Copycat class actions on the rise

Thepredictions that Canadawould go the way of the litigation-happy United States after class action proceedings were introducedinto Ontarioappear to have been a touch overdone. But "copycat" actions have been on therise.

"The percentage of class proceedings that are copycat actions is going up," says Deborah Glendinning of Osler Hoskin & Harcourt LLP.

It's a trend that's evident throughout Canada. In Vancouver, for example, about one-third of all class actions instituted are copycat actions.

As the debacle over insurance defence settlements in the Hollinger litigation demonstrates, the greatest difficulty with copycat actions — from the perspective of defendants — is that the trend may rob defendants of finality, the one benefit of class actions that clearly inures to them.

Adding complexity to the jurisdictional issue is Currie v. McDonald's Restaurants of Canada Ltd., the Ontario Court of Appeal decision that recognizes that Canadian plaintiffs may be bound by a U.S. class action judgment or settlement but imposes relatively onerous notice requirements on American defendants attempting to enforce them.

"There's only so much money available to settle all claims," says Joe Groia of Groia & Company, "and courts on both sides of the border will be careful to ensure that nobody finds themselves out in the cold."

It all follows, of course, from the cross-border commerce between the world's largest set of trading partners.

As the economies merge, so does the litigation, creating a complicated jurisdictional and procedural maze that has heightened, rather than dampened, the enthusiasm and co-operation between plaintiffs' firms on both sides of the borders.

"The number-one trend in Ontario is in attempts to leverage U.S. class action lawsuits using the same factual and expert evidence upon which the American action is based," says Robert L. Armstrong of Ogilvy Renault LLP.

U.S. courts haven't done much to discourage the trend.

"I've been surprised at how willing U.S. courts were to allow Canadian plaintiffs access to discovery from U.S. cases," says Paul Morrison of McCarthy Tétrault LLP, citing the decision of the U.S. Supreme Court in Intel v. AMD.

So even as the recently enacted Class Action Fairness Act (CAFA) — which moves most class actions from plaintiff-friendly state courts to federal jurisdiction — threatens to dampen class action enthusiasm in the United States, cross-border class actions show no sign of abating in Canada.

"I continue to see many product liability cases that are Xeroxes of what's going on in the United States," says James Hodgson of Hodgson Shields DesBrisay O'Donnell LLP.

Nine of Canada's 10 provinces now have class action legislation (Prince Edward Island does not), compared to just three provinces that had such legislation (Quebec, Ontario, and British Columbia) four years ago.

And although the six latecomers have much smaller populations and economies than the first three, there are already signs that the plaintiffs' bars in these other provinces have grand designs.

"The enactment of class action legislation throughout the country has people vying for turf," says Kent Thomson of Davies Ward Phillips & Vineberg LLP. "That's just going to make the plaintiffs' class action bar stronger."

Stirring the pot is Tony Merchant of the Merchant Law Group in Regina. Merchant has ruffled the feathers of the class action bars in Ontario and British Columbia by applying for carriage of the Canadian Vioxx cases.

"Merchant just throws out claims in various provinces in the hope of getting some of the action," says Morrison. "He's like a mining prospector who's putting stakes in the ground."

But Merchant is unapologetic.

"We're seeing a tug of war between east and west for control of class actions," he says. "Ontario lawyers are especially galling. If something happens in Ontario, they think it should bind Medicine Hat [Alta.] and Inuvik [N.W.T]. And they don't give much thought to the fact that it takes four years to get a trial date in Toronto and then it costs $15 for a cab from your hotel to court."

Manitoba, with a class action regime that has no costs, easy certification, and opt-out provisions for national classes, is also attracting attention.

"Manitoba has targeted class actions like Delaware has targeted corporations," says Won Kim of Roy Elliott Kim O'Connor LLP, whose Toronto firm is considering opening an office in Winnipeg.

For his part, Merchant has already opened offices in five provinces, and his firm's strategy may herald the arrival of national plaintiffs' class action law firms in Canada — which in turn could hook up with their American counterparts in the hope of acquiring continental clout.

"You're going to find more and more boutiques setting up across the country," predicts Malcolm Ruby, a class action lawyer with Gowling Lafleur Henderson LLP.

One of their favourite places will undoubtedly be Quebec, which enacted class legislation in 1978, some 15 years before Ontario, the second province to do so.

For the first 20 years or so, however, the vast majority of cases were homegrown actions unique to the Quebec environment. But when Ontario and British Columbia enacted class action legislation in 1995, Quebec jurisprudence developed a broader national base, followed quickly by a continental one.

It wasn't long before the province's judiciary became known for a liberal approach to certification. The Quebec legislature added to that reputation in 2003 when it changed the class action rules by removing the requirement for plaintiffs to file any affidavit material in support of certification.

In April, the Quebec Court of Appeal upheld the constitutionality of the measure in Option Consommateurs v. Pharmascience Inc.

The liberal and inexpensive certification procedure, then, means that Quebec could well become a proving ground for copycat actions.

"Everybody will rush to the jurisdiction that is the most favourable," says Rob Bell of Borden Ladner Gervais LLP.

The difficulty for plaintiffs, and the advantage for defendants, is that Quebec judges have been reluctant to certify national classes.

"When it comes to jurisdiction, no one knows what Canadian courts will come up with to resolve provincial conflicts," says Morrison.

Echoing that sentiment, Trisha Jackson of Torys LLP believes the defence bar would "very much look forward to getting some guidance from the Supreme Court of Canada."

Readers can order the judgments cited in this article through or by calling our CaseLaw Service at (905)841-6472.  Currie v. McDonald's Restaurants of Canada Ltd. Order No. 005/052/092, pp. 19; Option Consommateurs v. Pharmascience Inc. Order No. 005/150/124, pp. 18.

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