Three court rulings provide insight into competing class actions

Three recent decisions — one each from Quebec, Saskatchewan and Ontario — provide guidance about when one court may defer to another in competing class proceedings, Toronto class-action lawyer Margaret Waddell writes in The Lawyer’s Daily.

“The predominant concern expressed in each case is that the interests of the class members resident in one province will be adequately protected in the proceeding in another jurisdiction,” she says.

Waddell, a partner with Waddell Phillips Professional Corporation, says the most recent case saw the Quebec Superior Court agree with the plaintiffs that a Quebec-only action should be stayed in favour of an Ontario-based proposed national class proceeding.

Proceeding began in Quebec

In that case, the plaintiffs’ lawyers first started a class proceeding for Quebec residents and subsequently issued another action in Ontario in which they proposed a national class, but excluding Quebec, she explains.

“Class counsel then proposed that the Quebec proceeding be stayed, and that they would amend the Ontario claim to include Quebec residents, if the stay was granted. In an ironic twist, the defendant … opposed the stay based upon the procedural law governing class actions in Quebec,” she says.

In making his decision, Justice Stephen Hamilton reviewed the competing terms of Article 3137 of the Civil Code of Quebec (the stay rule) and Article 577 of the Civil Code of Procedure (multi-jurisdictional class actions), Waddell says.

“Article 577 CCP provides that the court may disallow the discontinuance of an application for authorization, or it may authorize another plaintiff to institute a class action involving the same subject matter and the same class, if the court is convinced that the class members’ interests would thus be better served than by allowing the stay in favour of a multi-jurisdictional class action,” she writes.

‘First to file’ rule

“He rejected the ‘first to file’ rule as having application in the multi-jurisdictional context. Rather, Justice Hamilton concluded that the overarching issue is whether the interests of the Quebec class members will be adequately protected in the multi-jurisdictional proceeding. He was satisfied that, in this case, they would be.”

While granting the stay, the judge also “remained seized of the putative class action, and has the ongoing oversight of the interests of the Quebec class members, including ensuring that the notices to the Quebec class are adequate in scope and substance to protect their procedural and substantive rights,” Waddell says.

Of particular note, the court identified the utility of the Canadian Bar Association’s new Canadian Judicial Protocol for the Management of MultiJurisdictional Class Actions and the Provision of Class Action Notice.

“This Protocol ensures that there is sufficient coordination amongst the courts in the different jurisdictions when competing class actions are extant,” Waddell explains. “It allows the judges in the different jurisdictions to communicate with each other to, among other things, ensure that their concerns about the protection of rights and interests of class members in each jurisdiction are met.”

Saskatchewan case

A case from Saskatchewan involving competing class actions saw the defendant agreeing to settle multiple provincial class actions, including an Ontario-based proposed national class action, on the condition that the proposed national class action commenced in Saskatchewan be permanently stayed, Waddell writes.

“Under Saskatchewan’s Class Proceedings Act, the representative plaintiff in the Ontario action had a right to appear and make submissions at the certification motion. He moved for a stay of that proceeding, which was granted,” she says.

“On appeal, the Saskatchewan Court of Appeal held that a motion to stay was not within the rights of the Ontario plaintiff. His rights were limited to making submissions. However, the motion judge had reached the correct result, nonetheless.

“Under s. 6.1 of the Act, the certification judge was obliged to consider whether it was preferable that the matters raised in the Saskatchewan proceedings be resolved in one of the other ongoing multi-jurisdictional class actions. To make that determination, the judge was required to take account of precisely the same matters he considered in deciding to grant the stay.”

The Appeal Court found that the Saskatchewan proceeding was duplicative of the Ontario action, Waddell writes.

‘Multiplicity of actions’

“It confirmed that the courts discourage a multiplicity of actions when they serve no purpose. Section 6(2) of the Act is intended to ‘avoid chaotic and unproductive overlap in class-action litigation.’ Therefore, the motion judge was required to consider, as part of the preferable procedure analysis, whether it would be preferable for some or all of the claims or common issues raised in that action to be resolved in a class action commenced elsewhere in Canada,” she says.

As the Quebec court did in its recent decision, the Saskatchewan Appeal Court emphasized the importance of protecting the interests of provincial class members, Waddell writes.

“It noted that the motions judge had been alert to the question of whether the settlement agreement would protect the interests of the proposed class members in the Saskatchewan action, including those resident in Saskatchewan,” she says. “It noted that this same question would necessarily be front and centre when the Ontario representative plaintiff applied in Ontario to have the settlement approved.”

Waddell notes the Saskatchewan court confirmed its confidence in the Ontario court taking into consideration the interests of all class members, wherever situated, when it approved the settlement.

“While the court did not expressly aver to the multi-jurisdictional protocol, there is no doubt that it was cognizant of the fact that if the courts had any concern about the rights and interests of class members in their home jurisdiction under the settlement, the various provincial courts could and would avail themselves of its benefits,” she says.

Competing actions

The third case also involved competing Saskatchewan and Ontario national class actions — but this time from the Ontario perspective, Waddell says.

Unlike Saskatchewan’s Act, the Ontario legislation is silent on the issue of multi-jurisdictional class actions, and doesn’t include terms that allow submissions from competing class proceedings, she adds.

“The Saskatchewan plaintiff therefore brought a motion to intervene in the Ontario action. The motion was denied,” Waddell says.

“The Saskatchewan plaintiff would not commit to what position it would take on the certification motion, if leave was granted. Justice Edward Morgan noted that the Saskatchewan action had yet to be certified, so whatever argument the plaintiff would make, it would of necessity be arguing that the Saskatchewan-based class members should be treated differently than the other class members, even though it was uncertain whether the Saskatchewan action would ever be certified. In other words, the proposed intervener would potentially be arguing for the exclusion of some part of the proposed national class from a claim in either jurisdiction. This was not tenable.”

Could opt out

The judge recognized that if the Saskatchewan-based members of the class, or any other members of the class, wanted to throw in their lot with the Saskatchewan action rather than the Ontario action, they could opt out of the Ontario proceeding, Waddell explains.

“Underlying this decision was, again, concern that class members’ interests not be run over roughshod in the jockeying for position between competing actions,” she writes. “This issue is and will remain of paramount importance in resolving competing claims. With the introduction of the broader scope of the new Multi-jurisdictional Protocol, we can anticipate more court to court dialogue, as well as greater assurances that each jurisdiction is fully apprised of the fact and status of competing class proceedings, which will lead … to greater reassurance among the supervising judges that local interests are being met in other jurisdictions’ proceedings.

“Counsel and the courts are encouraged to embrace these new procedures as a key tool that can help to eliminate or ameliorate the effect of duplicative multi-jurisdictional class proceedings.”