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Class Actions

Canadian class actions are procedures whereby one or more representative plaintiffs may commence a civil action on behalf of a larger class. While they are fundamentally similar in concept and form to class actions under the US Federal Rules of Civil Procedure, there are many important differences.

Canadian jurisdictions have class actions. Most Canadian provinces and territories have enacted legislation enabling class actions (including Ontario, British Columbia, Manitoba, Saskatchewan, Alberta, Quebec, Nova Scotia, Newfoundland and Labrador and New Brunswick). In provinces that do not have class action legislation, the Supreme Court of Canada has extended the right to bring class actions notwithstanding the absence of legislation, effectively creating a “common law” class action.

The rules of the Federal Court of Canada also permit the certification of class actions. Unlike the United States Federal Court, the Federal Court of Canada has a very narrow statutory civil jurisdiction, as it has no pendent, ancillary, diversity or common law jurisdiction.

No Multi-District Litigation (MDL) or other co-ordinating procedure currently exists in Canada for class actions brought in multiple jurisdictions, although the judiciary is prepared informally to co-ordinate to achieve judicial economy.

In all Canadian jurisdictions, the proposed class claim must raise common issues that may be determined for the class as a whole, and the proceeding must be determined by the court to be a preferable procedure for the resolution of the claims of the representative plaintiffs and putative class members. Before a class action may proceed, the court must certify it as such.

Although Canadian class action legislation has been explicitly drafted to make certification easier than in the United States, Canadian courts (with the possible exception of Quebec) have interpreted the legislation in a moderate fashion. Notwithstanding this, class actions have been commenced and certified in a range of circumstances including investor misrepresentation, securities fraud, defective and dangerous products, franchising, and standard form contracts.

PROCEDURES

Commencement of a Class Action

In all Canadian provinces, with the exception of Quebec, a class action is commenced by a statement of claim (complaint) in which the proposed representative plaintiff identifies an intention that the action proceed as a class action.

In Quebec, class actions are commenced by a motion seeking authorization of a class action, which precedes the actual pleadings in the action.

Whether by a motion in Quebec or a statement of claim in the rest of Canada, the initiating documents will generally describe the proposed class definition. Quebec allows for classes of natural persons and companies with fewer than 15 persons.

TEST FOR CERTIFICATION

Common Law Provinces

The judicial determination of whether a proceeding is appropriate as a class action is made on a certification motion. These motions are brought on the basis of lengthy affidavits with numerous attached exhibits. Affidavits from experts dealing with various aspects of the certification requirements are often submitted at this stage. In certification motions, the onus is on the plaintiff to demonstrate that the test for certification has been met. Although the test varies slightly from province to province, plaintiffs must generally establish that:

  • The pleadings disclose a cause of action;
  • There is an identifiable class of two or more persons that would be represented by the representative plaintiff(s);
  • The claims of the class raise common issues;
  • A class proceeding would be the preferable method for resolution of the common issues; and
  • A representative plaintiff has been identified who fairly and adequately represents the class, has no conflict of interest with other class members on the common issues and has produced a plan of proceeding that is workable.

There is no requirement that common issues predominate over individual issues, although the legislation in British Columbia, Alberta, Newfoundland and Labrador, New Brunswick and Nova Scotia permits the court to consider this factor.

Quebec

In Quebec, the test for certification requires the court to determine whether:

  • The recourses (i.e., claims) of the members raise identical, similar or related questions of law or fact;
  • The facts alleged seem to justify the conclusions sought;
  • The composition of the class makes joinder difficult or impracticable; and
  • The proposed representative is in a position to represent the members of the class adequately.

Of importance is the fact that if a class action is authorized in Quebec the decision cannot be appealed by the respondent, but if the class action is not authorized the would-be plaintiff has a right of appeal. Quebec’s procedure is also unique in that rights of the respondent to adduce evidence prior to and at the certification motion are limited.

TIMELINE FOR CERTIFICATION

With the exception of Quebec, where the motion for authorization usually sets a date on which the first court appearance is to be made, other provincial class action legislation requires that the certification motion is to be brought within 90 days of the date a defence is delivered. In practice, however, motions for certification have been brought well outside the 90-day period and defences are generally not filed prior to the certification motion unless demanded by plaintiffs’ counsel or required by the court.

A timetable leading up to certification in all provinces is worked out either between the parties, or in consultation with the judge assigned to manage the action through to the conclusion of the certification motion. Generally speaking, no schedule for the hearing of the certification motion is set unless plaintiffs’ counsel takes the initiative of arranging for a case conference with the case management judge, who will then work with counsel in setting a timeline for the delivery of the plaintiffs’ certification motion materials, the delivery of responding materials, a date by which cross-examination on affidavits is to take place, dates by which legal argument (briefs) are exchanged and a date or series of dates for the argument of the certification motion. Typically, the timeline for the steps leading up to certification motion may range from four to eight months or longer.

While preliminary motions may be brought in advance of the certification motion, in practice these are only brought with leave of the court. Recent decisions suggest that only motions which may narrow the litigation substantially or dispose of the entire action will be permitted by the court prior to the certification motion. When such motions are permitted by the court, this will usually mean that setting of the certification motion timeline will be delayed pending the outcome of the preliminary motion or motions.

JURISDICTIONAL AND MULTIPLICITY ISSUES

The legislation of Ontario, Manitoba, Saskatchewan, Nova Scotia and Quebec permits the certification of a mandatory “opt-out” national class.

In the other provinces with legislation, while a national class may be certified, only the residents of the province in which the action is commenced are bound by the proceeding unless they opt out. Residents outside those provinces may opt in to the proceeding and become part of the class, if the certification order provides for this. The situation in provinces without legislation is unclear.

Where two or more class actions are commenced in the same province in respect of the same alleged harm against the same defendants, either the plaintiffs’ counsel will come to an arrangement as to which action will proceed, or the question will be decided by the court on a carriage motion. Defendants are not parties to a carriage motion.

Where two or more actions are commenced in two or more provinces in respect of essentially the same alleged harm against the same defendants, those separate actions can proceed independently. These may be subject to challenges on the basis of jurisdiction and forum conveniens. While there are a few examples of the provincial courts engaging in informal co-ordination of multi-jurisdictional class actions, the law in this area is developing slowly; and, in the absence of an effective federal jurisdiction and any MDL processes, it will play a significant role in the management of these types of proceedings.

LEGAL FEES

In Ontario, Alberta, Quebec, New Brunswick, Nova Scotia and the provinces without legislation, if a certification motion is dismissed, it is within the discretion of the judge hearing the motion to award an amount on account of legal fees (or “costs” as they are called here) to the successful defendants. Recent Ontario decisions on this point appear to signify an increasing judicial comfort with granting legal fee awards to defendants in such cases. That being said, the quantum of legal fees awarded has been inconsistent and collection can be challenging.

British Columbia, Manitoba, Saskatchewan and Newfoundland and Labrador are “no-costs” jurisdictions, where costs will only be awarded on dismissed certification motions in rare and exceptional circumstances.

KEY DIFFERENCES BETWEEN CANADIAN AND US CLASS ACTIONS

There are a number of practical differences between class actions in Canada and the United States. Some of these are:

  • There is no requirement of predominance or numerosity for a Canadian class action. The courts weigh common issues in relation to individual issues as part of the preferability analysis, but have explicitly rejected a requirement that common issues predominate over individual issues.
  • Canadian courts consider the preferability of a class action for certification — in particular, whether the proposed action will promote access to justice, judicial economy and behaviour modification.
  • In those provinces which allow jury trials in civil actions, either party may request that the common issues trial proceed before a jury. However, there is no right to trial by jury in a civil action in Canada. The few class actions that have proceeded to trial have been determined by a judge without a jury.
  • Courts have approved levels of contingent fees for plaintiffs’ lawyers which, although much greater than the norm in Canada, are relatively low compared to the fees approved in litigated and settled cases in the US.
  • Compensatory and punitive damage awards tend to be much smaller in Canada than in the United States and are more subject to appellate review.
  • There is no federal civil jurisdiction of significance in Canada, and any class action of significance will proceed in one or more provincial courts. The management of multiple proceedings is subject to the common law approaches to jurisdiction and forum conveniens.

Cassels Brock has the depth and expertise to defend class actions in all substantive areas of law through all stages of the claim including certification, settlement and trial.