Industry-wide and multi-industry class actions: the example of Quebec

By Simon Potter, Pierre-Jérôme Bouchard & Léa Chebli

Posted: 21st August 2017 08:39

Manufacturers should brace themselves to face an even greater number of class action lawsuits from consumers in the province of Quebec.
 
This increase can safely be predicted on the basis of a number of factors, including rulings by the Supreme Court of Canada that have drastically lowered the threshold for authorisation (certification), even to the point of eliciting obiter comment from Quebec judges whether any screening mechanism is really necessary at all.
 
Though judges of the first-instance Superior Court of Quebec have tried to circumscribe the use of this proceeding, the Quebec Court of Appeal has reiterated their obligation to follow the very permissive principles set forth by the Supreme Court of Canada.
 
The Court of Appeal has, though, addressed a clear invitation to the Quebec legislature, if it wants to avoid quasi-automatic authorisation, to modify the Quebec Code of Civil Procedure’s provisions relating to authorisation.
 
Class actions in Quebec are an increasingly popular recourse: reasons and drivers
 
In the last few years, Quebec courts have witnessed an important number of motions for authorisation of class actions, in areas ranging from administrative law to Charter or environmental issues but very heavily concentrated in consumer law, which is fairly “paternalistic” in Quebec and offers a number of evidentiary presumptions favourable to the consumer plaintiff or to the class of consumer plaintiffs.
 
Manufacturers and retailers should understand the drivers of this trend, and think about solutions to mitigate their commercial and legal risks.
 
The motion to obtain authorisation is presented to a judge who is instructed by our Code to allow the class action to go forward if it meets the following criteria: the claim must raise identical, similar or relatedissues, the facts alleged must justify the conclusion sought, and the representative plaintiff must be in a position to represent the other members of the class. There is no requirement that a class action be the superior or even merely the preferred mechanism for settling the dispute, and there is no requirement that the common issues outweigh the disparate.
 
In light of various judgments, and especially of the recent teachings of the Supreme Court of Canada, these criteria will be applied in a way to favour authorisation.
 
The Supreme Court has held that a single common question is sufficient, as long as its determination will resolve the dispute in a “non-insignificant way”. In a stretch of logic which many find difficult to understand, it has also held that a question can be common even if the answer will vary depending on the class member, and even if there is no answer for some of them.
 
The Supreme Court has also held that Quebec courts cannot refuse to authorise a class action based on the “proportionality” principle alone, even though this principle suffuses all Quebec law. Proportionality can be a factor in the determination whether the proposed class action meets each of the named criteria, but cannot be a self-standing criterion for denying authorisation.
 
In a similar vein, the Supreme Court confirmed in a 2014 decision that a representative plaintiff does not need to have a direct cause of action against each defendant, as long as there exists a common issue. We can therefore see class actions with a number of defendants, many of whom will find themselves parties even though no representative or witness has any privity with them or even a ground of complaint against them.
 
Emboldened by this very lax test for authorisation, and motivated by the prospect of quick settlements from defendants disadvantaged by these rules, class counsel have begun to initiate actions against entire industries, and even across several industries, on the basis of a common practice.
 
For instance, in 2016, a motion for authorisation to institute class proceedings was filed against 13 defendants (furniture companies, phone companies, service providers) on the grounds that the extended warranty they sold breached the Consumer Protection’s Act, even though the warranties offered by each defendant had very little in common.
 
Quebec Courts’ answer to this trend: a plea for change?
 
Judges of the Quebec Superior Court, first instance jurisdiction for class actions, have sought to limit the onslaught of far-reaching, evidence-free and difficult-to-manage class actions, only to be brought back to order by the Quebec Court of Appeal. Last year alone, the Court of Appeal reversed no less than six denials of authorisation.
 
In those judgments, the Court of Appeal applied the criteria set down by the Supreme Court, and found itself constrained to grant the authorisations. In one of its recent rulings, one judge of the Court went so far as to note that, in light of the lax test set down by the Supreme Court, the process for authorisation may have lost any real utility.
 
The Honourable Justice Bich made this unprecedented call for change in Charlesv. Boiron Canada inc., 2016 QCCA 1716:
 
[73] Though class actions were supposed to be a means to facilitate access to justice, the authorisation process, as presently framed, is unfortunately an impediment to such access. Even when the process does not constitute an impediment, it is nevertheless a procedural formality which does not justify its enormous costs, and which does not allow an efficient screening of the cases. In either case, it will be the cause of a general dissatisfaction, not to say, and I dare to say it, a frustration that resonates throughout the entire judiciary. Notwithstanding that some may profit from the situation (countless are industry's denunciations of class actions and of their new face of the ambulance chasing), such reality does not justify the status quo.
[74] One may argue that, if the situation has turned out this way, it is because the legislation, though built on a strong theoretical foundation, is misunderstood or misapplied. This may be true, I admit, but such affirmation solves nothing. I would be tempted to say that, if the practice of law, after 38 years, is unable to apply the theory, it means that the theory is faulty or outdated, or that the model that it is supposed to portray needs to be reformed; simple modifications will not be enough. I mention above the possibility that the authorisation process be suppressed or, even better, integrated to the action on the merits, but others, with whom one may agree also, suggest reinforcing the process in order to give it the power of which it was been deprived since then. Either way, it is time for the legislator to rethink the issue. It is even surprising that it has not been addressed in the last reform of the Code of Civil Procedure.[1]
 
The Court has called for legislative reform to address the issue. Will the law makers take note and will they act swiftly? Only time will tell, though past is not a reassuring guide. In the meantime, however, we can only recommend thatproduct manufacturers take a preventative approach and that they keep up to date on the best commercial practices and the most recent developments in consumer law to avoid being dragged into opportunistic proceedings.
 
Simon Potter, Partner
T: 514-397-4268
E: spotter@mccarthy.ca
 
Simon Potter is a partner in our Litigation Group in Montréal. In his commercial litigation practice, he has handled a variety of cases ranging from class actions to corporate contractual liability to competition issues and constitutional questions, including the challenge of the federal legislation banning the Canadian advertising of tobacco products.
 
Mr. Potter is appears in the Lexpert American Lawyer Guide to the leading 500 Lawyers in Canada as a leading lawyer in the areas of class action litigation, corporate commercial litigation and international trade, in the recent edition of Who’s Who Legal Canada in product liability defence and trade and customs, and in the current edition of The Legal 500 - Canada in the areas of dispute resolution and international law.


Pierre-Jérôme Bouchard, Partner
T: 514-397-4163
E: pjbouchard@mccarthy.ca
 
Pierre-Jérôme Bouchard is a partner in our Litigation Group in Montréal. His practice encompasses class actions, commercial litigation as well as medical, product liability and intellectual property disputes at both the trial and appellate levels. He has particular expertise in consumer class actions based on the Quebec Consumer Protection Act and has acted for manufacturers in many different industries. He has also been involved in significant cases raising Charter arguments. Mr. Bouchard has pleaded before all levels of court in Québec.
 
Léa Chebli, Associate
T : 514-397-4179
E : lchebli@mccarthy.ca
 
Léa Chebli is an associate in our Litigation Group in Montréal. Her practice focuses on civil and commercial litigation and professional liability, particularly in the medical field, before trial and appellate courts.
 
Ms. Chebli has appeared before the Court of Québec, the Superior Court and the Court of Appeal of Québec. She has experience in all aspects of the litigation process, from preparation and representation to negotiation and settlement.


[1]The judgment is in French, and this is the authors' translation.

Related articles



Comments


close

Subscribe to our newsletter

Sign up here and get the latest news and updates delivered directly to your inbox

You can unsubscribe at any time