comparison between canadian and us class actions law and practice

McCarthy Tétrault LLP / mccarthy.ca

Jill YatesMcCarthy Tétrault LLP

Canadian Class Actions Law and Practice


Introduction

¬ Canadian class action legislation was originally modeled on Rule 23 of the United States Federal Rules of Civil Procedure, with some adjustments

¬ Canadian approach was designed to be more conducive to bringing class actions

¬ Has proven to be true


Canadian Overview

¬ Class action legislation in eight of the nine Canadian common law provinces and Quebec

¬ Quebec was first Canadian jurisdiction with class actions legislation in 1978; then Ontario in 1993 and then B.C. in 1995; others more recent

¬ All but New Brunswick, Newfoundland and B.C. are “opt-out” jurisdictions for non-resident class members. An amendment to switch B.C. from “opt-in” to “opt-out” has been proposed

¬ The legislation in each common law province is similar to one another


Canadian Overview

¬ "Trilogy" of decisions by Supreme Court of Canada in 2001 established numerous important principles, including defining the objects of class proceedings in Canada, which are:

¬ access to justice,

¬ judicial economy and

¬ behaviour modification

¬ These objects have informed a permissive attitude toward class actions generally


Canadian Overview

¬ Canada does not have national legislation comparable to Rule 23 governing class actions involving multiple provinces

¬ Multi-jurisdictional issues are discussed further below

¬ Federal Court of Canada allows class proceedings, but is a court of limited subject matter jurisdiction; hears claims in areas of Federal constitutional jurisdiction including tax, immigration and intellectual property

¬ Vast majority of Canadian class actions therefore brought in provincial superior courts


Comparison between Certification under Rule 23 and Canadian Legislation¬ Lower threshold for certification under Canadian

legislation

¬ Five general requirements for certification in Canadian common law provinces (with nuances between the provinces):

(a) pleadings must disclose cause of action;

(b) must be an identifiable class;

(c) there must be common issues;

(d) class action must be preferable procedure by which to resolve the case; and

(e) proposed representative plaintiff must be suitable


Comparison between Certification under Rule 23 and Authorization¬ The Quebec Code of Civil Procedure provides:

1002. A member cannot institute a class action except with the prior authorization of the court, obtained on a motion.

1003. The court authorizes the bringing of the class action and ascribes the status of representative to the member it designates if of opinion that:

(a) the recourses of the members raise identical, similar or related questions of law or fact;

(b) the facts alleged seem to justify the conclusions sought; (c) the composition of the group makes the application of article

59 or 67 difficult or impracticable; and (d) the member to whom the court intends to ascribe the status

of representative is in a position to represent the members adequately.


Comparison between Certification under Rule 23 and Canadian Legislation

¬ Each of the requirements for certification in common law Canada, and for authorization in Quebec, can be compared to the Rule 23 requirements for certification, as follows on the following slides:


Comparison – Canadian Requirement of Cause of Action

¬ Certification under Canadian class proceedings legislation in common law provinces requires the pleadings disclose a cause of action

¬ Onus on plaintiff

¬ No evidence is admissible

¬ Some courts have allowed motions to strike claim before certification, but sequencing is within the discretion of the case management judge

¬ In Quebec, authorization will not be granted unless the facts alleged seem to justify the conclusions sought

¬ Pleadings must be sufficiently detailed to allow the court to determine if the claim has any chance of success on the merits


Comparison – “Identifiable Class” not “Numerosity”¬ The “identifiable class” must consist of two or more

persons in Canadian common law provinces

¬ The number of potential class members or their identity need not be shown

¬ There must be objective criteria to identify the class members, which are not dependent on the merits

¬ Size of class may be a factor in determining if the class proceeding is preferable

¬ Quebec has an approach similar to numerosity, where class representative must show mandate/joinder is impractical


Comparison – Commonality

¬ Presence of common questions of law or fact is a requirement of both American and Canadian class proceedings

¬ In Canada, issue will be “common” where its determination is necessary to the resolution of each class member's claim

¬ Common issues need not be determinative of the defendant's liability or of the provision of relief to the class


Comparison – No Canadian Requirement of “Typicality”¬ Typicality is not explicitly required by Canadian class

proceedings legislation

¬ Factors used in analyzing typicality in the US are similar to those considered by Canadian common law courts in their examinations of commonality and preferability

¬ First step of Rule 23 analysis is establishing comparable claims or defences between plaintiff and other persons; similar investigation by Canadian courts when looking for common issues necessary to the resolution of class members' claims

¬ Second step of Rule 23 analysis is comparing claims and defences of plaintiff to those of the group; similar comparison by Canadian courts when considering preferability


Comparison - No Canadian Requirement of “Typicality”¬ Analogous analysis is that Canadian courts consider the

nature of the proposed common issues and the individual issues that would not be resolved through the class proceeding

¬ Although the factors considered by US and Canadian courts are similar, in practice "typicality" in US sets a higher bar to certification than commonality and preferability do in Canada

¬ Even where claims or defences are not typical of the class, Canadian courts allow certification as long as they are satisfied individual issues will not overwhelm the litigation and become its focus

¬ Canadian courts do not often conclude individual issues will become the focus of a case


Comparison – No Canadian Requirement of “Predominance and Superiority”¬ These were intentionally omitted by the government of Ontario when it

adopted the American class actions model¬ Similarly omitted from the legislation of the other common law provinces in

Canada

¬ Result is lowered threshold for certification in Canadian common law provinces

¬ Test in Canadian common law provinces is instead preferability, which is assessed according to several factors including:¬ extent to which certification furthers the objects of class action legislation

¬ presence of factors set out in the class action legislation, including ¬ whether common issues predominate, ¬ whether a significant number of class members have a valid interest in

pursuing separate actions, and ¬ whether there are other means of resolving the claims

¬ nature of the proposed common issues

¬ individual issues remaining after determination of common issues

¬ complexity and manageability of the proposed action

¬ alternative procedures to deal with the claims


Comparison – “Representative Plaintiff” similar to “Fair and Adequate Representation”

¬ Requirement is similar in US and Canadian class actions

¬ Canadian common law provinces require a representative plaintiff who will:

¬ fairly and adequately represent the interests of the class;

¬ has produced an acceptable plan for the class action and for notifying class members; and

¬ does not have a conflict of interest with the other class members on common issues

¬ In practice, the standard is low

¬ Quebec also requires an adequate representative


Comparison - Appeals

¬ The legislation in five Canadian common law provinces, like Rule 23, provides a right of appeal from an order granting or denying certification, in the discretion of the court of appeal

¬ In B.C., there is a right of appeal from every certification decision

¬ In Ontario, there is a right of appeal from decisions refusing certification but leave is required to appeal a decision granting certification

¬ In Quebec, there is a right of appeal from a decision refusing authorization but there is no right of appeal from decisions granting authorization unless such a decision dismisses a claim against certain defendants or excludes proposed class members


Comparison - Notice

¬ In Canada, individual class members need not be identified or notified in most cases

¬ The court may order any form of notice it deems appropriate, including publication in the media

¬ Notice will depend on the nature of the case and the nature and size of the class

¬ The court may, and often does, require the defendant to pay the cost of giving notice


Comparison - Relief and Distribution

¬ Canadian class proceedings legislation expressly authorizes aggregate damages awards and specifies procedures for their distribution

¬ In common law provinces, the court may make an aggregate award to the class if the only remaining questions relate to the assessment of monetary relief and if the aggregate award can reasonably be determined without proof by individual class members

¬ These prerequisites have been interpreted liberally

¬ In provinces other than Alberta, the court may use statistics or sampling to arrive at an aggregate award

¬ Distribution may be on a proportionate or average basis

¬ Where there is a residue of undistributed funds, cy-près distributions are permitted

¬ In common law provinces, Plaintiffs use “waiver of tort” to seek gains-based relief


Comparison – Relief and Distribution

¬ In Quebec, if the evidence can establish the amount of an aggregate award, the award may be made without establishing the identity of each class member or the exact amount of individual claims


Other Differences between the Legal Systems in Canada and the US¬ Costs: in at least some Canadian provinces (including

Ontario), adverse costs awards can serve as a deterrent to class action litigation

¬ Contingency fees: in Canada, plaintiff's counsel fees must be approved by the court and are generally modest by US standards

¬ Damage awards, including punitives: US awards are usually much higher than those granted by Canadian courts. Civil trials by jury are not as common in Canada. There has never been a jury trial in a Canadian class action

¬ Judicial scrutiny of settlement agreements: Canadian judges are prepared to scrutinize settlement agreements and look into the value received by the plaintiff class


Carriage Motions

¬ Proposed class actions seeking to represent the same class are sometimes filed concurrently in the same province

¬ Leads to “carriage motion” where different plaintiff firms seek to have carriage of the lawsuit on behalf of the class

¬ Superior Court judge, usually the case management judge, will decide who is entitled to carriage

¬ Defendants are spectators during this process


Multi-Jurisdictional Class Actions

¬ Duplicate class actions are often filed concurrently in several provinces

¬ The traditional approach was to file in B.C., Ontario and Quebec concurrently; it is now common for claims to be filed in all Canadian provinces with class action legislation (all provinces but Prince Edward Island)

¬ Constitutional issues?


Multi-jurisdictional Class Actions

¬ Within Canada, conflicts arising from multiple class actions have typically been resolved by counsel on a consensual basis

¬ Where plaintiffs' counsel in different provinces could not agree on which action should proceed "first", defendants could be required to fight in more than one province concurrently

¬ The Canadian Bar Association is in the process of developing a set of judicial protocols to help resolve such conflicts; these are focused on notice, judicial case management and coordinated settlement approvals

¬ Between Canada and the US, there is a continuing trend of parallel class actions being brought

¬ ABA has recently approved protocols for Canada-US cross border class actions, addressing coordination of notice and best practices for court-to-court communication

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comparison between canadian and us class actions law and practice

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