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Newsletter > August 2009

Class Actions and Multi-Jurisdictional Conflicts: The need for Class Action Reform In the Age of Globalization : Canada Post Corp. v Lépine

The globalization of our world economy coupled with the rise of multi-national corporations, mass production and technological advancement has no doubt conferred benefits to consumers in the form of choice, as well as great advantages to businesses in the form of opportunity and profit. However, with these great benefits may come great risk when things go wrong. Class action litigation is a useful vehicle for minimizing these potential risks.

Class actions serve three main purposes. Firstly, they provide for greater access to justice. This is demonstrated through the availability of contingency fees to class claimants. Class actions also permit individuals to bring claims as a group for actions that would not otherwise be brought independently due to the great financial burdens involved. Secondly, they promote judicial economy. For example, it is more efficient to have a group bringing an action as a whole class than each member of the class bringing a separate action in the courts. Lastly, class actions serve to modify the behaviour of potential defendants, and in essence make potential wrongdoers aware of the serious consequences that could follow in the event promises or duties to consumers are breached.

Given the global nature of commerce in the 21st century, the initiation of multi-jurisdictional class actions in the courts may pose future challenges. Maintaining judicial consistency in national class actions where members of the class are spread throughout Canada is a challenge that must be addressed. For example, class action settlements that are reached in more than one jurisdiction relating to the same matter may result in conflicting decisions.

In Canada Post Corp. v Lépine, class action proceedings were instituted against Canada Post for allegedly marketing a lifetime Internet service in 2000 to consumers, and subsequently canceling this service the following year. As a result, a class action was filed in Quebec in 2002. Later that year, subsequent class actions were filed in both the Ontario and British Columbia courts. Following settlement discussions in all three provinces, the Ontario and British Columbia plaintiffs eventually accepted an offer from Canada Post. However, the Quebec plaintiffs did not accept any offer.

The Ontario settlement offer was worded to cover all residents of every province except British Columbia but included Quebec. The Ontario settlement offer was approved by the Ontario Court in 2003. However, the following day, the Quebec court certified the class action against Canada Post on behalf of all Quebec residents in effect disregarding the earlier settlement offer approved in Ontario, which was intended to extend to all Quebec residents. The Ontario settlement was intended to settle the claims of all Quebec residents, yet the Quebec courts went ahead and certified an action for all Quebec residents effectively ignoring the previous Ontario order.

Canada Post appealed the Quebec decision through the Quebec court system in an attempt to have the Ontario Settlement offer recognized in Quebec. However, all of Canada Post’s appeals were dismissed. The matter then went before the Supreme Court of Canada, which upheld the decisions of the Quebec courts.

The Supreme Court had the opportunity to clarify the concerns associated with conflicting national class action decisions. However, the Supreme Court did not offer a broad ruling. Rather, it offered a limited decision to justify the decision of the Quebec Courts by focusing on the elements of notice and the timing of filing the action.

With respect to notice, the Supreme Court held that the notice provided to Quebec residents about the Ontario settlement was “insufficient and confusing”. The Supreme Court emphasized the importance of adequate notice in class actions. It stated that the notice to Quebec residents about the Ontario settlement was misleading because “it made it look like the Ontario proceeding was the only one.” The Supreme Court stated that notice is a fundamental principle of procedure in class actions because it enables class members to understand how the action may affect their rights, and provides information to class members about the possibility of opting out. Given that this notice requirement was not met, the Supreme Court upheld the decision of the Quebec Court of appeal and denied extending the reach of the Ontario settlement to Quebec residents.

In regards to the issue of the timing of the action, the Supreme Court in reviewing article 3155 of Quebec’s civil code held that because the Quebec action was filed before the Ontario action, Quebec did not have to enforce the later Ontario judgment.

This decision seems to suggest that a foreign decision may still be enforceable in another province provided that adequate notice is provided and that the class action in the foreign jurisdiction is filed first. The Supreme Court failed to provide broader guidance on handling the issue of multi-jurisdictional conflicts but it stated that this would be a more appropriate role for the provincial legislatures rather than the courts to work out. It stated:

The provincial legislatures should pay more attention to the framework for national class actions and the problems they present. More effective methods for managing jurisdictional disputes should be established in the spirit of mutual comity that is required between the courts of different provinces in the Canadian legal space. It is not this Court’s role to define the necessary solutions. However, it is important to note the problems that sometimes seem to arise in conducting such actions.

As class action litigation continues to progress, it is likely with time for further jurisdictional disagreements to take place. However, with legislatures working together to promote harmony through legislative framework, a better-coordinated system may soon be put in place to manage future conflicts as they arise.

Lawson Hennick

This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.

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