The End Of National Class Actions in Canada?

In his judgment rendered on April 19, 2022, in Option Consommateurs v. Nippon Yusen Kabushiki Kaisha,^[1] Justice Donald Bisson of the Superior Court of Québec refused to stay a Québec class action in favour of a parallel proceeding before the British Columbia Supreme Court. This ruling challenges the very notion and possibility of  national class actions in Canada, ruling that in some cases, a national class action may be “impossible”.^[2]

Context

On April 1, 2019, the Superior Court of Québec authorized a class action^[3] against the defendants, alleging a conspiracy to unduly restrict competition and unreasonably raise the price of roll-on/roll-off shipping services, also referred to as “Ro-Ro shipping.” The action was brought on behalf of all persons who purchased Ro-Ro shipping services in Québec or who purchased or leased a new motor vehicle, new agricultural machinery or new construction equipment in Québec shipped by Ro-Ro between February 1997 and December 31, 2012 (the “Class Members”). The Class Members’ claim was based on the Competition Act^[4]and on extracontractual liability under the Civil Code of Québec (“C.C.Q.”).

Subsequently, the defendants filed an application to stay the Québec class action and the parallel action in Ontario until a final judgment on the common issues was rendered in the case proceeding on the merits before the British Columbia Supreme Court, the objective being to proceed with a single national trial in British Columbia. While the British Columbia class action did not yet include the Quebec Class Members, a motion to that effect had been filed by the defendants who simultaneously sought to stay the Quebec case until the British Columbia Supreme Court had ruled on the motion to add the Québec subclass.

Key Findings

No class in British Columbia that included Quebec residents

While stays  of class proceedings in Quebec have been granted in situations where the foreign case already included Quebec residents, this was not the case here. As noted, the application to amend the British Columbia class action to include residents of Québec was still pending before the British Columbia Supreme Court.

The Court therefore decided that it was not appropriate or proportionate to stay the Quebec case in order to await the British Columbia decision on the request to add the Québec residents. Indeed, it was not known when the British Columbia Supreme Court would render a decision on the matter, and the judge held that the Quebec case would be stayed de facto for a year or more even without any decision on the application to stay in Quebec.

Consequently, the defendants had to demonstrate that the British Columbia Court had jurisdiction over the Quebec members under the internal law of that province. However, since the law of British Columbia was not argued by the defendants, the Court denied the application for a stay on this ground alone.

Nonetheless, in the interests of the sound administration of justice, the Court continued its analysis assuming that the Supreme Court of British Columbia had jurisdiction over Québec residents and would agree to add Quebec residents to the proceeding.

Forum non conveniens

The defendants further argued for a stay based on the principle of forum non conveniens, which is rather a request to decline jurisdiction in favour of a better-placed foreign court, and not a request for a stay per se. Article 3135 C.C.Q. provides that even though a Québec authority has jurisdiction to hear a dispute, it may, exceptionally and on an application by a party, decline jurisdiction if it considers that the authorities of another State are in a better position to decide the dispute. On this point, the decision of the Supreme Court of Canada in Spar Aerospace Ltd. v. American Mobile Satellite Corp.^[5] sets out the criteria that a Court must consider, while making it clear that no criterion is determinative in itself. Where no clear impression emerges for one single foreign forum, the Court should accordingly refuse to decline jurisdiction.

In this case, the Court concluded that the criteria had not been met, finding notably that the Supreme Court of British Columbia’s decision concerning the Québec Class Members could not be recognized in Québec, one of the criterion the Court must consider. Indeed, the first step in a case involving the recognition of a foreign judgment in is to verify whether any of these situations gives the foreign authority jurisdiction under article 3168 C.C.Q.^[6] :

1. the defendant was domiciled in the State where the decision was rendered;
2. the defendant possessed an establishment in the State where the decision was rendered and the dispute relates to its activities in that State;
3. injury was suffered in the State where the decision was rendered and it resulted from a fault which was committed in that State or from an injurious act or omission which occurred there;
4. the obligations arising from a contract were to be performed in that State;
5. the parties have submitted to the foreign authorities the present or future disputes between themselves arising out of a specific legal relationship; however, renunciation by a consumer or a worker of the jurisdiction of the authority of his place of domicile may not be set up against him;
6. the defendant has submitted to the jurisdiction of the foreign authorities. 

In this case, the Court was of the opinion that none of these situations validly gave jurisdiction to the Supreme Court of British Columbia. More specifically, the judge found that neither the applicant nor the Class Members submitted to the jurisdiction of the Supreme Court of British Columbia to adjudicate their dispute. On the contrary, they contested it. In these circumstances, the decision of the British Columbia Supreme Court could not be recognized in Quebec, and this was a fatal obstacle to the forum non conveniens application.

The conclusions of Justice Bisson with respect to the other criteria of forum non conveniens, in obiter dictum, either were neutral or supported Québec’s jurisdiction. As a result, he held that there was no ground for staying the Quebec proceeding.

Stay of proceedings under article 3137 C.C.Q.

Article 3137 C.C.Q. provides that the Court, on the application of a party, may stay its ruling on an action brought before it if another action, between the same parties, based on the same facts and having the same subject is pending before a foreign authority, provided that the latter action can result in a decision which may be recognized in Quebec, or if such a decision has already been rendered by a foreign authority. In this case, the action in British Columbia could not result in a decision that could be recognized in Quebec, and this was once again fatal to the stay request under that article.

Stay of proceedings under article 49 of the Code of Civil Procedure (“C.C.P”)

Pursuant to articles 18, 49 and 577 of the C.C.P., where the cases have the same facts, the same subjects and the same parties, the Quebec judge may nonetheless exercise its discretion to stay a class action proceeding if the interests of the proposed class members and the sound administration of justice so require.

In this case, the “judicial resources” aspect of the sound administration of justice favoured a single trial being held in Canada. However, the interest of the Quebec members in keeping the trial in Quebec were found to clearly outweigh any other consideration. Accordingly, and since the British Columbia Supreme Court did not yet have jurisdiction over Quebec residents and its decision could not be recognized in Quebec, the Court concluded that there was little benefit to staying the Quebec case.

As a result, Justice Donald Bisson dismissed the defendants’ application to stay the Quebec case on this basis.

Conclusion

As Justice Bisson himself notes, “[translation] this judgment therefore challenges the established idea of Canada-wide national classes throughout the country”.^[7] And so, while it remains theoretically possible to have national class actions proceed outside Quebec, the Court has made clear that this may only be possible in those cases where the Quebec class members consent or where there are overriding connecting factors with the foreign province. Absent this, it would appear that the Court has closed the door to national class actions proceeding outside of Quebec.

Finally, as Court points out, while it may seem odd that two trials on the same issue could potentially take place in Canada, it will be up to the B.C. Supreme Court to stay its case if asked, or for the parties to agree in which province the case should proceed and how to do so.

It should be noted that an application for leave to appeal this judgment filed by the defendants was granted by the Court of Appeal^[8].