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Québec Court of Appeal Decision re National Class Actions

Date

February 28, 2008

AUTHOR(s)

Martin Boodman


The recent Québec Court of Appeal decision in Société canadienne des postes v. Lépine appears to raise doubts as to the viability of truly national class actions in the Canadian context of recognizing and enforcing a non-Québec national class action settlement.

The case involves three parallel class claims filed in British Columbia, Ontario and Québec. The B.C. and Québec proceedings were instituted on behalf of residents in each province. The Ontario class action was instituted on behalf of Canadian claimants, excluding those in Québec. Prior to authorization in any jurisdiction, a settlement was reached in the Ontario proceedings. The settlement initially covered Ontario and B.C. claims and was subject to approval by the courts in those two provinces. At the defendant’s request, the settlement was expanded to include all Canadian claims.

At the hearing to approve the settlement in Ontario, legal counsel for the Québec representative claimant argued unsuccessfully that the Ontario court should decline jurisdiction regarding Québec residents who had refused the proposed settlement. The Ontario judgment approved the settlement for all persons in Canada other than those in B.C.

Subsequent to authorization and the institution of a class claim in Québec, the Québec defendant sought recognition of the Ontario settlement judgment and rejection of the Québec claim. The Québec Superior Court refused to recognize the Ontario settlement judgment, and the Québec Court of Appeal confirms that decision.

While the Québec Court of Appeal recognized the initial jurisdiction of the Ontario courts, it stated that the Ontario court should have declined jurisdiction over Québec residents on the basis of "comity", the principle that one jurisdiction will extend courtesy to another by recognizing the latter’s judicial acts. The initial decision of the plaintiffs’ lawyers to initiate proceedings in three provinces for the residents in each province was an appropriate and practical way to ensure respect for the principles of order and fairness for each group of claimants.

  1. The Court of Appeal recognized the possibility for national and international class actions in principle, particularly where there is a connection between the cause of action and the court chosen as regards all members of the class of claimants. Nonetheless, as the size of the group increases, the court must be vigilant to protect class members outside its jurisdiction, particularly in respect to the question of notices. More specifically, the Court of Appeal could not understand why the Ontario court was guided by a principle of equity as regards the B.C. courts, while not showing the same attitude towards the courts of Québec where the class proceedings were first instituted.
  2. The Ontario settlement judgment also failed the requirement that it conform to the fundamental principles of procedure. According to the Québec Court of Appeal, notices published in relation to the Ontario settlement judgment created confusion for Québec residents given prior notices of the Québec class claim. Adequate and clear notices are fundamental to the exercise of class members’ rights to remain with or opt out of a class proceeding.
  3. The Court of Appeal found a third basis to refuse recognition of the Ontario judgment in lis pendens finding that the Québec and Ontario class claims have the same parties, facts and object, and that the Québec proceedings were pending at the time of the Ontario judgment.

McCarthy Tétrault Notes:

The Court of Appeal judgment in Lépine applies a rigorous standard to non-Québec class action notices with a view to protecting the rights of Québec residents. More importantly, the decision appears to indicate that, in the context of class actions on a national scale, the rights of class members within each province are best protected through the institution of separate proceedings in each province. Further, recognition of this source of protection appears to be inherent in the principle of comity.

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