The Supreme Court Vivendi Decision and its Not Insignificant Implications
The first judgment of 2014 rendered by the Supreme Court of Canada, Vivendi Canada Inc. v. Dell’Aniello, 2014 SCC 1 (“Vivendi”), deals with the conditions for authorization of a class action in Quebec. The judgment has several important implications for Canadian businesses that are likely to be involved in class action proceedings.
First, the Court held that the “commonality of issues” test for authorization is satisfied by even a single common question, as long as it can serve to advance the resolution of a “not insignificant portion of the dispute”. Second, the Court stated that the answer to a common question may vary among class members, and that the authorization judge should not focus on what the answers might be, provided that success for one class member does not mean failure for any other. Third, the authorization judge ought not to concern himself with the existence of multiple sub-classes that may need to be created for trial purposes. Finally, the proportionality principle, an important precept of the Quebec Code of civil procedure (“CCP”), cannot serve as a basis to deny the authorization of a class action if the other conditions are met.
Overall, the Vivendi judgment endorses the “authorize now, ask questions later” approach already espoused by many judgments in Quebec. The Court, however, does not explain how common issues trials involving disparate claims and a multitude of sub-groups will achieve the objectives of efficiency that justify any class action regime.
Vivendi deals with a series of disputes concerning the interpretation of a pension plan (“Plan”) of the wine and spirits company Seagram Ltd., which Vivendi acquired in the early 2000s.
The Plan had been amended several times throughout the years. In particular, in 1985, the employer had inserted a unilateral amendment clause which reserved the company’s right to modify or suspend the Plan and its benefits.
In 2008, Vivendi, Seagram’s successor with respect to the Plan, informed the Plan’s beneficiaries (all retirees at the time) that it would be making amendments that were adverse to their interests. Those amendments came into effect on January 1, 2009 (“2009 amendments”), after which Mr. Dell’Aniello applied to the Quebec Superior Court for authorization to institute a class action against Vivendi on behalf of the beneficiaries of the Plan.
2. Decisions Below
(a) Superior Court of Quebec (Mayer J.)
Mayer J. dismissed the motion for authorization to institute a class action on the basis that the questions were not identical, similar or related, as required by art. 1003 (a) CCP.
Mayer J. found that the resolution of the dispute regarding the validity of the 2009 amendments to the Plan depended on the determination of each employee’s vested rights. Given that this determination had to be evaluated at the moment of retirement, it was impossible to examine the question collectively: the employees had retired at different times between 1971 and 2003, and each had received different communications from their employer with respect to their rights in the Plan.
Mayer J. reasoned that there were at least five (5) different sub-groups: (1) surviving spouses of employees who had retired before January 1977; (2) employees who had retired between January 1977 and July 1985; (3) employees who had retired between July 1985 and December 1995; (4) employees who had retired between January 1996 and June 2000; and (5) employees who had retired after June 2000.
Mayer J. also noted that the unilateral amendment clause did not apply to the group of beneficiaries who retired before June 1985. Consequently, any decision regarding the scope of the unilateral amendment clause would be irrelevant to the determination of the claims of as many as 20% of the proposed class.
Finally, Mayer J. observed that the proposed class members had worked in six (6) different provinces. This, combined with the multiple sub-groups, meant that the judge hearing the case would need to complete over twenty-two (22) different legal analyses in order to determine the validity of the class members’ claims. The lack of homogeneity in the proposed class contributed to his refusal to authorize.
(b) Quebec Court of Appeal (Chamberland, Rochon, and Léger JJ.A)
The Court of Appeal unanimously allowed the appeal and authorized the class action.
The Court of Appeal held that a court applying art. 1003 (a) CCP in the circumstances of this case must only determine whether a proposed common question, e.g. the validity of the 2009 amendments to the Plan, was identical, similar or related. By assessing how the amendments affected each sub-group and member of the proposed class, the Superior Court had effectively ruled on the merits of the claims and thus overstepped its role at the authorization stage.
The Court of Appeal held that the validity of the amendments was the main question at issue, and that it was a common concern of all members of the proposed class.
3. Supreme Court’s Decision (Lebel and Wagner JJ.)
The Supreme Court dismissed Vivendi’s appeal and affirmed the decision of the Court of Appeal. In doing so, the Court took the opportunity to reiterate and broaden the flexible approach pertaining to authorization proceedings in Quebec.
(a) Scope of Inquiry at the Authorization Stage
The Court reiterated the basic principles of its recent ruling in Infineon Technologies AG v. Option consommateurs, 2013 SCC 59 (“Infineon”), which can be summarized as follows:
• authorization is a screening mechanism intended to weed out untenable claims;
• petitioner need only establish a “prima facie case,” or an “arguable case”;
• authorization is a procedural stage; the merits of the case must not be examined.
It is now eminently clear that the threshold at the authorization stage is very low. Vivendi will support class counsel’s arguments that courts should spend as little time and energy as possible in assessing whether the claims of the class members are consistent or even answerable.
(b) Commonality and the “Not Insignificant” Test
One of the major tenets that the Vivendi ruling will stand for is that in order for a petitioner to meet the commonality requirement of art. 1003 (a) CCP, all he is required to demonstrate is that there exists at least one aspect of the case the determination of which will potentially resolve a “not insignificant portion of the dispute” for all members of the group.
If certain Quebec judgments had already established that one common question was sufficient to advance the debate, Vivendi and its “not insignificant part of the debate” language arguably goes beyond the existing state of the law and is, at the very least, a strong endorsement of the authorization-friendly current of jurisprudence. How to determine what a “not insignificant portion of the dispute” amounts to will, of course, need to be determined by Quebec courts.
(c) Common Questions, Not Common Answers
The Vivendi decision clearly confirms that there exist two distinct class action regimes in Canada.
Commenting on the commonality requirement, the Court points out that the applicable test is different in the common law provinces than in Quebec, and that common law precedents must be prudently applied in Quebec.
The Court also concludes that the commonality requirement in Quebec must concern the questions raised by the proposed class proceeding, and not the answers to them. The reason for the conclusion is based on the Court’s observations that: (1) the words of Quebec’s statutory provision is broader in scope as it does not require a Court to look for ‘common issues’ as well as ‘common questions’ in order to authorize a class action, and (2) Quebec case law has always interpreted the commonality requirement in a broader and more flexible manner.
The Court holds that as long as the answer to a common question does not give rise to conflicting interests among the members of the group, there is no need for the court to consider what the answers might be.
(d) Sub-Groups are No Obstacle
The Supreme Court stated that a judge at the authorization stage must not worry about the existence of potential sub-groups within a proposed group; this analysis is neither necessary, nor relevant.
The existence of sub-groups does not, in and of itself, constitute a sufficient basis for refusing to authorize a class action. For authorization to be refused, there must be conflicting interests between members of the group.
(e) Proportionality Cannot Be Assessed Separately
Vivendi has also clarified the role that the principle of proportionality, which is found in art. 4.2 CCP, is meant to play in class proceedings. In a rather significant change of position, the Court adopted and applied Deschamps J.’s dissenting opinion in Marcotte v. Longueuil (City of), 2009 SCC 43: the principle of proportionality must not be considered as a separate criterion on the basis of which a judge can refuse to authorize a class action. Rather, the four (4) criteria included in art. 1003 CCP are exhaustive and proportionality must only be considered and applied in the court’s assessment of each of them.
The Court concludes that allowing a judge to deal with proportionality separately could indirectly defeat the Quebec legislature’s decision to omit a requirement that class proceeding be “preferable” or “more appropriate” in a given set of circumstances, as is the case in the common law provinces.
4. Conclusion and Comments
Vivendi, along with the Supreme Court’s recent judgment in Infineon, will have an important impact on class proceedings in Quebec.
The Supreme Court’s latest pronouncements will allow class counsel to argue that authorization in Quebec is just a procedural formality. A well drafted motion will be enough to satisfy the authorization criteria in most cases. Class action defendants and their counsel will certainly need to re-evaluate their strategy with respect to the filing of preliminary motions prior to authorization, as well as their arguments at the authorization stage.
The Court’s clear endorsement of the broad and flexible approach to the commonality requirement of art. 1003 (a) CCP, distinct from the more rigid approach of the common law provinces, will motivate class counsel to file (or keep filing) multi-jurisdictional class actions in Quebec. The Court did note that Quebec judges have the ability to hear evidence regarding the law applicable in other provinces or take judicial notice of that law. The Court nevertheless confirmed that “substantial differences between the applicable legal schemes would cause a class action to lose its collective nature” (para. 62). This acknowledgment is important given the rising number of national and global class proceedings being filed in Canada, in the context of which choice of law differences among the class should in some cases be a barrier to authorization.
The absence of any discussion concerning the appropriate level of abstraction for a proposed common question is worrisome. Any question, if framed in a sufficiently general way, can become “common”. However, if the resolution of underlying claims requires disparate analyses, the question should, in theory, be unsuited for a class action. The Supreme Court had itself expressly recognized this notion in Rumley v. British Columbia, 2001 SCC 69 (“Rumley”), at para. 32:
It would not serve the ends of either fairness or efficiency to certify an action on the basis of issues that are common only when stated in the most general terms. Inevitably such an action would ultimately break down into individual proceedings. That the suit had initially been certified as a class action could only make the proceeding less fair and less efficient.
Despite referring to Rumley and Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 (“Dutton”) (see para. 44 of Vivendi), which expressly recognized the importance of avoiding duplication of fact-finding or legal analysis, the Court now appears to evacuate this concern for Quebec courts. Rumley, Dutton and other Supreme Court “common law” precedents, which had until now been routinely applied by Quebec courts, can no longer “be imported without adaptation” (para. 48).
While this may be true, part of the Court’s reasoning in holding that the Quebec regime is distinct appears unjustified. For instance, one of the justifications provided by the Court for its position on the particularity of the commonality requirement in Quebec is its observation that “[n]owhere has the legislature stated that there must be common answers” (para. 51).
The Supreme Court’s rejection of the proportionality principle as a potential tool to control whether the objectives of efficiency are achieved is also disappointing, as is the Court’s conclusion on sub-grouping, which effectively means that significant differences in the types of claims and damages between class members will have to be settled at trial.
Clarification may be needed as to how a judge can determine whether sub-groups or answers to common questions might result in conflicting interests when he or she is prohibited from any examination of how the case will play out on the merits post-authorization.
Overall, practitioners will probably be troubled to see that the Supreme Court chided the motion judge for his forward-looking analysis of whether a class action could be managed and tried efficiently.
Vivendi Canada Inc. v. Dell'Aniello, 2014 SCC 1
Date of Decision: January 16, 2014
class action authorization commonality of issues multiple sub-classes not insignificant test proportionality principle Supreme Court of Canada