Jurisdictional Considerations in Class Proceedings

Class proceedings are now a well-entrenched part of the legal landscape in Canada, but the issue of jurisdiction and the appropriate forum in which to conduct class proceedings often presents complex issues. Moreover, national and multi-jurisdictional class proceedings are becoming the new norm. These issues continue to cause difficulties for all parties, their counsel and the judges who hear these cases.

To understand and appreciate some of these issues and the complexities that can arise, two general issues of jurisdiction and forum that often present themselves in class proceedings will be examined: forum non conveniens, including not only whether a particular forum has jurisdiction, but also whether another jurisdiction is forum conveniens; and developments in the area of multi-jurisdictional class proceedings.

FORUM NON-CONVENIENS ANALYSIS IN CLASS ACTIONS

Forum selection is an important issue in class proceedings. Class proceedings legislation in some provinces mandates, upon certification, that a class includes “a person who meets the criteria to be a class member… unless the person opts out of the class proceeding.” In other jurisdictions, the legislation indicates that members of the class who are residents of the province in which certification is granted must specifically opt out of the class, whereas those who are not residents of that province must specifically opt in if they want their claims to be considered.

These distinctions in class proceedings legislation can cause counsel to “forum shop” for the most favourable jurisdiction in which to commence the action. That gives rise to questions of whether the province in which the action has been brought has jurisdiction and, further, if it does, whether there is a more convenient forum that should hear the action.

When considering the forum non-conveniens analysis, one must immediately be conscious of the 2012 Supreme Court of Canada decision, Club Resorts Ltd. v. Van Breda. While the Club Resorts case was not a class proceeding, it nevertheless provides useful guidance on the topic.

The first step in the Club Resorts analysis is to determine whether or not a court has simple jurisdiction over the claim. In addressing that question, the court must consider presumptive connecting factors. It must also assess the link between the subject matter of the litigation and the forum, but separate consideration must be given to values of fairness and efficiency and the principle of comity.

If a defendant challenging jurisdiction can establish that there is no presumptive connecting factor between the subject matter of the litigation and the forum selected by the plaintiff, the court will have no jurisdiction simpliciter and must decline to hear the dispute.

If the court determines it does have jurisdiction by virtue of one or more presumptive connecting factors, the second branch of the test must be considered.

In the second branch of the test, the court considers the distinction between the existence and the exercise of jurisdiction. In order to be successful on this second branch of the test, the Supreme Court of Canada noted the following:

The defendant must show, using the same analytical approach the court followed to establish the existence of a real and substantial connection with the local forum, what connections this alternative forum has with the subject matter of the litigation. Finally, the party asking for a stay on the basis of forum non-conveniens must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate.

Regarding the burden imposed on a party seeking a stay on the basis of forum non-conveniens, the court indicated the alternative forum must be “clearly more appropriate,” a well-established test.

MULTI-JURISDICTIONAL CLASS PROCEEDINGS

Several superior courts across Canada are now willing to certify national classes and it is now commonplace that multiple, overlapping proceedings are being commenced in different jurisdictions.

This is complicated further by the fact the legislation differs among certain provinces as to whether, upon certification, putative class members are required to “opt in” to be part of the class or whether they are automatically part of the class upon certification.

Provincial legislation is currently ill-equipped to address the jurisdictional problems and inefficiencies created by multi-jurisdictional class actions.

To bring clarity to these complex jurisdictional issues, legislative change will be needed.

Various jurists across Canada have called for some form of protocol to solve these complexities resulting from what are essentially the same claims brought in different jurisdictions.

In the 2008 decision, Tiboni v. Merck Frosst Canada, Justice Maurice Charles Cullity called for the development of a court-to-court agreement or protocol to address the complexities:

If decisions of provincial courts on carriage motions are not to be respected throughout Canada, this merely underlines – and makes even more urgent – the need for an agreement or protocol among superior courts that will provide for nationally accepted carriage motions and determine the jurisdiction in which such motions will be heard.

More recently, the 2009 Supreme Court of Canada decision, Canada Post v. Lépine, called on provincial legislators to pay more attention to the framework for national class actions, and recommended establishing more effective methods for managing jurisdictional disputes:

… 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 solution. (emphasis added)

Five years later, we are still waiting for some form of legislative reform to solve these difficulties.

The friction that can arise between courts of different provinces in multi-jurisdictional class proceedings was made evident in the 2014 British Columbia Court of Appeal’s decision, Endean v. British Columbia. The decision in Endean arose out of multi-jurisdictional class proceedings filed in Ontario, Quebec and British Columbia arising over tainted blood through which people were said to have contracted Hepatitis C. All three actions were certified as parallel class proceedings, which were ultimately settled.

In order to administer the settlement, the courts assumed a supervisory role requiring all three courts to issue identical orders for any order to be effective.

In administering the settlement, class counsel proposed that judges of all three jurisdictions hear parallel motions in one location. British Columbia refused to allow British Columbia Superior Court judges to sit outside of the territorial boundaries of British Columbia unless there was a direct link to a British Columbia courtroom so citizens of British Columbia could observe the proceedings, via video link or teleconference.

Issues become even more complex when proceedings are filed not only in Canada, but in other countries over the same dispute or cause of action. This was the situation in the 2014 decision, Kaynes v. B.P., PLC.

The Kaynes case dealt with misrepresentations allegedly made by B.P. in documents sent to its shareholders. Shares of B.P. were sold on various exchanges, including the Toronto Stock Exchange, the New Yo
rk Stock Exchange and on the London Stock Exchange.

The plaintiff in Kaynes purchased his shares over the New York Stock Exchange, but brought the action in Canada seeking to define the proposed class as including all residents of Canada who acquired B.P. securities between certain specific dates.

The court in Kaynes was faced with the issue of whether Ontario has or should assert jurisdiction over the claim of proposed class members who purchased B.P. shares on foreign exchanges. Ultimately, the court denied certification and found:

Order and fairness will be achieved by adhering to the prevailing international standard of tying jurisdiction to the place where the securities were traded.

Faced with numerous instances of overlapping national class actions and issues over forum selection, Canadian superior courts have, in some cases, adopted what could be called a “subclass deference model.”

Under this model, any court in which a national class action is brought will generally “defer” to the superior court of another province in respect of the subclass of persons residing in that other province. This deferential approach is frequently justified on the basis of judicial comity.

To date, Canadian courts have not, generally speaking, been prepared to stay or enjoin class proceedings on the grounds that there is a competing national class action in a more appropriate forum. On the contrary, it has become commonplace for Canadian courts to tolerate multiple overlapping national class actions.

This judicial tolerance for duplicative class proceedings lies in contrast to the judicial attitudes towards duplicative proceedings generally. Outside of the class context, Canadian courts have shown an aversion to duplicative lawsuits, and with good reason. A multiplicity of proceedings is problematic because, among other things, it creates a risk of conflicting decisions.

It appears that those courts that condone duplicative class proceedings in multiple provinces commonly propose that the risk of conflicting or confusing decisions can be overcome through “comity” between judges in different provinces.

The expectation is that the court of every province will engage in a form of “ongoing deference” to the courts of other provinces in respect of certification of any class that includes residents of those provinces.

CONCLUSION

Unless and until there is legislative intervention or a more co-operative, but at the same time less deferential, approach to multi-jurisdictional class proceedings, these problems will continue. An agreed-upon framework and an efficient structure to such claims are long overdue.

In the meantime, class counsel and the judges they appear before will have to continue to pay close attention to the legislation in place in the forum in which the action is being heard and be attentive to differences between that legislation and the legislation of other jurisdictions in which claims for the same wrongdoing may have been brought.

McLennan Ross is a member of The Arc Group of Canada, a network of independent insurance law firms across Canada.