Class Actions: the Supreme Court of Canada Reaffirms the Flexibility of the Conditions for the Authorization of a Class Action in Quebec
On January 16, 2014, the Supreme Court of Canada rendered an important decision in class action matters in the case of Vivendi Canada Inc. v. Dell’ Aniello, 2014 SCC 1.
Thirty-four years after the introduction of the class action regime in Quebec, the Supreme Court has unanimously reaffirmed the broadness and flexibility of Quebec’s conditions for the authorization of a class action, and specified how the authorization criterion that there be “identical, similar or related questions of law or fact” underlying the proposed action must be addressed.
Much has been written on this criterion in the last few years, but it is already expected that this decision of the Supreme Court of Canada will not put an end to the debate on this subject.
In 2008, the appellant Vivendi Canada Inc. (“Vivendi”), a wine and spirits production and distribution company, amended its health insurance plan for retirees and their surviving spouses, which had been in place for several years (the “Plan”), in order to limit its scope and the benefits available thereunder.
Considering himself harmed by the amendment, the respondent in 2009 filed a motion for authorization to institute a class action on behalf of the Plan’s beneficiaries and their dependents in order to have their rights under the Plan prior to its amendment judicially recognized, and to claim damages from Vivendi for its unilateral amendment of the Plan.
The judgment of the Superior Court
At first instance1, Justice Mayer of the Superior Court concluded that the nature of the questions at issue could not satisfy the criterion of Article 1003(a) of the Code of Civil Procedure (“CCP”) requiring that the proposed class action raise “identical, similar or related questions of law or fact”.
According to Justice Mayer, the determination of the vested rights of each member under the Plan, the benefits to which they were entitled and whether or not the amendments could be set up against them could only be achieved through an individualized analysis taking into account each class member’s date of hiring, retirement date, the content of their employment contract, their province of residence, and the amendments that had been made to the Plan.
Thus, faced with such a variety of individual factors and without even considering the other criteria for authorization, the Superior Court denied authorization to institute a class action, on the basis that there were no questions that were identical, similar or related for all the members of the proposed class.
The judgment of the Court of Appeal
In the view of the Court of Appeal2, the motion judge erred in concluding that the determination of the legality of the amendments to the Plan required an individualized analysis of the situation of each of the class members. The Court of Appeal also pointed out that the issue of whether the class members were entitled to post-retirement benefits went to the merits of the proposed class action and that the motion judge erred in engaging in this analysis at the authorization stage.
The Court of Appeal also remarked that the authorization of a class action is simply a filtering mechanism that should not address the merits of the dispute. The criterion of Article 1003(a) CCP requires only a demonstration that the proposed common issues are likely to significantly advance the class members’ individual claims.
In the Court of Appeal’s view, the study of the scope and legality of the amendments to the Plan is generic for all class members and can significantly advance their individual claims, and the factual differences among the members do not affect the usefulness of this analysis. At the authorization stage, the point of the exercise is not to separate the class members’ individual claims or to resolve any obstacle that may arise during the hearing on the merits.
Consequently, after concluding that the other authorization criteria of Article 1003 CCP were satisfied, the Court of Appeal authorized the institution of the class action.
The decision of the Supreme Court of Canada
For the reasons given by Justices LeBel and Wagner, writing on behalf of the Court, the Supreme Court of Canada unanimously confirmed the Court of Appeal’s decision to authorize the institution of the class action.
In its decision, the Court dealt primarily with the analytical framework for the authorization of a class action, the impact of the proportionality requirement under Article 4.2 CCP and the “common questions” requirement of Article 1003(a) CCP.
The Court first of all pointed out that while the judge hearing the motion for authorization has significant discretion, his role is simply to determine whether the criteria of Article 1003 CCP are satisfied, nothing more.
The Court stressed that, at the authorization stage, the judge is deciding only a procedural question and must refrain from addressing the merits of the case.
In the course of his or her analysis, and despite the importance of the proportionality principle in civil procedure, the motion judge does not have to ask whether a class action is the most appropriate procedural vehicle. Although the proportionality requirement reinforces the judge’s discretion at the authorization stage and can be considered in the analysis of each authorization criterion, proportionality does not constitute a “fifth criterion” on the basis of which a motion for authorization to institute a class action can be rejected.
[...] Article 1003 is clear: the motion judge must authorize the class action if he or she is of the opinion that the four criteria are met. The judge does not have to ask whether a class action is the most appropriate procedural vehicle. [...] [T]he motion judge cannot rely on the principle of proportionality to refuse to authorize an action that otherwise meets the established criteria. The proportionality of the class action is not a separate fifth criterion.3
The Supreme Court’s decision also provides some highly interesting guidance regarding the satisfaction of the criterion of Article 1003(a) CCP requiring that there be “common questions”.
This criterion, common to all Canadian provinces, seeks to determine whether allowing the action to proceed will avoid duplication of fact-finding or legal analysis.
Confirming the established case law, the Supreme Court confirmed that a question will be considered common if it enables the claims of the class members to significantly advance. Thus, a single common issue suffices to meet the criterion of Article 1003(a) CCP, unless it is not likely to affect the outcome of the class action.
However, the Supreme Court also noted that, contrary to popular belief, the requirement that there be “common questions” does not entail that there must be “common answers”. According to the Court, a question remains common even if a nuanced answer can be given for each of the class members’ claims. The common question criterion will not be satisfied, however, if success for one member results in failure for another.
[...] A common question can exist even if the answer given to the question might vary from one member of the class to another. Thus, for a question to be common, success for one member of the class does not necessarily have to lead to success for all the members. [...]4
In short, the answer to a common question should not give rise to conflicting interests among the class members; there can be no winner at the expense of another class member.
In the course of its analysis, the Supreme Court also emphasized the uniqueness of the Quebec class action scheme compared to those existing in other provinces in Canada.
The Court noted that the Code of Civil Procedure has broader and more flexible provisions than the analogous legislation in other provinces and in the U.S. Quebec’s authorization criteria are accordingly less stringent, especially with respect to the criterion of Article 1003(a) CCP, which does not require a common answer and which must not be confused with the common law jurisdictions’ “common issue” requirement.
Thus, to the extent that the proposed common questions are likely to advance the debate and do not play an insignificant role in the outcome of the class action, the criterion of Article 1003(a) CCP should be satisfied. The threshold that must be met for finding common questions is low in Quebec, concluded the Supreme Court.
The Supreme Court’s analysis leads to the inescapable conclusion that the requirements for authorizing a class action in Quebec are more flexible than in the other provinces and the United States and are intended to promote the prosecution of class actions.
[...] [T]he Quebec approach to authorization is more flexible than the one taken in the common law provinces, although the latter provinces do generally subscribe to an interpretation that is favourable to the class action. The Quebec approach is also more flexible than the current approach in the United States.5
As for the proposed class action in this case, the Supreme Court adopted a similar reasoning to that of the Court of Appeal whereby the determination of the validity or legality of the amendments to the Plan is a significant enough common question to warrant the authorization of the class action. The Court also recognized that the assessment of the class members’ claims may lead to different results, but this is not likely to give rise to conflicting interests among them.
This decision of the Supreme Court of Canada confirms the principle that the authorization of a class action is a mere procedural step designed to promote access to justice. Quebec also appears to be without question the most fertile ground in Canada for bringing class actions, and businesses apt to being sued in a class action must adapt their strategies to this reality.
The Supreme Court of Canada also seems to have expanded the scope of the criterion under Article 1003(a) CPP in relation to its previous decisions and Quebec case law on this matter.
We should keep a close eye on the Superior Court of Quebec’s application of these new principles and how its judges will proceed on the merits of a class action involving a common question that will be answered differently for each class member.
It must also be borne in mind that despite the broadness and flexibility of Quebec’s class action authorization criteria, petitioners are still required to prove their claims on the merits, at which stage the usual rules of evidence apply in full force.
1 Dell’Aniello v. Vivendi Canada Inc., 2010 QCCS 3416.
2 Dell’Aniello v. Vivendi Canada Inc., 2012 QCCA 384.
3 Vivendi Canada Inc. v. Dell’ Aniello, supra, note 1, paras.67-68.
4 Ibid., para.45.
5 Ibid., para.57.