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A review of the year 2021 and the trends that are emerging in the area of class actions in Québec, presented by the lawyers of the BLG Class Actions Team.
Sources:
(1)(2)(3) Source – compilation of applications for authorization identified in the Registry of class actions and the Class Action Database of the Canadian Bar Association between January 1st and December 31st, 2021.
(4) Source – Superior Court of Québec as at January 14, 2022. Information provided for the Montréal appeal division only.
* The authors thank Mathieu Lacasse, articling student, and Charlotte Rémillard, student-at-law, for their invaluable collaboration.
On January 20, 2021, Justice Donald Bisson rendered a decision on relevant evidence in a class action against the governments of Québec and Canada concerning adoption practices for Indigenous children.1 In the course of the proceedings, Judge Bisson had to decide on the respondents’ application to file evidence from related proceedings, as well as reports and agreements related to the history of adoption practices. The Court took care to summarize all the criteria applicable to requests to submit relevant evidence under article 574 CCP.2 This decision, which incorporates the principles recently established by the Court of Appeal in Durand,3 delineates relevant evidence at the authorization stage and provides respondents with better foreseeability from a strategic standpoint. This judgment has since been frequently cited and applied with some consistency.
On March 15, 2021, the Court of Appeal upheld the dismissal of the application for authorization instituted against several financial institutions alleging illegal practices in connection with over-the-limit transactions, i.e. transactions causing the cardholder’s credit limit to be exceeded. Justice Pierre-C. Gagnon had initially dismissed the application for authorization after determining that the over-the-limit transactions did not constitute credit limit increases.
The Court of Appeal concluded that the judge could, at the authorization stage, rule on a pure question of law on which the fate of the proposed action depended, even if the alleged facts were taken to be true. Moreover, the Court ruled that nothing prevented the judge seized of the application from answering a more complex question of law, and conducting a complete and thorough legal analysis. A “pure” question of law does not necessarily have to be simple to resolve. At the discretion of the authorizing judge, certain more complex questions of law may also be resolved, even if they do not require a detailed and exhaustive legal analysis, but only to the extent that evidence going to the merits is not necessary to decide them at the authorization stage. BLG Bulletin.
On March 26, 2021, Justice Florence Lucas dismissed the application of Mr. Danny Lamoureux, who sought compensation for damage suffered in connection with the loss of a laptop computer containing sensitive information of the defendant’s users.
Justice Lucas found that the plaintiff had failed to prove a causal link between the data loss and the allegations of attempted identity theft made by the members of the group, based in particular on the fact that those attempts relied on information that was not in the defendant’s possession. Moreover, the members of the group did not prove that they had suffered harm for the purposes of the claims for disturbances and inconveniences beyond the normal nuisances inherent to life in society. BLG Bulletin.
The Court of Appeal recently dismissed Mr. Lamoureux’s appeal. The Court determined that Mr. Lamoureux had not identified a palpable and overriding error. Justice Lucas’s conclusions were based on an expert report indicating that there was no causal link between the alleged identity theft and the theft of the computer. The defendant had also followed best practices in its response to the incident, which militated against an order for punitive damages. BLG Bulletin.
This case is particularly significant since it is the first decision on the merits of such a question. We anticipate that the reasons of Justice Lucas and the Court of Appeal will serve as a guide for data loss and data breach cases, which have tended to be more frequent in recent years.
On October 4, 2021, the Court of Appeal authorized a class action against ecclesiastical institutions for abuses committed by Mr. Guillot in religious schools he managed in the 1980s and 2000s.6 The Superior Court had initially dismissed the proposed action.
The Court of Appeal emphasized the broad powers of the courts, including the power to redefine the group if the allegations and evidence do not reflect what is being requested. Thus, in the circumstances of this case, the Superior Court should not have dismissed the action, but rather redefined the group to adapt it to the causes of action validly demonstrated by the applicants. In this instance, that translated into two time-limited groups, i.e. one from 1982 to 1984 and one from 2000 to 2015, whereas the time period covered by the application for authorization was from 1982 to 2015.
This decision of the Court of Appeal confirms both the broad powers of intervention of the courts in class action matters, and also the need to rigorously analyze the file. If the allegations giving rise to the action are incomplete or insufficient, it will still be possible for the plaintiff to avoid dismissal of the application, but at the cost of a class action with a reduced scope.
On June 28, 2021, Justice Donald Bisson of the Superior Court dismissed an application for authorization to institute a class action against various entities involved in the electronic chip industry (DRAM).7 The applicant alleged the existence of a cartel which unduly limited the production of DRAM and therefore benefited from an artificially high price.
This decision is particularly significant since it establishes the need to demonstrate the existence of a conspiracy or an agreement for the purposes of justifying an arguable case on the basis of the Civil Code of Québec or the Competition Act. Justice Bisson emphasized in particular that the existence of an oligopoly or investigations abroad were not sufficient factors in themselves.
This case clarifies the burden on the applicant at the authorization stage, and confirms that applicants are ill-advised to rely on parallel class actions or ongoing investigations without a conviction, confession or evidence establishing the existence of an agreement or genuine conspiracy. A related action was also dismissed by the Federal Court.8
1 - COVID-19 claims
COVID-19 related class actions have not been dealt with consistently by the courts. This can be explained in particular by the decision by many companies to fully reimburse their customers deprived of a service or delivery of a good due to the pandemic. Practices that most often take the form of a refund, a warranty extension, or a customer satisfaction program are becoming more and more widespread. It is evident that they have a direct impact on the fate of some class actions. Whether in education, insurance, leisure, or management of the pandemic, the proposed class actions have not yet all passed the authorization stage, while some were dismissed at the authorization stage and appealed. How these cases progress will need to be closely monitored. It is also evident that new class actions related to the pandemic are less and less numerous.
2 - Privacy and freedom of expression in the limelight
The year 2022 could see the final outcome of certain privacy class actions. The Lamoureux case, the first class action on data loss in Canada to be heard on the merits at the authorization stage, was recently dismissed by the Court of Appeal. In addition, the settlement of the Desjardins’ data theft class action is currently being approved. Also to watch is the fate that awaits class actions against certain IT giants that will proceed this year on issues of data use or freedom of expression.
3 - Is more rigorous scrutiny of the allegations in the application for authorization imminent?
The beginning of 2022 was marked by the Google v. Homsy decision. Justice Bisson dismissed the proposed class action, in particular on the basis that most of the allegations could not be held to be true because they were general allegations about the defendants’ conduct or allegations that did not relate to a factual situation specific to the plaintiff. The evidence underlying the application for authorization was also insufficient or absent in key respects. Attacking the weaknesses of the application for authorization is a contestatory means that the respondent can explore, to the extent that the possibility of relying on relevant evidence, while very often permitted, has however been limited by the Court of Appeal in recent decisions.9 It will be interesting to see the scope of this decision and its impact on authorization, the threshold for which is very low in Québec.
4 - Is a class action reform in the offing?
In 2021, the Québec Justice Department launched a public consultation aimed at exploring avenues for reforming the procedure for class actions in Québec. It concerns in particular the mechanism of authorization, a possible revision of the criteria (including a strengthening of the proportionality rule), as well as the management of the proceeding. Interested parties had until July 31, 2021 to submit their comments; it is possible that the Minister of Justice will eventually take a position by proposing a reform bill. The brief filed by the Barreau du Québec as part of this consultation is available here.
5 - A lull in new applications for authorization?
There has been a significant decrease in new class actions introduced since the beginning of 2022. This may be explained by the deployment of resources to manage the large number of actions authorized in recent years and which are currently proceeding on the merits. It remains to be seen whether this trend will continue in the coming months.
1 Ward v. Procureur général du Canada, 2021 QCCS 109.
2 Ward v. Procureur général du Canada, 2021 QCCS 109, par. 17-20.
3 Durand v. Subway Franchise Systems of Canada, 2020 QCCA 1647.
4 Pilon v. Banque Amex du Canada, 2021 QCCA 414, application for leave to appeal to the Supreme Court dismissed, 2022 CanLII 16713 (SCC).
5 L’Oratoire Saint‑Joseph du Mont‑Royal v. J.J., 2019 SCC 35, para. 55; Desjardins Financial Services Firm Inc. v. Asselin, 2020 SCC 30, para. 154; Allard v. Procureur général du Québec, 2022 QCCA 686, par. 27.
6 M.L. v. Guillot, 2021 QCCA 1450.
7 Hazan v. Micron Technology inc., 2021 QCCS 2710.
8 Jensen v. Samsung Electronics Co. Ltd., 2021 FC 1185.
9 See in particular Durand v. Subway Franchise Systems of Canada, 2020 QCCA 1647, paras. 51 54; Benamor v. Air Canada, 2020 QCCA 1597, para. 44.
