For the past two decades, how best to achieve the fair and efficient management of class actions in Canada was routinely resolved by a one-size-fits-all approach: a presumption that certification should be the first motion heard in the case. Defendants seeking an exception to this general rule faced a heavy burden. As a result, defendants with strong positions on the merits were often locked into procedurally complex, financially burdensome litigation that, in many cases, took years to get through the certification stage.
The past two years have witnessed important developments affecting the sequencing of certification and other potentially dispositive motions in class actions. Those developments, mainly in Ontario and British Columbia, may signal a broader culture shift in Canada, away from the presumption that the certification motion should be heard first, and towards a more bespoke procedure designed for the case at hand.
In Ontario, legislative amendments introduced by the Smarter and Stronger Justice Act, 2020 aimed to modernize and improve Ontario’s justice system, including by amending Ontario’s Class Proceedings Act, 1992 (CPA) since it had not been substantively overhauled since its inception nearly three decades earlier. One significant change was the addition of section 4.1 reversing the presumption that certification should be the first motion heard in a class action.
Section 4.1 only applies to class actions brought after October 1, 2020. Only one case has been decided under section 4.1 so far: Dufault v Toronto Dominion Bank. In this case, the Superior Court of Justice acknowledged that section 4.1 provides for a measure of judicial discretion that could lead to a variety of outcomes. Some judges may therefore interpret their discretion as unbounded and continue to rely on the reasons against allowing pre-certification motions relied on in past cases—for example, the added costs and delay of injecting a new appeal opportunity, or the need to discourage bifurcation and litigation by instalment. Indeed, this occurred in the Court’s decision in Strathdee v Johnson & Johnson Inc. That decision was not under section 4.1 of the CPA, but the Court stated: “Nothing much is likely to change in the future because of s. 4.1 other than the rhetorical temperature of the case management conference to schedule motions.” Other judges may take the provision as a strong legislative signal that motions that can narrow or dispose of a putative class action at an early stage should presumptively be heard.
Accepting the latter approach, Justice Belobaba in Dufault granted the defendant’s motion to schedule a pre-certification summary judgment motion. He identified at least two “good reasons” why the Court might deny a request to schedule a pre-certification summary judgment motion under section 4.1 of the CPA: (i) the motion does not narrow or dispose of all or part of the litigation and appears to be a delay tactic; and (ii) although the motion could narrow or dispose of all or part of the litigation, the certification motion is close enough that it makes sense to hear the motions together. Finding that neither reason applied, Justice Belobaba granted the request and allowed the pre-certification motion.
In British Columbia, the apparent culture shift was triggered, not by a legislative change, but by the Court of Appeal’s first decision weighing in on
class action sequencing: British Columbia v The Jean Coutu Group (PJC) Inc. In a unanimous decision, the Court of Appeal outright rejected the presumption yhat certification motions should be the first motions heard in class actions. It held that cases propounding this approach were “wrongly decided and should not be followed.” Rather, the Court held: “Each sequencing application must be determined in the context of the particular case before the court and the court’s discretion ought to be exercised in a manner that facilitates and achieves judicial efficiency and the timely resolution of the dispute.” On this basis, the Court allowed two defendants to proceed with their pre-certification jurisdictional challenges, having regard to the scope and complexity of the proceeding and to the prejudice to the defendants of not having the foundational question of jurisdiction considered at an early stage, including the considerable expense of remaining locked into lengthy, complex litigation.
Since Jean Coutu, the British Columbia Supreme Court has applied this reasoning in two sequencing decisions. In both cases, the Court allowed the defendants’ preliminary motions to precede the certification motions. Key to both decisions was that the defendants’ motions addressed discrete legal issues that could largely be parsed from the broader claim, and would significantly narrow the issues for trial, if not completely dispose of them.
Two competition class action decisions in 2021 show the wisdom of deciding motions to strike before certification in the right case. In Mohr v National Hockey League and Latifi v The TDL Group Corp, the Federal Court and British Columbia Supreme Court, respectively, struck plaintiffs’ claims that the defendant employers had violated section 45 of the Competition Act by agreeing to fix employees’ wages or refrain from hiring each other’s employees. Both courts held that section 45 applies only to agreements with respect to the sale of a product or service, not agreements with respect to the purchase of a product or service. Because the defendant employers were alleged to compete for the purchase of employees’ labour, their agreements could not violate section 45. These pre-certification dismissals saved the parties and the courts the additional burden of a full certification hearing for cases that were doomed in law.
The ultimate impact of these developments is yet to be determined. Class action judges and lawyers alike will be closely monitoring further developments in Ontario and British Columbia, as defence counsel are emboldened to propose dispositive precertification motions, and class counsel no doubt try to prevent them, relying on the arguments that worked for them in the past.
Although defence counsel will need to overcome residual skepticism flowing from concerns about the risk of added costs and delay and litigation by instalment, among other concerns, section 4.1 of the CPA in Ontario, and developments in the sequencing case law in both Ontario and British Columbia, suggest that 2022 could see defendants in Canadian class actions achieve unprecedented traction in putting potentially dispositive pre-certification motions on the books.