On August 2, 2012, the Québec Court of Appeal released its decision in Banque de Montréal v. Marcotte 2012 QCCA 1396 (“Marcotte”), which involved an appeal of a decision from the Québec Superior Court on the merits of a class action against nine different banks in relation to the way the banks charged and disclosed (or failed to disclose) fees for currency conversions in credit card transactions. The Superior Court had held that the fees charged to consumers for foreign currency transactions were either improperly disclosed under the Québec Consumer Protection Act, or were not disclosed at all, and condemned the nine banks to pay damages that collectively amounted to almost $200 million. The Court of Appeal granted the appeal and dismissed the claim against four of the banks entirely, and reduced the damages awarded against the other banks to roughly $13 million in total.
Apart from the importance of the decision from the standpoint of consumer protection law, the Court of Appeal also directly addressed the question as to whether it was necessary that a representative plaintiff in a multi-defendant class action have a direct legal relationship with each of the defendants in order to be able to sue. In the Marcotte case, the issue arose because the class representatives held a credit card issued by only two of the nine banks named in the action.
In a landmark judgment in 2006, Bouchard v. Agropur Coopérative (“Agropur”), the Court of Appeal dismissed a motion to authorize a class action on the grounds, amongst others, that the proposed representative had no contractual relationship with the defendants, and therefore no interest that would give him standing to sue. Subsequent to the decision in Agropur, class action authorization was routinely denied in Québec in respect of defendants where the representative plaintiff had no direct contractual link or other cause of action against them. However, in 2007 the Court of Appeal released a decision in the case of CHSLD Christ-Roi (Centre hospitalier, soins longue durée) v. Comité provincial des malades (“CHSLD”) which cast doubt on the principle that seemed to be so clearly enunciated in Agropur. In CHSLD, the Court of Appeal held that a direct cause of action against each defendant was not necessary where the same fault (in that case, a breach of a statutory obligation) was alleged against each of the defendants.
Marcotte is significant because it is the first decision of the Court of Appeal that clearly acknowledges the inconsistencies between the decisions in Agropur and CHSLD (real or imagined) and attempts to reconcile the two. The Court in Marcotte ultimately concludes that it is not necessary that a representative plaintiff in a multi-defendant class action have a direct cause of action (contractual or otherwise) with respect to each of the named defendants. Many have feared that any retreat from the bright-line rule enunciated in Agropur, that required a direct cause of action against each defendant, would result in speculative class actions being brought against entire industries on the basis of a single individual’s experience and essentially transform the class action into a kind of public inquiry, but in pursuit of private interests. The Court of Appeal in Marcotte acknowledges these fears, and emphasizes that a representative plaintiff should only be authorized to sue defendants in respect of which they have no direct cause of action where they can show that: (i) a class of individuals exists that do have a direct cause of action against the defendants in question; and that (ii) they are capable of adequately representing the members of the proposed class with respect to their claims against such defendants. The Court also explicitly confirms that class actions should not be used as a means to conduct a public inquiry with respect to the practices of an entire industry.
It remains to be seen how this attempt to reconcile the interest requirement in multi-defendant class actions will play out, now that the bright-line test in Agropur appears to have been abandoned, or at least severely nuanced, by the Court of Appeal. It must also be noted that the interest requirement as enunciated in Agropur has been explicitly endorsed by the Supreme Court of Canada, most recently in the case of Bou Malhab v. Diffusion Métromédia CMR inc.,  1 S.C.R. 214, and so the decision in Marcotte may be vulnerable to appeal to that Court, and is of questionable authority on this point even if it is not appealed.