General counsel and the class action bar should take note that a new provision in Québec’s new Code of Civil Procedure (NCCP), which comes into force on January 1, 2016, may create an obstacle for streamlining—and ultimately resolving—multi-jurisdictional class actions in Canada.
The new provision, article 577 of the NCCP, will require Québec courts to protect the rights and interests of Québec residents in multi-jurisdictional class actions when stays of proceedings are requested.
It is common for plaintiff and defence counsel to seek a stay of proceedings in Québec to allow for a single national class action to proceed in another province (e.g., Ontario) when similar class actions have been commenced in multiple jurisdictions across Canada. Counsel seeking to litigate a national class action in only one jurisdiction are required to obtain stays because, unlike the United States’ federal courts, there is no multidistrict litigation procedure for consolidation in Canada. Article 577 may create a hurdle for parties litigating a national class action, as it could result in a multiplicity of class proceedings across the country on the same issues.
Until now, Québec courts have shown some flexibility in granting stays. But the legislative intent behind article 577 indicates that it will likely raise the bar for parties, requiring them to show that the rights and interests of Québec residents are sufficiently protected in the province where a single national class action is sought, and this may mean showing that those rights are equivalent to those in Québec.
Under the new provision, if Québec class members are already members of a national class action in another province or territory, Québec courts must consider the rights and interests of Québec residents before either (i) declining to certify, (ii) staying certification or (iii) staying a similar class action that has also been commenced in Québec.
Article 577 provides:
The court cannot refuse to authorize a class action on the sole grounds that the class members are part of a multi-jurisdictional class action already under way outside Québec.
If asked to decline jurisdiction, to stay an application for authorization to institute a class action or to stay a class action, the court is required to have regard for the protection of the rights and interests of Québec residents.
If a multi-jurisdictional class action has been instituted outside Québec, the court, in order to protect the rights and interests of class members resident in Québec, may disallow the discontinuance of an application for authorization, or authorize another plaintiff or representative plaintiff to institute a class action involving the same subject matter and the same class if it is convinced that the class members’ interests would thus be better served.
According to Québec’s Minister of Justice, article 577 is “new law” intended to protect the rights and interests of Québec class members. The protection of these rights and interests is now a factor Québec courts must consider when granting a stay, in addition to the pre-existing conflicts of laws rules. The Minister’s comments further explain that the new provision is of interest to Québec residents because of the differences between Québec’s civilian legal system and the laws of the common law provinces. Québec’s robust consumer protection laws are one example of such a difference. This may mean that courts will have to consider such differences when granting stays.
In the past, Québec courts have granted stays on the grounds that a similar action is pending, that it has advanced further in another province, and that granting a stay in Québec would allow for the “efficient management” of the class action. For example, recently, the Québec Superior Court in Arsenault c. Bard Canada inc., 2015 QCCS 2530 granted a stay for a proposed medical device class action that had been commenced in Ontario and Québec, allowing for a single proposed national class action on the same issues to proceed in an Ontario court.
The legislative intent behind article 577 suggests that the new provision will likely raise the bar for parties seeking a stay of proceedings in Québec class actions (See Leroux c. Compagnie d’assurance-vie Manufacturers, 2014 QCCS 4104). Parties intending to proceed with a single national class action by staying simultaneous Québec proceedings will have to show to Québec courts that the proceeding outside Québec protects the rights and interests of Québec residents. This may mean showing that the rights and interests protected in class action proceedings outside Québec are equivalent to those available under Québec law. If parties fail to satisfy the court’s concerns over Québec class members, then they may be faced with having to continue litigation in Québec as well as another province.