The Globalization of Class Actions
An International Conference co-sponsored by
Law School and the Centre for Socio-Legal Studies, Oxford University
Representation & Conflicts of Interests in Class
Actions and Other Group Actions
The Honourable Warren K. Winkler
Chief Justice of Ontario
December 12 – 14, 2007
In the past decade, Canada has witnessed a dramatic increase
in the number of class actions. High profile class actions
have been commenced for damages attributable to tainted blood,
faulty pacemakers, defective breast implants, aboriginal residential
schools, price-fixing, prospectus misrepresentation, e-coli
in the water, criminal rates of interest charged by utilities
companies and banks, improper bank charges and the list goes
The number of Canadian jurisdictions that have class proceedings
legislation has also greatly expanded in the last ten years. As
it now stands, eight of the ten Canadian provinces have enacted
comprehensive class proceedings legislation. Of the two remaining
provinces, Nova Scotia has an act that will be proclaimed imminently,
while P.E.I. is in the process of considering draft legislation.
Even in the provinces and territories that do not have specific
class action legislation, the Supreme Court of Canada ruled
in 2001 that courts have a duty to structure class proceedings
using the applicable civil rules of practice. Within this legislative and common law
framework, a class proceeding may be commenced in any of the
ten provinces and three territories in Canada.
The prospect for inter-jurisdictional conflict in class actions
involving claims that spread across provincial or territorial
borders is therefore a significant one in Canada.
Context for considering multi-jurisdictional class actions
: the Canadian judicial system
A brief primer on the constitutional framework for the Canadian
judicial system helps to appreciate the types of jurisdictional
issues affecting class actions in our federal state. The
Canadian constitution assigns jurisdiction over property and
civil rights to the provinces. Class actions thus proceed
through the superior courts of each province.
Judges of the provincial superior court at both the trial and
appellate levels are appointed for life by the federal government
of Canada (there is a compulsory retirement age of 75). The
provincial superior courts have an extremely broad jurisdiction
that covers virtually all areas of civil, criminal and constitutional
law. The jurisdiction of the provincial superior courts
is thus comparable to the U.S. Federal District Courts rather
than to U.S. state courts.
The superior courts apply common law principles, which are
in many respects quite uniform across Canada. These courts
also apply the statutory law of the particular province, as
well as federal statutes and the federal Constitution, including
the Charter of Rights and Freedoms.
Unlike the U.S. system, Canada does not have any multi-district
litigation mechanism (MDL) for dealing with cases that involve
inter-provincial claims. Judges from one province do not
have authority to require judges of another province to transfer
a case or to determine who shall have carriage of an action
in another province. It is left to the courts of each
province to deal with any inter-jurisdictional issues that arise
in class actions.
The approach in
to multi-jurisdictional class actions: four issues
1) The National Plaintiff Class
One question that has arisen in the context of multi-jurisdictional
class actions is whether non-residents of a province can be
included in the plaintiff class. The superior courts in
various Canadian provinces have had occasion to consider whether
to certify a class action where the proposed plaintiff class
includes residents from other provinces, or from all of Canada.
My comments will be focused primarily on Ontario, which is
in part because of my judicial connection with that province,
but also because Ontario, as the most populous province and
as the second province to enact class proceedings legislation,
has generated a significant amount of the relevant case law.
To provide some perspective on the size of Ontario, if Ontario
were a U.S. state, it would rank second in size after Alaska
and, as of 2006, it would rank sixth in population after California,
Texas, New York, Florida and Illinois.
The Class Proceedings Act of Ontario does not speak
to the issue of whether a plaintiff class can include non-residents
of Ontario. The Quebec Act is also silent on the issue
of including non-residents as class members. In contrast,
the class proceedings legislation of the six other provinces
specifically contemplates the inclusion of non-resident class
members. Five of these provinces allow for non-resident
class members to opt in to a class proceeding commenced in another
province. Only Manitoba allows for certification of non-resident
class members on an opt-out basis.
The approach taken by certification judges at the trial level
in Ontario is that a national class action may be certified
on an opt-out basis, subject to requirements of the Constitution
being met. The
relevant constitutional requirement is that there must be a
real and substantial connection between the subject matter of
the action and Ontario. If such a connection is found,
then the Ontario court will apply the procedural law found in
the province’s Class Proceedings Act. The
requisite connection has been found to exist in cases where
the claims of non-resident class members are based entirely
on material facts that occurred outside of Ontario and where
the only connecting factor between Ontario and the non-resident
members is that their claims against the defendant raise the
same common issues as the claims of Ontario residents.
In determining whether non-residents may be included in the
proposed class, the court is guided by the requirements of orderly
decision-making and fairness to the parties. If the factual
issues can be litigated in one province even though the issues
relate to non-residents, then the court will conclude that orderly
decision-making and fairness to the parties favours a national
Ontario courts have not shied away from accepting a plaintiff
class that includes foreign residents, or from certifying a
class action against a foreign defendant. In a class action
against a publishing company, the defendant objected that the
proceedings were tainted with jurisdictional infirmity because
the class included foreign plaintiffs over whom the court had
no jurisdiction. The
certification judge refused to let this objection prevent the
claim from being certified. He left the potential question
of the binding effect of the result of the Ontario action on
an out-of-country plaintiff for the foreign court to decide.
To date, the Court of Appeal for Ontario has not considered
the issue of the permissibility of certifying an inter-provincial,
national or international plaintiff class on an opt-out basis:
this question may well receive more attention in the future. The
inter-jurisdictional issues that arise between the provinces
of Canada’s federal state are similar to those that will
exist between countries in class action cases involving claims
that spread across international borders. The jurisprudence
from Ontario may be of some assistance in formulating an approach
to deciding jurisdictional issues in such cases.
2) When will the court “stand down” a
A second issue that has received limited consideration by Canadian
courts is when it is appropriate to stay a class action where
a similar proceeding has been initiated in another province
and one or both actions are brought on behalf of a national
or inter-provincial class.
The Saskatchewan Court of Appeal recently stayed a class proceeding
against a drug manufacturer that was commenced by the same representative
plaintiffs in both Saskatchewan and Ontario. The court
held that the plaintiffs were using the courts in a vexatious
manner by bringing multiple claims in multiple jurisdictions
where there was no indication that multiple claims served any
legitimate interest of the plaintiffs.
In contrast, the Newfoundland and Labrador Court of Appeal
refused to interfere with the trial division’s decision
dismissing the defendant drug company’s application to
permanently stay the plaintiff’s class action as an abuse
of process. Class actions relating to the same matter – the
allegedly defective anti-cholesterol drug, Baycol – were
initiated in five other provinces. The defendant complained
that the Manitoba action, which had yet to be certified, included
Newfoundland plaintiffs as a proposed sub-class. In commenting
on the correctness of the lower court order refusing to stay
the Newfoundland action, the Court of Appeal noted that the
revised definition of the class in the Manitoba action excluded
non-residents who are members of an already certified class
action in another province.
3) Handling issues of representation: carriage
A third issue is whether conflicts in representation frustrate
the objectives of class actions in Canada. Generally speaking,
there seems to be a cooperative approach amongst the class action
plaintiffs’ bar in Canada. This cooperative behaviour
may explain the limited number of motions over what law firm
should have carriage of a class action. Of course, it
is not uncommon to have two or more class proceedings commenced
in different provinces seeking certification for similar classes. However,
in these situations, counsel from across Canada often work together
to pursue the class action.
To give an example, eight class actions were commenced in Ontario
against the pharmaceutical company Merck Frosst involving problems
allegedly associated with the painkiller Vioxx. Similar
class actions were commenced in other Canadian provinces. Six
of the Ontario actions were consolidated and went forward as
a single action with an amalgamated counsel team. The
team was made up of counsel drawn from some nineteen law firms
based in nine provinces across Canada. Members of the
firms appointed a Steering Committee of seven counsel to direct
the conduct of the lawsuit.
Counsel from the Steering Committee appeared on a carriage
motion seeking an order staying a rival Vioxx-related class
action, which was started in Ontario by a law firm based in
case management judge granted the relief requested by the amalgamated
counsel team and stayed the competing class action, explaining
that the way the causes of action had been framed by the amalgamated
counsel brought more efficiency to the proceeding and that the
resources and experience of the amalgamated counsel team were
superior to that of the Saskatchewan firm.
4) Recognition and enforcement of class action
judgments from other jurisdictions
Another issue that recently confronted the Court of Appeal
for Ontario is whether to recognize and enforce a class action
judgment from the United States. The court considered
whether the order of an Illinois court approving a settlement
of a class action that was brought on behalf of American and
international customers of McDonald’s Restaurant should
be given binding effect so as to preclude a proposed class action
in Ontario in respect of the same cause of action.
Our court signalled that it will enforce foreign class action
judgments provided that the following three criteria are met: (i)
there is a real and substantial connection linking the cause
of action to the foreign jurisdiction; (ii) the rights of non-resident
class members are adequately represented; and (iii) non-resident
class members are accorded procedural fairness, including adequate
notice. In such circumstances, failure of the non-resident class
member to opt out of the action may, in the words of the court, “be
regarded as a form of passive attornment sufficient to support
the jurisdiction of the foreign court.”
The court found that the Illinois judgment failed the test
because of inadequacies in the notice of the action that had
been provided to Canadian residents. This notice consisted
of an advertisement in Quebec newspapers and in a national subscription-based
magazine of quite limited readership. Accordingly,
the judgment was not enforced.
Interestingly, the related question of whether the courts of
one province will enforce a class action judgment rendered in
another province involving a national plaintiff class has received
limited consideration in Canada. There is, however, a
trial-level decision from the Superior Court of Quebec that
refuses to recognize and give effect to an order of the Ontario
Superior Court, which had approved a settlement of a class action
brought on behalf of a national class against a bank for allegedly
overcharging mortgage penalties.
What are the goals of class actions legislation in
What informs the approach taken by
Ontario courts to certification generally and, in particular,
to resolving multi-jurisdictional issues in a way that favours
recognizing a national class? The Supreme Court
of Canada in a trilogy of cases that were decided in 2001 -- Western
Canadian Shopping Centres v. Dutton; Hollick v. City
of Toronto; and Rumley v. British Columbia -- affirmed
the three main goals of class actions in Canada.
The first goal, as identified by Chief Justice Beverley McLachlin,
is judicial economy: by aggregating similar individual actions,
class actions avoid unnecessary duplication in fact-finding
and legal analysis.
The second goal is access to justice: by allowing fixed
litigation costs to be divided over a large number of plaintiffs,
class actions improve access to justice by making it economical
to prosecute claims that otherwise would be too costly to prosecute
individually. Sharing costs ensures that injuries are
not left unremedied by the judicial system.
The third goal is behavioural modification or deterrence of
wrongdoers and accountability to those who are wronged. Class
actions serve efficiency and justice by providing a mechanism
for ensuring that actual and potential wrongdoers do not ignore
their obligations to the public and for ensuring that defendants
take full account of the cost of their conduct. The cost-sharing
inherent in class actions decreases the expense of pursuing
legal recourse and thereby deters potential defendants who might
otherwise assume that minor wrongs would not result in expensive
litigation against them.
It is not difficult to see how permitting a representative
plaintiff to bring an action on behalf of a national class promotes
each of these three goals when it comes to litigating causes
of action with multi-jurisdictional dimensions. By permitting
the certification of a national plaintiff class, duplication
of judicial resources is avoided, the cost-sharing feature of
class actions is greatly enhanced and the goal of deterrence
is served by increasing the extent of the defendant’s
potential exposure to liability.
The three goals identified by the Supreme Court, and particularly
that of access to justice, have animated decisions of the Court
of Appeal for Ontario in a recent series of cases that are generally
seen by observers as having liberalized the approach to certification
of class actions in Ontario: Cloud v. Attorney General; Pearson v. Inco;
and Cassano v. Toronto-Dominion Bank.
The Cloud case arose in the context of a motion to
certify a class action against the federal government and others
for damages for physical and sexual abuse suffered by former
students of a native residential school. The Court of
Appeal in Cloud held that the screening requirement
in the Class Proceedings Act that
the proposed cause of action must raise common issues is a “low
court also asserted that the relative proportion of individual
to common issues is a factor that goes into determining whether
the class action will be the preferable procedure, rather than
determining the existence of common issues.
The Inco decision furthered the more liberalized approach
to certification by lowering the bar posed by the legislated
screening requirement that a class action be the preferable
procedure for pursuing the cause of action. Inco stands
as the first successful certification outside of Quebec of a
class action involving alleged environmental damages caused
by long-term emissions. The court made it clear that the
existence of substantial individual assessment issues related
to the damages assessment does not stand as a bar to finding
that the preferable procedure requirement is satisfied.
The very recent Cassano decision overturned a decision
of the Superior Court refusing to certify a class action involving
an allegation of improper credit card charges by the defendant
bank. The court in Cassano reaffirms that a class action
may still be the preferable procedure even where the resolution
of the common issues leaves the court with outstanding individual
issues related to calculating damages. The judgment also makes
it clear that the fact that damages cannot be assessed on an
aggregate basis does not mean that a class action is not the
preferable procedure, even in cases where individual assessments
of damages in small amounts may be necessary.
With this line of case law, the Court of Appeal for Ontario
has embraced the view that class actions have an important role
to play in enhancing access to justice and that this role is
a factor favouring certification.
This evolution in the case law harmonizes with recent recommendations
made by the former Associate Chief Justice of Ontario, Coulter
Osborne, to the Attorney General for achieving civil justice
reform in Ontario. In a report delivered in November 2007,
the Honourable Mr. Coulter Osborne made some eighty recommendations,
which in his words are geared towards making “the civil
justice system more accessible and affordable” for Ontarians.
The approach to costs in
Ontario: the elephant in the room
Having discussed the more liberalized approach to certification
of class actions in
Ontario, there is also somewhat of an elephant in the room when
it comes to selecting
Ontario as the forum for commencing multi-jurisdictional class
actions. The Ontario Class Proceedings Act permits
the judiciary to apply existing cost rules for civil litigation
in class actions: that is, the successful party is to be awarded
its costs unless the court orders otherwise.
In contrast with the Ontario approach, legislation in several
other provinces, including that of British Columbia and Manitoba,
prohibits the court from awarding costs associated with a class
action to any party, subject to certain exceptions such as for
vexatious, frivolous or abusive conduct.
The Ontario statute directs the court to have regard to three
factors when exercising the discretion to award costs of a class
proceeding (or of a step in the proceeding): (i) whether
the issue in dispute was in the nature of a test case; (ii)
whether the action raised a novel point of law; and (iii) whether
the case concerned a matter of public interest.
Early costs decisions of the Superior Court in Ontario were
seen as possibly having a chilling effect on bringing class
actions in that province. In one case, a judge awarded significant
costs to defendants who successfully resisted a certification
application in a case involving the manufacture and sale of
an allegedly defective plumbing system. The judge stated
that class proceedings should not be accorded any special treatment
in the disposition of costs, and went on to reject the view
of class actions as necessarily pitting David against Goliath.
However, several years later, the Court of Appeal released
a costs decision in Pearson v. Inco (referred to above) in which it disapproved of any such suggestion
that class actions do not raise different concerns when it comes
to awarding costs. The court observed that when the three
factors referred to in the Act apply, they should be given significance. The
court also held that in fixing costs of a certification motion,
the court should consider that a fundamental object of the Act
is to provide enhanced access to justice.
The threat that a representative plaintiff in a class action
commenced in Ontario will be exposed to a significant cost award
has potentially been increased by a very recent decision of
the Supreme Court of Canada: Kerr v. Danier Leather. The court in that case unanimously
upheld the decision of the Court of Appeal for Ontario that
the plaintiff’s class action for prospectus misrepresentation
should be dismissed.
The author of the opinion, Justice Binnie, rejected the plaintiff’s
argument that costs should not be awarded against him because
novel issues were raised or because the action constituted a
test case. Justice Binnie observed that the representative
plaintiff, who had a multi-million dollar investment portfolio,
stood to personally recover half a million dollars if the action
Justice Binnie said the following about the position of the
representative plaintiff: “[t]here is nothing to
be criticized in any of this… However, protracted litigation
has become the sport of kings in the sense that only kings or
equivalent can afford it. Those who inflict it on others
in the hope of significant personal gain and fail can generally
expect adverse cost consequences.” Justice Binnie
went on to emphasize that it will not simply be assumed that
class proceedings engage sufficiently weighty access to justice
concerns to justify withholding costs from the successful party.
It remains to be seen whether the approach to costs in Kerr
v. Danier Leather will be confined to situations where
the representative plaintiff has substantial means and stands
to make significant financial gain from prosecuting a class
action. In the meantime, this decision could have a
deterrent effect on the plaintiff class action bar in Ontario,
particularly when it comes to pursuing shareholder class actions
in this jurisdiction.
It also remains to be seen whether Danier will prompt
the plaintiff’s bar to forum shop in favour of selecting
cost neutral regimes when commencing class actions of inter-jurisdictional
scope. A possible solution to this dilemma may be to insert
a merits based test at the beginning of a class action and eliminate
what may be seen as a harsh cost consequence at the back end.
Quebec was the first province to enact class action legislation
in 1978, followed by
Ontario (1992); B.C. (1995);
Newfoundland and Labrador (2001);
New Brunswick (June 30, 2007). The three territories,
Nunavut, the Yukon and the Northwest Territories, currently
do not have class action legislation.
 Western Canadian Shopping Centres Inc. v. Dutton,
 2 S.C.R. 534 at para. 34.
 In Buffet v. Ontario (Attorney General) (1998),
42 O.R. (3d) 53 (Ont. Ct. (Gen. Div.)) per Crane J., the court
held that a class proceeding will not be certified where the
proposed class action is for a declaration of a breach of
the Charter of Rights and Freedoms.
 The Uniform Law Conference of Canada considered
using the MDL model. In the end, the committee concluded
that the most practical solution was to leave it to the courts
to resolve conflicts themselves building on a spirit of comity,
by allowing any province to certify a national or multi-jurisdictional
class action in appropriate circumstances: Report
of the Uniform Law Conference of Canada's Committee on the
National Class and Related Interjurisdictional Issues: Background,
Analysis, and Recommendations, Vancouver, B.C. (March
9, 2005). The model class proceedings legislation proposed
by the ULCC in 2006 provides that a court may certify a multi-jurisdictional
class proceeding on an opt-out basis. (Model legislation
proposed by the ULCC in 1995 provided that non-residents must
opt in to the proceedings.)
 Nantais v. Telectronics Proprietary (Canada)
Ltd. (1995), 25 O.R. (3d) 331 (Gen. Div.), leave to
appeal to Divisional Court refused; Carom v. Bre-X
Minerals Ltd. (1999), 43 O.R. (3d) 441 (Ont. Ct. (Gen.
Div.)); Webb v. K-Mart Canada Ltd. (1999), 45 O.R.
(3d) 389 (S.C.J.) per Brockenshire J.; Wilson v. Servier (2002),
59 O.R. (3d) 656 (S.C.J.) per Cumming J.; McCutcheon
v. The Cash Store Inc.,  O.J. No. 1860 (S.C.J.)
per Cullity J.; see also Harrington v. Dow Corning
Corp. (1997), 29 B.C.L.R. (3d) 88 (S.C.).
 In certification hearings where a national class
is proposed, the real and substantial connection has been
found to exist in mass tort cases where the locus of the tort
was in Ontario, or where aspects of the defendant’s
alleged tortious conduct against each class member occurred
in Ontario: see Nantais and Carom, supra.
 See Wilson v. Servier, supra,
at paras. 65-66 and McCutcheon, supra, at
 In contrast, a certification judge declined to
exercise jurisdiction over non-resident members of the proposed
class in a case where the proposed class action raised issues
that would require the interpretation of specific provincial
statutes that were quite different from the Ontario legislation: McNaughton
Automotive Ltd. v. Co-operators General Insurance Co. (2003),
66 O.R. (3d) 112 (S.C.J.).
 Robertson v. Thomson Corp. (1999), 43
O.R. (3d) 161 (Ont. Ct. (Gen. Div.)) per Sharpe J.
 Englund v.
Pfizer Inc., 2007 SKCA
62. The court stayed the Saskatchewan action on the
condition that it could be re-activated if the Ontario action
was discontinued, or if the Ontario action was certified
without the Saskatchewan plaintiffs.
 Pardy v. Bayer,
 N.J. No. 1982 (T.D.); 2003 NLCA 45 (C.A.).
 In Vitapharm Canada Ltd. v. F. Hoffman-La
Roche Ltd. (2000), 4 C.P.C. (5th ) 169 (Ont.
S.C.J.) per Cumming J., the court held that the criteria
that Ontario courts consider on a carriage motion in determining
who should be appointed as counsel of record in a class
action include: the nature and scope of the causes of action
advanced, the theories advanced by counsel as being supportive
of the claims advanced, the state of each class action,
including preparation; the number, size and extent
of involvement of the proposed representative plaintiffs; the
relative priority of commencing the class actions; and the
resources and experience of counsel.
 See Setterington v. Merck Frosst, 
O.J. No. 376 (S.C.J.) per Winkler J.
 It came to light that the latter firm had brought
another class proceeding against Merck raising a different
cause of action, which if successful, could seriously jeopradize
the ability of the proposed class to recover damages. The
same firm lost out in recent carriage motions in Ontario and
B.C. related to class actions involving the recall of cat
and dog food manufactured by Menu Foods: Whiting
v. Menu Foods Operating Limited Partnership,  O.J.
No. 3996 (S.C.J) per Lax J.; Joel v Menu Foods GenPar
Ltd., 2007 BCSC 1482 (B.C.S.J.) per Hinkson J. There
are 17 proposed class actions related to the pet food recall
that have been commenced in various parts of Canada, 11 of
which were commenced by members of law firms from various
cities and provinces on a consortium basis, and the remaining
six of which were commenced by the Saskatchewan firm. The
plan for the consortium group is to seek certification of
a national class proceeding in Ontario. If certification
is obtained, they plan to pursue a national remedy for all
those whose pets were adversely affected.
 Currie v. McDonald’s Restaurants of
Canada Ltd. (2005), 74 O.R. (3d) 321.
 In a ruling that is currently on appeal
to the Ontario Court of Appeal, a judge of the trial division
ruled that a New York class action judgment for over $36 million
is enforceable in Ontario against the defendants, Garth Drabinsky
and Myron Gottleib, as senior officers and directors of Livent. The
court held that as long as there is a real and substantial
connection between the action and the forum in which it is
heard, and provided there is an absence of fraud or a denial
of natural justice in obtaining the judgment, then judgments
rendered outside of the country should be enforced as a matter
of international comity: King v. Drabinsky, 
O.J. No. 2901 (S.C.J.) per Wilton-Siegel J.
 HSBC Bank
Canada Ltd. v. Hocking,
2006 QCCS 330 (Q.S.C.).
 These three goals were first identified in two
studies that led to the enactment of the Ontario Class
Proceedings Act: the 1982 Report of the Ontario Law Reform
Commission and the Report prepared by the Ontario Attorney
General’s Advisory Committee on Class Action Reform
 (2004), 73 O.R. (3d) 401, (2004), 247 D.L.R.
 (2006), 78 O.R. (3d) 641.
 The screening tests for certification set out
in Ontario’s Class Proceedings Act are: there
must be a cause of action that is shared by an identifiable
class, that raises common issues for which a class proceeding
is the preferable procedure for resolution and in which the
class may be fairly and adequately represented by a plaintiff
or plaintiffs who have produced a workable plan for advancing
 See also Carom v. Bre-X Minerals Ltd. (2000),
51 O.R. (3d) 236 (C.A) at para. 42, cited by the court in Cloud at
 See the Honourable Mr. Justice Osborne’s
Summary of Findings and Recommendations of the Civil Justice
Reform Project, November 20, 2007. This report does not specifically
discuss class actions.
The legislation of Quebec, Alberta and New Brunswick
permit the court to order costs, whereas the legislation of
Newfoundland and Labrador, Saskatchewan and Manitoba mirrors
that of B.C.
 The Report prepared
by the Ontario Attorney General’s Advisory Committee
on Class Action Reform in 1990 gave the following rationale
for empowering the courts to award costs in class actions: “This
leaves the risk of being held accountable for costs in the
mind of the plaintiff, thereby deterring weak claims and wasteful
steps and moderating the approach to the litigation.”
 Gariepy v.
Shell Oil Co., 
O.J. No. 3495 at para. 4.
 Pearson v.
Inco Ltd. (2006), 79
O.R. (3d) 427 at para. 11, footnote 1.