Droit canadien des actions collectiveshttps://stikeman.com/fr-ca/rss/droit-canadien-actions-collectives?utm_source=ca-list-fr&utm_medium=email&utm_campaign=classactionsDroit canadien des actions collectivesfr-CA{F8A60A03-EE2A-4595-B070-702AA614B96F}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/qui-doit-payer-cour-appel-ontario-donne-indications-necessaires-repartition-frais-defense-entre-assureurs-recours-collectifsAlan L. W. D'Silvahttps://stikeman.com/fr-ca/equipe/d/alan-l-w-dsilvaGlenn Zacherhttps://stikeman.com/fr-ca/equipe/z/glenn-zacherDroit canadien des actions collectivesActualités - Droit des assurancesQui doit payer? La Cour d’appel de l’Ontario donne des indications nécessaires sur la répartition des frais de défense entre les assureurs visés par des recours collectifs qui s’étendent sur plusieurs décennies<p><strong>Dans la décision <em>Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada, </em></strong><a rel="noopener noreferrer" href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.canlii.org%2Fen%2Fon%2Fonca%2Fdoc%2F2024%2F2024onca145%2F2024onca145.html%3FautocompleteStr%3D2024%2520ONCA%2520145%26autocompletePos%3D1%26resultId%3D44d0aeeb46c04111932db91dfbb1165b%26searchId%3D2024-03-05T21%3A23%3A42%3A017%2F7044a7fd264544f2ac82d9ec7c8c6c37&data=05%7C02%7Ctranslation%40stikeman.com%7C574563b21d2a4341915508dc42c0ceb2%7C394646dfa1184f83a4f46a20e463e3a8%7C0%7C0%7C638458643553533312%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=WzKP6041pM2Sm%2BJ0%2BasLPbzz5kO6YJsNNoVSVJfC9TY%3D&reserved=0" target="_blank"><strong>2024 ONCA 145</strong></a><strong>, la Cour d’appel de l’Ontario a, entre autres, infirmé la conclusion du tribunal inférieur selon laquelle des assurés avaient le droit de réclamer le remboursement de tous leurs frais de défense à n’importe lequel des assureurs qui avaient l’obligation de les défendre, que les sinistres soient ou non survenus au cours de la période d’assurance de l’assureur. La Cour a confirmé qu’une répartition <em>proportionnelle</em> à la période de couverture (<em>time-on-risk</em>) est la méthode adéquate à adopter pour les sinistres qui s’étendent sur de nombreuses années (sinistres « de longue durée » (<em>long-tail</em>)) lorsque plusieurs assureurs délivrent des polices consécutives à un assuré. Ce faisant, la Cour donne des indications utiles aux assureurs de la responsabilité civile qui sont concernés par des demandes de règlement de sinistres de longue durée, y compris les recours collectifs qui concernent de nombreuses polices et périodes d'assurance.</strong></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>In <em>Loblaw Companies Limited v. Royal & Sun Alliance Insurance Company of Canada, </em></strong><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/k33l5"><strong>2024 ONCA 145</strong></a><strong>, the Ontario Court of Appeal among other things, overturned the lower court’s finding that insureds were entitled to seek 100% of their defence costs from any one of the insurers who owed a duty to defend, regardless of whether or not the claims occurred during the insurer’s policy period. The Court confirmed that a <em>pro rata</em> “time-on-risk” allocation is the appropriate method for claims that span many years (long-tail claims) where there are multiple insurers issuing consecutive policies to an insured. In doing so, the Court provides welcome guidance for liability insurers involved in lengthy long-tail claims, including class actions that involve multiple policies and policy periods. </strong></p> <h2>Background</h2> <p>The case arose from five class actions in multiple provinces seeking billions of dollars in damages against numerous defendants relating to the manufacture, distribution, and sale of opioids in Canada beginning in 1996 (the “<strong>Underlying Claims</strong>”). Three of the defendants, Loblaw Companies Limited (“<strong>Loblaw</strong>”), Shoppers Drug Mart Inc. (“<strong>SDM</strong>”) and Sanis Health Inc. (“<strong>Sanis</strong>”) (together, the “<strong>Defendants</strong>”), sought coverage from their insurers. Five insurers – Royal & Sun Alliance Insurance Company of Canada (“<strong>RSA</strong>”), AIG insurance Company of Canada (“<strong>AIG</strong>”), Aviva Insurance Company of Canada (“<strong>Aviva</strong>”), Liberty Mutual Insurance Company (“<strong>Liberty</strong>”) and Zurich Insurance Company (“<strong>Zurich</strong>”) (collectively, the “<strong>Primary Insurers</strong>”) – issued primary commercial general liability (“<strong>CGL</strong>”) policies that covered one or more of the Defendants for varying portions of the class period, with various deductibles and self-insured retentions (“<strong>SIRs</strong>”). Importantly, there were no gaps in coverage. At any given time, one of the Primary Insurers was on risk.</p> <p>The Primary Insurers acknowledged their responsibility to pay defence costs of the class actions for the years they insured the Defendants and proposed a <em>pro rata </em>allocation of defence costs based on their respective time-on-risk for the class period (the Primary Insurers had agreed beforehand on a <em>pro rata </em>time-on-risk allocation amongst themselves). The Defendants rejected this <em>pro rata </em>allocation and applied to the Ontario Superior Court of Justice to select a single Aviva policy to defend SDM and Sanis, and an RSA policy to defend Loblaw, and to pay all of the defence costs from 1996 onward, subject only to the selected insurer’s right to seek equitable allocation as between it and other Primary Insurers at the conclusion of the litigation. Notably, the policies selected by the Defendants did not include applicable or significant self-insured retentions (“<strong>SIRs</strong>”) or deductibles, or they had already been exhausted.</p> <p>The Application Judge endorsed the Defendants’ choice of the Aviva and RSA policies to defend all of the Underlying Claims. The key findings of the Application Judge included, among other things, that:</p> <ul> <li>the Primary Insurers were required to pay all reasonable costs associated with the defence of the Underlying Claims. Rather than adopting a <em>pro rata </em>time-on-risk allocation, each insured was entitled to select any single policy under which there was a duty to defend and require the applicable insurer to defend and pay all reasonable defence costs (subject only to a right of apportionment at the end of proceedings and the right to seek an equitable allocation of defence costs among other Primary Insurers of that insured); and</li> <li>the defence costs incurred by each of the insureds would be applied toward the exhaustion of SIRs/deductibles under other policies, even if they are paid by Aviva or RSA.</li> </ul> <p>In arriving at these findings, the Application Judge relied in part on <em>Hanis v. Teevan, </em><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/2137f">2008 ONCA 678</a> (“<strong><em>Hanis</em></strong>”), which involved a single insurer in a case involving mixed claims (<em>i.e.</em>, some covered, some not) giving rise to multiple theories of liability, and <em>Family Insurance Corp. v. Lombard Canada Ltd., </em><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/51sl">2002 SCC 48 </a>(“<strong><em>Family Insurance</em></strong>”), which involved a single accident in relation to which two insurers had concurrently insured the same risk during the same time period.</p> <p>The Primary Insurers appealed from the decision of the Application Judge, arguing that it rewrote the terms of the parties’ insurance contracts by, amongst other things<em>, </em>(i) obligating Aviva and RSA to defend claims for multiple years in which they did not issue primary policies to the Defendants, (ii) relieving other Primary Insurers of their contractual obligations in those same years, and (iii) permitting the Defendants to circumvent and evade SIRs and deductibles that had been freely negotiated with the other Primary Insurers.</p> <h2>Decision of the Court of Appeal</h2> <p>The Court of Appeal (the “<strong>Court</strong>”) substantially reversed the holdings of the Application Judge detailed above. The Court succinctly summarized the case as follows:</p> <p style="padding-left: 30px;">The challenge presented by these appeals is what to do with the cost of defending claims that involve allegations of continuous or progressive injury that span many years (long-tail claims) where there are insurance policies with different insurers, different provisions governing deductibles and SIRs, and consecutive rather than concurrent coverage periods and therefore different risks.</p> <h3>Defendants cannot select single policy to pay for <em>all </em>defence costs</h3> <p>The Court held that the Application Judge erred in a number of respects in finding that the insurers had the right to select a single policy to provide a defence over the entire period covered by the Underlying Claims.</p> <h4>1. Policies provide for time-limited bargain</h4> <p>Acknowledging that the relationship between an insured and an insurer is a contractual one governed primarily by the terms of the insurance policy, the Court concluded that the Application Judge ignored the express language found in the policies of each of the Defendants that prescribed temporal limits on coverage (<em>i.e.,</em> “<em>during the policy period”</em>). The Court reasoned that each insurer covered a successive period of time that captured a different risk profile, and that no insurer had agreed to cover risks falling outside their prescribed time period.</p> <h4>2. The Primary Insurers are not “concurrent” insurers</h4> <p>The Application Judge had relied on <em>Family Insurance </em>and <em>Markham (City) v. AIG Insurance Company of Canada, </em><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/j64b6">2020 ONCA 239</a> (“<strong><em>Markham</em></strong><em>”) </em>to support the finding that the Defendants had a right to select a single policy to indemnify them for all defence costs in respect of the Underlying Claims. The Court held that in doing so, the Application Judge had erred as both these cases dealt with allocation issues as between “coordinate” or concurrent insurers, and were distinguishable from the case at hand, where the Primary Insurers insured discrete risks in <em>successive</em> time periods and did not agree to indemnify for risks falling outside those time periods.</p> <p><em>Family Insurance </em>involved a single claimant who had been injured in a fall from a horse and whose claim against the owner of a stable had been settled. The stable owner thereafter claimed under two policies of insurance. The Supreme Court of Canada applied what it described as the</p> <p>well established principle of insurance law that where an insured holds more than one policy of insurance that covers the same risk, the insured may never recover more than the amount of the full loss but is entitled to select the policy under which to claim indemnity, subject to any conditions to the contrary.</p> <p><em>Markham </em>also involved a single accident and the allocation of defence costs between concurrent insurers providing coverage. By contrast, the proposed class actions in this case allege continuous damage over multiple policy periods.</p> <h4>3. Hanis is not applicable to situations involving multiple policy periods</h4> <p>The Court held it was an error in law for the Application Judge to apply the principles from <em>Hanis </em>(<em>i.e., </em>that an insurer who owes a duty to defend is responsible for all reasonable costs associated with the defence of covered claims, even if those costs also benefit the defence of uncovered claims) to the case at hand. Unlike <em>Hanis, </em>which involved only one insurer and focused on mixed claims giving rise to multiple theories of liability, this case involved multiple insurers and multiple policy periods.</p> <p>According to the Court, to apply the principle in <em>Hanis </em>to the class actions involving multiple policy periods would place an unreasonable burden on the selected insurers and impose costs disproportionate to the insurers’ potential liability for covered claims. Also, unlike in <em>Hanis, </em>where some claims were “uncovered”, the Court noted that in this case, the Primary Insurers collectively proposed to pay all of the defence costs for the entire period, subject only to the payment of SIRs/deductibles where applicable.</p> <h4>4. Rejection of “all sums” approach</h4> <p>The Court concluded that the proposed <em>pro rata </em>allocation of defence costs accords with the contractual policy periods agreed to between the Defendants and Primary Insurers. In doing so, the Court rejected the “all sums” approach to defence costs, where the insurer could select a single insurer over the period of risk to cover all defence costs, stating that <em>“[b]ased on learned commentary, there is limited support for this approach</em>”. Drawing on its decision in <em>Goodyear Canada Inc. v. American International Companies et al., </em><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/fz58s">2013 ONCA 395</a>, the Court highlighted how Canadian courts have preferred the <em>pro rata </em>approach to allocating liability to ensure that the allocation of costs to a particular insurance policy is proportionate to the damages during the policy’s term.</p> <p>The Court expressly recognized the “<em>heavy burden</em>” of funding legal costs for a class action, and found that the Application Judge’s decision placed “<em>a disproportionate and unreasonable burden on the selected insurers</em>”. The potential unfairness was particularly extreme for RSA, who the Court noted had been on risk for just eight months, or 3% of the total class period, but would have been required to defend Loblaw for the entire decades-long period.</p> <p>The Court also agreed with counsel for some of the Primary Insurers that applying the “all sums” approach adopted by the Application Judge would result in conflicts of interest, as insurers who assumed the defence would be interested in ensuring that any ultimate liability arose from damage outside their policy periods. Notably, the Court concluded that “<em>the participation of all insurers at an early stage is conducive to the conduct of the best</em><em>defence possible and also serves to promote settlement</em>”.</p> <h3>SIR in each policy must be satisfied before insurer has duty to defend</h3> <p>The Court also reversed the Application Judge on the issue of how SIRs should be treated in these circumstances.<a href="#_ftn1" name="_ftnref1"><sup>[1]</sup></a> The Application Judge held that once the SIR or deductible on the selected insurance policy had been exhausted, then the Defendants no longer had any obligation to pay defence costs toward the SIRs/deductibles on other policies.</p> <p>Since the various policies were issued over many years, unsurprisingly they included various different SIRs/deductibles negotiated between the Defendants and their insurers. One of the key reasons the Defendants had sought to rely upon only the Aviva and RSA policies was to avoid the SIRs and deductibles under the other policies – Aviva conceded that its SIRs had been exhausted, and RSA’s deductible was relatively small.</p> <p>The effect of the decision in the court below was that Aviva and RSA would be paying toward the SIRs and deductibles of the other Primary Insurers. The Court found that this did not reflect the bargain struck between the Defendants and their insurers. The Court noted that SIRs are used by sophisticated insureds such as the Defendants to reduce their premiums and exercise a degree of control over costs of investigating and defending claims prior to triggering the insurer’s duty to defend. The Court cited <em>Ontario v. St. Paul Fire and Marine Insurance Co</em>., <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jw5wv">2023 ONCA 173</a>, in support of its conclusion that only after an applicable SIR has been exhausted is the duty to defend triggered. The Court held that the Application Judge’s decision was inconsistent with this principle. Until it has been determined whether the SIRs/deductibles are exhausted, the Defendants must pay their own defence costs.</p> <h3>Other findings on relief from forfeiture, and defence reporting</h3> <p>The Court also agreed with the appellants that the Application Judge had erred in granting relief from forfeiture for pre-tender defence costs (<em>i.e.,</em> costs incurred by the Defendants prior to notifying their insurer of the claim). In the Court’s view, there was no forfeiture to be relieved from because the insurer (AIG), on receipt of notice did not reject the contract. Rather, it reserved its rights and asserted that liability did not attach until the SIR had been exhausted. This, the Court observed, was very different from the situation where late notice to an insurer results in the insurer denying the duty to defend.</p> <p>The only issue of significance on which the Court substantially upheld the decision of the Application Judge was on the treatment of the Defence Reporting Agreement (“<strong>DRA</strong>”) among the Primary Insurers. The Court agreed with the Application Judge that only those insurers who entered into the DRA would be entitled to associate in defence and receive privileged defence information. The Court endorsed the DRA “split file protocol” that precluded most information-sharing between the coverage and defence sides of an insurer.</p> <p>The Court also made findings on the role of reservations of rights and conflicts of interest that will be of interest to claims handlers and insurance lawyers.</p> <h2>Key Takeaways</h2> <ul> <li>A <em>pro rata</em> time-on-risk approach to allocation of defence costs accords with the contractual allocation of risk and is the appropriate way of apportioning costs among consecutive (<em>e.,</em> non-concurrent) insurers. It is worth highlighting that the Primary Insurers in this instance acted reasonably and cooperatively and arrived at an arrangement for the sharing of defence costs among themselves, which was proposed by the Primary Insurers to the insured Defendants and was rejected.</li> <li>The decision establishes important principles regarding the treatment of SIRs and deductibles, including that defence costs covered by insurers under their policies do not count towards the satisfaction of other insurers’ SIRs.</li> <li>The decision underscores the importance of policy wording and a careful assessment of the obligations and risks undertaken by an insurer and the insured.</li> <li>The Court acknowledged (quoting an academic source) that the issues considered on appeal were “among the thorniest problems in insurance law”, and it is reasonable to think that the decision will provide lasting guidance on these issues.</li> <li>While the decision is a seminal insurance decision, it also has significant implications for class actions in which damages are claimed over long periods. The Court expressly recognized the “heavy burden” of funding lengthy class actions, and that an insurer should not be exposed to costs that are disproportionate to the extent of its potential liability.</li> </ul> <p><em>*The authors, Alan D’Silva and Glenn Zacher, were counsel of record for Aviva Insurance Company of Canada on the appeal.</em></p> <hr /> <p><a href="#_ftnref1" name="_ftn1">[1]</a> Traditionally, deductibles have been treated differently than SIRs in that a deductible goes only to reduce the insurer’s indemnity obligation but does not delay the point when the duty to defend is triggered. However, in this case the Court noted that the parties treated the RSA deductible as equivalent to a SIR, and declined to express any definitive view on the point.</p>13-Mar-2024 02:51:00{9F993F03-0145-4266-8A87-7CF5E86FA66E}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/cour-appel-ontario-confirme-principes-preuve-relatifs-requetes-autor-intenter-action-marche-secDaniel S. Murdochhttps://stikeman.com/fr-ca/equipe/m/daniel-s-murdochSinziana R. Hennighttps://stikeman.com/fr-ca/equipe/h/sinziana-r-hennigHesam Wafaeihttps://stikeman.com/fr-ca/equipe/w/hesam-wafaeiDroit canadien des actions collectivesLa Cour d’appel de l’Ontario confirme les principes de la preuve relatifs aux requêtes en autorisation d’intenter une action pour présentation inexacte des faits sur le marché secondaire<p><strong>Dans l’affaire <em>Drywall Acoustic Lathing and Insulation (Pension Fund, Local 675) </em>c.<em> Barrick Gold Corporation</em>, </strong><a rel="noopener noreferrer" href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.canlii.org%2Fen%2Fon%2Fonca%2Fdoc%2F2024%2F2024onca105%2F2024onca105.html%3FresultIndex%3D1%26resultId%3D5cacbeb6d3ef4f6c94f0cea61b2daa6a%26searchId%3D2024-02-26T15%3A32%3A28%3A267%2F51b45453dad442f295e05a0c2eb41f8b&data=05%7C02%7CAReda%40stikeman.com%7Cbe97111c53d24337f15108dc3a31825e%7C394646dfa1184f83a4f46a20e463e3a8%7C0%7C0%7C638449231547625338%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=aMKbSDaQyX6iUYNqufZk8fHxvrKmTMukjZzIBBJIIRQ%3D&reserved=0" target="_blank"><strong>2024 ONCA 105</strong></a><strong>, la Cour d’appel de l’Ontario a confirmé la décision du tribunal d’instance inférieure rejetant en partie la demande d’autorisation d’intenter un recours collectif contre Barrick Gold pour présentation inexacte des faits sur le marché secondaire et a fourni des précisions sur l’examen minutieux que les juges des requêtes doivent appliquer au dossier de la preuve.</strong></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>In <em>Drywall Acoustic Lathing and Insulation (Pension Fund, Local 675) v. Barrick Gold Corporation, </em></strong><a rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onca/doc/2024/2024onca105/2024onca105.html?resultIndex=1&resultId=5cacbeb6d3ef4f6c94f0cea61b2daa6a&searchId=2024-02-26T15:32:28:267/51b45453dad442f295e05a0c2eb41f8b"><strong>2024 ONCA 105</strong></a><strong><em>, </em></strong><strong>the Ontario Court of Appeal affirmed the lower court’s decision denying in part the motion for leave to commence a secondary market misrepresentation class action against Barrick Gold and provided clarification on the scrutiny that motion judges should apply to the evidentiary record.</strong></p> <h2>Background</h2> <p>A plaintiff seeking to bring a claim under section 138.3 of the Ontario <em>Securities Act </em>(“<strong><em>Act</em></strong><em>”</em>) that an issuer made misrepresentations in its public disclosure must first obtain leave from the court. Section 138.8 of the Act states that, in order for leave to be granted, the court must be satisfied that:</p> <ul> <li>the action is <strong>brought in good faith</strong>; and</li> <li>there is <strong>a reasonable possibility that the action will be resolved at trial in favour of the plaintiff</strong>.</li> </ul> <p>In this case, the plaintiff (“<strong>Drywall</strong>”) alleged that Barrick Gold (“<strong>Barrick</strong>”) made material misrepresentations about a gold mine in Chile. The alleged misrepresentations concerned the mine’s accounting, including its capital expenditure (“<strong>capex</strong>”) budget, as well as its production schedule. Following a five-day hearing, for which over 30,000 pages of materials were filed and multiple affiants were cross-examined, the motion judge:</p> <ul> <li><strong>dismissed</strong> the motion for leave to bring claims relating to alleged accounting misrepresentations and most of the capex budget and production scheduling misrepresentations; but</li> <li><strong>granted</strong> the motion for leave with respect to Drywall’s claim that Barrick misrepresented the capex budget and production scheduling forecasts in its Q4 and 2011 year-end report issued on February 16, 2012, and in its Annual Information Form (“<strong>AIF</strong>”) for the year ended December 31, 2011.</li> </ul> <p>The motion judge also decided that Barrick’s subsequent disclosures on May 2, 2012, and July 26, 2012, were possible public corrections, but that Drywall had not established that it had a reasonable possibility of establishing at trial that later disclosures were also interpreted by investors as corrections of the alleged misrepresentations. Drywall appealed that aspect of the decision as well as the motion judge’s dismissal of leave with respect to alleged misrepresentations in Barrick’s Q3 report issued on October 27, 2011. Success on either of these points would have enlarged the potential plaintiff class.</p> <h2>The Court of Appeal Decision</h2> <p>In <em>Theratechnologies Inc. v. 121851 Canada Inc</em>., <a rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/ca/scc/doc/2015/2015scc18/2015scc18.html?resultIndex=1&resultId=39e33c28f95e4befae6ef1657265bf3d&searchId=2024-02-29T15:49:15:436/382396d797374e25a298ec589768b4d5">2015 SCC 106</a>, the Supreme Court of Canada stated that the leave requirement is a robust screening mechanism intended to screen out, early in the process, “strike suits” and unmeritorious litigation against issuers. In Ontario and other provinces, the issue of how robust a screening mechanism the leave motion should be has been a matter of continuing debate.</p> <p>On appeal, Drywall argued that the motion judge erroneously evaluated and failed to act on certain evidence before the court. With respect to the motion judge’s refusal to grant leave for certain alleged misrepresentations prior to Barrick’s Q4 and 2011 year-end report and AIF, Drywall argued that the motion judge improperly weighed and rejected credible evidence, conducted a mini-trial, and failed to consider or trivialized major evidentiary gaps.</p> <p>The Court of Appeal (the “<strong>Court</strong>”) rejected these arguments and dismissed Drywall’s appeal. In doing so, the Court has provided clarity with respect to the level of rigour to be applied by motion judges at the leave stage.</p> <h3>Applicable evidentiary principles on leave motions</h3> <p>The Court set out three evidentiary principles applicable to the judge’s role on a motion for leave.</p> <h4>1. The motion judge has a robust and important gatekeeping role</h4> <p>The Court reiterated that motion judges have a robust and important gatekeeping role in conducting the leave hearing, which includes determining whether there is sufficient evidence to support a reasonable or realistic chance that the action will be resolved in the claimant’s favor. The Court held that this requires a <strong>“qualitative evaluation of the proposed action.”</strong> It is not enough to show that there is a triable issue or a “mere possibility of success”.</p> <h4>2. Interplay between requirement to show credible evidence and that there be a reasonable or realistic possibility of success</h4> <p>In <em>Theratechnologies </em>and <em>CIBC v. Green</em>, <a rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/ca/scc/doc/2015/2015scc60/2015scc60.html">2015 SCC 60</a>, the Supreme Court of Canada stated that, on a leave motion, the plaintiff must “offer both a plausible analysis of the applicable legislative provisions, and some credible evidence in support of the [plaintiff’s] claim.” In this recent decision, the Court made clear that while the plaintiff must satisfy these conditions:</p> <p>“[they] do not alone express the leave standard. These conditions must be satisfied <em>plus</em> the record before the leave judge must demonstrate that there is a realistic or reasonable chance that the action will succeed.”</p> <p>The Court clarified the interplay between the requirement to show credible evidence and that there be a reasonable or realistic possibility of success:</p> <p>“[A]t times, Drywall proceeded as if the entire standard for obtaining leave is the ‘some credible evidence’ standard. It attempted on a number of occasions to identify ‘credible evidence’ favoring its case and then submitted on this basis that the motion judge should have granted leave. However, … to be sufficient, evidence must be credible, but even credible evidence may not be sufficient to show that there is a realistic or reasonable chance that a claim will succeed.”</p> <p>Accordingly, on leave, a court is not meant to conduct an isolated review of only the evidence that supports the plaintiff’s theory. Instead, it should review all evidence adduced by both parties to ascertain whether there is a reasonable or realistic chance that the action will succeed.</p> <p>If the evidence relied upon by the defendant is so compelling that there is no reasonable possibility that the appellant would succeed at trial, leave may be denied. If critical evidence offered by a plaintiff is shown by other evidence to be “completely undermined by flawed factual assumptions”, a motion judge may choose not to act on that evidence.</p> <h4>3. Avoiding an improper mini-trial</h4> <p>As noted by the Court, an oft-repeated admonition has been that the leave motion should not be a “mini-trial”, but it has not always been clear what constitutes a mini-trial. The Court provided guidance as to when the evidentiary assessment bleeds into an improper “mini-trial.” To avoid an improper mini-trial, the motion judge <strong>should not</strong>:</p> <ul> <li>assess the case at the leave stage against the ultimate burden (balance of probabilities), but against the relatively low merits-based threshold applicable at this stage;</li> <li>attempt to resolve realistic and contentious issues arising from conflicting credible evidence; and</li> <li>fail to consider what evidence is not before them (i.e., the motion judge should not treat the evidence before the court as the “full” evidence for and against the claim).</li> </ul> <p>However, the motion judge <strong>may</strong> assess the credibility and reliability of the evidence, including with reference to cross-examinations on affidavits, or the comparative strength of competing evidence: “a s. 138.8 motion judge cannot be found to have engaged in a mini-trial simply because their decision turned on considerations of the credibility and reliability or weight of the evidence.”</p> <h3>Affirming the motion judge’s assessment of the evidence</h3> <p>Drywall alleged that Barrick’s disclosure regarding its capex budget and production schedule were misrepresentations when they were made in October 2011 and again in February 2012. The motion judge concluded that there was no evidence in the record to suggest that, in October 2011, Barrick had any reason to be concerned about the accuracy of these statements and no other reason to believe its forecasts were inaccurate. Therefore, the motion judge concluded that there was no realistic or reasonable possibility that a trial court would find that, in October 2011, Barrick was making actionable misrepresentations rather than expressing reasonably mistaken conclusions.</p> <p>In contrast, when these statements were made after October 27, 2011, and before February 16, 2012, Barrick had acquired information that exposed its capex budget and production schedules as unreasonable, rendering its statements with respect to the same capex budget and projected production schedule on February 16, 2012, and March 27, 2012, potential misrepresentations.</p> <p>The Court noted that Drywall did not identify any direct evidence establishing that Barrick knew prior to its October 27, 2011, disclosure that its capex budget was inaccurate or that its own capex budget forecasts were fundamentally unreliable. Drywall argued that these conclusions could be inferred from Barrick’s own documents, which were in evidence before the motion judge. The motion judge did not take issue with the credibility of this evidence but held that there was no realistic or reasonable chance that the inferences advanced by the plaintiff would be drawn at trial. As such, it was inaccurate for Drywall to suggest that the motion judge had weighed and disregarded credible evidence because, in the Court’s view, she “found as she was entitled to do, that on the record as a whole, there was no realistic or reasonable possibility that this claim would succeed”.</p> <h3>The linkage test for a potential public correction</h3> <p>Drywall argued that statements made in November 2012 through June 2013 addressed the same subject matter (capex budget and production schedules) as the alleged misrepresentations, and therefore, satisfied the “linkage test” at the leave stage for a potential public correction. The Court rejected this argument:</p> <p>“…a mere coincidence in subject matter is not enough on its own to establish a sufficient linkage or connection.”</p> <p>To establish a sufficient linkage or connection, the alleged public correction must be <strong>“reasonably taken as correcting the alleged misrepresentation”</strong>. The Court dismissed the appeal from the motion judge’s conclusion that Barrick’s disclosures on July 26, 2012 would have been a complete correction of the alleged misrepresentations, such that subsequent disclosures were not reasonably capable of being understood as corrections.</p> <h2>Key Takeaways</h2> <p><em>Drywall </em>provides a detailed articulation of the applicable evidentiary principles on a leave motion. Counsel may find guidance in the Court’s reasoning when considering the appropriate evidentiary record to advance for a leave motion and the scope of a motion judge’s assessment of competing fact and expert evidence. In particular, the Court’s reasoning as to when a leave motion may become an improper mini-trial and when an alleged public correction has a sufficient linkage or connection to an alleged misrepresentation will be helpful to counsel in understanding the parameters of the evidentiary analysis on leave.</p>04-Mar-2024 03:54:00{34731984-26CA-4017-A10B-7A5131487296}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/plaider-manquement-obligation-fiduciaire-recours-collectif-cour-appel-ontarioJenna Rumeohttps://stikeman.com/fr-ca/equipe/r/jenna-rumeoDroit canadien des actions collectivesDroit canadien des valeurs mobilièresPlaider le manquement à l’obligation fiduciaire dans le cadre d’un recours collectif: la Cour d’appel demeure peu exigeante en Ontario<p><strong>Dans sa décision </strong><a rel="noopener noreferrer" href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.canlii.org%2Fen%2Fon%2Fonca%2Fdoc%2F2023%2F2023onca840%2F2023onca840.html%3FautocompleteStr%3DBoal%2520v%2520International%2520Capital%2520Management%2520%26autocompletePos%3D6%26resultId%3Da49e74bc65c341c2bdd47789a632d438%26searchId%3De6fbfa0500b7437c92956ac82f3085c6&data=05%7C02%7CENaufal%40stikeman.com%7C596815d001dc482655e608dc379ec650%7C394646dfa1184f83a4f46a20e463e3a8%7C0%7C0%7C638446402280086289%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=%2FcjlzZGnXgCyc778xcrO3QV1lvKOJLk6jbGhBnSxcAI%3D&reserved=0" target="_blank"><strong><em>Boal v International Capital Management Inc.</em></strong></a><strong> (« <em>Boal »</em>), la Cour d’appel de l’Ontario (la « Cour ») a examiné les obligations procédurales visant la certification d’une cause d’action en matière de manquement à une obligation fiduciaire. La Cour, qui a observé qu’il n’était pas évident que la demande n’ait aucune chance de succès, a affirmé que les relations fiduciaires <em>ad hoc</em> étaient susceptibles d’entraîner la certification en dépit d’enjeux individuels et elle a donné des exemples de caractéristiques « communes » éventuelles dans les circonstances.</strong></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>In </strong><strong><em><a rel="noopener noreferrer" href="https://canlii.ca/t/k1wkd" target="_blank">Boal v International Capital Management Inc.</a></em></strong><strong>(“<em>Boal”</em>), the Ontario Court of Appeal (the “Court”) considered the pleading requirements for certification of a breach of fiduciary duty cause of action. In holding that it was not plain and obvious that the claim had no chance of success, the Court affirmed that <em>ad hoc</em> fiduciary relationships are amenable to certification despite inherent individualistic issues in play and provided examples of potential features of commonality in these circumstances.</strong></p> <h2>Background</h2> <p>The plaintiff was a client of two mutual fund salespersons/financial planners and the corporate entity through which they operated (collectively, the “<strong>Defendants</strong>”).</p> <p>The corporate defendant was a member of the Mutual Fund Dealers Association of Canada (the “<strong>MFDA</strong>”), and the financial planners were “Approved Persons” under the MFDA rules. The MFDA rules imposed fiduciary-like obligations on the financial planners, including, among other things, to deal fairly, honestly, and in good faith with their clients, and to address conflicts of interest in the best interests of the clients.</p> <p>The Defendants presented the plaintiff with an opportunity to invest in promissory notes in Invoice Payment Systems Corp. (“<strong>IPS</strong>”). The Defendants and their immediate family members owned 75% of the IPS shares, but did not disclose this information to the plaintiff before recommending the investment in the notes.</p> <p>The plaintiff purchased an IPS note for over $100,000, and ultimately commenced a class action for the investment losses relating to the investment in the IPS note. The plaintiff claimed, among other things, that the Defendants breached their fiduciary duties.</p> <p>The <a rel="noopener noreferrer" href="https://canlii.ca/t/jd57s" target="_blank">certification judge at the Superior Court of Justice</a> held that the plaintiff failed to make out a cause of action for breach of fiduciary duty on a <em>class-wide basis</em>, and therefore, did not satisfy the common issues and preferable procedure prongs of the certification test. The plaintiff’s other claims relied on the existence of a breach of fiduciary duty and therefore also failed.</p> <p>The <a rel="noopener noreferrer" href="https://canlii.ca/t/jmpnh" target="_blank">majority at the Divisional Court</a> upheld the decision of the certification judge, finding that the pleadings did not set out sufficient facts that would establish the indicia for <em>ad hoc</em> fiduciary relationships set out in <em>Hodgkinson v Simms, </em><a rel="noopener noreferrer" href="https://canlii.ca/t/1frpl" target="_blank">[1994] 3 S.C.R. 377</a> (“<em>Hodgkinson</em>”), namely that (i) the alleged fiduciary has scope for the exercise of some discretion; (ii) the alleged fiduciary can unilaterally exercise that discretion so as to affect the beneficiary’s legal interest; (iii) the alleged beneficiary is peculiarly vulnerable to the alleged fiduciary; and (iv) the alleged fiduciary has accepted responsibility to act in the best interests of the alleged beneficiary and in accordance with a duty of loyalty.</p> <p>The Divisional Court held that the pleadings relied solely on the MFDA rules, which were insufficient to establish a fiduciary duty, and dismissed the appeal. In dissent, Justice Sachs found that the claim did include additional facts aside from the breach of the MFDA rules, which supported a breach of fiduciary duty. Accordingly, Justice Sachs would have sent the matter back to the Superior Court for redetermination.</p> <p>The plaintiff appealed the decision of the Divisional Court to the Court of Appeal.</p> <h3>The Decision of the Court of Appeal</h3> <p>The Court found that the claim provided the basis for a cause of action for breach of fiduciary duty.</p> <p>Agreeing with Justice Sachs that the certification judge had made an error in principle by failing to consider all of the facts pled aside from the breach of MFDA rules, the Court remitted the action to the Superior Court for a fresh determination.</p> <p>Relying on <em>Hodgkinson</em> and <em>Hunt v TD Securities</em>, <a rel="noopener noreferrer" href="https://canlii.ca/t/5zqq" target="_blank">2003 CanLII 3649 (ONCA)</a>, the Court affirmed the that five relevant factors in establishing an <em>ad hoc </em>fiduciary are: (i) vulnerability; (ii) trust; (iii) reliance; (iv) discretion; and (v) governance of professional rules or codes of conduct. The Court held that the plaintiff’s pleading, read as a whole, characterized the relationship with the Defendants as “one of vulnerability, trust, and reliance”.</p> <p>The Court’s holding that it was not plain and obvious a breach of fiduciary duty claim would fail was based on a number of facts, including the following:</p> <ul> <li>the Defendants prepared and monitored financial plans and recommendations for and in the best interests of each proposed class member.</li> <li>the Defendants controlled all information concerning the IPS notes, including what to reveal to proposed class members, which rendered them vulnerable.</li> <li>the relationships between the class and the Defendants appeared to be long standing, in that the Defendants selected whom to invite to purchase IPS notes from a roster of clients.</li> <li>the Defendants exercised discretion in selecting whom to invite to invest in IPS and it was the Defendants who brought the opportunity to proposed class members.</li> <li>this was not an isolated breach, but rather numerous breaches of industry standards and professional rules from which the Defendants profited greatly.</li> <li>there was a knowledge imbalance between the class and the Defendants, and the class member’s knowledge that the Defendants were bound by professional rules created reasonable expectations and created an environment in which they were vulnerable.</li> </ul> <h3>Key Takeaways</h3> <p>As the Court has sent the plaintiff’s claim back to the Superior Court, it remains to be determined whether the plaintiff’s claim is suitable for resolution on a class-wide basis and satisfies the certification criteria beyond the cause of action criterion.</p> <p><em>Boal </em>reinforces how the bar to satisfying the reasonable cause of action criterion is a low one and highlights how regulatory standards may be considered when assessing whether financial advisors owe a fiduciary duty to their clients.</p>27-Feb-2024 04:29:00{B266E825-33C1-422D-9F83-79BDC2222889}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/clause-arbitrage-obligatoire-impose-coursiers-entreprise-services-livraison-repasGary T. Clarkehttps://stikeman.com/fr-ca/equipe/c/gary-t-clarkeCheryl Reahttps://stikeman.com/fr-ca/equipe/r/cheryl-reaEmily Tessierhttps://stikeman.com/fr-ca/equipe/t/emily-tessierDroit canadien des actions collectivesDroit canadien de l'emploi, du travail et des régimes de retraiteActualités - Sociétés et droit commercialLa clause d’arbitrage obligatoire imposée aux coursiers par une entreprise de services de livraison de repas est abusive selon la Cour d’appel du Manitoba<p><strong>Dans l’affaire </strong><a rel="noopener noreferrer" href="https://www.canlii.org/en/mb/mbca/doc/2024/2024mbca3/2024mbca3.html?autocompleteStr=2024%20MBCA%203&autocompletePos=1&resultId=1e4aa58dbd104297b301c19538b1e98a&searchId=560ab9d050014eeca934bb5bed968db7" target="_blank"><strong><em>Pokornik v. SkipTheDishes Restaurant Services Inc.,</em></strong><strong> 2024 MBCA 3</strong></a><strong>, la Cour d’appel du Manitoba (la « Cour ») a confirmé dernièrement la </strong><a rel="noopener noreferrer" href="https://www.stikeman.com/fr-ca/savoir/droit-canadien-emploi-travail-regimes-retraite/la-clause-d-arbitrage-d-un-service-de-repas-en-ligne-ne-livre-pas-la-marchandise" target="_blank"><strong>décision d’un tribunal inférieur</strong></a><strong> qui a rejeté la motion d’une grande entreprise de services de livraison de repas en ligne visant à suspendre un recours collectif et à favoriser la tenue d’un arbitrage, même si elle n’a pas accepté sa conclusion au sujet de la convention contestée. La décision renforce le contrôle rigoureux auquel les tribunaux soumettent les contrats types de l’économie « à la demande » et, en particulier, les clauses d’arbitrage.</strong></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>The Manitoba Court of Appeal (the “Court”) in </strong><strong><em><a rel="noopener noreferrer" href="https://canlii.ca/t/k2blp" target="_blank">Pokornik v. SkipTheDishes Restaurant Services Inc.,</a></em></strong><strong><a rel="noopener noreferrer" href="https://canlii.ca/t/k2blp" target="_blank"> 2024 MBCA 3</a></strong><strong>, recently upheld a </strong><strong><a href="https://stikeman.com/fr-ca/savoir/droit-canadien-emploi-travail-regimes-retraite/la-clause-d-arbitrage-d-un-service-de-repas-en-ligne-ne-livre-pas-la-marchandise">lower court decision</a></strong><strong> dismissing a large online meal delivery service’s motion to stay a class proceeding in favour of arbitration, although it did not accept the lower court’s finding with respect to agreement “under protest”. The decision reinforces the high level of scrutiny that courts may apply to standard form contracts in the “gig” economy and, in particular, to arbitration clauses. </strong></p> <h2>Background</h2> <p>The plaintiff courier (the “<strong>Plaintiff</strong>”) brought an action against SkipTheDishes Restaurant Services Inc. (“<strong>Skip</strong>”), seeking a declaration that she was an employee of Skip and not an independent contractor, that Skip had breached the terms of applicable employment standards legislation, and for damages. The Plaintiff also applied for an order that the claim proceed as a class action and filed a motion for certification.</p> <p>Skip applied to stay the Plaintiff’s action based on the arbitration clause in Skip’s new standard service agreement with couriers (the “<strong>New Agreement</strong>”), which required disputes to be submitted to individualized arbitration.</p> <p>When the Plaintiff began working as a courier in 2014, her relationship was governed by an agreement (the “<strong>2014 Agreement</strong>”) that did not contain an arbitration clause, but rather conferred jurisdiction on the Manitoba Court of Queen’s Bench (as it then was). When Skip emailed the Plaintiff to inform her it was implementing the New Agreement, the Plaintiff was required to click “I Accept” to the New Agreement on the Skip application before she could continue working. To keep working, the Plaintiff, who was also a single mother with a high school education, sent an email back saying, “I do not agree with the new terms, but will indicate ‘Agree’ so I can continue to get shifts because I want to work. I am doing this under protest.”</p> <h2>Decision of the Manitoba Court of King’s Bench</h2> <p>The motion judge held that there was no arbitration agreement between the parties (see our discussion of the case <span style="text-decoration: underline;"><a rel="noopener noreferrer" href="https://canlii.ca/t/k2blp" target="_blank">here</a></span>) and found, among other things, as follows:</p> <ul> <li>the arbitration clause in the New Agreement was forward-looking and did not encompass a pre-existing court action;</li> <li>as the Plaintiff clicked “I Agree” under protest so she could keep working, the Plaintiff had not accepted the terms of the New Agreement; and</li> <li>even if the New Agreement could apply, the arbitration agreement was invalid for unconscionability and lack of consideration (i.e., continued ability to perform services was not consideration).</li> </ul> <p>In finding the arbitration agreement unconscionable, the motion judge applied the two-step test from <em><a rel="noopener noreferrer" href="https://canlii.ca/t/j8dvf" target="_blank">Uber v. Heller</a></em><a rel="noopener noreferrer" href="https://canlii.ca/t/j8dvf" target="_blank">, 2020 SCC 16</a> (“Uber”): (i) was there inequality in bargaining power?; and (ii) was the resulting bargain improvident? Ultimately, the motion judge held that:</p> <ul> <li>there was significant inequality of bargaining power between the parties; and</li> <li>the bargain was improvident, because the arbitration clause (if applied as interpreted by Skip) would benefit Skip at the expense of the Plaintiff “by retroactively removing her ability to access the courts”.</li> </ul> <h2>Grounds of Appeal</h2> <p>Skip appealed the motion judge’s decision on the grounds that the motion judge had erred (i) in undertaking an analysis of what agreement governed rather than referring the matter to an arbitrator, and (ii) in finding that the New Agreement did not govern the parties’ relationship.</p> <h2>Decision of the Court of Appeal of Manitoba</h2> <p>The Court of Appeal upheld the motion judge’s decision in part, affirming that the mandatory arbitration clause was void for unconscionability, and quashed Skip’s appeal.</p> <p>However, the Court held that the motion judge had erred in finding that the Plaintiff was governed by the 2014 Agreement (without an arbitration clause), rather than the New Agreement (with the arbitration clause). The 2014 Agreement clearly stated that the terms of the agreement could be amended at any time, and that the continued provision of services after notice of new terms would constitute consent to be bound by them. According to the Court, it was not enough for the Plaintiff to rely on sending an email to Skip stating “I do not agree” as an objective outward manifestation of assent, especially since she clicked “I agree” in the Skip platform and continued to provide services after the 2014 Agreement was amended. Therefore, the Court found that the Plaintiff was bound by the New Agreement that contained the mandatory arbitration clause.</p> <p>Finding that the New Agreement applied, the Court then examined whether the motion judge erred in refusing to stay the action because the New Agreement was invalid by virtue of either unconscionability or lack of consideration. The Court affirmed the motion judge’s findings that the two elements of unconscionability – an inequality of bargaining power and a resulting improvident transaction – were present in this case, and thus, the Agreement was invalid. Specifically, the Court found that the nature of the contract (one of adhesion that left no opportunity to negotiate), and the presence of the class action waiver, were the two main factors that made the arbitration clause unconscionable.</p> <p>While the Court acknowledged that arbitration can be an appropriate and acceptable alternative to litigation, it also reiterated the important role that class actions play in upholding principles of efficiency and access to justice, especially in circumstances where there is the possibility of many similarly situated claimants. The Court also noted that any disputes likely to arise would concern relatively small amounts, and that, while the New Agreement provided that Skip would pay the reasonable arbitration costs, the Plaintiff would still have to pay for her legal costs to advance the claim through arbitration, which would work out to be “grossly disproportionate” compared to the monetary value of her claim. Given this context, the Court concluded that the practical effect of the mandatory arbitration clause was to make arbitration realistically unattainable, so as to functionally preclude resolution altogether.</p> <h2>Key Takeaways</h2> <ul> <li>This decision is another example of Canadian courts applying high scrutiny to standard form contracts in the “gig” economy and, in particular, to arbitration clauses. It underscores how companies using standard form contracts will want to be cautious in drafting arbitration clauses that are enforceable.</li> <li>Inequality of bargaining power and the resulting unfairness of the contract are factors that will inform whether a mandatory arbitration clause should be voided for public policy reasons. A court may find a mandatory arbitration clause unenforceable if the practical effect of the clause makes arbitration unrealistic or unattainable, so as to functionally preclude resolution altogether.</li> <li>The decision paves the road for the Plaintiff’s class action to move forward through the courts, where ultimately a determination may be made as to the classification of couriers as independent contractors or employees. We will keep readers informed of further developments.</li> </ul>06-Feb-2024 05:10:00{AE174481-E694-4DD8-9A34-45050A0D7E3C}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/pratique-matiere-recours-collectifs-10-faits-saillants-2023Alexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesActualités - Sociétés et droit commercialPratique en matière de recours collectifs : 10 faits saillants de 2023<p><strong>L’arrivée de</strong> <strong>2024 clôt une année bien remplie dans le domaine des recours collectifs. Notre groupe Litige à Toronto a dressé une liste de certaines des affaires les plus dignes d’intérêt (et d’autres faits nouveaux) en 2023, plus particulièrement en Ontario. Ces affaires sont regroupées en quatre catégories : procédure, concurrence, valeurs mobilières et responsabilité du fait des produits. </strong></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>The arrival of 2024 marked the end of a year filled with class action activity. Our Litigation group in Toronto has prepared a list of some of the more notable cases (and other developments) of 2023, with a focus on Ontario. They are grouped into the following four categories: procedure; competition; securities; and product liability. </strong></p> <p>Here are our top 10 picks:</p> <h2>Procedure</h2> <ol> <li><strong>Ontario Court Considers New Preferable Procedure Test </strong><em>– </em>In <em>Banman v. Ontario, </em><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/k0wmc">2023 ONSC 6187</a><em>, </em>the Ontario Superior Court considered the new preferable procedure criterion of the certification test under the amended <em>Class Proceedings Act </em>in certifying a systemic negligence and institutional abuse case. The decision represents the first interpretation and application by the Court of the new preferable procedure test and confirms the legislative intent behind the superior predominance criteria was to create a more rigorous certification test in Ontario. See <strong><a href="https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/cour-superieure-ontario-examine-critere-procedural-meilleur-moyen-decision-Banman"><strong>our post</strong></a> </strong>for a review of the decision and some key takeaways.</li> </ol> <ol start="2"> <li><strong>Mandatory arbitration clauses in standard form contracts found enforceable by British Columbia Court of Appeal </strong>– In <em>Williams v. Amazon com Inc., </em><a rel="noopener noreferrer" href="https://canlii.ca/t/jzh27" target="_blank">2023 BCCA 314</a> and <em>Petty v. Niantic Inc., </em><a href="https://canlii.ca/t/jzh28">2023 BCCA 315</a> the British Columbia Court of Appeal upheld the partial stays of proposed class actions finding that the mandatory arbitration clauses contained within electronic standard form contracts were valid and enforceable. In both cases, the plaintiffs opposed the stay on the basis that, among other things, the arbitration clauses were unconscionable and/or contrary to public policy. The British Columbia Court of Appeal held that there were insufficient grounds to support a finding that the arbitration clauses were unconscionable and/or contrary to public policy. The decisions suggest that in the absence of clear legislative intention to limit the application of mandatory arbitration clauses to consumer claims, such clauses may be enforceable, even in standard form contracts, provided the arbitration process is accessible and offers a viable means for resolving disputes. The plaintiff in <em>Williams </em>has sought leave to appeal to the Supreme Court of Canada.</li> </ol> <ol start="3"> <li><strong>Ontario Court reinforces that section 29.1 of the <em>Class Proceedings Act, 1992 </em>is mandatory </strong>– In <em>Tataryn v. Diamond & Diamond, </em><a rel="noopener noreferrer" href="https://canlii.ca/t/k0wn5" target="_blank">2023 ONSC 6165</a> the Ontario Superior Court of Justice dismissed a proposed class action, reinforcing that the language of s. 29.1 is mandatory and that an action must be dismissed if it is clear that none of the enumerated steps are taken in time. The Court also confirmed that s. 29.1 is a statutory provision in which there is a substantial public interest and cannot be waived if defendants bring pre-certification motions and wait a substantial time in advance of bringing a motion for dismissal for delay. The Court also found that a “phoenix order” as was granted in <em>D’Haene v. BMV Canada Inc., </em><a href="https://canlii.ca/t/jst0j">2022 ONSC 5973</a>, where the action was dismissed but leave was granted to start a new action, would be contrary to the policy goal of s. 29.1 and that resurrecting an identical case after a dismissal for delay could constitute an abuse of process in certain circumstances.</li> </ol> <ol start="4"> <li><strong>Ontario Court provides guidance on defendants’ rights and role in motion to approve third-party funding</strong> – In <em>Gebien v. Apotex, </em><a rel="noopener noreferrer" href="https://canlii.ca/t/k03g9" target="_blank">2023 ONSC 4651</a>, the plaintiff sought to approve a third-party funding agreement in a putative class action against opioid manufacturers and distributors. The defendants raised several objections to the agreement, including that the agreement did not effectively protect the defendants’ confidentiality rights. The Court provided the plaintiff with an opportunity to justify the existing provisions of the agreement or submit a proposal that would resolve the defendants’ objections, highlighting that a defendant may make objections to the approval of an agreement where it would affect the defendants’ legitimate interests.</li> </ol> <h2>Competition</h2> <ol start="5"> <li><strong>Courts must do more than “a rubber-stamping and symbolic review of proposed class actions at the certification stage” </strong>–<strong> </strong>In <em>Jensen v. Samsung Electronics Co. Ltd</em><em>.</em>, <a href="https://canlii.ca/t/jwxk4" target="_blank"></a><span style="text-decoration: underline;"><a rel="noopener noreferrer" href="https://canlii.ca/t/jwxk4" target="_blank">2023 FCA 89</a></span>, the Federal Court of Appeal upheld the lower court’s refusal to certify a proposed class action involving allegations that the defendants had breached the <a rel="noopener noreferrer" target="_blank" href="https://laws.justice.gc.ca/eng/acts/C-34/index.html"><em>Competition Act, </em>R.S.C. 1985, c. C-34</a> by conspiring through direct communications in private meetings and through public statements – or “signalling” – to each other, to suppress the global supply of dynamic random-access memory chips and increase prices. This decision highlights the increased willingness of courts to exercise their gatekeeper function and scrutinize proposed causes of action and<strong> </strong>pleadings in determining whether proposed class actions should move forward. See <a href="https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/jensen-c-samsung-la-cour-appel-federale-confirme-que-norme-preuve-va-au-dele-de-simple-formalite">our post</a> for a review of the decision and some key takeaways. The plaintiffs have filed an application for leave to appeal to the Supreme Court of Canada.<strong> </strong></li> </ol> <ol start="6"> <li><strong>Ontario Court denies certification of proposed class action alleging price-fixing conspiracy by canned tuna companies </strong>–<strong> </strong>In <em>Lilleyman v. Bumblebee Foods LLC, </em><a rel="noopener noreferrer" href="https://canlii.ca/t/k08vq" target="_blank">2023 ONSC 4408</a>, the Ontario Superior Court of Justice dismissed the motion for certification of a proposed competition class action commenced in Ontario involving allegations of price fixing of canned tuna. The representative plaintiff had tried to compare and draw parallels to the conspiracy class action that was commenced in the U.S. against three leading tuna producers there, and which entailed the CEO of one of the producers being convicted and certain employees of tuna producers entering guilty pleas. Relying on industry evidence tendered by the defendants concerning the differences between the U.S. and Canadian tuna markets, the Ontario Court held that the guilty pleas in the U.S. did not provide some basis in fact for the existence of an alleged conspiracy in Canada. The plaintiffs have appealed the decision. </li> </ol> <ol start="7"> <li><strong>Proposed class action involving Amazon has no prospect of success, says the Federal Court </strong>– In <em>Difederico v. Amazon.com Inc., </em><a rel="noopener noreferrer" href="https://canlii.ca/t/jzcvr" target="_blank">2023 FC 1156</a> the Federal Court refused to certify a proposed class action involving allegations that a collection of Amazon entities had breached sections 45 and 46 of the <a rel="noopener noreferrer" target="_blank" href="https://laws.justice.gc.ca/eng/acts/C-34/index.html"><em>Competition Act, </em><em>S.C. 1985, c. C-34</em></a><em>, </em>which establish indictable criminal offences for conspiring, agreeing, or arranging certain anti-competitive conduct. See <a href="https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/difederico-amazon-cour-federale-conclut-action-coll-proposee-pas-reussite">our post</a> for a review of the decision, which is a further example of courts exercising their gate-keeping function at the certification stage to weed out claims that have no prospect of success. The plaintiffs have sought leave to appeal to the Supreme Court of Canada.<em> </em></li> </ol> <h2>Securities</h2> <ol start="8"> <li><strong>“Material Change” Under the Securities Act? Ontario Court of Appeal provides guidance </strong>–The Court of Appeal for Ontario released a pair of decisions, <em>Markowich v. Lundin Mining Corporation</em>, <a rel="noopener noreferrer" href="https://canlii.ca/t/jxbjs" target="_blank">2023 ONCA 359</a> (“<em>Lundin</em>”) and <em>Peters v. SNC-Lavalin Group Inc</em><em>.</em>, <a rel="noopener noreferrer" href="https://canlii.ca/t/jxbjt" target="_blank">2023 ONCA 360</a> (“<em>SNC”</em>) that provide guidance on the requirement to disclose a “material change” under the Ontario <em>Securities Act</em>. The decisions underscore that the test for a “material change” under the <em>Securities Act </em>consists of two inquiries: i) whether there has been a change in risk in an organization’s business, operations, or capital; and ii) if so, whether it would reasonably be expected to have a significant effect on the marketplace of the issuer’s securities. Leave to appeal to the Supreme Court of Canada has been sought in <em>Lundin</em>, but not in <em>SNC.</em></li> </ol> <h2>Product Liability</h2> <ol start="9"> <li><strong>British Columbia Court dismisses proposed class action brought by rantidine users in Canada finding the “plaintiff has failed to raise a bona fide triable issue regarding injury due to the ingestion and/or purchase of rantidine</strong>” –<em> </em><em>In Dussiaume v. Sandoz Canada Inc.</em>, <a rel="noopener noreferrer" href="https://canlii.ca/t/jx5wb" target="_blank">2023 BCSC 795</a>, several pharmaceutical companies successfully defeated certification and obtained summary dismissal of a proposed pharmaceutical product liability class action, arguing that the plaintiff’s claims of alleged increased risk of contracting cancer should be summarily dismissed because there is no basis in evidence or law to support such claims. The decision underscores the willingness of courts to exercise their gatekeeper function and how lack of present injuries and reliable scientific evidence could prove fatal to advancing plaintiffs’ claims.</li> </ol> <ol start="10"> <li><strong>Ontario Introduces a New Consumer Protection Act </strong>– On December 6, 2023, Ontario’s new <a rel="noopener noreferrer" target="_blank" href="https://www.ola.org/sites/default/files/node-files/bill/document/pdf/2023/2023-12/b142ra_e.pdf"><em>Consumer Protection Act, 2023</em></a> (the “New CPA”) received Royal Assent, with effect on proclamation (not yet received). The New CPA alters the regulatory landscape for many businesses operating in the province, and potentially enhances their class action risk. We are monitoring the implementation of this legislation. </li> </ol>15-Jan-2024 06:44:00{538A85FD-F816-4B3D-BCA1-A50BBE28E7A4}https://stikeman.com/fr-ca/savoir/droit-canadien-concurrence/changements-generationnels-apportes-droit-concurrence-canada-gouvernement-accroit-risquesStikeman ElliottDroit canadien de la concurrenceDroit canadien des actions collectivesDroit canadien des fusions et acquisitionsLes « changements générationnels apportés au droit de la concurrence au Canada » par le gouvernement accroît les risques pour les entreprises canadiennes<p><strong>Le 28 novembre 2023, le gouvernement canadien a dévoilé une autre série de modifications à la <em>Loi sur la concurrence</em>, dont il avait offert un aperçu dans son Énoncé économique de l’automne la semaine précédente. Ces modifications, ainsi que plusieurs modifications qui avaient déjà été instaurées en septembre 2023, constituent les plus importantes modifications apportées au droit de la concurrence canadien depuis l’adoption de la <em>Loi sur la concurrence</em> en 1986.</strong></p> <p>En résumé, les modifications élargissent la portée des litiges privés au Canada et les incitatifs à y recourir, et assouplissent considérablement les exigences permettant de conclure à l’existence d’un comportement anticoncurrentiel dans plusieurs domaines clés. Le demandeur à l’instance semble être le principal gagnant ici, ce qui, selon nous, ne devrait probablement pas plaire aux parlementaires qui adoptent cette législation à la hâte. Les perdantes seront probablement les entreprises du Canada qui devront désormais évaluer un plus large éventail de leurs pratiques commerciales sous l’angle des risques éventuels de poursuite provenant d’un concurrent, d’un plaideur stratégique ou d’un groupe d’« intérêt public ». Le rôle du Tribunal de la concurrence pourrait également augmenter considérablement en droit de la concurrence canadien, puisqu’il lui sera probablement demandé de se prononcer sur un plus grand nombre d’affaires en application de nouveaux critères juridiques.</p> <p>Rappelons que les modifications proposées font suite à une campagne de lobbyisme menée depuis de longues années par le commissaire de la concurrence et une coterie d’universitaires canadiens qui ont défendu l’argument que la <em>Loi sur la concurrence</em> n’est pas adaptée à son objectif. Cet argument en faveur de la modification de la législation sur la concurrence a connu des hauts et des bas au fil des ans et, en règle générale, un regain d’intérêt à la suite de pertes découlant de litiges, qui ont à leur tour entraîné des demandes de modifications plutôt qu’un examen attentif des circonstances entourant les affaires portées en justice. Les dernières grandes modifications apportées à la <em>Loi sur la concurrence</em>, qui remontent à 2009, avaient alors été qualifiées de modifications de « grande ampleur », et le commissaire de la concurrence de l’époque avait déclaré avec enthousiasme : [traduction] « Il en résulte une <em>Loi sur la concurrence</em> actualisée dont l’application est plus efficace, qui nous met au diapason de nos homologues internationaux et qui garantit que les entreprises et les consommateurs tirent parti d'un marché concurrentiel. C'est notre travail de saisir cette occasion et d’en tirer le meilleur parti ». Voilà pour le contexte.</p> <p>Le gouvernement canadien a modfié la <em>Loi sur la concurrence</em> pour la dernière fois en <a href="https://www.parl.ca/legisinfo/fr/projet-de-loi/44-1/c-19">2022</a>. Il a instauré de lourdes sanctions criminelles visant les accords de fixation des salaires et les pratiques connexes, ainsi qu’un certain nombre de modifications relativement peu controversées à la Loi. À la suite de ces modifications, le gouvernement a <a rel="noopener noreferrer" href="https://www.stikeman.com/fr-ca/savoir/droit-canadien-concurrence/le-gouvernement-du-canada-lance-des-consultations-sur-l-avenir-de-la-politique-de-la-concurrence-au-canada" target="_blank">lancé des consultations</a> sur l’avenir de la politique de la concurrence du Canada, et sollicité des commentaires sur un <a rel="noopener noreferrer" href="https://ised-isde.canada.ca/site/secteur-politique-strategique/fr/politique-dencadrement-marche/politique-concurrence/lavenir-politique-concurrence-canada" target="_blank">document de consultation </a>dans lequel un large éventail de thèmes étaient examinés. Ces consultations <a rel="noopener noreferrer" href="https://ised-isde.canada.ca/site/secteur-politique-strategique/fr/politique-dencadrement-marche/politique-concurrence/consultations-lavenir-politique-concurrence-canada/consultation-lavenir-politique-concurrence-canada-rapport-nous-avons-entendu" target="_blank">ont entraîné</a> plus de 130 contributions de la part des parties prenantes, et plus de 400 réponses de la part du grand public.</p> <p>Le 21 septembre 2023, le gouvernement a alors présenté une série de <a rel="noopener noreferrer" href="https://www.parl.ca/documentviewer/en/44-1/bill/C-56/first-reading?col=2" target="_blank">modifications</a> qui semblent sur le point d’être adoptées. Il a fait preuve d’une grande détermination pour les faire cheminer le plus rapidement possible. Le 21 novembre 2023, le gouvernement a offert un aperçu d’autres modifications dans le cadre de son <a rel="noopener noreferrer" href="https://www.budget.canada.ca/fes-eea/2023/report-rapport/toc-tdm-fr.html" target="_blank">Énoncé économique de l’automne</a>, observant que ces changements et plusieurs modifications annoncées plus tôt cette année équivalaient à des changements générationnels au droit de la concurrence au Canada. Le texte de la deuxième série de modifications a été publié dans le <a href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html">projet de loi</a> de mise en œuvre de l’Énoncé économique de l’automne le 28 novembre 2023.</p> <p>Contrairement à la dernière <a rel="noopener noreferrer" href="https://www.stikeman.com/fr-ca/savoir/droit-canadien-concurrence/modifications-a-la-loi-sur-la-concurrence-et-a-la-loi-sur-investissement-canada" target="_blank">grande série</a> de modifications à la <em>Loi sur la concurrence</em> de 2009, qui était quelque peu équilibrée parce qu’elle assouplissait certaines normes d’application et en renforçait d’autres, les modifications de novembre sont expressément conçues pour « renforcer les outils et les pouvoirs dont dispose le Bureau de la concurrence ». Les coûts éventuels de non-conformité ont augmenté dans un certain nombre de domaines, et, compte tenu de la portée accrue des actions privées, les sociétés pourraient faire l’objet de litiges plus opportunistes ou stratégiques.</p> <p>Nous en aurons davantage à dire sur les modifications dans des billets à venir, mais les principaux faits saillants et leurs répercussions éventuelles sur les entreprises canadiennes sont décrits ci-après.</p> <ul> <li><strong>Dédommagement </strong><strong>accordé à une partie privée</strong><strong> pour « comportement susceptible d’examen » comme le maintien des prix de revente et l’exclusivité :</strong> Actuellement, la partie reconnue coupable d’avoir pris part à une pratique commerciale susceptible d’examen, comme le refus de vendre, le maintien des prix, l’exclusivité, la limitation du marché ou les ventes liées, peut seulement se voir imposer une ordonnance d’interdiction du Tribunal de la concurrence l’obligeant à cesser son comportement ou à prendre toute autre mesure destinée à corriger les effets du comportement. Les <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications proposées</a> accorderont le pouvoir au Tribunal, en cas de réussite d’une action privée, d’ordonner au défendeur de payer au demandeur et à toute autre personne touchée par le comportement une somme ne pouvant excéder la valeur du bénéfice tiré du comportement visé par l’ordonnance. Aucune méthode de calcul de la somme ni aucun mécanisme de distribution des fonds ne sont fournis.</li> <li><strong>Dédommagement accordé à une partie privée pour « abus de position dominante »:</strong> Les <a rel="noopener noreferrer" href="https://www.parl.ca/legisinfo/fr/projet-de-loi/44-1/c-19" target="_blank">modifications de 2022</a> ont instauré la possibilité d’intenter des actions privées relativement à un abus de position dominante allégué. Cependant, le plaideur qui obtenait gain de cause n’avait pas le droit de recevoir de paiement de la part du défendeur; toute sanction pécuniaire était payable au gouvernement. Les <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications en cours</a> permettent au Tribunal de la concurrence, comme il est décrit précédemment, d’ordonner le versement d’une certaine somme à un demandeur qui a gain de cause et à toute autre personne qui est touchée de façon semblable par le comportement. En outre, les <a rel="noopener noreferrer" href="https://www.parl.ca/documentviewer/en/44-1/bill/C-56/first-reading?col=2" target="_blank">modifications de septembre</a> assoupliront le critère permettant de conclure à l’existence d’un abus de position dominante.</li> <li><strong>Portée accrue des actions privées :</strong> Actuellement, seuls les pratiques commerciales susceptibles d’examen mentionnées précédemment et l’abus de position dominante peuvent donner lieu à des actions privées. Dans les <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications en cours</a>, il est proposé d’accorder plus largement aux personnes physiques, aux groupes et aux entreprises le droit d’intenter leurs propres actions privées devant le Tribunal de la concurrence afin d’inclure les demandes qui concernent des pratiques commerciales trompeuses et les accords qui diminuent ou empêchent sensiblement la concurrence. Le fait de contester avec succès un accord qui diminue ou empêche sensiblement la concurrence peut entraîner le paiement d’une somme au demandeur et à toute autre personne touchée de façon semblable.</li> <li><strong>Définition plus large des « accords anticoncurrentiels » et des dédommagements accordés à une partie privée :</strong> La <em>Loi sur la concurrence</em> comprend une <a rel="noopener noreferrer" href="https://laws.justice.gc.ca/fra/lois/c-34/section-90.1.html" target="_blank">disposition civile</a> applicable aux accords qui auront vraisemblablement pour effet de diminuer ou d’empêcher sensiblement la concurrence. Cette disposition est différente des <a rel="noopener noreferrer" href="https://laws.justice.gc.ca/fra/lois/c-34/section-45.html" target="_blank">restrictions d’ordre criminel</a> imposées aux cartels (p. ex., les accords de fixation des prix et d’attribution de marchés) et elle est censée s’appliquer à un ensemble plus vaste d’accords qui pourraient avoir des effets anticoncurrentiels, mais qui ne sont pas aussi problématiques à première vue qu’un cartel. Lorsque cette disposition a été instaurée pour la première fois en 2009, elle s’appliquait aux accords entre concurrents, y compris les concurrents potentiels. Les <a rel="noopener noreferrer" href="https://www.parl.ca/documentviewer/en/44-1/bill/C-56/first-reading?col=2" target="_blank">modifications de septembre</a> élargiraient la portée de la disposition afin qu’elle s’applique aux accords entre des parties qui ne sont pas des concurrents si l’un des objets importants de l’accord est d’empêcher ou de diminuer la concurrence. Les <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications en cours</a>, outre qu’elles instaurent un droit privé d’action relativement à ces accords, instaureront également d’importantes sanctions administratives pécuniaires, des paiements destinés aux demandeurs qui ont gain de cause et à d’autres personnes touchées de façon semblable, et permettront aussi d’ordonner aux parties de prendre certaines mesures (sans leur consentement) afin d’éliminer les effets anticoncurrentiels de leur accord. Ces modifications élargiront considérablement la portée de cette disposition et augmenteront considérablement les coûts de non-conformité.</li> <li><strong>Protections contre les représailles :</strong> Une <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">nouvelle disposition</a> sera ajoutée en vue de sanctionner les « représailles » visant les personnes qui communiquent ou qui coopèrent avec le Bureau de la concurrence. Lorsque le Tribunal de la concurrence est convaincu qu’il y a eu contravention à cette disposition, il peut rendre une ordonnance interdisant le comportement et également imposer une sanction administrative pécuniaire maximale de 10 millions de dollars (et jusqu’à 15 millions de dollars pour les contraventions subséquentes) contre une personne morale.</li> <li><strong>Diverses modifications portant sur les fusionnements placent la barre moins haut pour le commissaire :</strong> Les <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications en cours</a> comprennent une interdiction automatique de conclure une transaction si le commissaire présente une demande d’injonction, et ce, jusqu’à ce que le tribunal statue sur la demande d’injonction. Les fusionnements qui ne font pas l’objet d’un avis seront assujettis à un « rappel » pour examen éventuel au cours d’une période maximale de trois ans après qu’ils auront été « en substance réalisés », comparativement au délai actuel d’un an. Les <a rel="noopener noreferrer" href="https://www.parl.ca/documentviewer/en/44-1/bill/C-56/first-reading?col=2" target="_blank">modifications de septembre</a> élimineraient également la défense fondée sur les gains en efficience et, par conséquent, une opération de fusion et acquisition qui accroît l’efficacité économique globale ne peut plus être « sauvée » par le Tribunal de la concurrence. En outre, il est actuellement interdit au Tribunal de rendre une ordonnance d’interdiction d’un fusionnement fondée sur les parts de marché seulement. Les <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications proposées</a> abrogeraient la disposition, ce qui donnerait au Tribunal toute la latitude nécessaire à l’adoption de présomptions structurelles du type de celles qui existent aux États-Unis s’il choisit cette voie. Deux nouveaux facteurs ont été proposés au Tribunal, qui les examinera afin d’établir si un fusionnement est anticoncurrentiel : les effets de la variation de la concentration ou des parts de marché et la possibilité que le fusionnement entraîne une coordination expresse ou tacite entre les concurrents dans un marché. Ces facteurs ne sont pas nouveaux, mais les modifications entraîneront leur codification dans la <em>Loi sur la concurrence</em>.</li> <li><strong>Aucuns frais à la charge du commissaire :</strong> Le gouvernement – de toute évidence toujours piqué au vif d’avoir à verser des dépens de quelque 13 millions de dollars à Rogers et à Shaw à la suite de la décision du Tribunal de la concurrence selon laquelle le commissaire avait fait preuve d’intransigeance dans le cadre de sa contestation infructueuse de l’acquisition de Shaw par Rogers – a inclus une <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modification</a> qui empêchera le Tribunal d’ordonner au gouvernement de payer des frais, à moins que l’absence d’ordonnance ne mine la confiance du public envers l’administration de la justice ou n’ait un effet négatif important sur la capacité de l’autre partie d’exploiter son entreprise – la barre est très haute.</li> <li><strong>Conventions de protection de l’environnement :</strong> La série de <a rel="noopener noreferrer" href="https://fin.canada.ca/drleg-apl/2023/nwmm-amvm-1123-fra.html" target="_blank">modifications en cours</a> contient de nombreuses épées; les ententes de collaboration visant la « protection de l’environnement » pourraient constituer le seul bouclier. Lorsque les parties en font la demande et que le commissaire est convaincu que l’accord ne diminuera pas ou n’empêchera pas sensiblement la concurrence, l’accord sera à l’abri des allégations présentées en application des dispositions relatives au complot, au truquage des offres, aux accords conclus entre des institutions financières et aux accords civils anticoncurrentiels. Le certificat pourrait être valable jusqu’à dix ans et être prorogé pour dix années supplémentaires. Également dans le domaine de l’environnement, une interdiction expresse de l’écoblanchiment a été ajoutée aux dispositions sur les pratiques commerciales trompeuses.</li> </ul> <h2>Prochaines étapes</h2> <p>Les modifications ont été présentées dans le cadre de la loi de mise en œuvre de l’Énoncé économique de l’automne du gouvernement. Malheureusement, les modifications importantes récemment apportées à la Loi sur la concurrence ont suivi ce cheminement familier. Les projets de loi omnibus d’exécution du budget ont été utilisés en vue de l’adoption des dernières modifications importantes de 2009 et des modifications de 2022. Le recours à des projets de loi omnibus d’exécution du budget tend à limiter les occasions de débat sérieux sur le bien-fondé des propositions. Nous continuerons à surveiller ces modifications au fur et à mesure de leur cheminement à travers le processus législatif et nous ferons les mises à jour qui s’imposent.</p> <p>N’hésitez pas à communiquer avec un membre du <a rel="noopener noreferrer" href="https://www.stikeman.com/fr-ca/expertise/concurrence-investissements-etrangers" target="_blank"><strong>groupe Concurrence et investissements étrangers</strong></a> de Stikeman Elliott S.E.N.C.R.L., s.r.l. pour obtenir plus d’information.</p>30-Nov-2023 06:14:00{E45E6C15-761B-4281-9F0E-5BE2201F42AF}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/cour-superieure-ontario-examine-critere-procedural-meilleur-moyen-decision-BanmanAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesLa Cour supérieure de l’Ontario examine le nouveau critère procédural du meilleur moyen dans la décision Banman v. Ontario<p><strong>Dans la décision </strong><a rel="noopener noreferrer" href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.canlii.org%2Fen%2Fon%2Fonsc%2Fdoc%2F2023%2F2023onsc6187%2F2023onsc6187.html%3FautocompleteStr%3D2023%2520ONSC%25206187%26autocompletePos%3D1&data=05%7C01%7Ctranslation%40stikeman.com%7Cf59d0c2eb52c46757f2008dbef592570%7C394646dfa1184f83a4f46a20e463e3a8%7C0%7C0%7C638366938534830293%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=NVP862f7%2B%2FDnRuSiiG7eDljpUb01nmKgRXz0Akw8Ync%3D&reserved=0" target="_blank"><strong><em>Banman v. Ontario</em></strong></a> <strong>(« Banman<em></em>»), la Cour supérieure de l’Ontario (la « Cour ») a examiné le nouveau critère procédural de certification d’un recours collectif, à savoir le critère du « meilleur moyen » prévu par la <em>Loi</em></strong><strong><em> de 1992 sur les recours collectifs </em></strong><strong>modifiée</strong> <strong>(la « LRC »), dans le cadre de la certification d’un recours collectif portant sur la négligence systémique et l’abus institutionnel. La décision constitue la première interprétation et application par la Cour du nouveau critère procédural du meilleur moyen et confirme que l’intention législative derrière les critères de supériorité et de prédominance était de créer un critère de certification plus rigoureux en Ontario.</strong></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>In </strong><strong><em><a rel="noopener noreferrer" href="https://canlii.ca/t/k0wmc" target="_blank">Banman v. Ontario</a></em></strong><strong>(“<em>Banman</em>”), the Ontario Superior Court (the “Court”) considered the new preferable procedure criterion of the certification test under the amended <em>Class Proceedings Act, 1992 (</em>“CPA”) in certifying a systemic negligence and institutional abuse class action. The decision represents the first interpretation and application by the Court of the new preferable procedure test and confirms that the legislative intent behind the superiority and predominance criteria was to create a more rigorous certification test in Ontario. </strong></p> <h2>The Amended CPA and the New Preferable Procedure Criterion</h2> <p>The test for certification in Ontario consists of the following criteria: (1) whether the pleadings disclose a cause of action; (2) whether an identifiable class exists that would be represented by the representative plaintiff; (3) whether the claims raise common issues; (4) whether a class proceeding would be the preferable procedure for the resolution of the common issues; and (5) whether a suitable representative plaintiff exists.</p> <p>In October 2020, several amendments to the CPA came into effect, including the introduction of a new preferable procedure criterion as part of the foregoing certification test. Specifically, the amendments added a new subsection 5(1.1) that provides that a class proceeding will be the preferable procedure for the resolution of common issues only if, at a minimum:</p> <ul> <li>it is <strong>superior </strong>to all reasonably available means of determining the entitlement of class members to relief or addressing the impugned conduct of the defendant; and</li> <li>the questions of fact or law common to the class members <strong>predominate </strong>over any questions affecting only individual class members.</li> </ul> <h2>Background</h2> <p>The plaintiffs in <em>Banman </em>moved to certify a proposed class action against the Ontario Government and its Attorney General for alleged harms incurred to 429 patients treated in the forensic psychiatric unit (the “PST Unit”) of the St. Thomas Psychiatric Hospital between 1976 and 1992.<a href="#_edn1" name="_ednref1"><sup>[i]</sup></a> The plaintiffs alleged breach of fiduciary duty, negligence, vicarious liability and breach of non-delegable duty, and breaches of sections 7, 9, 12, 15 and 28 of the <em>Canadian Charter of Rights and Freedoms </em>(the “<em>Charter</em>”)<em>. </em> </p> <p>Among other things, the Government asserted that the proposed class action did not satisfy the preferable procedure criterion of the certification test. In this regard, the Government submitted that the individual issues predominate over common issues and that a joinder action<a href="#_edn2" name="_ednref2"><sup>[ii]</sup></a> would be more appropriate. The Government pointed to the joinder action that was used by 28 co-plaintiffs against the Government in <em>Barker v. Barker</em><a href="#_edn3" name="_ednref3"><sup>[iii]</sup></a><em>, </em>a case that involved similar allegations of harm and resulted in a $10 million damages award in the aggregate for 27 of the 28 plaintiffs.</p> <p>The Court certified the action as against the Government, but dismissed the action as against the Attorney General as it was never a proper party. The Court held that the plaintiffs satisfied the cause of action criterion, except with respect to certain breach of <em>Charter </em>claims, and that certain common issues regarding causation and damages could not be certified. Subject to these qualifications, the plaintiffs satisfied all the certification criteria.</p> <h2>The Preferable Procedure Analysis</h2> <p>The Court held that once the first three certification criteria are satisfied, the new more rigorous preferable procedure analysis involves determining: (1) whether the design of the class action is manageable; (2) whether there are reasonable alternatives to the proposed class action (<em>i.e.,</em> individual actions, joinder actions, consolidation, test cases, quasi-judicial or administrative proceedings and remedial schemes or programs outside of a proceeding); (3) whether the common issues predominate over the individual issues; and (4) whether the proposed class action is superior (better) to the alternatives. </p> <p>The analysis should involve comparing the advantages and disadvantages of the alternatives to the proposed class action through the lens of judicial economy, behaviour modification and access to justice. However, the Court emphasized that the primary lens for the preferability analysis will always be access to justice.</p> <p>Applying the new test, the Court held that the plaintiffs’ proposed class action satisfied the preferable procedure criterion.</p> <h3><em>Manageable Design</em></h3> <p>The Court noted that the case is fundamentally a systemic institutional abuse or malfeasance class action with a common issues trial to be followed by individual issues trials to determine causation and damages. Noting that more complex systemic or institutional abuse or malfeasance class actions have been certified, the Court held that the design of the class action was manageable.</p> <h3><em>Reasonable Alternatives </em></h3> <p>The Court recognized that there were some reasonable alternatives to a class action: (1) up to 429 individual issues trials; (2) a joinder action of up to 429 co-plaintiffs; and (3) several joinder actions in which up to 429 patients are grouped into categories of claims. Viewing these alternatives through the lens of behaviour modification and judicial economy was not particularly helpful and the Court viewed them as “neutral factors” because the alleged wrongs stopped in 1992, and all alternatives involved the possibility of adjudicating 429 individual claims. However, through the crucial access to justice lens, the Court found that a class proceeding was the preferable procedure, and superior to any of these alternatives.</p> <h3><em>Predominance </em></h3> <p>To satisfy the new predominance requirement, the Court emphasized that the common issues <em>taken together </em>must predominate over the individual issues. In this case, the Court concluded that the common issues predominated over the individual issues for all but the patients who had economically viable assault or sexual assault claims, which are idiosyncratic. Despite the diverse claim demographics in this case, and the fact that some patients could have multi-million dollar claims and could pursue individual claims, the Court ultimately held that for many patients in this case a class proceeding was the only viable means to achieve access to justice.</p> <h3><em>Superiority</em></h3> <p>The plaintiffs asserted that the class action was the preferable procedure and superior to individual trials or joinder actions. Drawing on their experience in <em>Barker v. Barker, </em>the plaintiffs asserted that the prosecution of individual or group institutional abuse or malfeasance actions requires significant financial expense, such that it would not be economically feasible to pursue such claims absent certification as a class proceeding. The Court found merit in this argument and noted that a class action is a means to overcoming such barriers to access to justice.</p> <p>The Court also held that the class action was the preferable procedure and superior to the alternatives considering that a class action:</p> <ul> <li>automatically assembles the class members who may benefit by a common issues trial (and provides an opportunity for class members to opt into individual issues trials if they have economically viable claims);</li> <li>secures class members with legal representation that they might not otherwise obtain;</li> <li>is a viable route to access to justice for those with economically viable claims if class counsel may not be willing to take on risks of a joinder action;</li> <li>achieves economies of scale for the whole group, and allows those with economically viable individual claims to pursue them later depending on the outcome of the common issues trial; and</li> <li>is favourable to the defendant because if the class action ended in individual issues trial, then all of the claims of class members who wished to pursue them would be accommodated, and if the class action settled, it would discharge the defendant from liability for all the class members, even those who have not proceeded to individual trials.</li> </ul> <h2>Key Takeaways</h2> <p><em>Banman </em>provides an overview of the application of the new preferable procedure analysis under section 5(1.1), and highlights that:</p> <ul> <li>the purpose of section 5(1.1) was to “raise the threshold, heighten the barrier, or make more rigorous the challenge of satisfying the preferable procedure criterion”;</li> <li>the crucial and primary lens for reviewing the preferability analysis is access to justice;</li> <li>to satisfy the predominance requirement, common issues <em>taken together</em> must predominate over the individual issues; if they do not, then a class action is not productive and is inferior (not superior) to the alternatives of proceeding to individual issues trials; and</li> <li>a class action will not be preferable if, at the end of the day and the common issues trial, claimants face the same economic and practical hurdles that they faced at the onset of the proposed class action.</li> </ul> <hr /> <p><a href="#_ednref1" name="_edn1">[i]</a> The Plaintiffs also sued 2 psychiatrists but at the commencement of the certification hearing, the plaintiffs moved for a discontinuance of the action as against the defendant doctors, which was granted.</p> <p><a href="#_ednref2" name="_edn2">[ii]</a> A joinder action is where two or more persons who are represented by the same lawyer join as plaintiffs in the same proceeding, where they assert claims that arise out of the same occurrence, or the claims give rise to common questions of fact or law.</p> <p><a href="#_ednref3" name="_edn3">[iii]</a> 2020 ONSC 3746 and 2021 ONSC 158, var’d 2022 ONCA 567.</p>27-Nov-2023 05:37:00{05EAB155-71E9-4719-A961-BCB0F28AD760}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/difederico-amazon-cour-federale-conclut-action-coll-proposee-pas-reussiteRJ Reidhttps://stikeman.com/fr-ca/equipe/r/rj-reidDroit canadien des actions collectivesDroit canadien de la concurrenceDifederico c. Amazon.com Inc. : La Cour fédérale conclut que l’action collective proposée n’a pas de chance de réussite<p><strong>Dans l’affaire <em>Difederico c. Amazon.com</em>, </strong><a rel="noopener noreferrer" href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcanlii.ca%2Ft%2Fjzw2f&data=05%7C01%7CGClark%40stikeman.com%7Cba9bd86ff7ad44fef3fc08dbbdc89091%7C394646dfa1184f83a4f46a20e463e3a8%7C0%7C0%7C638312441328712238%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=lRdxynqKvkuJhA%2Fo4HUnl5hgbwCHYJ3KgJ%2BaxIfhbus%3D&reserved=0" target="_blank"><strong>2023 CF 1156, </strong></a><strong>la Cour fédérale a refusé de certifier une action collective proposée en lien avec des allégations selon lesquelles un ensemble d’entités d’Amazon (« Amazon ») avaient contrevenu aux articles 45 et 46 de la</strong> <a rel="noopener noreferrer" href="https://laws.justice.gc.ca/fra/lois/c-34/index.html" target="_blank"><strong><em>Loi sur la concurrence</em></strong><strong>, L.R.C.. 1985, ch. C‑34</strong></a><strong> (la « Loi »<em>). </em></strong><em><strong>Cette décision constitue un autre exemple de l’exercice par les tribunaux de leur fonction de sélection à l’étape de la certification dans le but d’éliminer les demandes qui n’ont aucune de chance de réussite.</strong></em></p> <p><em>Ce billet est disponible en anglais seulement.</em></p> <p><strong>In <em>Difederico v. Amazon.com</em>, </strong><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jzw2f"><strong>2023 FC 1156, </strong></a><strong>the Federal Court refused to certify a proposed class action involving allegations that a collection of Amazon entities (“Amazon”) had breached sections 45 and 46 of the </strong><a rel="noopener noreferrer" target="_blank" href="https://laws.justice.gc.ca/eng/acts/C-34/index.html"><strong><em>Competition Act, </em></strong><strong>R.S.C. 1985, c. C-34</strong></a><strong> (the “<em>Act”). The decision is a further example of courts exercising their gate-keeping function at the certification stage to weed out claims that have no prospect of success. </em></strong></p> <h2>The Claim</h2> <p>The plaintiffs sought to certify a class action alleging Amazon’s agreements with third-party sellers contravened sections 45 and 46 of the <em>Act</em>, which establish indictable criminal offences for conspiring, agreeing, or arranging certain anti-competitive conduct. A contravention of these sections can lead to civil recovery for loss or damage via section 36 of the <em>Act</em>.</p> <p>The plaintiffs’ claims were based on two <strong>allegedly anti-competitive agreements</strong>, namely:</p> <ol> <li>A clause in Amazon’s Business Solutions Agreement that required third-party sellers to ensure that prices of products they sold on Amazon’s online retail platform were at least as favourable as the selling prices of those products on any other e-commerce website; and</li> <li>Sections of Amazon’s Fair Pricing Policy, which allowed Amazon to take action against pricing practices that harmed customer trust, including setting a price on a product or service that was significantly higher than recent prices offered on or off Amazon.</li> </ol> <p>In this case, the plaintiffs alleged that the estimated inflationary impact of Amazon’s alleged anti-competitive practices to be upwards of $12 billion.</p> <h2>The Decision of the Court</h2> <p>The Court refused to certify the class, finding that the plaintiffs failed to establish the first requirement for certification, namely, that the pleadings disclose a reasonable cause of action:</p> <ul> <li>First, the Court held that the plaintiffs had <strong>not pled sufficient material facts</strong> with respect to all of the constituent elements of sections 45 and 46, for either of the allegedly anti-competitive agreements; and</li> <li>Second, the Court found it was plain and obvious that <strong>neither of the allegedly anti-competitive agreements is an agreement contemplated by sections 45 and 46 of the <em>Act</em></strong><em>, </em>which target “hard-core” or “naked” cartel agreements (<em>e.,</em> agreements that are generally recognized to have unambiguously harmful effects on competition and consumers).</li> </ul> <p>To determine whether pleadings disclose a reasonable cause of action, courts assume the facts pleaded to be true and consider whether it is “plain and obvious” that the pleadings fail to disclose a reasonable cause of action. The test is a high standard and courts err on the side of permitting novel but arguable claims to proceed.</p> <p>To bring a successful claim under section 45 of the <em>Act</em>, the plaintiffs needed to plead and later prove that Amazon had been a part of a “conspiracy, agreement or arrangement” with a competitor to engage in certain anti-competitive practices described in the subsections. As section 45 establishes a criminal offence, the plaintiffs also needed to plead and later prove the requisite <em>mens rea</em> element, (i.e., that Amazon subjectively intended to enter into these agreements and had the objective intention of engaging in the prohibited anti-competitive practices).</p> <h3>Failure to Plead Sufficient Material Facts</h3> <p>For pleadings to disclose a reasonable cause of action they must include sufficient material facts to support their allegations.</p> <p>The Court found that the plaintiffs’ Statement of Claim pled sufficient material facts to support their allegations that Amazon had entered into agreements with third-party sellers and that Amazon and at least some third-party sellers were actual competitors.</p> <p>However, the Court found that the plaintiffs had only made bald allegations that the agreements contravened sections 45 and 46 of the <em>Act</em>. For instance, the plaintiffs alleged that the agreements limited price competition, but failed to plead any particular price or price range that the parties agreed to fix, maintain, or increase. Likewise, the plaintiffs failed to plead the objective <em>mens rea</em> element or sufficient material facts to establish the element for each subsection of section 45.</p> <h3>Not Contemplated by the <em>Act</em></h3> <p>The Court reviewed the legislative purpose and jurisprudence of sections 45 and 46 of the <em>Act </em>and found that the provisions were meant to capture “hard-core” or “naked” cartel agreements. In establishing criminal offences in which offenders could be sentenced for up to 14 years in prison, the Court found that the sections were clearly not intended to capture agreements that <em>may </em>have the indirect effect of adversely impacting prices.</p> <p>In this context, the Court held that it was plain and obvious that sections 45 and 46 were not intended to capture Amazon’s agreements with third-party sellers. The agreements raised by the plaintiffs were explicitly directed towards favouring customers on Amazon’s platform and did not directly seek to control the prices on other platforms or harm the consumer.</p> <h3>Key Takeaways</h3> <ul> <li>The decision reinforces the importance of pleading material facts with sufficient particularity. Bald allegations that merely track statutory language are not sufficient.</li> <li>The decision highlights the willingness of courts to exercise their gatekeeping function at the certification stage of a proposed class proceeding. Here the Court meaningfully engaged with the legislative purpose and jurisprudence of the <em>Act</em> to determine that the claim had no reasonable prospect of success.</li> <li>The decision is a reminder that in cases where civil recovery is available for criminal offences, the plaintiff will likely need to plead and later prove not just that the defendants acted in a certain manner, but also that they intended to do so.</li> </ul>25-Sep-2023 04:04:00{23489E52-075B-4C37-96D1-0303ADFB0A3A}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/jensen-c-samsung-la-cour-appel-federale-confirme-que-norme-preuve-va-au-dele-de-simple-formaliteDanielle K. Royalhttps://stikeman.com/fr-ca/equipe/r/danielle-k-royalAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesDroit canadien de la concurrenceJensen c. Samsung : La Cour d’appel fédérale confirme que la norme de preuve va au-delà de la « simple formalité »<p><strong>Dans l’affaire <em>Jensen c. Samsung Electronics Co. Ltd.</em>, </strong><a rel="noopener noreferrer" href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.canlii.org%2Fen%2Fca%2Ffca%2Fdoc%2F2023%2F2023fca89%2F2023fca89.html&data=05%7C01%7Ctranslation%40stikeman.com%7C8c5e211145544c47d6e708db92d87085%7C394646dfa1184f83a4f46a20e463e3a8%7C0%7C0%7C638265231084849485%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=5IIXerKUy%2FmUxWWnOek3RN3nmaFXpFDfbFQpBViXJkU%3D&reserved=0" target="_blank"><strong>2023 FCA 89</strong></a><strong>, la Cour d’appel fédérale (la « Cour ») confirme la décision du tribunal d’instance inférieure de refuser d’autoriser un recours collectif alléguant la violation, par les défendeurs, des articles 45 et 46 de la </strong><a rel="noopener noreferrer" href="https://laws.justice.gc.ca/fra/lois/c-34/index.html" target="_blank"><strong><em>Loi sur la concurrence</em></strong><strong>, L.R.C.</strong></a><a href="https://laws.justice.gc.ca/fra/lois/c-34/index.html"><strong></strong></a><a rel="noopener noreferrer" href="https://laws.justice.gc.ca/fra/lois/c-34/index.html" target="_blank"><strong>1985, c. C -34</strong></a><strong> (la « Loi »). La décision souligne la volonté accrue des tribunaux d’étudier attentivement les causes alléguées des recours et les prétentions des parties avant d’autoriser ces recours.</strong></p> <h2>Contexte</h2> <p>Les demandeurs ont tenté d’obtenir l’autorisation de présenter un recours collectif au motif que les fabricants de puces de mémoire vive dynamique (DRAM) avaient enfreint les articles 45 et 46 de la Loi en complotant, au moyen de communications directes lors de réunions privées et de déclarations publiques qu’elles s’adressaient (ou de « signaux » qu’elles se sont envoyés) pour créer une pénurie mondiale de DRAM et d’en augmenter ainsi le prix.</p> <p>Comme nous l’avons expliqué <a rel="noopener noreferrer" href="https://www.stikeman.com/en-ca/kh/canadian-class-actions-law/cartel-conduct-courts-reject-conspiracy-claims-in-proposed-class-actions" target="_blank">dans un autre billet traitant du litige</a>, les défenderesses ont fait valoir avec succès que l’autorisation du recours devait être refusée au motif que :</p> <ul> <li>les faits exposés dans la déclaration des demandeurs <strong>n’avaient pas permis d’établir qu’il existait une cause d’action valable</strong> fondée sur la violation des articles 45 et 46 de la Loi;  </li> <li><strong>aucun «</strong><strong> </strong><strong>fondement factuel</strong><strong> </strong><strong>»</strong><strong> n’avait été établi pour ce qui est des points communs proposés.</strong></li> </ul> <p>Les demandeurs ont interjeté appel de la <a rel="noopener noreferrer" href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/515921/1/document.do" target="_blank">décision de la Cour fédérale rejetant la requête en autorisation</a>, estimant que le juge de la requête avait mal analysé le bien-fondé de l’affaire et avait [traduction] « outrepassé son pouvoir, plus limité dans le cas d’une requête en autorisation ». </p> <h2>La décision de la Cour d’appel fédérale</h2> <h3>La Cour a rejeté l’appel des demandeurs et approuvé la décision du tribunal d’instance inférieure.</h3> <h3>Cause d’action valable</h3> <p>La Cour a entériné la conclusion du juge de la requête selon laquelle les actes de procédure des demandeurs n’avaient pas révélé de cause d’action pour complot. Rappelant que l’autorisation demeure un mécanisme important de filtrage des poursuites plutôt qu’une simple formalité, la Cour a rejeté les prétentions des demandeurs selon lesquelles le juge de la requête avait appliqué des normes si pointilleuses qu’il était impossible de les respecter vu la nature occulte de l’infraction. La Cour a fait sienne la conclusion du juge de la requête selon laquelle, même en l’absence d’une preuve directe de l’existence d’un accord, le demandeur doit néanmoins exposer des faits substantiels et tous les détails d’une entente au moyen d’éléments de preuve indirecte ou circonstancielle tendant à établir l’existence d’un tel accord.</p> <p>Selon la Cour, le juge de la requête a conclu à juste titre qu’aucune des prétentions des demandeurs ne permettait de déduire que les défenderesses avaient conclu avec leurs concurrents un accord illicite portant sur l’approvisionnement ou les prix des DRAM. La déclaration n’était pas détaillée, les allégations qu’elle contenait étaient vagues et générales, et les actes de procédure en général tendaient à démontrer que le comportement des défenderesses était unilatéral et licite et « consciemment parallèle » (à celui de concurrents adoptant des pratiques commerciales ou des prix semblables ou identiques en l’absence de tout accord visant à limiter la concurrence).</p> <p>La Cour a donc conclu que le juge de la requête avait à bon droit statué que les actes de procédure ne démontraient pas adéquatement un complot entre les défenderesses.</p> <h3>Points de droit et de fait communs</h3> <p>La Cour a confirmé la décision du juge de la requête selon laquelle il n’y avait aucun fondement factuel à l’appui des points communs proposés.</p> <p>Rejetant les arguments des demandeurs soutenant qu’une approche en deux étapes de la norme reposant sur un « certain fondement factuel » exige, à tort, une analyse au fond, la Cour a retenu l’<strong>approche en deux étapes</strong>, estimant que :</p> <p>1)   les membres présumés du recours doivent avoir une réclamation ou, du moins, fournir certains éléments de preuve minimaux à l’appui de la réclamation;  </p> <p>2) les preuves que le point commun est tel que son règlement est nécessaire au règlement de la réclamation de chaque membre du recours doivent être établies.</p> <p>Abondant à tous égards dans le sens du juge de la requête, la Cour a souligné que, pour que le processus d’autorisation soit utile et puisse atteindre l’objectif consistant à écarter les recours futiles, il faut rechercher une preuve minimale à l’appui de la réclamation. Citant le juge de la requête, la Cour a déclaré  « [qu’]une cause d’action sans fondement factuel ne devient pas en quelque sorte plus fondée parce qu’elle est commune à un groupe de demandeurs, et elle n’a pas plus de valeur ou de poids simplement parce qu’elle est partagée par des centaines, des milliers ou des millions de personnes ». </p> <h2>Principaux points à retenir</h2> <ul> <li>Cette décision souligne la volonté accrue des tribunaux d’exercer leur rôle de gardien et d’examiner les causes d’action proposées et les éléments de preuve présentés comme fondement factuel à l’appui des points communs proposés.</li> <li>La décision renforce l’importance d’exposer les faits substantiels avec suffisamment de précision. Les actes de procédure ou la preuve d’un parallélisme conscient ne suffisent pas à justifier une allégation de complot.</li> </ul> <p>La décision entérine l’approche analytique en deux étapes pour déterminer s’il existe des points communs. Suivant cette approche, un certain fondement factuel est nécessaire pour à la fois soutenir l’existence d’une réclamation et la nécessité de régler le point commun proposé pour que la réclamation de chaque membre du recours soit réglée.</p>02-Aug-2023 05:43:00{29810957-6F69-47E5-830F-E500A119841E}https://stikeman.com/fr-ca/savoir/droit-canadien-communications/la-negligence-sur-le-plan-de-la-securite-n-est-pas-une-intrusion-dans-l-intimiteDavid Elderhttps://stikeman.com/fr-ca/equipe/e/david-elderTessa Martelhttps://stikeman.com/fr-ca/equipe/m/tessa-martelDroit canadien des communicationsDroit canadien des actions collectivesLa Cour d’appel de l’Ontario lève la confusion : la négligence sur le plan de la sécurité n’est pas une « intrusion dans l’intimité » <p>La Cour d'appel de l'Ontario a décidé dernièrement qu'une organisation qui ne prend pas de mesures adéquates pour protéger les renseignements personnels en sa possession ne peut être tenue responsable de la commission d’un délit d'intrusion dans l’intimité lorsque des pirates informatiques tiers non autorisés accèdent à ces renseignements personnels, et ce, même si elle pourrait bien être tenue responsable de réclamations fondées sur un contrat, sur la négligence ou sur des causes d’origine législative.</p> <p><em>Mise à jour : Le 13 juillet 2023, la Cour suprême du Canada <a rel="noopener noreferrer" href="https://scc-csc.lexum.com/scc-csc/scc-l-csc-a/fr/item/19982/index.do" target="_blank">a rejeté une demande d'autorisation d'appel</a> du jugement de la Cour d'appel de l'Ontario dans l'affaire Owsianik c. Equifax Canada.</em></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p>The Ontario Court of Appeal recently ruled that an organization that fails to take adequate steps to safeguard personal information in its possession cannot be held liable under the tort of intrusion upon seclusion when that personal information is accessed by unauthorized third-party hackers, although the organization may well be liable for claims based on contract, negligence or statutory causes. This is significant because, while successful claims for intrusion upon seclusion need not prove pecuniary loss, such losses must be proved for claims grounded in negligence or contract, which can be more difficult in a class action.</p> <p><em>Update: On July 13, 2023, the Supreme Court of Canada <a rel="noopener noreferrer" href="https://scc-csc.lexum.com/scc-csc/scc-l-csc-a/en/item/19982/index.do" target="_blank">dismissed an application for leave to appeal </a>from the judgement of the Ontario Court of Appeal in Owsianik v. Equifax Canada.</em></p> <h2>Background</h2> <p>In the case of <a rel="noopener noreferrer" target="_blank" href="https://coadecisions.ontariocourts.ca/coa/coa/en/item/21028/index.do"><em>Owsianik v Equifax Canada</em></a>, 2022 ONCA 813 (“<em>Owsianik</em>”), the Ontario Court of Appeal (the “ONCA”) considered three grouped appeals, each arising from a separate class action that was at the certification stage.<a href="#_ftn1" name="_ftnref1"><sup><sup>[1]</sup></sup></a></p> <p>The facts in each proceeding were similar—a database containing vast amounts of personal information was breached by third-party hackers, acting independently from, and against the interests of the operators of the databases (which the Court termed “Database Defendants”). In each case the plaintiffs sought to apply the tort of intrusion upon seclusion to such defendants who, for commercial purposes, collected and stored the personal information of others, and who allegedly failed to take adequate steps to protect that information, thereby allowing third-party hackers to access and/or use the personal information. Although they were successful in obtaining certification to proceed with other claims, each of the three representative plaintiffs, on behalf of their respective identified classes, appealed from lower court rulings that refused to certify the intrusion upon seclusion claim.</p> <p>In all three proceedings, the Database Defendants argued that the intrusion upon seclusion claim should not be certified because, as pleaded, it did not disclose a cause of action as required by section 5(1)(a) of the <em>Class Proceedings Act</em>. The Database Defendants submitted that the tort of intrusion upon seclusion targets those who had actually invaded or intruded upon the privacy of a plaintiff, by accessing that plaintiff’s private information and that the tort could not reach Database Defendants whose inadequate security measures may have allowed others, with no connection to the Database Defendants, to access the private information stored in the databases.</p> <h2>Analysis</h2> <h3>Overview of the Tort of Intrusion Upon Seclusion</h3> <p>The common law right to privacy was first recognized in Ontario in 2012 in <em><a href="https://stikeman.com/fr-ca/savoir/droit-canadien-technologies-propriete-intellectuelle/banking-your-secrets-just-got-safer-invasion-of-privacy-tort-recognized">Jones v Tsige</a></em>, 2012 ONCA 32 (“<em>Jones</em>”).In <em>Jones,</em> the plaintiff and defendant were employees of the Bank of Montreal, and the plaintiff maintained her primary bank account there. Because of her job function, the defendant had full access to Jones’ banking information. The defendant, who was in a common-law relationship with Jones’ ex-husband, accessed Jones’ banking records at least 174 times, contrary to the bank’s policy.</p> <p>In <em>Jones</em>, the ONCA endorsed the following statement as a summary of the elements of the tort of “intrusion upon seclusion”:</p> <p><em>One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person. </em></p> <p>Three elements are required to establish the tort of intrusion upon seclusion:</p> <p style="padding-left: 30px;">(1) the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns (conduct requirement);<br /> (2) the defendant’s conduct must be intentional or reckless (state of mind requirement); and<br /> (3) a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish (consequence requirement).</p> <h3>Lack of Required Conduct</h3> <p>In the view of the ONCA in <em>Owsianik</em>, the plaintiffs’ case failed at the conduct requirement of the tort of intrusion upon seclusion. The conduct component of the tort requires that the defendant invaded the plaintiff’s private affairs or concerns without lawful justification. In this case, the Database Defendants did not themselves invade the plaintiff’s private affairs—they stored, accessed, and used the data for commercial purposes under contracts with those whose data was stored. The plaintiff’s alleged that the intrusion occurred when “the [Database Defendants] failed to take appropriate steps to guard against unauthorized access to sensitive” personal information involving the class members’ private affairs or concerns. However, the ONCA held that Database Defendants failing to take steps to prevent independent hackers from invading the plaintiff’s private affairs did <em>not</em> amount to invading the private affairs of the plaintiffs.</p> <p>The plaintiffs also submitted that their claim of intrusion upon seclusion discloses a cause of action because the Database Defendants acted recklessly. However, the ONCA clarified that the reckless component of the tort is part of the state of mind requirement, not the conduct requirement.</p> <h3>Incremental Development in the Common Law</h3> <p>The plaintiff’s submitted that the extension of the tort from the actual intruder to entities who fail to adequately protect information in their possession is a natural, incremental development in the common law. The ONCA disagreed, holding that extending the tort of intrusion upon seclusion would “create a new and potentially very broad basis for a finding of liability for intentional torts”. Intentional torts require that the <em>defendant</em> engage in the proscribed conduct with a specified state of mind. The Court noted that by extending the tort of intrusion upon seclusion, the scope of intentional torts would be expanded such that a defendant could be liable for an intentional tort committed by anyone if the defendant owed a duty under contract, tort, or statute to protect the plaintiff from the conduct amounting to the intentional tort.</p> <p>Furthermore, the ONCA held that extending the tort of intrusion upon seclusion would drastically reconfigure the border between the defendant’s liability for the tortious conduct of third parties and the defendant’s direct liability. The law of negligence in Canada regarding a defendant’s potential liability for the tortious conduct of a third party is well-developed. In these cases, liability would be imposed if the plaintiff can show that the Database Defendants had an obligation at tort, under contract, or under statute to protect the private information stored in its database from access by third-party hackers, and failed to do so, thereby causing economic harm to the plaintiffs. In short, the Court stated, “negligence cannot morph or be transformed into an intentional tort”.</p> <h3>Consistency with American Case Law</h3> <p>The plaintiffs also argued that expanding the tort of intrusion upon seclusion to capture situations such as this one would be consistent with American case law. The ONCA disagreed, stating that it could not arrive at a generalized conclusion about the state of the law, due to the quantity of American caselaw, the different statutory provisions at play in the cases, and the fact that the outcomes of the cases turned on a variety of legal principles.</p> <h3>Inadequate Remedies</h3> <p>Lastly, the plaintiffs alleged that, as in <em>Jones</em>, they were left in circumstances that “cry out for a remedy” because the remedies available against Database Defendants in a claim based on breach of contract, negligence or statute are inadequate. The ONCA distinguished the plaintiffs in this case from the plaintiff in <em>Jones</em>, as the plaintiff in <em>Jones</em> had <em>no remedy of any kind</em> against the defendant who had intentionally invaded her privacy; by contrast, in the claims considered in <em>Owsianik</em>, the plaintiffs could sue the hackers for invasion of privacy, or could sue the Database Defendants for breach of contract, negligence, or under statutory causes. While the ONCA acknowledged that identifying the hackers to be able to sue for invasion for privacy was a major, if not impossible, obstacle to overcome, it stated that “the inability to sue the actual hackers is not […] justification for creating a remedy against a different defendant who has committed a different tort for which the plaintiffs have all the usual remedies available to them”.</p> <p>The ONCA noted that the plaintiffs’ “no remedy” argument really came down to the assertion that, because the remedies in contract and negligence require proof of pecuniary loss, the plaintiffs, who could not prove pecuniary loss, were left without a remedy. The Court rejected this argument, noting that this was not what the court intended in <em>Jones</em> when it described the plaintiff as being without a remedy, further noting that the plaintiffs in the cases considered in <em>Owsianik</em>, were in the same position as anyone else who advances claims in negligence or contract: pecuniary loss must be demonstrated.</p> <p>In obiter comments, the ONCA noted that the risk presented by the accumulation of private personal information by Database Defendants is real, and that it may be that existing common law remedies do not adequately encourage Database Defendants to take all reasonable steps to protect the personal information under their control. However, the Court stated that this risk is one better addressed by Parliament and the legislatures, rather than the courts.</p> <p><em>The author would like to acknowledge the support and assistance of <a href="{CB74A7F3-145D-43BD-B241-EC320A128CA1}?item=web%3a%7b349C54C1-54FB-465E-B437-45416F8D4442%7d%40fr-CA">Renée Taillieu</a>, articling student at law.</em></p> <hr /> <p><a href="#_ftnref1" name="_ftn1">[1]</a> The other two cases are <em>Obodo v Trans Union of Canada, Inc</em>, 2022 ONCA 814 [<em>Obodo</em>] and <em>Winder v Marriott International, Inc</em>, 2022 ONCA 815 [<em>Winder</em>].</p>Wed, 07 Dec 2022 12:30:00 Z06-Dec-2022 11:59:00{6D3DF8FC-2EA9-41D1-83BD-07F934F4C96D}https://stikeman.com/fr-ca/savoir/droit-canadien-emploi-travail-regimes-retraite/la-clause-d-arbitrage-d-un-service-de-repas-en-ligne-ne-livre-pas-la-marchandiseGary T. Clarkehttps://stikeman.com/fr-ca/equipe/c/gary-t-clarkeCheryl Reahttps://stikeman.com/fr-ca/equipe/r/cheryl-reaCameron Pennhttps://stikeman.com/fr-ca/equipe/p/cameron-pennDroit canadien des actions collectivesDroit canadien de l'emploi, du travail et des régimes de retraiteActualités - Sociétés et droit commercialLa clause d’arbitrage d’un service de repas en ligne ne livre pas la marchandise : un tribunal du Manitoba statue en faveur d’une livreuse qui l’avait acceptée « sous toute réserve »<p><strong>La Cour du Banc du Roi du Manitoba a <a rel="noopener noreferrer" href="https://canlii.ca/t/jrw4v" target="_blank">rejeté dernièrement la motion d’une grande entreprise de services de livraison de repas en ligne</a> visant à suspendre un recours collectif en faveur de la tenue d’un arbitrage conformément aux modalités d’une nouvelle convention conclue avec ses livreurs. La livreuse demanderesse avait intenté une action par laquelle elle demandait des mesures de redressement, notamment une déclaration portant qu’elle était une employée de la société et l’attestation de son instance à titre de recours collectif. La décision est un autre exemple qui illustre le contrôle rigoureux auquel les tribunaux canadiens soumettent les contrats types de l’économie « à la demande » et, en particulier, les clauses d’arbitrage.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>The Manitoba Court of King’s Bench <a href="https://canlii.ca/t/jrw4v">recently rejected a motion by a large online meal delivery service</a> to stay a class proceeding in favour of arbitration in accordance with the terms of a new agreement with its couriers. The plaintiff courier had commenced an action seeking relief that included a declaration that she was an employee of the company and to have her action certified as a class proceeding. The ruling is another example of Canadian courts applying high scrutiny to standard form contracts in the “gig” economy and, in particular, to arbitration clauses.</strong></p> <p>The Court sided with the plaintiff courier (the “Plaintiff”), finding that:</p> <ul> <li>the new arbitration clause did not apply retroactively to the lawsuit, which started before the new agreement came into effect;</li> <li>there was no effective acceptance of the terms of the new agreement because the Plaintiff clicked “I accept” under protest;</li> <li>the arbitration provision in the new agreement <ul> <li>lacked consideration; and,</li> <li>was unconscionable (applying the unconscionability test set out by the Supreme Court of Canada in <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/j8dvf"><em>Uber v Heller</em>, 2020 SCC 16</a> (“<em>Uber</em>”)).</li> </ul> </li> </ul> <h2>Background</h2> <p>The company, SkipTheDishes (“Skip”), applied to stay the Plaintiff’s action – which sought a declaration that she was an employee as well as certification of the class action – on the basis of the arbitration clause in Skip’s new standard service agreement with couriers (the “New Agreement”). The company argued that this clause deprived the Court of King’s Bench (and all courts) of jurisdiction over the matter.</p> <h3>Original agreement, with no arbitration clause (2014)</h3> <p>When the Plaintiff began working as a courier in 2014, her relationship with Skip was governed by an earlier agreement (the “Original Agreement”) that did not contain an arbitration clause but instead conferred jurisdiction on the Manitoba Court of Queen’s Bench (as it then was), and established Manitoba law as the governing law of the agreement.</p> <p>Another point that was of significance to the decision was that the Plaintiff, a single mother with a high school education, was a relatively unsophisticated party in comparison with the company.</p> <h3>New agreement, with an arbitration clause, accepted “under protest” (2018)</h3> <p>In July 2018, Skip emailed the Plaintiff to inform her that it was implementing the New Agreement, which would take effect one week later. This email included highlights of the New Agreement and specifically noted that the New Agreement required disputes to be submitted to individualized arbitration. The New Agreement’s arbitration clause sited arbitration in Ontario, made Skip responsible for paying reasonable arbitration costs, and barred class proceedings. Further, the arbitration clause purported to apply to disputes “arising from or related to this Agreement or any previous Agreement…”.</p> <p>The Plaintiff was required to click “I Accept” to the New Agreement on the Skip application before she could continue working. The company confirmed that if she did not accept the New Agreement, she could not continue using its platform. To keep working, the Plaintiff sent an email back saying, “I do not agree with the new terms, but will indicate ‘Agree’ so I can continue to get shifts because I want to work. I am doing this under protest”. The company did not reply to this email and the Plaintiff proceeded to click “I Accept”.</p> <p>The Plaintiff engaged legal counsel and, before the New Agreement came into effect, commenced the action.</p> <h2>Analysis and Decision</h2> <p>The Court concluded that there was no arbitration agreement between the parties. In so doing it found as follows:</p> <ul> <li>The New Agreement and arbitration clause could not be construed as applying retroactively. When the Plaintiff filed the action, the Original Agreement was in force. The arbitration clause in the New Agreement was forward-looking and did not encompass a pre-existing court action.</li> <li>The Plaintiff had not accepted the terms of the New Agreement (which meant that the Original Agreement continued to apply). Specifically, the Court pointed to the Plaintiff’s email to Skip saying that she did not agree with the terms but would click “I Agree” under protest so she could keep working. Although the company received the email it did not reply, which the Court held to demonstrate its acquiescence to the Plaintiff’s position.</li> <li>Even if the Court’s interpretation of the arbitration clause and applicability of the New Agreement was wrong, it was of the view that the arbitration agreement was invalid for unconscionability and lack of consideration. The Court’s reasoning with respect to these two issues is interesting, so we will consider it in detail.</li> </ul> <h3>Unconscionability</h3> <p>In finding the arbitration agreement unconscionable, the Court applied the <strong>two-step test from <em>Uber</em>:</strong> (i) was there inequality of bargaining power?; and (ii) was the resulting bargain improvident?</p> <p>Here, the Court found that there was significant<strong> inequality of bargaining power</strong> between the parties. The New Agreement was a contract of adhesion, imposed without any opportunity to negotiate and while the Plaintiff had legal assistance in reviewing the contract, that did not change the inequality of bargaining power in the relationship. Further, there was also a significant gap in sophistication between the parties.</p> <p>The resulting bargain was also <strong>improvident</strong> because the arbitration clause, if applied as interpreted by Skip, would benefit the company at the expense of the Plaintiff “by retroactively removing her ability to access the courts”. While noting that <em>Uber </em>recognized judicial respect for arbitration based on arbitration being a cost-effective and efficient method of resolving disputes, the Court stated that arbitration agreements that preclude the possibility of class actions undermine the principle of efficient adjudication of claims given the access to justice benefits of class actions. It should be noted that the Court found that the arbitration clause had been included in the New Agreement at least in part to prevent class actions.</p> <h3>Lack of consideration</h3> <p>Finally, the Court ruled the arbitration agreement was invalid for <strong>lack of consideration</strong>. In return for a new promise by an employee – in this case, adjudicating disputes in arbitration – the employer must pass new consideration on to the employee. Continued employment is not consideration. Further, the removal of the right to sue, as well as removing the right to participate in class actions, was not a benefit to the Plaintiff but to Skip. Additionally, while the New Agreement expressly allowed couriers to provide services to other platforms, the Court found this not to be new consideration as the Original Agreement had also recognized that the relationship was “non-exclusive”.</p> <h2>Takeaways for Employers</h2> <p>After <em>Uber v. Heller</em>, the decision in this case, cited as<a rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/mb/mbkb/doc/2022/2022mbkb178/2022mbkb178.html"><em> </em></a><em><a href="https://canlii.ca/t/jrw4v">Pokornik v. SkipTheDishes Restaurant Services Inc.</a></em><a href="https://canlii.ca/t/jrw4v">, 2022 MBKB 178 (CanLII)</a>, is another example of Canadian courts applying high scrutiny to standard form contracts in the “gig” economy and, in particular, to arbitration clauses. While companies and employers may prefer adding arbitration clauses to avoid court disputes and class actions, they must be wary of several issues raised in the case.</p> <h3>Offer and acceptance</h3> <p>First, for any contract to take effect, there must be a clear offer, acceptance, and consideration:</p> <ul> <li>The Court held that an email stating that the Plaintiff accepted the terms “under protest” invalidated her act of clicking “I Accept” as a legitimate form of acceptance.</li> <li>Further, Skip failed to provide new consideration for the New Agreement to become effective – mere continuation of employment or service was not “new” consideration.</li> </ul> <p>Companies wishing to insert arbitration clauses in their agreements must ensure the acceptance is unqualified and that they provide something new of value (e.g., a pay raise, increase in other benefits, promotion, etc.).</p> <h3>Courts’ reluctance to enforce arbitration clauses in standard form contracts</h3> <p>Second, companies should be wary about the enforceability of arbitration clauses in standard form contracts. The arbitration clause in this case differed from the clause that was at issue in <em>Uber</em> – notably, it placed arbitration in Canada and required the company to pay the costs – but, like the clause in that case, it was found to be unconscionable. Similarly to the<em> Uber</em> ruling, the Court in this case emphasized the gap in sophistication between the parties in finding an inequality of bargaining power existed, while also broadly criticizing arbitration clauses that prohibit class actions as undermining access to justice and the efficient adjudication of claims.</p> <p><em>The Authors would like to acknowledge the assistance of <a href="/fr-ca/equipe/p/cameron-penn">Cameron Penn</a> in the preparation of this blog.</em></p>Wed, 23 Nov 2022 12:00:00 Z23-Nov-2022 06:48:00{4409AF5D-6F12-4BEA-A5B5-52C869FA9FBE}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/prolongation-du-delai-d-exclusion-d-un-recours-collectif-la-cour-d-appel-de-l-ontarioAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesProlongation du délai d’exclusion d’un recours collectif? La Cour d’appel de l’Ontario donne des directives au sujet des critères applicables<p><strong>Dans la décision <a rel="noopener noreferrer" href="https://canlii.ca/t/jslq2" target="_blank"><em>Johnson v. Ontario</em></a><em>, </em>la Cour d’appel de l’Ontario (la « Cour ») a autorisé la prolongation du délai au cours duquel l’appelant pouvait s’exclure d’un recours collectif. Ce faisant, la Cour a donné des directives d’appel utiles au sujet des critères qui s’appliquent à la motion de prolongation du délai d’exclusion d’un recours collectif. </strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In </strong><strong><em><a rel="noopener noreferrer" href="https://canlii.ca/t/jslq2" target="_blank">Johnson v. Ontario</a></em></strong><strong><em>, </em>the Ontario Court of Appeal (the “Court”) allowed for the extension of time within which the appellant could opt out of a class action. In doing so, the Court provided welcome appellate guidance on the test to be applied on a motion to extend the time to opt out of a class action. </strong></p> <h2>Background</h2> <p>This class action was brought by representative class members against the Respondent Her Majesty the Queen in Right of Ontario (“Ontario”) on behalf of all persons who were incarcerated at the Elgin-Middlesex Detention Centre (“EMDC”) between January 1, 2010, and May 18, 2017. Among other things, the class action seeks damages for alleged negligence and violations of the <em><a rel="noopener noreferrer" href="https://canlii.ca/t/ldsx" target="_blank">Canadian Charter of Rights and Freedoms</a></em> (the “<em>Charter</em>”) arising from the conditions at, and the operation and management of, EMDC during the class period.</p> <p>After the class action was certified, the court approved a notice plan that advised class members of their right to opt out of the class action, the method, and implications of doing so (the “Notice Plan”). Specifically, the Notice Plan provided that class members had to complete and return an opt-out form by June 20, 2018. Pursuant to the Notice Plan, a short form of notice was published in two local newspapers and a long form of notice was sent to class members via regular mail to their last known address.</p> <p>The appellant was an inmate at EMDC within the class period, but was transferred to a federal institution in August 2017, where he remained until 2019. During this time, class counsel had mailed the long form of notice to the appellant to his last known address, where he had lived with his father prior to being incarcerated. While the appellant kept in touch with his father, who still resided at that address, the appellant denied receiving or seeing any notices about the class action at any time before the opt-out deadline.</p> <p>In April 2020, before he had become aware of the class action, the appellant commenced an individual action against Ontario and employees of EMDC for, among other things, breach of fiduciary duty, and for infringements of his <em>Charter </em>rights. In June 2020, counsel for Ontario wrote to the appellant’s counsel to advise that the individual action overlapped with the class action and that the appellant had failed to opt out before the June 2018 deadline. Ontario’s counsel requested that the individual action against Ontario be discontinued, at least in respect of events within the class period.</p> <p>Claiming that he only became aware of the class action upon receiving the letter from Ontario’s counsel in June 2020, the appellant brought a motion in the Ontario Superior Court of Justice seeking to extend the time to opt out.</p> <h3>The motion judge’s decision</h3> <p>The motion judge dismissed the appellant’s request. Referring to the case of <em>Young v. London Life Insurance Co., </em>[2002] O.J. No. 5971 (<em>“Young”</em>), the motion judge noted that the jurisdiction to extend an opt-out period is rarely exercised. Among other things, the motion judge held that the notice sent to the appellant’s last known address “should have come to [the appellant’s] attention” and found that the appellant’s implicit assertion that he could not reasonably have known his cause of action until the fall of 2018 to be unsupported by any evidence.</p> <p>The appellant appealed the decision.</p> <h2>The Court of Appeal Decision</h2> <p>The Court allowed the appeal and set aside the order of the motion judge and extended the time within which the appellant may opt out of the class action.</p> <p>The Court held that, while the motion judge referred to <em>Young </em>for the proposition that the power to grant an extension of time to opt out will rarely be exercised, the motion judge did not identify the test he was applying, nor refer to the “<strong>excusable neglect/no prejudice test”</strong> articulated in <em>Young</em> that provides that an extension of time to opt out be granted <em>only</em> where:</p> <p>(i) the delay in opting out is due to <strong>excusable neglect – </strong>in good faith and with a reasonable basis; and</p> <p>(ii) an <strong>extension will not result in prejudice to the class, the defendant, or the administration of justice</strong>. </p> <p>Noting that there is no appellate authority in Ontario that has settled the question of when the discretion to extend the time to opt out should be exercised, the Court stated it should take the opportunity to confirm that the excusable neglect/no prejudice test is to be applied on a motion to extend the time to opt out. According to the Court, this test balances the importance of the right to opt out with the importance of adhering to court-ordered deadlines.</p> <p>Finding that the motion judge failed to articulate the required test and apply it, the Court went on to apply the test to the appellant’s case.</p> <h3>Excusable neglect</h3> <p>The Court held that the appellant established that his delay in opting out arose from excusable neglect as the short form of notice was published while the appellant was incarcerated, and there was no suggestion he should have seen it. Meanwhile, the long form of notice was sent to an address at which he was not physically present during the opt-out period. Moreover, the Court found that there was no assertion of any delay in requesting an extension of time to opt out after the appellant became aware of the class action.</p> <p>The Court rejected the notion that any evidence about what the appellant may have done had he received the notices was relevant and confirmed that the appellant was <em>not </em>required to prove that he would have opted out based on what he knew at the June 2018 deadline. Rather, the question was whether “<em>the fact that he did not opt out then, but was requesting an exercise of discretion to do so late, was the result of excusable neglect</em>”.</p> <p><strong>Prejudice </strong></p> <p>The Court acknowledged that had the appellant tried to extend the time for opting out after the class action had settled or resulted in a judgment, his request would most likely have been denied on the basis of prejudice. However, in this case, the Court found there was no evidence of any judgment or settlement, and the appellant’s behaviour did not show any “strategic wait-and-see approach” such that granting him an extension would cause prejudice to the integrity of the process or the administration of justice.</p> <p>Furthermore, Ontario did not point to any prejudice it would suffer, nor did class counsel oppose the appeal, which according to the Court was “a strong indicator” that granting an extension would not cause prejudice to the class in this case.</p> <h2>Key Takeaways</h2> <p><em>Johnson</em> affirms that the excusable neglect/no prejudice test should be applied on a motion to extend the time to opt out of a class action. While the test may allow potential class members to extend the opt-out deadline, defence counsel may take comfort in the fact that the test also reinforces respect for court-imposed deadlines and certainty in class actions and emphasizes that class members may not be granted an extension to opt out where they adopt a “wait and see” approach that may prejudice defendants.</p>Tue, 08 Nov 2022 12:00:00 Z08-Nov-2022 09:30:00{161246C7-4BC0-4771-8E12-D33231CA0619}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/la-cour-supreme-de-la-colombie-britannique-rejette-laction-collective-proposee-en-lien-avec-un-complot-portant-sur-des-audiolivres-numeriques-Danielle K. Royalhttps://stikeman.com/fr-ca/equipe/r/danielle-k-royalAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesDroit canadien de la concurrenceLa Cour suprême de la Colombie-Britannique rejette l’action collective proposée en lien avec un complot portant sur des audiolivres numériques<p><strong>Dans la décision <em><a href="https://canlii.ca/t/jp9kk" target="_blank"></a><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jp9kk"><strong><em>Williams v. Audible</em></strong></a></em>, la Cour suprême de la Colombie-Britannique (la « Cour ») a examiné trois demandes dans le contexte d’une action collective proposée en lien avec un complot portant sur les clauses d’exclusivité d’une convention de distribution et de vente d’audiolivres numériques au Canada conclue entre Audible Inc. et Apple Inc. La Cour a finalement rejeté la demande d’autorisation du demandeur et la demande de jugement sommaire des défendeurs, mais elle a accueilli la demande de prolongation du sursis d’instance d’Audible en faveur de deux groupes de membres putatifs.</strong></p> <p><span style="background-color: #ffffff; color: #000000;"><em><strong>Ce billet est disponible en anglais seulement.</strong></em></span></p> <p><strong>In </strong><a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jp9kk"><strong><em>Williams v. Audible</em></strong></a><strong>,</strong><strong> the Supreme Court of British Columbia (the “Court”) considered </strong><strong>three applications in the context of a proposed conspiracy class action focused on exclusivity provisions in an agreement between Audible Inc. and Apple Inc. relating to the distribution and sale of digital audiobooks in Canada. Ultimately, the Court dismissed the plaintiff’s certification application as well as the defendants’ application for summary judgment and granted Audible’s application to extend a stay of proceedings to two groups of putative class members. </strong></p> <h2>Background</h2> <p>In 2003, Audible and Apple entered into an agreement that allowed Apple to sell Audible audiobooks on iTunes. The agreement contained exclusivity provisions that imposed restrictions on Apple to source its audiobooks exclusively from Audible, and restrictions on Audible to refrain, subject to limited exceptions, from integrating its content with any other internet-based store or distribution service other than Apple. In 2006, the parties replaced the 2003 agreement with a Global Master Agreement (the “2006 Agreement”) that maintained the general exclusivity provisions of the 2003 agreement but allowed Audible to engage in direct sales of audiobooks from its own website.</p> <p>In 2018, the plaintiff filed a notice of civil claim against Apple, Audible and Amazon, which had acquired Audible in 2008 and previously entered into a Co-Branding Agreement with Audible pursuant to which Amazon advertised Audible content on its website. Among other things, the plaintiff alleged that the defendants violated s. 45 of the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/55h64"><em>Competition Act</em></a> (which creates a <em>per se </em>criminal offence for competitors who enter into agreements or arrangements to fix prices, allocate markets, or restrict output) and certain provisions of the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/55g0g"><em>Business Practices and Consumer Protection Act</em></a> (“<em>Consumer Act</em><strong><em></em>”</strong>).</p> <p>In 2019, the plaintiff sought to certify the action as a class proceeding on behalf of all persons in Canada who purchased digital audiobooks from the Amazon or Audible websites or Apple iTunes Store between 2003 and the date of certification. Prior to the certification hearing, in January 2020, the plaintiff amended the claim to address the fact that Amazon was not a party to the 2006 Agreement. The amendments included a new pleading of two separate agreements that in combination amounted to a conspiracy by Apple, Audible and Amazon: (i) the agreement between Apple and Audible; and (ii) the agreement between Audible and Amazon.</p> <p>The same representative plaintiff commenced a separate class proceeding against Amazon relating to an agreement between Amazon and third-party sellers not to compete for the sales of new books, music, movies and DVDs on the Amazon Canada website. In March 2020, <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/j5q37">the Court granted</a> Amazon’s application for a stay of proceedings under the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/531ff"><em>Arbitration Act</em></a>, other than in relation to the plaintiff’s claims under the <em>Consumer Act </em>(the “Amazon Stay Decision”). The exception for claims under the <em>Consumer Act </em>was based on <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/fkkkj"><em>Seidel v. TELUS Communications</em></a>, where the Supreme Court of Canada held that, notwithstanding the existence of a mandatory arbitration clause, claims under section 172 of the <em>Consumer Act </em>may be pursued in Court.</p> <p>There is a similar arbitration clause in Audible’s contract with the plaintiff, which Audible sought to enforce; however, in light of <em>Seidel, </em>and pending the appeal proceedings of the Amazon Stay Decision , the plaintiff agreed to a consent stay of all non-<em>Consumer Act </em>claims, subject to two exceptions: (i) claims for relief on behalf of Alberta residents under the Alberta <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/55h0m"><em>Consumer Protection Act</em></a><em>; </em>and (ii) all claims concerning purchases between July 21, 2010 and September 5, 2012, when Audible’s contracts lacked an arbitration clause.</p> <p>In December 2021, the plaintiff amended the pleadings again to drop the case against Amazon, and in early February 2022 the Court heard the following three applications, which are the subject of this decision: </p> <ol> <li>an application by Audible to <strong>extend the consent stay</strong>;</li> <li>applications for <strong>summary judgment</strong> brought by Audible and Apple, seeking to dismiss the <em>Consumer Act </em>claims against Audible and <em>all</em> claims against Apple (there is no arbitration clause in Apple’s contracts with its customers and Apple is not a party to the consent stay), or alternatively, seeking to dismiss all claims prior to two years before the action was filed on the basis of a limitation defence; and</li> <li>an application by the plaintiff to <strong>certify the action </strong>as a class proceeding<em>.</em></li> </ol> <h2>The Decision</h2> <p>The Court granted Audible’s application to extend the consent stay to the Non-<em>Consumer Act</em> claims of Alberta residents and Canadians who purchased audiobooks between July 21, 2010 and September 5, 2012. The Court dismissed the summary judgment applications of Apple and Audible as well as the plaintiff’s certification application.</p> <h3>Audible’s stay application</h3> <p>In opposing Audible’s extension of the consent stay, the plaintiff advanced the same argument that the Court rejected in the Amazon Stay Decision; that is, that the plaintiff can maintain claims on behalf of putative class members even if he himself cannot pursue the claims. However, the plaintiff argued that this case was distinguishable from the Amazon Stay Decision because: (i) Audible’s stay application was being heard at the same time as the certification application; and (ii) the plaintiff had put forward an additional proposed representative plaintiff who made purchases at a time when there was no arbitration clause in the Audible customer contracts.</p> <p>The Court held that the timing of the certification decision was not relevant to Audible’s substantive right to pursue a stay of proceedings and that the Amazon Stay Decision was not distinguishable on this basis. Moreover, the Court concluded that the plaintiff could not continue non-<em>Consumer Act</em> claims against Audible on behalf of the new proposed representative plaintiff for the same reason it could not advance such claims on behalf of any other putative class member: if the plaintiff’s proceeding against Audible is stayed, there is no proceeding to continue.</p> <h3>Summary judgment applications</h3> <p>Pursuant to Rule 9-6 of the B.C. <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/55dgc"><em>Supreme Court Civil Rules</em></a>, summary judgment may be granted if the court is satisfied, based on the evidence, that the plaintiff has no chance of success. The onus is on the defendant to show that there is no genuine issue for trial. If a determination of the merits of the plaintiff’s claim requires a weighing of the evidence, then judgment cannot be granted under Rule 9-6.</p> <p>The defendants asserted that there is no genuine issue for trial on the basis that the 2006 Agreement was not unambiguously harmful to competition, and thus, all the plaintiff’s causes of action were bound to fail. Viewing the legislative history and context of s. 45 of the <em>Competition Act</em>, the defendants claimed that s. 45 was intended to apply to “hard core” or “naked” cartel agreements that lacked any pro-competitive benefits.</p> <p>The defendants emphasized that their agreement was not a horizontal agreement between competitors, but rather, a vertical agreement between an upstream supplier of audiobooks (Audible) and a downstream purchaser and reseller (Apple), which the defendants stated is well recognized to have pro-competitive justifications. The Court noted that the agreement is what is known as a “dual distribution” agreement as Audible competes with Apple in addition to supplying it with audiobooks.</p> <p>To support their position, the defendants proffered two affidavits of the former Commissioner of Competition, who provided his opinion on the approach he anticipates the Competition Bureau would take to the agreements between the defendants and what Parliament intended the scope of s. 45 to capture.</p> <p>Subject to limited exceptions, the Court struck the affidavit evidence relied on by the defendants, finding it irrelevant and unnecessary as to how the Bureau would characterize the actual agreements in issue in this case. The Court held that it did not require the assistance of an expert to interpret domestic legislation; rather, the Commissioner’s review of the legislative history and evolution of s. 45 could have been put before the Court in the form of legal argument or a journal article.</p> <p>Ultimately, the Court held that the evidence on the record was not uniform on how to properly characterize the exclusivity provisions in the 2006 Agreement. The experts disagreed as to whether the exclusivity provisions are properly characterized as a vertical agreement, which would unambiguously have a pro-competitive justification. Consequently, the Court declined to grant summary judgment on the basis that it was not satisfied beyond a doubt that the plaintiff’s claims were “bound to fail”.</p> <p>Notably, the Court held that the B.C. summary judgment provision is not suitable to resolve a complex and relatively novel issue of competition law regarding the application of s. 45 to a “dual distribution” agreement, and ought to be decided based on a full evidentiary record. </p> <p>Based on the evidence on the record, the Court was also not satisfied beyond doubt that the claims of class members arising prior to two years before the action was filed were bound to fail based on a limitation defence. Contrary to the defendants’ assertions, the Court held that this was not an exceptional case in which it was appropriate to resolve limitation issues at an early stage.</p> <p><strong>Certification application </strong></p> <p>The Court dismissed the plaintiff’s application to certify the action as a class proceeding, finding that the common issues and preferability criteria were not satisfied.</p> <p>The Court held that the plaintiff had failed to put forward sufficient evidence to show harm or loss could be determined on a class wide basis. The Court noted that the only common issue that could conceivably be certified on the record was the issue of whether the defendants’ agreements were contrary to s. 45 of the <em>Competition Act. </em>However, in the absence of any evidence of a methodology for assessing damages on a class-wide basis, the Court held that the certification of that issue alone will not advance the claims of class members.</p> <p>In the absence of any evidence that there is a methodology for assessing damages across the class, the Court ultimately held that a class proceeding was not the preferable procedure for the fair and efficient resolution of a common liability issue in this case.</p> <p><strong>Key Takeaways </strong></p> <ul> <li>The case serves as a reminder to consider the impact of arbitration provisions and stays of proceedings on all putative class members. While courts may draw distinctions between <em>Consumer Act</em> claims and non-<em>Consumer Act </em>claims given the Supreme Court of Canada’s decision in <em>Seidel, </em>once a proposed representative plaintiff’s non-<em>Consumer Act </em>claims are stayed, there is no proceeding to advance the non-<em>Consumer Act </em>claims of other possible class members.</li> <li>The case highlights how courts in British Columbia may be unlikely to find summary judgment suitable to resolve relatively novel and complex issues such as the application of s. 45 to a “dual distribution” agreement.</li> <li>The case exemplifies a greater willingness by the Court to exercise its gatekeeper role and take a somewhat closer look at evidence at the certification stage.</li> </ul> <p>As the plaintiff has filed a Notice of Appeal with the British Columbia Court of Appeal in this case, counsel will want to keep an eye on any guidance offered by the higher court(s).</p>Mon, 19 Sep 2022 17:00:00 Z26-Aug-2022 12:42:00{1E4D226B-AD50-43F4-8BD7-89628BAB0A9E}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/la-cour-de-l-ontario-rejette-un-recours-collectif-autorise-en-matiere-de-publicite-mensongereDroit canadien des actions collectivesDroit canadien de la responsabilité du fait des produitsLa Cour de l'Ontario rejette un recours collectif autorisé en matière de publicité mensongère<p><strong>Dans l'affaire <a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onsc/doc/2022/2022onsc2396/2022onsc2396.html?autocompleteStr=rebuck&autocompletePos=6#_ftn4" target="_blank"><em>Rebuck c. Ford Motor Company</em></a>, 2022 ONSC 2396 (Rebuck), la Cour supérieure de justice de l'Ontario a rejeté sur le fond, par voie de jugement sommaire, un recours collectif autorisé. La demande visait l’obtention de dommages-intérêts de 1,5 milliard de dollars dans le cadre d’un recours collectif national se rapportant à des violations alléguées de dispositions sur la publicité trompeuse de la <a rel="noopener noreferrer" href="https://canlii.ca/t/ckj6" target="_blank"><em>Loi sur la concurrence</em></a> et de certaines lois provinciales sur la protection du consommateur. L'affaire démontre que l’autorisation d’un recours ne garantit pas son succès sur le fond, et offre de précieux conseils sur les types de preuves nécessaires pour défendre les recours collectifs en matière de publicité mensongère.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jpt2n"><em>Rebuck v. Ford Motor Company</em></a><em>,</em> 2022 ONSC 2396 (<em>Rebuck</em>), the Ontario Superior Court of Justice dismissed a certified class action on its merits by way of summary judgment. The claim sought $1.5 billion in damages on behalf of a national class with respect to alleged breaches of misleading advertising provisions in the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/7vdv"><em>Competition Act</em></a> and certain provincial consumer protection statutes. The case highlights how success on certification does not guarantee success on the merits, and offers valuable guidance on the types of evidence relevant to defending false advertising class actions. </strong></p> <h2>Background</h2> <p>In 2016, the plaintiff commenced this class action against Ford on behalf of a national class, claiming damages of $1.5 billion for alleged breaches of the <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/7vdv"><em>Competition Act</em></a> as well as the consumer protection statutes of several provinces. The core allegation was that Government of Canada-mandated “EnerGuide” labels that were affixed by Ford to windows of its vehicles had misled potential purchasers about the vehicles’ fuel efficiency and that Ford bore legal responsibility for the damages that the plaintiff class allegedly suffered as a consequence.</p> <p>Specifically, the plaintiff argued that although Ford had tested the fuel consumption of its vehicles using the most up-to-date “5-Cycle Test” method, and had subsequently become aware that the fuel consumption figures contained in the EnerGuide labels (which were based, as per Government of Canada requirements at the time, on the older and less accurate “2-Cycle Test” method) were understated, Ford had omitted to disclose this in the EnerGuide labels or to correct the impression allegedly given by the labels in any other way.</p> <h2>Certification Decision (2018)</h2> <p>The plaintiff moved for <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/hwpw9">certification in 2018</a>. Ford opposed certification, arguing that, among other things:</p> <ul> <li><strong>No misrepresentation:</strong> the limited evidence tendered by the plaintiff (i.e., the text on the EnerGuide labels and Ford’s other promotional materials) did not establish that a misrepresentation was made, nor could representations arising from an industry-wide fuel consumption rating system promoted by the federal government (such as EnerGuide) be actionable as misrepresentations;</li> <li><strong>No commonality:</strong> the limited evidence tendered by the plaintiff did not establish common issues between the putative class members<strong>,</strong> given that each consumer in the automobile market approaches promotional materials from their own particular point of view; and</li> <li><strong>No causality:</strong> the plaintiff could not establish a causal connection between the representations made in the EnerGuide labels and the damages allegedly suffered by class members.</li> </ul> <p>The Court nevertheless ruled for the plaintiff and certified the class action on the following grounds:</p> <ul> <li>The representations on the EnerGuide labels were <strong>objectively inaccurate and misleading</strong>, since they were based on the results from the older and less accurate test rather than the newer and more accurate test;</li> <li><strong>Individualized evidence was not required</strong>, given that the alleged misrepresentations that formed the heart of the claim were made in writing within nationally disseminated materials<strong>, </strong>such as the EnerGuide. Case law had affirmed that sufficient commonality could be established on the basis of this evidence where the representations at issue are in written form; and</li> <li>The plaintiff had <strong>adequately pled a causal connection</strong> between the representations and alleged damages by claiming that the alleged misrepresentations concerning fuel consumption had caused buyers and lessees to spend more on fuel than they had anticipated. Notably, unlike common law claims for misrepresentation, the plaintiff was not required to establish actual reliance (i.e., that buyers and lessees of Ford vehicles had actually relied on the content of the EnerGuide labels in deciding to buy or lease those vehicles).</li> </ul> <p>In light of the foregoing, the Court held in favour of the plaintiff and certified six common issues.</p> <h2>The Summary Judgment Motions (2022)</h2> <p>Almost four years after certification was granted, both parties elected to move for summary judgment. The plaintiff brought a motion for summary judgment on three of the six certified common issues:</p> <ul> <li>whether Ford had breached 52 of the <em>Competition Act</em> (i.e., by making a false or misleading representation for the purpose of promoting a product);</li> <li>whether Ford had breached sections 14 and 17 of the <em>Consumer Protection Act, 2002 </em>(Ontario) and parallel provisions of other provincial consumer protection legislation by making false, misleading or deceptive representations; and</li> <li>whether the class members were entitled to damages.</li> </ul> <p>Ford brought a cross-motion to have the entire action dismissed.</p> <p>Notably, during the years that elapsed between the certification motion and the hearing of the summary judgment motions in April 2022, the parties had built a substantial evidentiary record (comprised of filed documents, affidavits and transcripts) upon which the parties and the Court agreed that the common issues could be adjudicated. Furthermore, the parties submitted extensive arguments in support of their positions on the merits, including a 340-page factum prepared by Ford.</p> <h3>The Decision</h3> <p>Based on the record and parties’ submissions, the motion judge ruled in favour of Ford and dismissed the class action in its entirety, with respect both to the <em>Competition Act </em>and to the consumer protection law claims.</p> <h4>Section 52 of the Competition Act</h4> <p>In order to prove a breach of the <em>Competition Act</em>, the plaintiff was required to establish that: Ford had knowingly or recklessly made a false or misleading representation; and the class members had suffered damages as a result.</p> <p>The Court affirmed that s. 52 of the <em>Competition Act</em> only applies where a party <em>makes</em> a representation in issue and does not impose a general duty on a party to disclose information (i.e., information updating or contextualizing a representation previously made). As such, whether Ford had breached s. 52 of the <em>Competition Act </em>would be determined with reference to the specific representations made by Ford in the EnerGuide labels, without consideration of whether Ford ought to have disclosed the matter of the transition between the two test methods to the public.  </p> <p>The Court held that the content of the EnerGuide labels had not constituted a false or misleading representation for two reasons.</p> <p>Firstly, the content of the EnerGuide labels complied with federal government guidelines prescribing its content and the required fuel consumption test method. The Court held that compliance with such guidelines cannot fairly or reasonably amount to a breach of federal competition law. In other words, the legislature should not be held to have criminalized or otherwise impugned its own EnerGuide labels. The motion judge noted that to find otherwise would violate an established principle of statutory interpretation: the presumption of consistency. This principle affirms that where federal statutes can be interpreted so as not to interfere with one another, that interpretation is to be preferred. Interestingly, in this case he applied that principle to a purported conflict between a statute and the federal guidelines underlying the EnerGuide program – holding that, since Ford had complied with those guidelines, it could not be held to have breached federal competition law in doing so.</p> <p>Secondly, under s. 52(4) of the <em>Competition Act</em>, a Court must consider “the general impression conveyed by a representation” in determining whether that representation was false or misleading. There was no dispute that each of the statements made in the EnerGuide labels was literally true. Accordingly, the Court held that the alleged misrepresentation was not inherently obvious in the circumstances. The Court noted that in such cases, plaintiffs may often supplement evidence of “general impression” with focus group, survey or expert evidence. However, in this case, while the plaintiff argued that the “general impression” created by the EnerGuide labels was that the fuel consumption estimates represented the median of what drivers could expect to achieve, the plaintiff did not tender any evidence on point beyond an affidavit that he swore concerning how he himself was allegedly misled. As a result, the Court held that there was insufficient evidence of any alleged class-wide expectation of fuel consumption.</p> <h4>Consumer protection legislation</h4> <p>In order to prove a breach of the relevant provincial consumer protection legislation, the plaintiff was once again required to establish that Ford had made a false or misleading representation and that the class members had suffered damages as a result. In contrast to the <em>Competition Act</em> claim, however, the plaintiff was entitled under the consumer protection legislation to argue misrepresentation by non-disclosure. The plaintiff made such an argument in addition to asserting the foregoing “impression” argument that was made under the <em>Competition Act</em>.</p> <p>The Court rejected the plaintiff’s “impression” argument for the same reasons as it did under the <em>Competition Act</em> claim. With respect to the misrepresentation by non-disclosure argument, the Court considered the specific content of the EnerGuide labels and whether the material facts purportedly omitted deceived customers, and thus, required further disclosure. The EnerGuide labels contained two statements (one in block letters) referring consumers to government fuel consumption guides, which themselves made clear that the fuel consumption figures contained in the EnerGuide labels were provided for comparison purposes and not to predict actual fuel consumption.</p> <p>Ford led uncontroverted expert evidence that Google search rankings for the government fuel consumption guides were high and that consumers for whom fuel consumption was important would likely have consulted them. The plaintiff did not lead evidence that despite the EnerGuide label’s references to the guidelines, consumers simply relied on the EnerGuide labels without consulting the guidelines, nor that Ford knew that this was the case. Ultimately, the Court was not persuaded on the evidence that additional disclosure had been required and held that the plaintiff had failed to establish a false or misleading representation by omission.</p> <h4>Damages</h4> <p>Given the motion judge’s findings on the foregoing issues, the damages common issue was also decided in Ford’s favour. The motion judge held that even if the plaintiff had prevailed in establishing liability under the <em>Competition Act</em> and/or the consumer protection legislation, he would likely have failed to establish that damages could be determined on an aggregate basis given a myriad of further hurdles (i.e., the need for individualized assessments, detrimental reliance issues, limitation periods and privity of contract problems).</p> <h2>Key Take-Aways</h2> <p>The decision is an example of a court dismissing a class action by way of summary judgment and on its merits after certification is granted.</p> <p>While class action counsel will want to be on the lookout for a possible appeal, <em>Rebuck </em>highlights:</p> <ul> <li>how success on certification does not guarantee success on the merits of a case, and how summary judgment motions are likely to become more prevalent, especially in light of the amendments to Ontario’s <a rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/2tv"><em>Class Proceedings Act, 1992</em></a> that require courts to hear dispositive motions and motions that may narrow the issues to be determined in advance of certification (unless ordered that the motion be heard in conjunction with certification);</li> <li>that courts will generally require evidence that the defendants knew or ought to have known that their customers would rely on misleading or deceptive omissions to prove that a representation violates provincial consumer protection legislation;</li> <li>that representations made in compliance with federal guidelines will generally not be found unlawful; and</li> <li>how consumer focus group, survey or expert evidence may be relevant to establishing that a representation made in promotional materials or labels created a “general impression” that was false or misleading, and/or that a defendant ought to have disclosed further information clarifying that representation.</li> </ul>Thu, 27 Oct 2022 18:48:00 Z21-Jul-2022 04:36:00{6FCB2E6C-2F1B-4E91-85A7-8972F0C30239}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/les-annonceurs-ont-le-fardeau-de-prouver-que-les-particuliers-ont-consenti-a-apparaitre-dans-les-publicitesAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesDroit canadien des technologies et de la propriété intellectuelleSelon la Cour suprême de la Colombie-Britannique, les annonceurs ont le fardeau de prouver que les particuliers ont consenti à apparaître dans les publicités et les pouvoirs législatifs ne peuvent limiter les recours fondés sur la législation provinciale à leurs propres tribunaux <p><strong>Dans la décision <em>Douez v. Facebook, Inc., </em><a rel="noopener noreferrer" href="https://www.canlii.org/en/bc/bcsc/doc/2022/2022bcsc914/2022bcsc914.html" target="_blank">2022 BCSC 914</a>, la Cour suprême de la Colombie-Britannique (la « Cour ») a décidé que l’utilisation par Facebook des noms et des photos des membres du groupe dans son programme publicitaire appelé « actualités commanditées » (<em>Sponsored Stories</em>) sans leur consentement contrevenait à quatre lois provinciales sur la protection des renseignements personnels (Colombie-Britannique, Saskatchewan, Manitoba et Terre-Neuve-et-Labrador). La position adoptée par la Cour est contraire à celle de la jurisprudence de l’Ontario, selon laquelle la compétence<em> ratione materiae</em> accordée par le législateur à un tribunal particulier signifie que la compétence de tous les autres tribunaux est exclue, y compris celle des cours supérieures des autres provinces.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In <em>Douez v. Facebook, Inc., </em></strong><a rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/bc/bcsc/doc/2022/2022bcsc914/2022bcsc914.html"><strong>2022 BCSC 914</strong></a><strong>, the </strong><strong>Supreme Court of British Columbia (the “Court”) held that Facebook used class members’ names and images in its “Sponsored Stories” advertising program without their consent, contrary to four provincial privacy statutes (British Columbia, Saskatchewan, Manitoba, and Newfoundland and Labrador). In doing this, the Court took a position that is contrary to Ontario authority that states that legislative conferral of subject matter jurisdiction to a particular court means that all other courts, including superior courts of other provinces, do not have jurisdiction over that subject matter.</strong></p> <h2>Background</h2> <p><strong>Facebook’s Sponsored Stories</strong></p> <p>From January 2011 to May 30, 2014, Facebook offered an advertising program called “Sponsored Stories”, whereby advertisers could pay Facebook to associate the advertiser’s name or identifiable mark with a Facebook user who performed certain social actions in connection with the advertiser (i.e., liking the advertiser’s Facebook profile or other content). Facebook’s software would attach a banner to the social action such as “Sponsored”, as well as the advertiser’s thumbnail icon, and increase the likelihood that the user’s friends would see the now “Sponsored” social action on their news feeds. Facebook did not display the Sponsored Story on the user’s home page and did not inform a user when their name and image were used to create a Sponsored Story.</p> <p><strong>The Class Proceeding</strong></p> <p>In 2012, Ms. Douez brought a proposed class action in B.C. on behalf of Facebook users alleging that Sponsored Stories violated section 3(2) of the <a rel="noopener noreferrer" target="_blank" href="https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/00_96373_01">B.C. Privacy Act</a>, which states:</p> <p style="padding-left: 30px;">It is a tort, actionable without proof of damage, for a person to use the name or portrait of another for the purpose of advertising or promoting the sale of, or other trading in, property or services, unless that other, or a person entitled to consent on his or her behalf, consents to the use for that purpose.</p> <p>As a threshold matter, Facebook argued that the B.C. courts should decline jurisdiction because the Terms of Use agreed to by the plaintiff contained a forum selection clause in favour of California. The Court refused to decline jurisdiction and proceeded to <a rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/bc/bcsc/doc/2014/2014bcsc953/2014bcsc953.html?searchUrlHash=AAAAAQANMjAxNCBCQ1NDIDk1MwAAAAAB">certify the action in 2014</a>.</p> <p>Facebook appealed to the B.C. Court of Appeal, which held that the forum selection clause was enforceable and did not consider the challenge to the certification of the common issues. The plaintiff appealed to the Supreme Court of Canada, which in 2017, held that the forum selection clause was unenforceable.</p> <p>The matter returned to the B.C. Court of Appeal for consideration of Facebook’s challenge to the certification order. The B.C. Court of Appeal upheld the certification decision, and in 2019, the case management judge granted the plaintiff’s application to amend the claim to include residents of Saskatchewan, Manitoba, and Newfoundland and Labrador.</p> <p>The plaintiff applied for summary trial of the common issues that were certified by the Court in 2014 (and amended in 2019). Facebook opposed the motion and argued that:</p> <ul> <li>the <strong>Court </strong><strong>lacked jurisdiction</strong> to determine the privacy claims under Manitoba’s and Newfoundland and Labrador’s privacy statutes; and</li> <li>the matter is <strong>not suitable for determination by way of summary trial</strong>.</li> </ul> <h2>The Jurisdictional Challenge</h2> <p>The Court held that it did not lack jurisdiction to determine the privacy claims under Manitoba’s and Newfoundland and Labrador’s privacy statutes.</p> <p>Facebook had argued that the Court could not adjudicate the claims under the Manitoba and Newfoundland and Labrador legislation as those statutes granted exclusive jurisdiction to their respective provincial superior courts. In making this argument, Facebook drew on a line of Ontario cases that have held that when a provincial legislature confers jurisdiction over a particular subject to a particular court, other courts, including those in other provinces, do not have jurisdiction over that subject matter.</p> <p>The Court rejected Facebook’s argument and found that provincial superior courts have the power to adjudicate disputes arising under statutes of other jurisdictions, including other provinces. Relying on constitutional principles, the Court noted that the legislatures of Manitoba and Newfoundland and Labrador cannot legislate extraterritorially, and thus lack the legislative competence to prohibit the Court from adjudicating claims under their respective privacy statutes.</p> <p>Ultimately, the Court held that it has adjudicative competence to determine the claims under the Manitoba and Newfoundland and Labrador privacy acts, and whether it should do so in this case is a question to be decided through a <em>forum non conveniens </em>analysis (i.e., whether there is another more appropriate forum in which to hear the dispute). As Facebook did not raise a <em>forum non conveniens </em>objection, the Court held that it could not decline to exercise its jurisdiction over the extra-provincial statutory claims.</p> <h2>Liability for Breach of Privacy Legislation</h2> <p>The Court held that the liability common issues (i.e., whether users expressly or impliedly consented to their name or portrait being used in Sponsored Stories) in this case are amendable to summary resolution. The Court did not find damages issues suitable for summary determination and deferred them for determination by conventional trial.</p> <p><strong>Express or Implied User Consent</strong></p> <p>The Court began its analysis by examining who bears the burden of proving consent. Upon examining all four provincial privacy statutes in issue, the Court concluded that a defendant is best suited to prove consent as a defence. While the plaintiff must establish a <em>prima facie </em>case for breach of the relevant legislation, the Court noted that this threshold is low and Ms. Douez’s affidavit evidence that she did not consent satisfies the low threshold for a <em>prima facie </em>case and Facebook bears the burden of proving consent.</p> <p>The Court found that a reasonable reader would interpret Facebook’s terms of use as providing users with the ability to control whether their name and profile picture could be used by advertisers. Yet, as the evidence established that a user could not control the use of their information, the Court ruled that Facebook had not obtained express consent as required by the provincial legislation.</p> <p>Facebook argued that its practices were consistent with the terms of use that provided that Facebook would not “give” a user’s content or information to advertisers without their consent. Specifically, Facebook argued it did not transfer the individual names and profiles pictures of users who became the subject of Sponsored Stories, and advertisers could not “review or store or process this information in any way”. However, the Court held that Facebook’s interpretation of “give” was unrealistically narrow and unreasonable as Sponsored Stories “gave” advertisers the means to add their image to a user’s social action, add the “sponsored” banner and “hitch their brand” to user information.</p> <p>The Court found that unless and until a user learned that they had been featured in a Sponsored Story, and about the ineffectiveness of privacy settings to prevent them being featured in other Sponsored Stories, the evidence did not support an inference of implied consent. </p> <h2>Key Take-Aways</h2> <ul> <li>This decision departs from a line of Ontario cases regarding the issue of the scope of the provincial superior courts’ jurisdiction to deal with statutory privacy claims pursuant to the legislation of a different province. This may cause uncertainty in national class actions brought outside the provinces that enacted these statutes and class counsel will want to keep an eye on any guidance offered by the higher courts.</li> <li>The onus rests with the defendant to prove it obtained consent to use a person’s name and image in advertising under these provincial statutes. While the plaintiff must establish a <em>prima facie </em>case for breach of the relevant legislation, this threshold is low and may be easily satisfied.</li> </ul> <p>The right to privacy requires consent to be sought, not presumed. It is important that privacy policies and terms of use make it clear how and when user information may be used for advertising and promotional purposes.</p>29-Jun-2022 05:33:00{52FFBD49-7C81-4B30-8894-EBA40F2F6FFC}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/la-cour-divisionnaire-de-l-ontario-invalide-la-certification-d-une-demande-fondee-sur-l-intrusion-dans-l-intimiteAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesDroit canadien des technologies et de la propriété intellectuelleLa Cour divisionnaire de l’Ontario invalide la certification d’une demande fondée sur l’intrusion dans l’intimité dans le cadre d’un recours collectif pour atteinte à la sécurité des données<p><strong>Dans la décision <a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onscdc/doc/2022/2022onsc1790/2022onsc1790.html" target="_blank"><em>Stewart v. Demme</em></a>, la Cour divisionnaire de l’Ontario (la « Cour ») a invalidé la certification d’une demande fondée sur le délit d’intrusion dans l’intimité qui avait été accordée dans le cadre d’un recours collectif pour atteinte à la sécurité des données intenté contre un hôpital, dans lequel une infirmière avait utilisé les dossiers médicaux de patients afin de voler des médicaments sur ordonnance.  </strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In </strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onscdc/doc/2022/2022onsc1790/2022onsc1790.html"><strong><em>Stewart v. Demme</em></strong></a><strong><em>, </em></strong><strong>the Ontario Divisional Court (the “Court”) overturned the certification of </strong><strong>an intrusion upon seclusion claim in a data breach class action against a hospital, where a nurse used patient health records to steal prescription medication. </strong></p> <h2>Background</h2> <p>This case arose from a decade-long theft of thousands of Percocet pills by a nurse employed by the defendant, William Osler Health System (the “Hospital”). The nurse, who had a drug addiction, improperly accessed the health records of over 11,000 patients for the purpose of obtaining the pills, and not to satisfy any other need for patients’ health information. The Hospital’s records showed that she had accessed each patient’s records for only a few seconds and that this had had no effect on the treatment of the patients.</p> <p>The Hospital terminated the nurse’s employment upon discovering the theft, of which she was subsequently convicted criminally. After the Hospital contacted the affected patients, this proposed class action was commenced seeking damages for:</p> <ol> <li>Negligence, for failing to safeguard private health information; and</li> <li>Intrusion upon seclusion (a tort recognized by the Ontario Court of Appeal in <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onca/doc/2012/2012onca32/2012onca32.html#par15"><em>Jones v. Tsige</em></a>), which requires the plaintiff to demonstrate that: <ol style="list-style-type: lower-alpha;"> <li>the defendant’s conduct was intentional or reckless;</li> <li>the defendant invaded, without lawful justification, the plaintiff’s private affairs; and</li> <li>a reasonable person would regard the invasion as highly offensive, causing distress, humiliation, or anguish.</li> </ol> </li> </ol> <h3>Certification Decision</h3> <p>While <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onsc/doc/2020/2020onsc83/2020onsc83.html?autocompleteStr=2020%20ONSC%2083&autocompletePos=1">the certification judge held</a> that the elements of negligence were not made out against the Hospital because there was no provable harm, he found that that the plaintiff’s intrusion upon seclusion claim was viable.</p> <p>Finding that the first two elements of the tort were met – namely, intentional, or reckless conduct, and the unlawful invasion into the patients’ private affairs or concerns – the certification judge held that the “central question of liability” in this case was whether the invasion of the class members’ privacy is “highly offensive”.</p> <p>While the certification judge noted that the nurse’s access to the patients’ data was fleeting and that the facts of this case “do not exactly cry out for a remedy”, based on his interpretation of <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onca/doc/2012/2012onca32/2012onca32.html#par15"><em>Jones</em></a><em>, </em>he held that “even a small [intrusion] into a realm as protected as private health information may be considered highly offensive, and therefore, actionable”.</p> <h2>Divisional Court Decision</h2> <p>On appeal, the Divisional Court overturned the certification decision and dismissed the intrusion upon seclusion claim.</p> <p>The Court held that the certification judge erred in how he interpreted <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onca/doc/2012/2012onca32/2012onca32.html#par15"><em>Jones</em></a><em>. </em>Notably, the Court held that “not every intrusion into private health information amounts to a basis to sue for the tort of intrusion upon seclusion”. Rather, if the case does not “cry out for a remedy” it should signal that the high standard for certification of the tort may not be met.</p> <p>The Court emphasized that because the tort of intrusion upon seclusion is a “no actual damages tort” it should only be available for deliberate and significant invasions of personal privacy. Having regard to the facts of this case, the Court held that the certification judge erred in concluding that the claim met the high threshold necessary to disclose a tenable cause of action in intrusion upon seclusion. Specifically, the patient health information accessed was limited and not particularly sensitive in the realm of health information; the access was fleeting and incidental to the medication theft; and there was no discernible effect on the patients.</p> <p>The Court also noted that the significance of the intrusion must be assessed individually, not collectively. The fact that there were over 11,000 patient intrusions in this case did not mean that each intrusion was significant and highly offensive.</p> <h2>Key Take-Aways</h2> <p>The decision in this appeal underscores:</p> <ul> <li>The high bar a plaintiff must meet to bring an intrusion upon seclusion claim: not all privacy breaches, even those related to personal health information, rise to the level of tortious intrusions upon seclusion. To the contrary, only deliberate and significant affronts to privacy that are “highly offensive” are actionable on this basis;</li> <li>That in making the assessment of whether a breach is “highly offensive”, courts will look to the specific circumstances and context of the case at hand, including the nature and sensitivity of the information accessed, the defendant’s motives and the actual impact on affected individuals. If the facts of the case don’t “cry out for a remedy”, it may be a sign that the high standard for certification of the tort has not been met; and</li> <li>That the significance of a breach is to be assessed individually, rather than collectively. Even though the many breaches that occurred might collectively have been considered a serious privacy incident by the Hospital, it did not follow that each individual breach was significant and highly offensive.</li> </ul>21-Apr-2022 05:53:00{56E82C8E-AF8F-4240-9258-C8D56FDF8F33}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/le-recours-collectif-sur-la-protection-des-renseignements-personnels-intente-contre-facebook-n-est-pas-certifie-en-appelAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesLe recours collectif sur la protection des renseignements personnels intenté contre Facebook n’est pas certifié en appel : la Cour divisionnaire réitère que le recours collectif doit reposer sur un « certain fondement factuel »<p><strong>Dans <em><em><a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onscdc/doc/2022/2022onsc1284/2022onsc1284.html?autocompleteStr=2022%20ONSC%201284&autocompletePos=1" target="_blank">Simpson v. Facebook, Inc.</a></em></em>, la Cour divisionnaire de l’Ontario a confirmé le rejet de la motion en certification du demandeur contre Facebook dans le cadre du recours collectif envisagé, selon lequel les données personnelles des utilisateurs canadiens de Facebook ont été abusivement partagées avec le groupe Cambridge Analytica (« Cambridge Analytica »). </strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In </strong><strong><em><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onscdc/doc/2022/2022onsc1284/2022onsc1284.html?autocompleteStr=2022%20ONSC%201284&autocompletePos=1">Simpson v. Facebook, Inc.</a></em></strong><strong>, the Ontario Divisional Court upheld the dismissal of the plaintiff’s certification motion against Facebook in a proposed class action alleging that the personal data of Canadian Facebook users was improperly shared with the Cambridge Analytica Group (“Cambridge Analytica”). </strong></p> <p>The Divisional Court concluded that the action was not appropriate for certification because the plaintiff failed to satisfy the common issues requirement of the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.ontario.ca/laws/statute/92c06"><em>Class Proceedings Act</em>, <em>1992,</em> S.O. 1992, c. 6 (“CPA”)</a> and, in particular, the requirement to provide “some evidence” that Canadian users’ data had actually been shared with Cambridge Analytica.</p> <p>The decision in this appeal:</p> <ul> <li>Reaffirms that there must be some evidentiary basis indicating that a common issue exists beyond a bare assertion in the pleadings. This does not involve an examination of the merits of the claim, but simply requires that there be some factual basis – in the form of admissible evidence – to support the allegation.</li> <li>Underscores the willingness of Canadian courts to exercise their “gatekeeper” role and bar certification of privacy class actions based merely on speculative assertion.</li> </ul> <h2>Background</h2> <p>The proposed class action in this case arose from a personal data breach linked to the 2016 U.S. election campaign where voters were targeted with messages tailored to influence their votes. The targeting apparently relied on the use of personal data obtained from Facebook users, allegedly accessed without their knowledge or consent through a third-party “app” created by a British academic, who then sold the data to Cambridge Analytica, which proceeded to use it to target U.S. voters on behalf of its clients.</p> <p>The fallout resulted in several putative class actions filed in Canada. The plaintiff in this case was granted carriage of a proposed class action on behalf of “Canadian residents whose Facebook Information was shared with Cambridge Analytica”. </p> <h2>Certification Decision</h2> <p>The plaintiff sought to certify a putative action against Facebook, alleging that Canadian Facebook users’ personal data was improperly shared with Cambridge Analytica, and that by allowing this to happen, Facebook breached its own terms of use and invaded the privacy of the putative Canadian class members. The plaintiff relied on the tort of intrusion upon seclusion and sought approximately $622 million in “symbolic or moral damages” and another $62 million in punitive damages.</p> <p>The Ontario Superior Court of Justice dismissed the plaintiff’s certification motion. The motion judge considered the evidence proffered and held that there was no evidence in the record to support the plaintiff’s core allegation that the personal data of at least some Canadian Facebook users had been shared with Cambridge Analytica. He went on to conclude that:</p> <p>there is no basis in fact for any of the proposed common issues that ask whether the defendants invaded any class member’s privacy, whether at common law under the tort of intrusion upon seclusion or in breach of provincial privacy statutes.</p> <h2>Divisional Court Decision</h2> <p>On appeal, the Divisional Court upheld the ruling of the motion judge.</p> <p>Among other things, the plaintiff argued that the motion judge erred by failing to apply the statutory five-part test under the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.ontario.ca/laws/statute/92c06"><em>CPA</em></a> and had instead determined certification on a threshold evaluation of the merits. The plaintiff argued that she is not required to prove a “core allegation” at certification and that the motion judge had erred in assessing the core allegation under the s.5(1)(c) “some basis in fact” standard.</p> <p>The Divisional Court held that the motion judge had properly applied the certification test and that it was not an error in principle to focus on the s.5(1)(c) common issues requirement because a failure to meet any of the certification requirements is fatal.</p> <p>Drawing on the case law, the Court explained that to show the existence of the common issues, the plaintiff must establish “a factual basis for her claim and the allegations to which the common issues relate”. The Court reiterated that this does not involve an examination of the merits, but simply requires that there be some factual basis – in the form of admissible evidence – to support the allegation.</p> <p>The Court held that the motion judge did not assess the merits of the case or require that the plaintiff prove the core allegation at the certification stage. Rather, the Court held that the motion judge properly considered and applied the governing legal principles to find that there was no evidence in the record for the core allegation on which the plaintiff’s claim and proposed common issues depend (i.e., that the personal data of at least some Canadian Facebook users was shared with Cambridge Analytica).</p> <p>The Court rejected other arguments advanced by the plaintiff relating to findings of fact and the motion judge’s interpretation of the carriage orders.</p> <h2>Conclusion</h2> <p>The case highlights the recent trend by Canadian courts to exercise their gatekeeper function and deny certification of proposed privacy class actions based on speculative assertions (<a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/bc/bcsc/doc/2022/2022bcsc137/2022bcsc137.pdf"><em>Chow v. Facebook</em></a>, <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/sk/skqb/doc/2021/2021skqb198/2021skqb198.pdf"><em>Kish v. Facebook</em></a><em>, </em><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jcgnw"><em>Setoguchi v. Uber B.V.</em></a> ).</p>17-Mar-2022 02:14:00{211DF2A8-E429-4E38-9C35-23D5FCF4815C}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/obtention-du-rejet-pour-cause-de-retard-en-vertu-de-la-loi-sur-les-recours-collectifs-un-tribunal-de-l-ontarioHamza Mohamadhossenhttps://stikeman.com/fr-ca/equipe/m/hamza-mohamadhossenDroit canadien des actions collectivesObtention du rejet pour cause de retard en vertu de la Loi sur les recours collectifs : un tribunal de l’Ontario examine une nouvelle disposition de rejet automatique<p>Dans la décision <a rel="noopener noreferrer" rel="noopener noreferrer" href="https://www.canlii.org/en/on/onsc/doc/2022/2022onsc174/2022onsc174.pdf" target="_blank"><em>Bourque v Insight Productions</em>, 2022 ONSC 174</a>, la Cour supérieure de justice de l’Ontario (la « Cour ») a rejeté un recours collectif envisagé pour cause de retard. La décision est digne de mention puisqu’il s’agit de la première décision publiée qui examine l’article 29.1 de la <em>Loi sur les recours collectifs</em>. Cet article oblige les demandeurs à signifier les documents de motion en certification ou à établir un calendrier de signification de ces documents dans l’année de l’introduction du recours collectif.</p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p>In <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/on/onsc/doc/2022/2022onsc174/2022onsc174.pdf"><em>Bourque v Insight Productions</em>, 2022 ONSC 174</a>, the Ontario Superior Court of Justice (the “Court”) dismissed a proposed class proceeding for delay. The decision is noteworthy as it’s the first reported decision that considers section 29.1 of the <em>Class Proceedings Act</em>, which requires plaintiffs to either serve or establish a timeline to serve certification motion materials within one year of starting a class action.</p> <h2>Background</h2> <h3>Amendments to Class Action Legislation in Ontario</h3> <p>This motion to dismiss for delay arose from the newly-introduced section 29.1 of the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.ontario.ca/laws/statute/92c06"><em>Class Action Proceedings Act</em>, <em>1992</em></a> (the “Act”) that came into force on October 1, 2020, as amended by the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.ontario.ca/laws/statute/s20011"><em>Smarter and Stronger Justice Act</em>, <em>2020</em></a>. Section 29.1 of the Act provides that a court shall dismiss for delay a proceeding commenced under the Act if one of the following steps are not taken within <strong>one year</strong> of the proceeding’s commencement date:</p> <ol> <li>The representative plaintiff has filed “a final and completed motion record” for certification;</li> <li>The parties have agreed in writing and filed a timetable for the representative plaintiff to serve their motion record for certification or for completing the steps required to advance the proceeding;</li> <li>The court has established a timetable for the representative plaintiff to serve their motion record for certification or for completing the steps required to advance the proceeding; and</li> <li>Any other steps or items specified by regulations.</li> </ol> <p>This amendment to the Act was enacted in response to the recommendations made by the Law Commission of Ontario’s (“LCO”) final report on class actions. In <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.lco-cdo.org/wp-content/uploads/2019/07/LCO-Class-Actions-Report-FINAL-July-17-2019.pdf"><em>Class Actions: Objectives, Experiences and Reforms</em></a>, the LCO recommended introducing an “automatic dismissal and costs provision” for cases where plaintiffs fail to file certification materials within one year of starting their class action, as a way to establish “<em>reasonable and firm consequences for parties to advance their actions in a timely manner</em>”, including imposing “<em>discipline on counsel</em>”.</p> <p>Pursuant to the transition provisions in the Act, section 29.1 deemed all class actions commenced prior to the amendments coming into force, to have commenced on October 1, 2020.</p> <h3>The Proposed Class Action</h3> <p>The plaintiffs in this case commenced a proposed class action on February 21, 2020. The claim alleged that the defendant violated the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.ontario.ca/laws/statute/00e41"><em>Employment Standards Act</em>, <em>2000</em></a> by misclassifying workers as independent contractors, instead of employees.</p> <p>Given the transition provisions in the Act, the action was deemed to have commenced October 1, 2020, and therefore, October 1, 2021 was the deadline by which the plaintiffs had to deliver certification materials or take one of the aforementioned steps to move their case forward. However, the representative plaintiff only served her certification motion record on October 6, 2021, one day after the defendant brought a motion to dismiss for delay and six days <em>after</em> the statutory deadline.</p> <p>In response, the plaintiffs argued, <em>inter alia,</em> that:</p> <ol> <li>a timetable was established by the court informally during a telephone case conference by allowing the plaintiff to serve her certification record “<em>when she can</em>”; and</li> <li>as remedial legislation, section 29.1 should be given a broad and liberal interpretation, and accordingly, some latitude should be afforded to the plaintiff in not dismissing her action for delay.</li> </ol> <h2>The Court’s Decision </h2> <p>Justice Belobaba granted the defendant’s motion to dismiss for delay under section 29.1 of the Act, and dismissed the proposed class proceeding in its current form. However, he noted that the plaintiffs’ class counsel may re-file an identical action against the defendant with a different proposed representative plaintiff.</p> <p>Justice Belobaba began his analysis by noting the mandatory dismissal date of October 1, 2021, and by highlighting that section 29.1 employs clear, yet imperative, statutory language: a court “shall” dismiss for delay if none of the requirements outlined in section 29.1 are met by the mandatory dismissal date.</p> <p>Justice Belobaba then addressed the arguments raised by the plaintiffs:</p> <ul> <li><strong><em>No timetable was established by the court</em></strong><em> – </em>Justice Belobaba held that to allow a plaintiff to file materials “<em>when [they] can</em>” does not satisfy either the statutory definition of “timetable” or the common language definition, both of which require setting a schedule for specific steps towards completing a larger goal (i.e.<em>,</em> advancing the proceeding). In fact, he noted that allowing a plaintiff to file motion materials at their convenience would be antithetical to the definition of a “timetable” and would contradict the statutory objective underlying section 29.1 of the Act.</li> </ul> <ul> <li><strong><em>Statutory interpretation did not assist the plaintiff</em></strong> – While Justice Belobaba agreed that the Act should be given a “<em>generous, broad, liberal and purposive interpretation</em>” as a remedial legislation, he found that a plain language interpretation is in fact a “<em>liberal and purposive</em>” approach as it best advances the purpose and objective of section 29.1. In short, as section 29.1 seeks to ensure the timely advancement of class action proceedings, a plain language interpretation that facilitates this exact goal amounts to a “<em>large and purposive</em>” interpretation that is required for remedial legislation.</li> </ul> <p>The plaintiffs had also advanced the argument that the Court should factor in the suspension of the limitation periods from the COVID-19 pandemic when applying section 29.1. Rejecting this argument, Justice Belobaba held that the pandemic had limited impact on the representative plaintiff’s ability to follow section 29.1, as courts were operational from the third week of May 2020 and the limitation period’s suspension was lifted prior to the coming into force of section 29.1.</p> <p>Justice Belobaba declined to use the broad discretion afforded to courts under section 12 of the Act, which empowers courts to make any order regarding the conduct of the proceeding to ensure its fair and expeditious resolution. Rather, Justice Belobaba concluded that section 12 cannot be used to override other mandatory provisions of the Act, and that overriding section 29.1 would be inappropriate as it would not be “<em>fair and expeditious</em>” to either of the parties in the proposed class action.</p> <p>Justice Belobaba noted that interpreting and applying section 29.1 “<em>as written</em>” best achieves the provision’s intended purpose and is “<em>to everyone’s advantage (both putative class members and defendants)</em>”. This is especially so when the consequence of the dismissal is mostly inconvenient and not “<em>particularly onerous</em>” – such as re-filing the same action with a different proposed representative plaintiff.</p> <h2>Key Take-aways</h2> <p>While the case may serve as a reminder to plaintiffs to be more vigilant in moving matters forward, the case raises some interesting questions for defendants and whether bringing a dismissal motion for delay under section 29.1 is worthwhile when the action can ultimately be refiled with a new representative plaintiff.</p> <p>It remains to be seen how courts will deal with plaintiffs’ attempts for a “do-over” after a dismissal for delay, including whether courts will continue to uphold the statutory objectives of speeding up class action proceedings and the role of strict statutory interpretation.</p>09-Feb-2022 04:19:00{B3AD9F3C-96C2-46D1-9C1D-C54FD1FB0965}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/activites-de-cartel-les-tribunaux-rejettent-les-allegations-de-complot-dans-des-actions-collectives-projeteesIrma Shaboianhttps://stikeman.com/fr-ca/equipe/s/irma-shaboianDroit canadien des actions collectivesDroit canadien de la concurrenceActivités de cartel : les tribunaux rejettent les allégations de complot dans des actions collectives projetées<p><strong>De récentes décisions rendues par la Cour suprême de la Colombie-Britannique dans l’affaire <em>Latifi </em>c.<em> The TDL Group Corp., </em><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.bccourts.ca/jdb-txt/sc/21/21/2021BCSC2183.htm">2021 BCSC 2183</a>, et par la Cour fédérale du Canada dans l’affaire <em>Jensen </em>c.<em> Samsung Electronics Co. Ltd.</em>, <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/515921/1/document.do">2021 FC 1185</a>, visaient des actions collectives projetées invoquant des manquements aux dispositions sur les complots criminels de l’article 45 de la <em>Loi sur la concurrence</em>. Ces décisions témoignent de la volonté accrue des tribunaux d’examiner minutieusement les causes d’action et les actes de procédure proposés pour déterminer si les actions collectives projetées doivent aller de l’avant.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>Recent decisions from the British Columbia Supreme Court in <em>Latifi v. The TDL Group Corp., </em></strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.bccourts.ca/jdb-txt/sc/21/21/2021BCSC2183.htm"><strong>2021 BCSC 2183</strong></a><strong> and the Federal Court of Canada in <em>Jensen v. Samsung Electronics Co. Ltd.</em>, </strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/515921/1/document.do"><strong>2021 FC 1185</strong></a><strong> involved proposed class action suits alleging breaches of the criminal conspiracy provisions in section 45 of the <em>Competition Act</em>. These decisions </strong><strong>exemplify an increased willingness by the courts to scrutinize the proposed causes of action and pleadings in determining whether proposed class actions should move forward. </strong></p> <h2>Background</h2> <p><em>Latifi</em> and <em>Jensen</em> were proposed class action suits. Each alleged breaches of the criminal conspiracy provisions in section 45 of the Act. Private parties can sue for damages suffered as a result of such breaches. </p> <p>In <em>Latifi</em>, the plaintiff alleged that hiring restrictions among restaurant franchisees (known as “no-poach agreements”) violated section 45 of the Act because they prevented employee poaching between restaurant franchisees. The defendant franchisor successfully struck the plaintiff’s claims – before certification of the class action – on the basis that the Statement of Claim disclosed no reasonable cause of action because the criminal conspiracy provisions of the Act do not apply to buy-side agreements. (“Buy-side agreements” are agreements that involve the purchase or acquisition of goods or services, such as employee services, and in contrast to, supply-side agreements that relate to the sale or supply of products.)</p> <p>In <em>Jensen</em>, the plaintiffs sought to certify a class action alleging that the manufacturers of dynamic random-access memory (DRAM) chips violated section 45 of the Act by conspiring, through communications in private meetings and through public statements – or “signalling” – to each other, to suppress the supply of DRAM and increase DRAM prices. The defendants successfully argued that certification should be denied as the plaintiffs (i) failed to establish a reasonable cause of action on the facts set out in the Statement of Claim, and (ii) provided no basis in fact for the proposed common issues for the class. </p> <p>Both <em>Latifi</em> and <em>Jensen</em> were decided at the trial level and may therefore not be the final word if they are appealed.</p> <h2>The Decisions</h2> <h3>Buy-side agreements are not captured in section 45 (Latifi)</h3> <p>In <em>Latifi, </em>the British Columbia Supreme Court (the “B.C. Court”) granted the defendant’s application to strike the plaintiff’s claims that the no-poach agreements violated section 45.</p> <p>The judge agreed with the defendant that section 45, on a plain reading, prohibits agreements or conspiracies between people who compete with one another for the production or supply (but not the purchase) of a product. The B.C. Court held that it was “plain and obvious” that the conspiracy claim against restaurant franchisees was bound to fail because no-poach agreements are not subject to prosecution in Canada under the criminal conspiracy provisions of the Act.</p> <p>The B.C. Court’s interpretation of section 45 and buy-side agreements is consistent with the Competition Bureau’s approach set out in the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04582.html"><em>Competitor Collaboration Guidelines</em></a> and the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canada.ca/en/competition-bureau/news/2020/11/competition-bureau-statement-on-the-application-of-the-competition-act-to-no-poaching-wage-fixing-and-other-buy-side-agreements.html"><em>Competition Bureau statement on the application of the Competition Act to no-poaching, wage-fixing and other buy-side agreements</em></a>. In these Guidelines and Statement, the Bureau has indicated that, based on legal advice, it would consider buy-side agreements for the purchase of products and services, including employee no-poaching and wage-fixing agreements, to fall outside the ambit of section 45. The B.C. Court agreed with the plaintiff that the Bureau’s statements are “neither binding nor determinative” and that conclusions about the meaning of section 45 “do not turn” on the consideration of the Bureau’s interpretation.</p> <h3>Evidence of an agreement among competitors cannot be speculative (Jensen)</h3> <p>In <em>Jensen, </em>the Federal Court (the “Court”) denied the plaintiffs’ certification motion on two grounds.</p> <h4>The plaintiffs failed to plead a reasonable cause of action</h4> <p>The Court held that it was “plain and obvious” that the plaintiffs’ claim could not succeed. The Statement of Claim lacked detail and contained only vague and general allegations that amounted to a fishing expedition. None of the statements relied on by the plaintiffs suggested that the defendants had reached an unlawful agreement with their competitors, whether on DRAM supply or prices. Rather, the pleadings were consistent with the defendants’ engagement in lawful unilateral conduct and conscious parallelism (where competitors adopt similar or identical business practices or pricing absent any agreement to limit competition). The pleadings, therefore, did not adequately disclose a conspiracy between the defendants.</p> <h4>The plaintiffs failed to provide any factual basis for the alleged conspiracy</h4> <p>The plaintiffs offered no evidence that supported an allegation that the defendants were parties to a coordinated restriction of DRAM supply and had made an agreement in breach of section 45 of the Act. There was not a scintilla of evidence regarding any investigations undertaken in Canada, or anywhere else, besides allegedly in China. The court indicated that this was a "very rare" situation in the context of competition class actions, where plaintiffs often rely on the existence of ongoing investigations, criminal charges, guilty pleas, etc.</p> <p>The plaintiffs also relied on public statements made by the defendant parties regarding DRAM supply. None of the public statements relied on showed that the defendants suppressed, restricted, or limited DRAM supply. The public statements showed the opposite: that the defendants expected increases in DRAM supply during the class period, but that this growth lagged behind the growth in demand. Accordingly, the plaintiffs’ evidence fell short of demonstrating some basis in fact.</p> <h2>Key Take-Aways</h2> <ul> <li>Courts are showing an increased willingness to scrutinize the proposed causes of action and pleadings in determining whether proposed class actions should move forward.</li> <li>Buy-side agreements, including no-poach agreements, among competitors are unlikely to fall within the ambit of the conspiracy provisions of the Act.</li> <li>Pleadings or evidence of conscious parallelism are not enough to ground a conspiracy claim.</li> <li>The Federal Court may be reluctant to certify price-fixing class actions where the conspiracy pleadings are based on bald statements, if the alleged misconduct is consistent with unilateral conduct or conscious parallelism and when there is an absence of some basis in fact to support the allegations. While persuasive, decisions from the Federal Court are not binding on provincial superior courts.</li> </ul>13-Dec-2021 03:21:00{9292B303-8910-4BC0-913E-A39E4C72C5B0}https://stikeman.com/fr-ca/savoir/droit-canadien-emploi-travail-regimes-retraite/certification-du-recours-collectif-contre-uber-la-decision-de-la-cour-de-l-ontario-etablit-les-fondements-de-l-instanceTamara Ticollhttps://stikeman.com/fr-ca/equipe/t/tamara-ticollAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien de l'emploi, du travail et des régimes de retraiteDroit canadien de l'énergieDroit canadien des actions collectivesActualités - LitigeCertification du recours collectif contre Uber : la décision de la Cour de l’Ontario établit les fondements de l’instance sur les questions communes dans le différend lié à la qualification d’entrepreneur indépendant<p><strong>Dans l’affaire <a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/jhj5q" target="_blank"><em>Heller v. Uber Technologies Inc.</em></a><em>, </em>la Cour supérieure de justice de l’Ontario a certifié le recours collectif intenté par les chauffeurs Uber qui prétendent avoir été erronément qualifiés d’entrepreneurs indépendants et s’être vu refuser des avantages liés à l’emploi. </strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In </strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jhj5q"><strong><em>Heller v. Uber Technologies Inc.</em></strong></a><strong><em>, </em></strong>t<strong>he Ontario Superior Court of Justice</strong><strong> certified a class action lawsuit brought by Uber drivers who claim they have been misclassified as independent contractors and denied employment benefits. </strong></p> <h2>Background</h2> <p>In 2017, the representative plaintiffs, an UberEats driver and an Uber driver (the “Plaintiffs”) commenced a proposed class action in Ontario against Uber Technologies Inc. and related entitles (together, “Uber") on behalf of persons who have entered into Service Agreements with Uber to use software applications (“Uber Apps”) developed and operated by Uber to provide transportation and food delivery services (the “Class Members”).</p> <p>The Service Agreements label the Uber drivers or delivery people as “independent contractors”. This legal categorization was disputed by the Plaintiffs, who alleged that they should be classified as employees, and therefore, entitled to the benefits of Ontario’s <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/30f"><em>Employment Standards Act</em>, <em>2000</em></a> (“ESA”) and other federal employment-related legislation such as the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-8/latest/rsc-1985-c-c-8.html"><em>Canada Pension Plan</em></a> and the <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/7vtf"><em>Employment Insurance Act</em></a><em>. </em></p> <p>Uber initially asserted that the Plaintiffs’ class action was precluded by an arbitration clause in its Services Agreements that required all disputes to be resolved through arbitration in the Netherlands. As <a href="https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/la-cour-supreme-du-canada-invalide-la-clause-d-arbitrage-obligatoire-imposee-par-uber-et-ouvre-la-voie-a-une-action-collective">we noted in 2020</a>, the Supreme Court of Canada ruled that the mandatory arbitration clause in Uber’s service agreement was unconscionable, and therefore invalid, with the consequence that the proposed class action could proceed to court.</p> <p>Following the Supreme Court’s ruling, the Plaintiffs moved to certify the proceeding as a class action.</p> <h3>Overview of the parties’ positions</h3> <p>The Plaintiffs submitted that Uber had misclassified the proposed Class Members as independent contractors rather than employees, and that there was some basis in fact for the commonality of all the proposed common issues that would determine and classify the employment relationship. For instance, they all used the Uber App, were bound by the standard form service agreements, and shared rules of contract performance imposed on them by Uber.</p> <p>In their Statement of Claim, the Plaintiffs advanced four causes of action: (i) breach of the ESA<em>;</em> (ii) breach of contract; (iii) negligence; and (iv) unjust enrichment. The Plaintiffs claimed that their proposed class action is similar to other employment status misclassification cases that have been certified and that it too should be certified.</p> <p>Uber, on the other hand, argued that the Class Members were independent contractors as this was a status expressly attributed to them in the Service Agreements. Uber also argued that the Class Members made the choice to provide services to riders using the Uber App, with Uber’s role being to develop, license, and market the app, as well as to facilitate payment for services (among other things). Uber claimed that the matter of employee or independent contractor status could not be determined at a common issues trial because, regardless of the common Uber Apps, common Service Agreement, and common rules and regulations, employment status is ultimately an idiosyncratic analysis that varies from driver to driver.</p> <h2>The Certification Decision</h2> <p>The Court certified the class proceeding, finding that the five criteria set out in section 5 of Ontario’s <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/2tv"><em>Class Proceedings Act, 1992</em></a> (the “CPA”) were met, namely that:</p> <ul> <li>the pleadings disclose a <strong>cause of action</strong>;</li> <li>there is an <strong>identifiable class</strong> of two or more persons;</li> <li>the claims of the class members raise <strong>common issues</strong>;</li> <li>a class proceeding would be the <strong>preferable procedure</strong> for the resolution of the common issues; and</li> <li>there is a <strong>representative plaintiff</strong> who would fairly and adequately represent the interests of the class in accordance with a workable plan and who does not have a conflict of interest with other class members on the common issues to be raised.</li> </ul> <h3><strong>Cause of action</strong></h3> <p>While the Court concluded that the Plaintiffs satisfied the cause of action criterion for breach of the ESA and breach of contract, the Court agreed with Uber that the Plaintiffs did not satisfy the cause of action criteria or the preferable procedure criteria for their claims of unjust enrichment and negligence.</p> <p>The Court held that the Plaintiffs’ claims for ESA entitlements and other unpaid statutory payment and out-of-pocket expenses were all breach of contract claims, and that the equitable relief of unjust enrichment was not available where the plaintiff possesses a right to contractual relief. Relying on the Supreme Court in <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/j8tcb"><em>Atlantic Lottery v. Babstock</em></a>, the Court held that disgorgement is generally not available for breach of contract and is only available in extraordinary circumstances, which did not exist in this case.</p> <p>With respect to the negligence claim, the Court held that the putative Class Members’ pure economic loss claims did not fall within any of the recognized categories where recovery for pure economic loss is permitted in negligence and that the claims were more than adequately addressed by the ESA and the alleged contracts of employment. The Court further held that this was not an occasion for concurrent liability in contract and tort. Moreover, the Court held that any claim in negligence would be redundant and cumbersome and would not satisfy the preferable procedure criterion.</p> <h3>Identifiable class</h3> <p>The Court held that the Plaintiffs satisfied the identifiable class criterion, but that the class definition needed a modest revision. Specifically, the Plaintiffs’ proposed class definition referred to “any person who, since January 1, 2012, worked or continues to work … pursuant to a Service Agreement”. Finding that this definition obscured the key issue in the case as to whether the Class Members, all of whom are Uber App users, are “working for” Uber, the Court revised the definition to identify the putative Class Members simply as any person who “used” the Uber App to transport passengers and/or to provide delivery services.</p> <h3>Common issues</h3> <p>The commonality or idiosyncrasy of the proposed common issues questions was a “major factual and legal battleground” of the proposed class action.</p> <p>After reviewing the extensive evidentiary record, the Court held (notwithstanding Uber’s arguments to the contrary) that there was some basis in fact for a number of proposed common issues, including whether the Uber App users were employees or independent contractors, and the Class Members’ related breach of contract and statutory claims. Moreover, the Court held that all proposed Class Members had in common that they invariably used Uber Apps and were bound by the Service Agreements. In light of the foregoing, the Court held that there were sufficient common issues to bind all Class Members. The ultimate determination of whether an employment relationship exists will be decided by a common issues trial judge at a later date (pending the outcome of any appeals, to the extent made).</p> <p>Significantly, the Court held that, in this case, the question of aggregate damages was <strong>not</strong> certifiable as a common issue. The CPA provides that a court can determine damages on an aggregate (i.e. class-wide basis) when “no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined in order to establish the amount of the defendant’s monetary liability” and “the aggregate of the defendant’s liability can reasonably be determined without proof by individual class members”. In this case, however, the Court held that individual questions of fact relating to the determination of each Class Member’s damages remained to be determined on an individual basis, with Class Members required to provide proof in support of their damages claims at individual issues trials.</p> <p>In the event that the Class Members are successful in proving they are Uber employees at the common issues trial, individual issues trials will follow to determine the Class Members’ individual damages. While the number of individual issues trials in this circumstance could be quite large (there are 366,259 Class Members), the Court noted in its decision that the take up of individual claims may be small due to Class Member attrition (individuals may decide that they do not have provable claims or that they would not benefit from a “employee” finding).</p> <h3>Preferable procedure</h3> <p>The Court held that the Plaintiffs satisfied the preferable procedure criterion and rejected Uber’s arguments that the individual issues in this case stemming from employment classification and limitations issues will overwhelm the common issues and make the class action unmanageable.</p> <p>The Court held that there are viable common issues and a class action would be a meaningful route to access to justice for both parties. According to the Court, the proceeding would be manageable, and a common issues trial would provide “considerable momentum for individual issues trials”. The Court noted that waiting for legislative reform would be of no use to Class members who have present day claims and that the court could eventually rely on section 25 of the CPA to develop protocols for the resolution of the individual issues trials.</p> <p>The fifth certification test requirement (an adequate representative plaintiff with a workable litigation plan) was not contested.</p> <h2>Key Take-aways</h2> <p>Businesses in which independent contractors form part of the workplace fabric will want to keep an eye on this case, which – as a result of this ruling – could now proceed to a common issues trial. There is of course the possibility of an appeal of the certification order, and it will be interesting to see if that is pursued and what the result is. In any event, it should be remembered that this decision is not a decision on the merits: there is still a long way to go before any determination will be made as to the classification of Uber drivers as independent contractors or employees.</p>01-Sep-2021 03:43:00{C9B5E6F5-D050-4A75-B1A9-7A7139BCBB41}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/recours-collectif-relatif-a-des-fonds-communs-de-placement-non-certifie-en-appel-la-Cour-divisionnaire-confirme-qu-il-n-y-a-pas-d-obligation-de-diligenceDroit canadien des actions collectivesDroit canadien des valeurs mobilièresRecours collectif relatif à des fonds communs de placement non certifié en appel : la Cour divisionnaire confirme qu’il n’y a pas d’obligation de diligence de l’auditeur envers les investisseurs<p><strong>Le récent jugement de la Cour divisionnaire de l’Ontario dans </strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jff7w"><strong><em>Whitehouse et al. c. BDO Canada LLP</em></strong></a> <strong><em>(en anglais)</em> donne des indications sur les circonstances dans lesquelles une motion de certification peut être rejetée lorsqu’une plaidoirie échoue à déclarer une cause d’action. La Cour divisionnaire a validé une décision antérieure en déterminant que l’auditeur financier, lorsqu’il s’acquitte de ses missions d’audit pour une société de gestion de portefeuille, n’a aucune obligation de diligence envers les porteurs de parts d’un fonds géré par la société.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>The Ontario Divisional Court’s recent decision in </strong><strong><em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/jff7w" target="_blank">Whitehouse et al. v. BDO Canada LLP</a></em></strong><strong> provides guidance on when a certification motion can be dismissed in the context of a pleading that fails to disclose a cause of action. The Divisional Court upheld a previous ruling in determining that a financial auditor, in performing audit engagements for a portfolio management firm, owed no duty of care to the firm’s unitholders in funds. </strong></p> <h2>Key Takeaways</h2> <p>The Divisional Court’s decision has some direct implications for financial auditors and defendants to class actions. Specifically, it reinforces that:</p> <ul> <li>where the plaintiff has not specifically pled material facts showing a precise undertaking/representation to assist unitholders, allegations of negligence brought against auditors by third-party investors will likely not succeed and a corresponding class proceeding will likely not be certified; and</li> <li>an action will not be certified as a class proceeding if the cause of action in negligence is based on a duty owed to an overly broad, unknown, and indeterminate group of class members.</li> </ul> <h2>Background</h2> <p>The plaintiffs were individual unitholders in mutual fund trusts (the Funds) issued by Crystal Wealth Management System Ltd (the Company), a portfolio management firm. In accordance with the <em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/2qs" target="_blank">Securities Act</a></em> (Ontario) (OSA)<em>, </em>the Company was required to prepare annual audited financial statements to send to every unitholder and file with the Ontario Securities Commission (OSC). The Company retained BDO Canada LLP (the Auditor) to audit the Funds.</p> <p>From 2007 to 2015, the Auditor provided clean audit opinions. In April 2017, the OSC issued a temporary order prohibiting trading in the Funds and trading in securities held by the Funds. In April 2017, the OSC also appointed Grant Thornton LLP as receiver (the Receiver) over all the assets of the Company. The Receiver subsequently found that the Funds’ net asset values, as disclosed by the Company, were false or manipulated and that, as a consequence, the net asset values of certain Funds had been materially overstated. Since April 2017, the unitholders have been unable to redeem their investments in the mutual funds.</p> <p>In June 2017, the plaintiffs commenced an action under the Ontario <em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/2tv" target="_blank">Class Proceedings Ac</a></em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/2tv" target="_blank">t, <em>1992</em></a> against the Auditor, alleging negligence in preparation of the audit reports for the Company. The claim sought a declaration that the Auditor had a duty of care to the class members, which it breached by negligently performing its professional services. The “class members” included every person who invested in any of the Funds of the Company from April 12, 2007 to April 7, 2017 and who retained investments in any of the Funds on April 7, 2017.</p> <h2><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/j4j6t" target="_blank">Certification Decision</a></h2> <p>On June 15, 2018, the plaintiffs brought a motion at the Ontario Superior Court of Justice to certify the action as a class proceeding. The motion judge refused to certify the class proceeding against the Auditor, stating that the pleading failed to disclose a cause of action.</p> <p>For negligent performance of a service to be a cause of action, there must have been a duty of care, which in turn requires (<em>inter alia</em>) sufficient proximity and reasonable foreseeability. However, any duty that is owed can be negated by public policy concerns.</p> <p>After reviewing existing settled law on the duty of care owed to unitholders (including <em><span style="text-decoration: underline;"><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/1fr23" target="_blank">Hercules Managements Ltd v Ernst & Young</a></span></em><em>, </em><em><span style="text-decoration: underline;"><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/hpdq9" target="_blank">Deloitte & Touche v Livent Inc. (Receiver of)</a></span></em> and <em><span style="text-decoration: underline;"><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/hts38" target="_blank">Lavender v Miller Bernstein LLP</a></span></em> each as discussed below), the motion judge held that for cases arising from the negligent performance of a service:</p> <ul> <li>there must be a specific undertaking from the defendants to the plaintiffs; and</li> <li>the plaintiffs’ reliance must be sourced within that undertaking.</li> </ul> <p>However, any duty that appears to be owed on that basis might nevertheless be negated on the ground, for example, that it would impose indeterminate liability on the defendants.</p> <p>The motion judge held that the plaintiffs failed to plead any facts indicating a “direct relationship, undertaking or representation” between the Auditor and the class members. Without a pleaded basis for sufficient proximity, the motion judge held it was plain and obvious that the Auditor, in performing statutory audits, did not owe the plaintiffs a duty of care with respect to their investment decisions. There was no undertaking for the class members to rely on.</p> <p>The motion judge further considered whether a duty of care arose from the Auditor’s role in ensuring the Company’s compliance with Ontario securities law. The motion judge ultimately concluded that the relationship between the Auditor, the OSC and the unitholders was too remote to ground a duty of care. The motion judge noted that there was no undertaking by the Auditor to assist the proposed class members in their investment decisions or safeguard them from the Company’s non-compliance with the OSA<em>. </em></p> <p>The plaintiffs appealed the motion judge’s decision to the Divisional Court.</p> <h2>Divisional Court Decision</h2> <p>On appeal, the Divisional Court upheld the motion judge’s ruling that the plaintiffs had not properly pleaded a cause of action in negligence. Specifically, the Divisional Court held that (i) there was no duty of care that the Auditor owed to the class members, and (ii) the class member definition, as pleaded, was overly broad and indeterminate.</p> <h3>Relationship between auditor and investors</h3> <p>The Divisional Court noted that the judicial and appellate authority considered by the motion judge confirmed that pleaded facts must suggest a precise undertaking of responsibility that gives rise to a relationship owed to the class members. Two cases were particularly influential in the ruling:</p> <ul> <li><em><span style="text-decoration: underline;"><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/1fr23" target="_blank">Hercules Managements Ltd v Ernst & Young</a></span></em> involved a similar fact pattern in which investors claimed for loss against a company’s auditor. The Supreme Court of Canada ultimately reasoned that the auditor’s mere knowledge of the investors is insufficient for a claim in negligence. The Court also acknowledged that many investors could conceivably review and rely on an audit report even after an auditor ceases to act for the company. Therefore, the Court cautioned that a finding of a category of duty of care would create a risk of indeterminate liability, which might be contrary to public policy.</li> <li><em><span style="text-decoration: underline;"><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/hts38" target="_blank">Lavender v Miller Bernstein LLP</a></span></em> involved a company that retained an auditor to audit reports to file with the OSC. The Ontario Court of Appeal confirmed that absent making representations to the members of the class, or an undertaking to assist the investors in particular investment decisions, there was no direct relationship between the Auditor and the investors.</li> </ul> <p>On appeal, the plaintiffs argued that the motion judge failed to accept, as pleaded, that: (i) the audit reports were delivered directly to the unitholders, (ii) the Auditor knew and intended that the unit-holders would rely on the reports for investment decisions, and (iii) the unitholders did rely on the audit reports in making their investment decisions. The Divisional Court affirmed the motion judge’s conclusion that simply providing audit reports to the OSC did not give rise to a level of undertaking to assist unitholders with investment decisions. Similarly, the Court held that the Auditor’s mere knowledge that the unitholders might rely on the reports did not establish an undertaking either. Ultimately, the Court held that in failing to plead specific facts in which intent could be inferred, a conclusion could not be drawn that the Auditors intended for the unitholders to rely on the reports for their investment decisions.</p> <h3>Class member definition</h3> <p>The Divisional Court held that the class definition, which included every person who invested in any Funds from April 12, 2007 to April 2017 and retained those investments on April 7 ,2017, was overly broad and indeterminate.</p> <p>Specifically, the Divisional Court reasoned that the class definition implied that there would be members who relied on the Auditor’s reports but acquired units after the Auditor ceased to be the Auditor. The Court observed that, if the plaintiffs’ argument were to be accepted, a cause of action in negligence could be founded on a duty an auditor owed to an unknowable group of prospective investors. The Court concluded that this would lead to the risk of indeterminate liability, against which the Supreme Court of Canada had cautioned in<em> Hercules.</em></p>23-Jul-2021 06:07:00{596B77E6-8350-42EE-B0B1-F56B8FE6BA04}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/pas-de-perte-indemnisable-pas-de-certification-la-cour-divisionnaire-de-l-ontario-convient-que-les-demandeurs-doivent-demontrer-un-fondementDanielle K. Royalhttps://stikeman.com/fr-ca/equipe/r/danielle-k-royalAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesDroit canadien de la responsabilité du fait des produitsActualités - LitigePas de perte indemnisable, pas de certification : la Cour divisionnaire de l’Ontario convient que les demandeurs doivent démontrer un fondement en fait pour leurs recours collectifs<p><strong>Dans sa décision <a href="https://canlii.ca/t/jg5m9"><em>Maginnis v. FCA Canada Inc</em></a><em>.</em>, la Cour divisionnaire de l’Ontario confirme le rejet de la motion en certification des demandeurs contre un fabricant automobile et d’autres défendeurs dans le cadre d’un recours collectif envisagé relativement à un dispositif d’invalidation du système de contrôle des émissions d’un véhicule automobile.  </strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In </strong><a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://canlii.ca/t/jg5m9"><strong><em>Maginnis v. FCA Canada Inc</em></strong><strong><em>.</em></strong></a><strong> the Ontario Divisional Court upheld the dismissal of the plaintiffs’ certification motion against an automobile manufacturer and other defendants in a proposed class action relating to an automotive emission defeat device. </strong></p> <p>Apart from reaffirming that plaintiffs must provide evidence, and not just allegations of compensable loss to succeed at certification, the Divisional Court’s decision in this appeal has some direct implications for manufacturers across industries. Specifically, it:</p> <ul> <li>Underscores how a robust recall program may assist to reduce or eliminate compensable harm to consumers that could otherwise support certification; and</li> <li>Reinforces that compensable harm is a “fundamental prerequisite” for class certification in Ontario. A plaintiff’s failure to file evidence of compensable harm can therefore be fatal to a certification motion.</li> </ul> <h2>Background</h2> <p>In early 2017, various American environmental agencies issued violation notices to a large vehicle manufacturer in the U.S. relating to the installation of software “defeat devices” in certain eco-diesel vehicles (the “Subject Vehicles”). Litigation followed shortly thereafter in both the U.S. and Canada.</p> <p>In Canada, the plaintiffs commenced a proposed class action against the following (collectively, the “Defendants”):</p> <ul> <li>the manufacturer of the Subject Vehicles (“FCA”);</li> <li>the designers and suppliers of the emission control devices, and</li> <li>a car dealership that sold a Subject Vehicle to one of the plaintiffs.</li> </ul> <p>The plaintiffs made various claims, including negligent misrepresentation, breach of the <em>Competition Act, </em>breach of the <em>Consumer Protection Act, </em>breach of contract, and unjust enrichment.</p> <p>Prior to the hearing of the certification motion, the U.S. litigation settled and FCA U.S. agreed to recall the Subject Vehicles and repair the emission systems by installing software known as the Approved Emission Modification (“AEM”). FCA U.S. also agreed to pay an amount of money to U.S. owners and lessees if they obtained the AEM, and it provided an extended warranty on the emissions system. FCA Canada began a similar recall program. By the time of the certification decision (discussed below), over two thirds of the Subject Vehicles had been repaired in Canada.</p> <h2>Overview of the Plaintiffs’ Arguments</h2> <p>At certification, the plaintiffs claimed that they had suffered loss because:</p> <ul> <li>they had paid a premium price for an eco-diesel engine, and had instead received a “dirty” diesel engine; and</li> <li>the repair of the eco-diesel engine resulted in reduced fuel economy or vehicle performance.</li> </ul> <h2><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/j9pll" target="_blank">The Certification Decision</a></h2> <p>The Certification Judge <strong>refused to certify</strong> the class proceeding against the Defendants, stating that the plaintiffs provided no basis in fact for any compensable loss.</p> <p>The Certification Judge held that there was no evidence that anyone paid a “premium price” for a Subject Vehicle, and even if they did, the Subject Vehicles would be emissions-compliant post-repair, and could be sold, bought, or traded at a value unaffected by the defeat device. There was also no evidence that the repair of the defeat device resulted in reduced fuel economy or vehicle performance.</p> <p>The Certification Judge did not examine all the factors in the certification test under the <em>Class Proceedings Act </em>(the “<em>CPA</em>”), focusing instead on the preferable procedure criterion under s.5(1)(d), which requires judges to “consider the goals of class proceedings – <strong>access to justice, behaviour modification and judicial economy.” </strong></p> <p>Ultimately, the Certification Judge held that a class proceeding was not a preferable procedure in this case because:</p> <p>[A]bsent compensable harm, there are no access to justice concerns, the defeat device has been (or is being) repaired and thus behaviour has been modified; and certifying this action would not advance any viable lawsuit and would only result in a waste of judicial resources.</p> <h2>The Divisional Court Decision</h2> <p>On appeal, the Divisional Court upheld the ruling of the Certification Judge.</p> <p>The plaintiffs argued that the Certification Judge erred in, among other things: (i) requiring the plaintiffs to prove their loss at the certification stage, (ii) finding that there was no evidence of compensable loss and (iii) finding that a class action would not be a preferable procedure.</p> <p>The Divisional Court disagreed with the plaintiffs’ contention that the Certification Judge had erred. Accordingly, it dismissed the plaintiffs’ appeal.</p> <h3>Proof of loss at certification</h3> <p>The Divisional Court held that the Certification Judge did not require the plaintiffs to prove loss at the certification stage, nor did he enter into an assessment of the merits stage of the case.</p> <p>The Defendants led evidence that the AEM provided through the recall made the emissions device effective without affecting overall fuel economy and vehicle performance. Given this evidence, the Certification Judge required the plaintiffs to provide some evidence of compensable loss to the plaintiffs. The Divisional Court noted this approach is consistent with the case law respecting certification motions. While no evidence is admissible in determining whether the pleadings disclose a reasonable cause of action under s. 5(1)(a) of the CPA<em>, </em>the other paragraphs in s. 5(1) require that the plaintiff show that there is <em>some basis in fact </em>for each requirement. Such an inquiry is not to be an assessment of the merits of the case at the certification stage.</p> <p>The Certification Judge correctly held that there was no basis in fact for the proposition that a class proceeding would be the preferable procedure for resolution of the class proceeding. As the defect in the product had been repaired and there was no evidence of compensable harm, then “there are no access to justice concerns, behaviour modification has been achieved, and proceeding any further in court would be a waste of judicial resources.”</p> <p>The Divisional Court rejected the plaintiffs’ argument that the Certification Judge’s decision was inconsistent with <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="http://canlii.ca/t/j2hbf"><em>Pro-Sys Consultants Ltd. v. Microsoft Corporation</em></a> (“<em>Pro-Sys</em>”) because he had required them to prove actual loss at the certification stage. The Divisional Court recognized that in <em>Pro-Sys,</em> an indirect purchaser action, the Supreme Court was not focused on the issue in this case - namely, whether there was some basis in fact for finding any compensable loss at all had been suffered by the plaintiffs. Rather, it was focused on whether there was some basis in fact to show that loss-related issues were capable of resolution on a common basis.</p> <h3>Evidence of compensable loss</h3> <p>The Divisional Court held that the Certification Judge did not err in finding that there was no evidence of compensable loss. </p> <p>The Certification Judge had found that there was no evidence that anyone paid a premium price for the eco-diesel engine. Even if there had been such evidence, the Certification Judge held that the plaintiffs could not show that there was a difference in value between what they paid and the value of the vehicle when repaired, so as to permit a remedy pursuant to s.18(2) of Ontario’s <em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/54cf8" target="_blank">Consumer Protection Act, 2002</a></em><em>. </em>Moreover, the Certification Judge had found that the plaintiffs provided no evidence that there were changes to fuel economy or performance after the updated AEM.</p> <p>According to the Divisional Court, the plaintiffs had not shown any palpable and overriding error in the Certification Judge’s findings of fact. While the plaintiffs argued that they had pleaded losses such as the need to rent a vehicle during the repair of their own, there was no evidence of any such loss before the Certification Judge to that effect.</p> <h3>Preferable procedure</h3> <p>The Divisional Court held that the Certification Judge did not err in finding that a class action would not be a preferable procedure.</p> <p>Ultimately, the Certification Judge determined that the remedy provided by the repair FCA offered was a remedy that provided access to justice for class members and that a class proceeding would not be a wise use of judicial resources in this case. The Divisional Court held that this finding was consistent with the Supreme Court of Canada’s decision in <em><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/j8tcb" target="_blank">Atlantic Lottery Corp. Inc. v. Babstock</a></em> and other cases.</p> <p>The plaintiffs had alleged that the Defendants had engaged in deceitful conduct and misrepresentation, yet they had not been held accountable for that conduct, as there had been no Canadian regulatory proceedings like those in the U.S. In response, the Divisional Court stressed that the purpose of class proceedings is not to punish defendants, but rather provide access to justice for those who have been harmed by the misconduct of a defendant and to achieve behaviour modification. Ultimately, the Divisional Court held that the Certification Judge’s finding that there was no compensable harm because the plaintiffs had been made whole, there had been behaviour modification and a class proceeding would not be a wise use of judicial resources, was entitled to deference.</p>29-Jun-2021 06:22:00{6F7283FB-B044-4A85-AE2F-CF726717D367}https://stikeman.com/fr-ca/savoir/litige/comprendre-le-reglement-des-differends-au-canada-principes-fondamentaux-et-dernieres-tendancesSamaneh Hosseinihttps://stikeman.com/fr-ca/equipe/h/samaneh-hosseiniZev Smithhttps://stikeman.com/fr-ca/equipe/s/zev-smithActualités - LitigeDroit canadien des actions collectivesComprendre le règlement des différends au Canada : principes fondamentaux et dernières tendances<p>Deux membres de notre groupe Litige et règlement de différends, Samaneh Hosseini et Zev Smith, ont récemment mis à jour leur article « <a href="/-/media/files/kh-general/litigation-and-enforcement-in-canada---overview.ashx">Litigation and Enforcement in Canada : Overview</a> » publié par Thomson Reuters dans le <em>Practical Law Global Guide 2021 : Dispute Resolution</em>. Cette publication offre un excellent aperçu des dernières tendances en matière de règlement des différends au Canada et aborde les sujets suivants :</p> <ul> <li>Les délais de prescription</li> <li>La structure du système judiciaire canadien</li> <li>Le financement par des tiers</li> <li>Les étapes d'une procédure judiciaire</li> <li>Les jugements sommaires et les injonctions</li> <li>Les ordonnances de type <em>Norwich</em> et <em>Anton Piller</em></li> <li>Le droit de la preuve et du privilège documentaire</li> <li>L’interrogatoire des témoins et le recours à des experts</li> <li>Les appels</li> <li>Les recours collectifs</li> <li>Les règles relatives aux dépens</li> <li>L’exécution des jugements et les litiges transfrontaliers</li> <li>Les modes substitutifs de règlement des différends et les réformes y étant liées</li> </ul> <p>Nous sommes heureux de pouvoir rendre cette <a href="/-/media/files/kh-general/litigation-and-enforcement-in-canada---overview.ashx">publication de 13 pages</a> disponible pour téléchargement (en anglais seulement).</p>22-Jun-2021 01:49:00{FE851D71-AB4C-41A6-816D-8E25AAE1816F}https://stikeman.com/fr-ca/savoir/droit-canadien-responsabilite-produits/actions-collectives-en-responsabilite-du-fait-des-produits-la-cour-de-l-ontario-se-prononce-sur-les-obligations-des-fabricantsDroit canadien de la responsabilité du fait des produitsDroit canadien des actions collectivesActions collectives en responsabilité du fait des produits : la Cour de l’Ontario se prononce sur les obligations des fabricants de produits intrinsèquement dangereux<p><strong>Dans <em>Price </em>c.<em> Smith & Wesson</em>, <a href="https://canlii.ca/t/jd65c">2021 ONSC 114</a> (« <em>Price »</em>), les victimes de la fusillade de masse sur l’avenue Danforth à Toronto en 2018 ont fructueusement défendu leur proposition de recours collectif de 150 millions de dollars pour conception négligente contre la motion en radiation connexe d’un fabricant d’armes de poing.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>In <strong><em>Price v. Smith & Wesson</em></strong>, <strong><a rel="noopener noreferrer" rel="noopener noreferrer" href="https://canlii.ca/t/jd65c" target="_blank">2021 ONSC 1114</a></strong><strong> (“<em>Price”</em>) victims of the 2018 Danforth Avenue mass shooting in Toronto successfully defended their proposed $150 million negligent design class action against a handgun manufacturer’s motion to strike</strong>.</strong></p> <strong> </strong> <h2>Key Take-Aways</h2> <ul> <li>For the first time in Canada, a court has recognized a duty of care between a firearms manufacturer and the victims of a shooting.</li> <li>Manufacturers of products that are dangerous in themselves owe a duty of care to those who will come into proximity of those products (and not just the purchasers and/or intended users) and should give careful consideration to ensure that they are taking reasonable precautions.</li> <li>Plaintiffs may be able to sustain claims for negligent design of a product where they identify specific alleged design defects; a substantial likelihood of harm which could be caused by those defects; and that there were safer and economically feasible ways of manufacturing the product.</li> </ul> <h2>Background</h2> <p>The Plaintiffs in <em>Price </em>were victims and the parents of victims of a tragic mass shooting (“Danforth Shooting”), which occurred on the Danforth Avenue in Toronto on July 22, 2018. The Defendant manufactured the stolen semi-automatic handgun (“Handgun”), which was used by the perpetrator of the Danforth Shooting.</p> <p>The Plaintiffs commenced a proposed class action against the Defendant to hold the Defendant liable for the injuries suffered in the Danforth Shooting.</p> <p>The Plaintiffs’ central allegation in this case was negligence. The Plaintiffs alleged that the Defendant, as the designer, manufacturer and distributor of a product intended to be used as a weapon, owed a duty of care to persons who would come into proximity with that product to ensure that the weapon included safety mechanisms sufficient to deter significant and foreseeable harm. The Plaintiffs further alleged that, although the Defendant both developed and patented technology (“Safety Mechanisms”) that could deter unauthorized individuals from using its weapons, it unreasonably elected not to incorporate the Safety Mechanisms into the design of the Handgun. On this basis, the Plaintiffs claimed that the harm inflicted by the Handgun was preventable, and that the Defendant should be held liable as a result.</p> <p>The Plaintiffs’ claim is groundbreaking in Canada, but mirrors a long line of cases brought by victims of shootings against firearms manufacturers in the United States. The prevailing practice among firearms manufacturers in the U.S. has been to move quickly to have the plaintiffs’ claims dismissed on the ground that there is no possible basis on which the victims of a shooting could establish that a manufacturer owes a duty of care to persons injured in the illegal use of its products. In the vast majority of these American cases, the plaintiffs’ claims have failed to survive pre-trial dismissal or summary judgment.</p> <p>In line with the common practice in the United States, the Defendant in <em>Price </em>moved to strike the Plaintiffs’ negligence claim (along with claims for strict liability and public nuisance) and to have the proposed class action dismissed. The Defendant submitted that there was no possible basis for a claim in negligence against it on the basis that the relationship between a firearms manufacturer and a victim of a shooting:</p> <ul> <li>did not fall within any of the established categories of duties of care that have been recognized in the jurisprudence; and</li> <li>did not satisfy a duty of care analysis whereby a new category of duty of care could be recognized.</li> </ul> <p>Furthermore, the Defendant argued that the Plaintiffs’ claim in negligence was doomed to fail because the Plaintiffs did not plead material facts to establish causation. Specifically, the Defendant claimed that the cause of the harm was the independent criminal acts of the perpetrator of the Danforth Shooting, rather than any purported act or omission of the Defendant, and that the Plaintiffs neglected to plead material facts which could establish otherwise.</p> <p>The motion judge ordered that the certification motion for the proposed class action would proceed in two stages: first, a hearing would occur to address the Defendants’ motion to strike the Plaintiffs’ claim and whether the Plaintiffs had properly disclosed a cause of action in their pleading (which overlaps with the first part of the certification test, i.e. whether the pleadings disclose a cause of action). If the Ontario Superior Court of Justice (the “Court”) held in favour of the Plaintiffs, a second hearing would be held in order to address the remaining four certification criteria. On December 3-4, 2020, the first hearing was held.</p> <h2>The Decision</h2> <p>The motion judge dismissed the Defendant’s motion to strike and held that the Plaintiffs’ certification motion will proceed to a second hearing.</p> <h3>The “cause of action” criterion and motions to strike</h3> <p>In order to establish that the claim did not disclose a reasonable cause of action, the Defendant bore the onus of convincing the motion judge that it was plain and obvious that the claim could not succeed:</p> <p style="padding-left: 30px;">In a proposed class proceeding, in determining whether the pleading discloses a cause of action, no evidence is admissible, and the material facts pleaded are accepted as true, unless patently ridiculous or incapable of proof. The pleading is read generously, and <strong>it will be unsatisfactory only if it is plain, obvious, and beyond a reasonable doubt that the plaintiff cannot succeed</strong>. [emphasis added]</p> <p>The motion judge acknowledged that this is a high standard. While a motion to strike a pleading for lack of a reasonable cause of action is an important means for achieving judicial efficiency, the overriding principle, as repeatedly endorsed by the Supreme Court of Canada, is that cases should generally be disposed of on their merits.</p> <p>The motion judge held that it was not plain and obvious that the Plaintiffs’ claim in negligence would not succeed at trial. Interestingly, the motion judge determined that not only did the Plaintiffs’ claim fall within an established category of negligence, the proof was to be found in the seminal 1932 “snail in a bottle of ginger beer” decision of the House of Lords in <a rel="noopener noreferrer" rel="noopener noreferrer" target="_blank" href="https://www.canlii.org/en/ca/forep/doc/1932/1932canlii536/1932canlii536.html"><em>Donoghue v. Stevenson</em></a> (“<em>Donoghue</em>”)<em>.</em></p> <h3>The two established categories of duties of care</h3> <p>The motion judge held that the relationship between the firearm manufacturer and the victims of a shooting fell within not one, but two recognized categories of duties of care: (1) products dangerous <em>per se</em>; and (2) general product liability. Both of these categories arose in <em>Donoghue</em> and appear to remain applicable to the manufacture of products nearly a century later.</p> <h4>Products dangerous per se</h4> <p><em>Donoghue </em>acknowledged that a duty of care exists for the manufacturers of goods that are dangerous in and of themselves (<em>per se</em>) to take reasonable precautions to avoid foreseeable harm to proximate parties. In fact, it was this centuries-old duty of care which Lord Atkin analogized in order to establish the general product liability category for which the decision’s legacy is mostly attributed.</p> <p>The Defendant argued that the action must fail because the proximate cause of the harm was the criminal act of the shooter not the alleged negligence of the firearms manufacturer. The motion judge rejected this argument as a basis to strike the claim, holding that although the volition of the perpetrator of the Danforth Shooting clearly contributed to the harm, there appear to have been precautions which the Defendant could have taken to protect against the risk of that volition (i.e. implementing the Safety Mechanisms into the Handgun’s design). The motion judge concluded that there is an established duty of care relationship in the immediate case and it was not plain and obvious that the negligence claim was destined to fail.  </p> <h4>Product liability</h4> <p>The motion judge also held that the relationship between the parties fell within the general product liability duty of care.</p> <p>The motion judge agreed with the Defendant that the Plaintiffs’ claims for negligent manufacture and negligent distribution were deficient, as the Plaintiffs had failed to plead material facts regarding negligence in the manufacturing of the Handgun, or in its distribution. However, the motion judge held that the crux of the negligence claim, being the claim for negligent design, was not doomed to fail.</p> <p>The Plaintiff had pled, inter alia, that the Defendant manufactured a product that was dangerous by its nature, that the Defendant had actual knowledge of a method of manufacturing the product which would prevent foreseeable harm, and that the Defendant had unreasonably decided not to adopt this method and had caused preventable harm. If taken as true, the Court held that these facts could give rise to a successful product liability claim: “a manufacturer does not have the right to manufacture an inherently dangerous article when a method exists of manufacturing the same article without risk of harm.”</p> <p>The Defendant’s arguments regarding negligent design (chiefly, that it had designed the Handgun for use by a police officer only, and that the design was not negligently designed for use by a police officer) spoke to the merits of the Plaintiffs’ claim in negligence and not to whether a legally viable cause of action had been pled. This argument, held the Court, may prove relevant in the risk-utility analysis (of implementing the Safety Measures), which would likely arise later in the litigation, but did not render such a risk-utility analysis obsolete. Rather, it affirmed that such a risk-utility analysis was necessary, and that the negligent design claim should not be struck.</p> <p>It is important to emphasize that in reaching these conclusions, the motion judge was simply making a determination as to whether there were established duties of care in relation to the relationship between the parties and was not making any conclusions as to whether the Defendant had breached those duties. The Plaintiffs had simply established that they should not be denied a day in court – not that they were likely to succeed on that day.</p> <h2>Conclusion</h2> <p><em>Price</em> provides guidance with respect to what must be pled in order to sustain a claim for negligent design, and when it may and may not be appropriate for a defendant to attempt to strike a claim before certification. The decision reinforces the high threshold for a motion to strike and that manufacturers of products that are dangerous in themselves (i.e. handguns) owe a duty of care to parties who will come into proximity of those products, and not just the purchasers and/or intended users of those products. A number of questions naturally arise from this: how are products categorized as being dangerous <em>per se</em> and not dangerous <em>per se</em>? What does it mean to take reasonable precautions in the design of a potentially dangerous <em>per se</em> product? As the proceeding progresses to a second hearing, hopefully <em>Price</em> may offer answers to these questions and more.</p>06-Apr-2021 07:48:00{AB7F9018-991B-407B-8D0D-743D8AC807DA}https://stikeman.com/fr-ca/savoir/droit-canadien-actions-collectives/quand-les-elements-d-une-reclamation-pour-presentation-inexacte-et-frauduleuse-des-faits-deviennent-ils-susceptibles-d-etre-decouvertsAlexandra Urbanskihttps://stikeman.com/fr-ca/equipe/u/alexandra-urbanskiDroit canadien des actions collectivesActualités - LitigeDroit canadien des valeurs mobilièresÀ partir de quand les éléments d’une réclamation pour présentation inexacte et frauduleuse des faits deviennent-ils susceptibles d’être découverts? La Cour d’appel de l’Ontario donne des indications dans le contexte d’une action collective en valeurs mobilières<p><strong>Le jugement récent <a href="https://canlii.ca/t/jcp02"><em>Kaynes </em>v.<em> BP p.l.c., </em>2021 ONCA 36</a> (« <em>Kaynes </em>») de la Cour d’appel de l’Ontario donne des indications sur le moment où les éléments d’une réclamation pour présentation inexacte et frauduleuse des faits deviennent susceptibles d’être découverts dans une action collective en valeurs mobilières. Les cas où une telle réclamation peut être considérée comme prescrite sur présentation d’une motion en vertu de la Règle 21 sont discutés. Le jugement est le dernier d’une série de tentatives du demandeur d’intenter une action collective contre British Petroleum (« BP ») en Ontario en raison de l’explosion de la plateforme pétrolière <em>Deepwater Horizon</em> de BP, qui a eu lieu dans le golfe du Mexique en avril 2010.</strong></p> <p><strong><em>Ce billet est disponible en anglais seulement.</em></strong></p> <p><strong>The Court of Appeal for Ontario’s recent decision in </strong><a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onca/doc/2021/2021onca36/2021onca36.html?autocompleteStr=2021%20ONCA%2036&autocompletePos=1" target="_blank" rel="noopener noreferrer"><strong><em>Kaynes v. BP p.l.c., </em>2021 ONCA 36</strong></a><strong> (“<em>Kaynes</em>”) provides guidance on when a claim for fraudulent misrepresentation is discoverable in a securities class action and when a claim can be dismissed as statute-barred on a Rule 21 motion. The decision is the last in a series of attempts made by the plaintiff to commence a class proceeding against British Petroleum (“BP”) in Ontario, following the April 2010 explosion of the BP oil rig <em>Deepwater Horizon</em> in the Gulf of Mexico.</strong></p> <h2>Background</h2> <p>The plaintiff Kaynes was a resident of Alberta who on or before August 2008 purchased BP shares on the New York Stock Exchange. Kaynes alleged that BP made numerous misrepresentations in its securities filings about its operational safety and its ability to respond to an oil disaster, which had artificially inflated BP’s stock price. In the wake of the Deepwater Horizon explosion, Kaynes alleged that BP made several revisions to its disclosure documents correcting the misrepresentations it had made over the previous years, which caused BP’s share price to plummet.</p> <p>In November 2012, Kaynes filed a statement of claim in Ontario alleging the statutory cause of action for secondary market misrepresentation provided for in s.138.3 of Ontario’s <em>Securities Act</em> (the “<em>Act</em><em>”</em>) and common law negligent misrepresentation (this allegation was withdrawn in August 2013). BP challenged Ontario’s jurisdiction over this matter, alleging that there was no real and substantial connection between Ontario and the claims of Canadian residents who purchased their shares on foreign exchanges. BP’s jurisdictional challenge was initially dismissed, but the <a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onca/doc/2014/2014onca580/2014onca580.html?autocompleteStr=2014%20ONCA%20580&autocompletePos=1" target="_blank" rel="noopener noreferrer">Court of Appeal</a> for Ontario allowed BP’s appeal on the basis of <em>forum non conveniens </em>and permitted the proposed class action to proceed only on behalf of those plaintiffs who had purchased BP shares on the Toronto Stock Exchange. The claim of Canadians who purchased their shares on foreign exchanges was stayed.</p> <p>After bringing a successful motion to lift the stay of his Canadian proceedings in Ontario, in June 2017, Kaynes delivered an amended statement of claim. This amended claim advanced statutory misrepresentation claims solely on the basis of the <em>Act. </em>It added new misrepresentation claims, and added for the first time, allegations that BP knew that its misrepresentations were false when it made them. BP succeeded in challenging the timeliness of many of the misrepresentation claims, which were held to be statute-barred as the three-year limitation period under the <em>Act</em> had lapsed. This decision had the effect of significantly reducing the scope of the proposed class period (from 1,080 days to 55 days).</p> <p>In September 2019, Kaynes delivered another amended statement of claim that for the first time expressly advanced a cause of action for fraudulent misrepresentation.</p> <h2><a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onsc/doc/2018/2018onsc718/2018onsc718.html" target="_blank" rel="noopener noreferrer">Decision of the Motion Judge</a></h2> <p>BP brought a motion under Rule 21.01(1)(a)<a name="_ftnref1" href="#_ftn1"><sup>[1]</sup></a> of the Ontario <em>Rules of Civil Procedure</em> for an order declaring that Kaynes’ fraudulent misrepresentation claims were statute-barred pursuant to the Ontario <em>Limitations Act, 2002. </em>Kaynes resisted the motion on two bases: (i) that it was not plain and obvious that his claim was statute-barred; and (ii) a limitations issue cannot be determined on a Rule 21 motion when discoverability is in issue.</p> <p>The motion judge granted BP’s motion and dismissed the action, holding that all common law misrepresentation claims, whether negligent or fraudulent, were discovered when BP made corrective disclosures between March and June 2010. The limitation period for this cause of action expired in June of 2012, and therefore, the fraudulent misrepresentation claims advanced by Kaynes in 2019 were out of time. Alternatively, the motion judge concluded that Kaynes would have discovered BP’s fraudulent intent by 2010 from the existence of U.S. litigation against BP, which advanced claims based on <em>scienter </em>(an intent to deceive, manipulate or defraud) – that is, BP had fraudulently misrepresented its securities to secondary market purchasers.<a name="_ftnref2" href="#_ftn2"><sup>[2]</sup></a></p> <p>While the motion judge acknowledged that a court should only rule on a limitation issue before a statement of defence is filed in the rarest of circumstances, the motion judge was satisfied this was such a case as it was “plain and obvious” that no additional facts could be asserted that would alter the conclusion that the limitation period had expired.</p> <p>Kaynes appealed the motion judge’s decision.  </p> <h2><a rel="noopener noreferrer" href="https://www.canlii.org/en/on/onca/doc/2019/2019onca1/2019onca1.html" target="_blank" rel="noopener noreferrer">Decision of the Court of Appeal for Ontario</a></h2> <p>The Court of Appeal held that the motion judge erred in his discovery analysis and particularly in his finding that the claim for fraudulent misrepresentation was discovered when BP admitted to making the misrepresentations, rather than when BP admitted to <em>knowingly </em>making the misrepresentations.</p> <h3>The timing of “discoverability”</h3> <p>Under the <em>Limitations Act, 2002, </em>a “claim” is discovered when the person with the claim first knew or ought to have known “that the injury, loss or damage was caused by or contributed to by an <em>act or omission</em>” (among certain other criteria). As a claim necessarily involves a legal remedy, the act or omission that must be discovered is one that will give rise to a legal remedy, <em>i.e.,</em> a cause of action. Therefore, the Court reasoned, in the case of a fraudulent misrepresentation the act or omission that must have been discovered is a misrepresentation “<em>made with knowledge that the representation was false, an absence of belief in its truth or recklessness as to its truth</em>”. To define “discovery” of such a claim in a way that omitted this “knowledge” requirement would make no sense, as it would require a person to commence a fraudulent misrepresentation action without the legal basis for doing so, in order to preserve the limitation period.</p> <h3>The Court’s holding</h3> <p>Ultimately, the Court held that Kaynes had not discovered the fraudulent misrepresentation claim in 2010 as the motion judge found, but found that Kaynes was still out of time on the basis that, the plaintiff’s pleadings conceded that July 2015 was the last date BP’s fraudulent conduct could have been discovered. As this July 2015 date was not in dispute, the Court held it is plain and obvious that Kaynes’ 2019 fraudulent misrepresentation claim was out of time and statute barred. </p> <p>The Court further held that the motion judge erred in relying on pleadings from the U.S. proceedings to establish discoverability of fraudulent circumstances. While the <em>scienter </em>pleading means that the plaintiff alleges knowing falsehoods, the Court noted that a pleading on its face is not determinative of the knowledge issue and a factual inquiry was required.</p> <p>The Court agreed with the motion judge that the limitations issue could be determined on a Rule 21 motion. While Rule 21.01(1)(a) refers to the determination of a question of law, the Court held that where the facts regarding discovery of a claim are undisputed so that the determination is “plain and obvious”, then whether the action is statute-barred is considered a question of law that can be determined on a Rule 21 motion.</p> <h2>Key Take-Aways</h2> <p><em>Kaynes </em>makes it clear that a limitation period for fraudulent misrepresentation commences when a claimant is able to discover that a misrepresentation was made “<em>with knowledge that the representation was false, an absence of belief</em> <em>in its truth or recklessness as to its truth”; </em>and that a Rule 21 motion may be an effective way to dismiss statute-barred claims provided the facts regarding discovery of the claim are undisputed.</p> <p>From a practical perspective, this case is a good reminder about the importance of observing limitation periods in securities class actions and how defendants can rely on limitation period defenses to substantially limit plaintiffs’ claims.</p> <hr /> <p><a name="_ftn1" href="#_ftnref1">[1]</a> Rule 21.01(1)(a) provides that “<em>A party may move before a judge, for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs</em>.”</p> <p><a name="_ftn2" href="#_ftnref2">[2]</a> In the U.S., investors rely on SEC Rule 10b-5, 17 C.F.R. s. 240. 10b-5 under s.10(b) of the <em>Securities Exchange Act of 1934, </em>to bring actions for misrepresentation in continuous disclosure. A plaintiff in the U.S. must plead and prove <em>scienter, </em>namely an intent to deceive, manipulate or defraud.</p>04-Feb-2021 09:26:00