Adapting to Climate Change: A Look at Three Controversial Developments That Are Heating Up the Canadian Class Action Debate
Author | Shaun Finn and Jonathan Ostrega |
Pages | 258-327 |
258
ADAPTING TO CLIMATE CHANGE:
A LOOK AT THREE CONTROVERSIAL
DEVELOPMENTS THAT ARE HEATING
UP THE CANADIAN CLASS ACTION
DEBATE
By Shaun Finn1 and Jonathan Ostrega2
Adaptation to climate change is now inevitable. The only question is whether
it will be by plan or by chaos.
– Roger Jones, co-author of the Intergovernmental
Panel on Climate Change Report of 20073
A. INTRODUCTION
The proliferation of class actions in Canada, vaguely predicted less than a
decade ago, is a reality that governments, courts, companies, and counsel
have had to come to terms with. Unlike other areas of the law that have
experienced a more gradual evolution, group litigation has gone through
a series of mutations and continues to expand at an unprecedented rate.
This is explained, in part, by the fact that it is nourished by a much older,
more vigorous tradition south of the border and also, in part, because it
can be employed in a wide variety of different factual and economic cir-
cumstances. Products liability, consumer protection, and mass torts are
just some of the many environments in which class action proceedings
can flourish. One of the difficulties facing parties and practitioners alike
1 Associate, McCarthy Tétrault LLP, Montréal, member of the firm’s National
Class Actions Group. The authors wish to thank the Honourable James Farley
and Me Donald Bisson of McCarthy Tétrault LLP, Professor Denis Ferland of
Laval University, Mr. Cameron Fiske, and Me Carl Dholandas for their gener-
ous assistance. Any mistake is that of the authors only.
2 Student, McCarthy Tétrault LLP, Montréal.
3 Time Magazine, online: www.time.com/time/magazine/arti-
cle/0,917,1,1604879,00.html.
VOL UME 4, No 2, march 2008 259
is getting a handle on the quickly changing caselaw and gauging how it
is likely to develop.
Although it would be impossible to survey all of the issues that have
arisen in the Canadian class action context, this paper examines three
controversial subjects that have come to dominate much of the discourse:
class-wide arbitration, securities class actions, and multi-jurisdictional
class proceedings. These three topics have emerged as hot spots precisely
because they all lie at the intellectual frontier of class action practice and
raise important substantive, procedural, and policy concerns. While the
authors cannot purport to resolve the dilemmas faced by modern jurists
and lawmakers, they do provide context, information, and analysis that
will hopefully render the debate more accessible. Adaptation to the cli-
mate changes that are reshaping our legal world is critical. Without such
adaptation, events are likely to outpace decisions and the people who
make them.
B. SECTION ONE: CLASS-WIDE ARBITRATION
1. Introduction to Class-Wide Arbitration
One of the emerging fields in the area of class actions is that of class-wide
arbitration. This unique method of dispute resolution seeks to combine
two judicial institutions—the class action and arbitration procedure—to
allow arbitrators to mediate disputes on behalf of multiple claimants.
Class-wide arbitration is perceived by some as having the potential to
dramatically increase the powers of arbitrators, who are granted consid-
erable latitude for contract interpretation. In legal systems that permit
class-wide arbitration, such as the United States, arbitrators have the
authority to determine whether an arbitration clause applies in a given
case, and whether class-wide arbitration will be permitted in specific
circumstances. In this respect, class-wide arbitration can be seen as a
way to bypass ordinary court procedures. It is imperative, therefore, that
this novel approach to conflict resolution be explored, so that jurists can
assess whether this development is a step in the right direction.
260 THE CANADIAN CLASS ACTION REVIEW
2. History of Class-Wide Arbitration in the United
States
a) The Dawn of U.S. Class-Wide Arbitration—T he
Keating Decision
Although the United States has had traditional class action4 and arbitra-
tion5 regimes since the 1930s, the prospect of class-wide arbitration was
never truly addressed until the 1982 case of Keating v. Superior Court of
Alameda County.6 This case involved a franchise agreement between the
Southland Corporation and approximately 800 of its California-based
franchisees. The various claims alleged a variety of contractual and statu-
tory breaches. At issue was whether the inclusion of an arbitration clause
in the franchise agreements could prevent a class action proceeding from
taking place. The court considered imposing a solution whereby arbitra-
tion agreements contained in contracts of adhesion would not be permit-
ted to operate to stay (what would otherwise be) properly maintainable
class actions. In its ruling, however, the Supreme Court of California
opted to allow the arbitration to proceed on a class-wide basis.
The court held that the decision as to whether claimants can proceed
by way of class-wide arbitration should be made at the trial level. The
logic of the majority’s opinion in this regard was based on considerations
of efficiency, flexibility, and fairness.7 Where multiple parties are involved
in the dispute, each having a relatively small claim and lacking the req-
uisite means to participate actively, the argument is that consolidation
is both necessary and desirable. According to a majority of the court, if
the right to a class-wide proceeding could be automatically eliminated
through the inclusion of an arbitration clause, “the potential for under-
cutting class action principles, and for chilling the effective protection of
interests common to a group, would be substantial.”8
The court, in Keating, suggested that the interests of justice would
be best-served by allowing class-wide arbitration to proceed in certain
4 Fed. Rules Civ. Proc., rule 23, 28 U.S.C. [F.R.C.P.].
5 Title 9, U.S.C. §§ 1–14, was first enacted 12 February 1925 (43 Stat. 883),
codified 30 July 1947 (61 Stat. 674), and amended 3 September 1954 (68 Stat.
1233). Chapter 2 was added 31 July 1970 (84 Stat. 692), two new sections
were passed by Congress in October of 1988 and renumbered on 1 December
1990 (PL 669 and 702); Chapter 3 was added on 15 August 1990 (PL 101-
369); and section 10 was amended on 15 November 2006 [F.A.A.].
7 Ibid. at 613.
8 Ibid. at 609.
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