Fumbling Toward Efficacy: Interjurisdictional Class Actions After Currie V. Mcdonald’s
| Author | Craig Jones and Angela Baxter |
| Pages | 405-436 |
405
FUMBLING TOWARD EFFICACY:
INTERJURISDICTIONAL CLASS ACTIONS
AFTER
CURRIE
v
. M
c
DONALD’S
1
Craig Jones and Angela Baxter2
A. INTRODUCTION
This article reviews three recent decisions of Canadian courts in which
at least some of the chickens of the interjurisdictional class action are
coming home to roost. The leading case is the decision of the Ontario
Court of Appeal in Currie v. McDonald’s Restaurants of Canada Ltd.,3
where Sharpe J.A., for the Court, refused to bar an action launched by
Canadians even though their claims had been purportedly settled in an
Illinois court. This was followed by the decisions of the Quebec Superior
Court in Lépine v. Canada Post4 and HSBC v. Hocking,5 each of which
declined to bind Quebec residents to settlements reached on their behalf
in Ontario. Together, these decisions provide, for the first time, some
insight into the way courts will deal with the “back end” of the interjuris-
dictional class problem; that is, when the court of a forum will give effect
to a foreign court’s certification and/or resolution of a claim including the
citizens of the forum jurisdiction. In so doing, these decisions illuminate
the expectations of Canadian courts regarding when it is appropriate to
assume jurisdiction over foreign claims within a national or international
class, and when it is not.
Although these decisions seem to unequivocally confirm the concept
of interjurisdictional classes (in the past the subject of some controversy),
they do leave some important questions unanswered as to when such
1 A draft of this article was presented at the Osgoode Hall 3rd Annual Class
Action Symposium, 6 April 2006. The authors are grateful for the comments of
the conference faculty and participants, and in particular Garry Watson, Q.C.,
Ward Branch, and Yves Lauzon.
2 Craig Jones, LL.B. (U.B.C.), LL.M. (Har vard), of the Faculty of Law, U.B.C.;
Angela Baxter, LL.B. (Queen’s), Associate, Stikeman Elliott LLP, Vancouver.
3 Currie v. McDonald’s Restaurants of Canada Ltd., [2005] O.J. No. 506 (C.A.)
[Currie].
4 Lépine c. Société canadienne des postes, [2005] Q.J. no 9806 (S.C.) [Lépine].
5 HSBC Bank Canada c. Hocking, [2006] J.Q. no 507 (S.C.) [Hocking].
406 THE CANADIAN CLASS ACTION REVIEW
classes are permissible. While they recognize a free-standing requirement
of “order and fairness” (that is to say, one that is not necessarily satisfied
by the establishment of a “real and substantial connection” between the
action and the original forum), they appear to ignore the “full faith and
credit” standard of comity, and arguably do not give sufficient weight
to the advantages to plaintiffs that accrue from being in a larger, more
effective class action. And while they hint that standards of notice might
be different for non-resident class members, they do not explain why
this should be so, particularly in the case of interprovincial, rather than
international, classes. Moreover, although the question of applying the
“real and substantial connection” test is finally explored in the unique
context of aggregate litigation, the analysis from the cases is not entirely
satisfactory, and indeed might tend to restrict effective interjurisdictional
claims to provinces that can claim a fairly overwhelming connection to
the action.
In this article we explore the decisions and their implications for the
interjurisdictional class action in Canada. We propose that the decisions
have established an unnecessarily high bar for the enforcement of class
claims, and that they did so apparently due to the courts’ concern that the
settlements imposed upon the class were unsatisfactory.
B. OVERVIEW
We live in a world where the products and services that cause actionable
harm are distributed across provincial and national boundaries, and yet
those borders still reflect the more modest geographic ambitions of a
more local era. The problem in a nutshell is how to, as one judge aptly
put it, “fit the forum to the fuss.”6 Efficient class actions must be market-
wide, but the legislation that facilitates and governs them is dictated by
smaller entities: in Canada, by the courts and legislatures of the respective
provinces and territories.
The solution, as developed by the Ontario courts in a series of early
decisions,7 was to simply permit interjurisdictional, opt-out class actions
6 Webb v. K-Mart Canada Ltd. (1999), 45 O.R. (3d) 389, [1999] O.J. No. 2268
at para. 52, Brockenshire J. [Webb]. The expression is borrowed from Harvard
professor Frank Sander, who coined it in the alternative dispute resolution set-
ting. See Frank E. A. Sander & S. Goldberg, “Fitting the Forum to the Fuss: A
User-Friendly Guide to Selecting an ADR Procedure” (1994) 10 Negotiation
Journal 49.
7
See Carom v. Bre-X Minerals Ltd. (1999), 43 O.R. (3d) 441 (Gen. Div.) [Bre-X];
Webb, ibid.; Wilson v. Servier Canada Inc. et al. (2000), 50 O.R. (3d) 219 (S.C.J.).
VOL UME 3, No 2, July 2006 407
to proceed in the Ontario courts. This was not without controversy,8 and
certainly had the potential to add a certain disorderliness to the resolu-
tion of large-scale claims, but by and large, it worked. The unique aspect
of opt-out class actions9 is that courts purport to take jurisdiction over
absent plaintiffs. A certification binds a class of such persons to a deci-
sion of the court, or a settlement approved by the court, and it does it
according to provincial law. In an opt-out action, it does so without their
active consent, and in many cases without their actual knowledge that
a proceeding affecting their rights is underway. So when some of those
plaintiffs are outside the jurisdiction, the issue becomes at root a con-
stitutional question: what right does Ontario, whose lawmaking ability
is limited to property and civil rights and the administration of justice
“within the Province,”10 have to bind the citizens of other jurisdictions,
and vice-versa?
Some commentators, including one of us, have suggested that the
notional question of jurisdiction over plaintiffs in a national class should
be resolved on the same constitutional principles as those that govern
a Canadian court’s jurisdiction over foreign defendants in an ordinary
action; that is, that “order and fairness” should be the prevailing con-
sideration, overlain with principles of comity among the jurisdictions.11
This does not mean, however, that each and every class member to be
bound by the decision must have a connection with the forum, as the
U.S. Supreme Court confirmed in Phillips Petroleum Co. v. Shutts.12 This
8 See Ward Branch & John C. Kleefeld, “Settling a Class Action (Or How to
Wrestle and Octopus),” presented at the Canadian Institute Conference on
Litigating Toxic Torts and Other Mass Wrongs (Toronto, December, 2000).
9 This paper considers only opt-out class actions. So-called “opt-in” class actions,
rarely seen, are little more than a joinder of multiple claims and are not consid-
ered here.
10 Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, reprinted in R.S.C. 1985,
App. II, No. 5, ss. 92(13) & (14).
11 See Craig Jones, Theory of Class Actions (Toronto: Irwin Law, 2003); Jamie
Cassels & Craig Jones, The Law of Large-Scale Claims (Toronto: Irwin Law,
2005); and Craig Jones, “The Case for the National Class” (2004) 1 Canadian
Class Action Review 29.
est on delayed royalty payments for gas leases. The plaintiff class consisted of
members from all fifty states. Only 3 percent of the class members were from
Kansas, and only .25 percent of the gas leases involved Kansas land. The defen-
dant argued that class members could not be bound unless they satisfied the
“minimum contact” test of Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945),
developed to determine where a defendant should be required to defend a suit.
The defendant in Shutts argued, at 807, that the same test would apply to a
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