When a foreign defendant is the target of a Québec class
action, one of the first questions to consider is whether the
Québec court has jurisdiction over such defendant. Pursuant
to Québec's private international rules, one of the
criteria that grounds jurisdiction in a Québec court is
whether a damage was "suffered" in
Québec1. Québec courts have held that the
mere fact that a financial loss is "recorded" in
Québec (on the sole basis, for example, that a Québec
resident has his/her patrimony in Québec) does not meet the
test for a damage "suffered" in Québec, but a
financial loss that is substantively suffered in Québec
based on "material facts" arising in that province will
be a sufficient basis to ground jurisdiction2.
In the September 4, 2013 decision in Mouaikel vs. Facebook Inc.,
2013 QCCS 417 ("Mouaikel"), the Québec Superior
Court (the "QSC") applied the above principles and
declined jurisdiction over a proposed class action launched, based
on alleged misrepresentations and the failure to state material
facts, against Facebook, its directors and underwriters involved in
the social networking company's IPO.
In Mouaikel, the QSC noted that it was not contested that all of
the respondents' alleged activities occurred in the U.S. and
that no allegations were made that Facebook was a reporting issuer
in Québec or that it had distributed securities in that
province within the meaning of the Québec Securities Act.
The only "connecting" factor alleged by the petitioner,
who bears the burden of proof with respect to the jurisdiction of
the Québec courts, was that she and the other proposed group
members suffered a damage in Québec as a result of having
purchased Facebook's shares at an allegedly inflated price.
While the petitioner sought to rely on her statement of account
with her Montréal broker, reflecting her purchase and sale
of Facebook's shares, the QSC noted that the statement in
question did not indicate where the transactions occurred or where
the petitioner paid for her shares and that nothing indicated that
this occurred in Québec. Based on the fact that
Facebook's shares would have been notionally delivered at
either the NASDAQ exchange in New York or at Facebook's head
office in California, the QSC found that petitioner's payment
would have been legally owed at one of such locations. The QSC
noted that "nothing happened in Québec other than the
recording of the petitioner's loss in her brokerage
account." Based on the above, the QSC held that there was no
basis to conclude that there was a substantial connection between
the alleged facts and the province of Québec and that,
accordingly, the QSC had no jurisdiction to entertain the proposed
Interestingly, the QSC went on to note that even if it had
concluded that it had jurisdiction to entertain the proposed class
action, it would have, based on a number of factors, declined
jurisdiction, which it characterized as "tenuous [...] at
best", in favour of the New York courts where 41 lawsuits
relating to the Facebook IPO and raising the same allegations of
wrongdoing have been consolidated. The QSC noted that the claims of
the putative Québec class members were already covered by
the consolidated class actions in New York, and, as such,
Québec shareholders were not left without any remedy.
1 See Article 3148 (3) of theCivil Code of
2 See, for example,Options Consommateurs v.
Infineon Technologies, a.g.,2011 QCCA 2116, which is
currently under appeal before the Supreme Court of
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