Canada: Forcing Class Actions Plaintiffs To Cherry Pick From A Single Tree: Nova Scotia Court Of Appeal Finds Abuse Of Process In Duplicative Class Actions

On April 9, 2015, in BCE Inc. v. Gillis, the Nova Scotia Court of Appeal permanently and unconditionally stayed a proposed class action against cell phone providers in connection with system access fees on the basis that it was an abuse of process because duplicative claims had been brought in nine provinces.

BACKGROUND

The plaintiffs filed a statement of claim in 2004 for certification of a national class action in Nova Scotia. In their claim, the plaintiffs alleged that the defendant cell phone providers had improperly charged system access fees to cellular phone users across Canada for many years. Around the same time, the same law firm filed "virtually identical" actions in eight other provinces, including in British Columbia, Manitoba, Alberta, and Saskatchewan. In 2007, the Saskatchewan action was certified as a class proceeding: the national class included Saskatchewan residents on an opt-out basis and residents of other jurisdictions on an opt-in basis. The plaintiffs subsequently brought a motion to convert the class to a national opt-out class such that out-of-province class members would be automatically included in the class unless they opted out. Their motion was denied in Frey v Bell Mobility Inc.  (which denial was affirmed by the Saskatchewan Court of Appeal). Leave to appeal this decision, among others, to the Supreme Court of Canada was denied in 2012.

The Gillis action in Nova Scotia laid dormant for ten years while the action in Saskatchewan was "intensely" litigated. Apart from some correspondence with the prothonotary, no action was taken in Nova Scotia until 2014 when the defendants brought a motion to dismiss or permanently stay the action as an abuse of process.

Similar motions were brought in other provinces. In Drover v BCE Inc., Justice Weatherill of the British Columbia Supreme Court stayed the British Columbia action as an abuse of process, as did Justice Schulman of the Court of Queen's Bench of Manitoba in Hafichuk-Walkin et al. v BCE Inc. et al., (this decision is currently under appeal). The Alberta Court of Queen's Bench, however, denied an application to strike or stay the action in Alberta (Turner v Bell Mobility Inc., which is also under appeal). A motion for a stay has also been brought in Ontario, but has yet to be heard.

On the motion to stay the Gillis action in the Nova Scotia Supreme Court, Justice Rosinski found that there was no abuse of process merely by filing similar class actions in different jurisdictions and dismissed the motion. The defendant cell phone providers appealed.

DECISION ON APPEAL

Although the Court of Appeal agreed with Justice Rosinski that there is no presumptive abuse of process by commencing actions in multiple jurisdictions, the Court observed that the motions judge did not conduct an analysis to determine whether there was in fact an abuse of process in this case.  The Court held that a case-by-case assessment should be carried out to determine whether there is an abuse of process in the circumstances of each proceeding.  

In conducting its assessment as to whether this case was an abuse of process such that it should be stayed, the Nova Scotia Court of Appeal considered several factors, including: whether there was an intention to prosecute the action; delays in advancing the action; whether there would be a disadvantage to Nova Scotia residents given the different opt-in/opt-out regimes; the multiplicity of proceedings; the actions of counsel (including filing proceedings to secure carriage and toll limitation periods); and the issue of comity.

The Abuse of Process Analysis

(a) No Intention to Prosecute the Nova Scotia Action

First, the Court of Appeal emphasized that there must be an intention to pursue the action in the jurisdiction in which it was filed. In this case, the plaintiffs and their counsel clearly intended to pursue the Saskatchewan action only: absent intent to prosecute a claim, the claim serves no proper purpose.

(b) Delay in Advancing the Nova Scotia Action

Because provincial class actions legislation contemplates that class actions proceed in a timely manner, the second factor supporting an abuse of process is delay. While not always determinative of the issue, delay in and of itself can result in an abuse of process especially where (as in this case) the delay is reflective of the fact that the plaintiffs never intended to prosecute the action. Further, the Court of Appeal rejected the argument that commencing multiple class actions across the country is sound practice or a permissible tactic, stressing that "parking" an action in one jurisdiction pending proceedings in another jurisdiction does not offer a suitable excuse for delay.

(c) Opt-In versus Opt-out Class Action Schemes

Third, the Court of Appeal concluded that Saskatchewan's opt-in regime (for out of province class members) did not put Nova Scotia's residents at a disadvantage, holding that, at best, opt-in versus opt-out regimes is a neutral consideration as it relates to the issue of abuse of process.

With this holding, the Court expressly declined to follow the decision of the Alberta Court of Queen's Bench in Turner in which the Alberta court concluded that Alberta residents are denied access to justice by the Saskatchewan action's opt-in regime for out-of-province class members because many (if not most) of the out-of-province class members would not take the necessary action to opt-into the Saskatchewan action. Accordingly, the Court held that an Alberta opt-in action was necessary to ensure that all Albertans "automatically" have rights in the action without needing to take any additional steps.

The Nova Scotia Court of Appeal, however, questioned why, if potential class members do not care enough to opt-in to the action, the court and its resources should be more devoted to the financial self-interest of private litigants in a civil proceeding than those litigants are themselves. The Court of Appeal thus concluded that the "opt-in/opt-out" issue did not trump a proper abuse of process analysis.

(d) Multiplicity/Duplicity of Proceedings

The fourth factor pointing to abuse of process was the other "virtually identical" claims in other provinces.

(e) Actions of Counsel

Likewise, where counsel attempts to do an "end run" around adverse decisions of courts in other jurisdictions, advancing a duplicitous claim in a different jurisdiction with the hopes of obtaining a more favourable result constitutes abuse of process.

(f)  Carriage of an Action

The Court of Appeal noted that it is well established that commencing an action for the purpose of securing carriage is an abuse of process. The Court noted that filing an action simply to maintain carriage is "especially distasteful" where, as here, the case was never intended to be pursued. Such a practice acts as a disincentive to the commencement of actions by other counsel and plaintiffs who are ready to proceed with the action by forcing them to enter into carriage disputes.

(g) Tolling the Limitation Period

Similarly, if there is no intention to prosecute the case, the Court of Appeal held that it is an abuse of process to file a claim for the sole purpose of tolling the limitation period.

(h) Comity

Putting it all together, the Court of Appeal found that, in this case, the plaintiffs and their counsel made a conscious and informed decision to pursue certification in Saskatchewan, not in a province with an opt-out regime. Now that their request to convert the certified proceeding to an opt-out proceeding was denied by Saskatchewan courts, the plaintiffs were attempting to obtain through the Nova Scotia action the very relief that was refused in Saskatchewan. The Court of Appeal denounced this practice, noting that "[p]arties must understand that they live with their choices."

In light of these considerations, the Court of Appeal found that the Nova Scotia action was abuse of process and, therefore, stayed the action permanently and unconditionally, stating: "It is time the [plaintiffs] be forced to pick cherries from a single tree; the one groomed for so many years, while the one in Nova Scotia was neglected."

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