Canada: Quebec Superior Court Refuses To Stay Equifax Class Action, Adopts Restrictive Approach To Stays In Multi-Jurisdictional Proceedings And To Pre-Authorization Examinations

The Quebec Superior Court ("QCSC") has refused to stay the Quebec class action relating to the Equifax data breach in 2017, despite five substantially similar class proceedings currently ongoing in other Provinces. In Li c. Equifax inc., 2018 QCCS 1892, ("Li") the QCSC confirmed that class actions in other provinces can only potentially be the basis for a stay of a Quebec class action if the other actions were filed before the Quebec proceeding. Li is also of interest because the judge held that, after Asselin c. Desjardins Cabinet de services financiers Inc, 2017 QCCA 1673 ("Asselin"), the scope of defendants' rights to examine a Petitioner at the pre-authorization stage no longer included a right to examine to clarify vague allegations in the motion for authorization. Interestingly, another judge of the QCSC reached an opposite decision one week later. Leave of appeal from the Asselin decision is currently being sought before the Supreme Court of Canada, so the appeal, if leave is granted, may provide clarity on these two seemingly conflicting decisions.

Regarding Equifax's application to stay the Quebec proceeding, Justice Bisson applied the two-step framework from Garage Poirier & Poirier Inc. c. FCA Canada Inc. 2018 QCCS 107 (currently under appeal) for determining whether a stay should be granted in a class action. Under that framework, the court must first determine whether the general conditions under s. 3137 of the Civil Code of Quebec ("CCQ") for a stay of proceeding in favour of a foreign authority are satisfied. If the test under CCQ s. 3137 is met, the Court must then examine whether it should exercise the discretion under s. 577 of the under Civil Code of Procedure ("CCP") and decline to stay a class proceeding if doing so is not in the interest of justice, with a view to protecting the rights and interests of Quebec residents in class proceedings.

As to the analysis under CCQ s. 3137, Justice Bisson adopted a restrictive interpretation of the requirement that the foreign proceeding must "be pending before the foreign authority". The foreign proceeding must have been filed in court before the Quebec proceeding, otherwise it will not be considered "pending" for the purpose of a potential stay. Here, only one of the five other filings, that in the Saskatchewan action, was anterior to the Quebec filing, so the Saskatchewan action was the only one capable of giving rise to any stay of proceedings in Quebec. In this case, the result was that the Ontario proceeding filed one day after the Quebec proceeding and which Equifax had proposed to be the "lead" class action was not even potentially eligible to give rise to a stay in Quebec.

The formalistic application of the anteriority criterion under CCQ s. 3137 would appear to preclude any possible stay in other provinces that were commenced after a Quebec action. However, Justice Bisson did leave the door open for defendants to invoke the forum non conveniens doctrine, pursuant to which Quebec courts retain the discretion to refuse to exercise their jurisdiction over a particular dispute in exceptional circumstances.

As to the analysis under CCP s. 577, Justice Bisson held that general arguments about judicial economy and avoidance of a multiplicity of proceedings are generally not independently sufficient to stay a Quebec class action. Instead, the specific implications of a stay for Quebec class members in the particular case must be examined under CCP s. 577. Here, Justice Bisson found that the rights and interests of the Quebec residents would be better protected if the Quebec action was to be continued. The judge relied on the fact that the Quebec Consumer Protection Act contained a distinctive notion of consumer contracts; there was a risk the Saskatchewan claim would not proceed because of an abuse of process application brought by Equifax; the authorization hearing in the Quebec action was likely to proceed before any certification hearing in the Saskatchewan claim; and, there was no proof of the participation by Quebec residents in the Saskatchewan proceeding.

Justice Bisson also mostly dismissed Equifax's alternative application for leave to examine the Petitioner and file evidence before the authorization hearing. Justice Bisson held that the Asselin decision had changed the law on the scope of pre-authorization examination, and examinations for the purpose of obtaining clarity on vague allegations by a Petitioner in a motion for authorization were no longer permitted. Instead, leave to examine the Petitioner and file evidence will be allowed only where the evidence sought is directly relevant to one of the four criterion for authorization. Here, Justice Bisson held that examination on matters relevant to the Petitioner's individual claim were not permitted.

Interestingly, another decision of the QCSC rendered a week after Li reached an opposite result. In Shore c. Symantec Corporation, 2018 QCCS 2062, ("Shore") the judge allowed the defendant to examine the Petitioner in order to clarify ambiguous allegations in the authorization motion. Unlike Justice Bisson in Li, the judge in Shore limited the scope of Asselin and allowed examination on some facts and circumstances underlying the Petitioner's individual right of action. Leave of appeal from the Asselin decision to the Supreme Court of Canada is currently being sought. If leave is granted, the appeal may provide clarity for litigants in light of the seemingly conflicting decisions in Li and Shore.

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