Canada: Are Repetitive Class Actions Res Judicata Or Abusive (And What Future For The Authorization Stage)?

Proposed class actions dismissed at the authorization stage resulting from the plaintiff's lack of a cause of action or its incapacity to represent the class rarely remain unattended and are often reinstituted with another plaintiff.

The Court of Appeal was recently seized with the issue as to whether a novel motion for authorization to institute a class action filed by another putative class members could be sanctioned as being res judicata or amounting to an abuse of process. Without having so concluded, the Court of Appeal in Whirpool Canada v. Gaudette1 nonetheless mentioned that the circumstances in which a second motion for authorization to institute a class action could proceed were limited, especially to ensure a sound management or judicial resources.

I. The history of the proceedings

In 2009, a motion for authorization to institute a class action was brought against the manufacturer of household appliances alleging the faulty design of a product. That claim was dismissed in 2013 at the authorization stage as a result of the plaintiff's cause of action being time-bared,2 a judgment later confirmed by the Court of Appeal3.

In 2016, another motion for authorization to institute a class action for the same cause and object was filed by another plaintiff through the same counsel.

Responding to this claim, the defendants filed a motion to dismiss based on res judicata, which was dismissed by the Superior Court,4 thus the appeal.

II. The decision of the Court of Appeal

With regard to the res judicata argument, and while the second plaintiff was a purported class member in the first action, the court indicated that even if both cases met the triple identity of parties, cause and object, res judicata only applies to what was actually decided.

Reminding that a claim has no collective dimension before it is authorized and that the first action was dismissed as a result of the prescription (limitations) of the plaintiff's cause of action, the first judgment is thus only res judicata towards the plaintiff himself. As the legal syllogism underlying the first action was not scrutinized, it is therefore not possible to bar another member that would be better qualified to bring another action seeking the same remedies.

As for the ground of dismissal based on an abuse of process, it relied on the premise that the first plaintiff should have been substituted as soon as the limitations argument was first raised to avoid the waste of judicial resources. Although a serious argument, the Court of Appeal found that the circumstances in this case do not amount to an abuse within the meaning of Article 51 of the Code of Civil Procedure. Indeed, the court could not appreciate when the limitations argument was first raised to assess whether class counsel acted in a negligent manner, as well as the claim is not necessarily frivolous and could warrant a determination on the merits.

As a result, the court dismissed the appeal and confirmed the dismissal of the defendants' attempt to strike the claim. This case can thus proceed to another assessment.

III. What future for the authorization stage?

In 2016, in Charles v. Boiron5, Justice Bich questioned the authorization stage and suggested that it could be removed altogether or recast with the assessment of the merits of a claim. To the contrary, Justice Savard in Whirpool Canada v. Gaudette, positioned that the authorization stage should be strengthen.

While highlight diverging views within the judiciary with regard to the scope and extent of the authorization stage and how the criteria set forth at Article 575 of the Code of Civil Procedure should be construed, this duality certainly calls for a reconsideration of the authorization stage by the legislator or the Supreme Court of Canada.

Justice Savard is also inviting to argue and adjudicate preliminary motions at the same time as the authorization stage to expedite the process and reduce legal delays in order for the authorization to be ruled upon in the event that any such preliminary motion be dismissed. While such an option is conceivable for motions akin to that the court was seized with in this case, it may not proved to be possible for other types of motions that can be filed before the authorization stage.

Regardless, how motions for authorization to institute a class action are handled and how the authorization criteria are applied are not necessarily cast in stone and could be revisited in the future.

Footnote

1 Whirpool Canada v. Gaudette, 2018 QCCA 1206.

2 Lambert v. Whirlpool Canada, l.p., 2013 QCCS 5688.

3 Gaudette v. Whirlpool Canada, 2017 QCCS 4193.

4 Lambert v. Whirlpool Canada, l.p., 2015 QCCA 433.

5 2016 QCCA 1716.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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