Canada: B.C. Court Of Appeal Provides Its First Pronouncement On Sequencing Issues

The B.C. Court of Appeal's decision in British Columbia v The Jean Coutu Group (PJC) Inc., 2021 BCCA 219, is the first time the B.C. Court of Appeal has weighed in on class action sequencing issues. The core issue on appeal was whether the motion judge erred by making a sequencing order that required 2 of 48 defendants to participate in long, complex and expensive proceedings that could continue for years before their challenge to the Court's jurisdiction over them would be heard.

Background

The Province of British Columbia commenced a class proceeding on behalf of itself and all federal, provincial and territorial governments and agencies, seeking to recover opioid-related healthcare costs from 48 defendants involved in the manufacturing, marketing, distribution or sale of opioid drugs and products in Canada.

The case management judge held a sequencing hearing to determine the timing of preliminary applications proposed by the various defendants, including motions to strike and for summary judgment and objections to the Court's jurisdiction.

The case management judge held that all applications should proceed along with the certification application based on his assessment of the non-exhaustive factors originally laid out in Cannon v Funds for Canada Foundation, 2010 ONSC 146, for guiding the exercise of discretion in sequencing.

Summary of the B.C. Court of Appeal's Decision

Two of the defendants based in Quebec, which do not carry on business, distribute or sell opioids in B.C., appealed the case management judge's decision. They argued that their jurisdiction applications should proceed before the certification application and along with all other preliminary applications.

In a unanimous decision, the B.C. Court of Appeal overturned the motion judge's decision, finding that the judge erred by failing to give adequate weight to the scope and complexity of the proceedings and to the prejudice to the Quebec defendants of not having the foundational question of jurisdiction considered at an early stage of long and complex proceedings: "By requiring the [Quebec defendants] to wait until the certification hearing, they will incur considerable expense and remain involved in lengthy and complex litigation without having that foundational issue considered at the outset" (para 93).

In arriving at this decision, the Court of Appeal outright rejected the presumption that certification motions ought to be the first motions heard in class actions, which dates back to 2001 (Moyes v Fortune Financial Corp (2001), 109 ACWS (3d) 556 (Ont SCJ)). The Court held that the cases that have propounded this presumption were "wrongly decided and should not be followed" (para 37).

The Court of Appeal found that a judge's discretion in sequencing ought to be guided by the non-exhaustive factors developed in the case law since Cannon and recently summarized in Shaver v Mallinckrodt Canada ULC, 2021 BCSC 455. That said, the Court held that these factors are not a checklist the Court reviews by rote; whether any individual factor needs to be considered depends on what the case management the judge is considering. "Each sequencing application must be determined in the context of the particular case before the court and the court's discretion ought to be exercised in a manner that facilitates and achieves judicial efficiency and the timely resolution of the dispute" (para 45).

Given the scope and complexity of this proceeding, the Court of Appeal held that "consideration of the Shaver factors required a more extensive consideration of potential prejudice having regard to the nature of the appellants' preliminary objections and the likely manner in which the proceeding will unfold" (para 60). The Court acknowledged that prejudice is not explicitly included in the Shaver factors. Still, it found prejudice to be clearly relevant, and that it ought to be considered under several of the Shaver factors, including the cost to the parties of participation in pre-certification procedures and the potential to avoid exposing the defendants to costs of a full certification hearing.

Further, the Court of Appeal held that the interplay of the issues is no reason to favour hearing all applications concurrently. The analysis is not merely whether there is interplay between issues, but "how best to utilize judicial resources to resolve the issues expeditiously."

Shaver factors that would have been relevant in more typical class proceedings were neutralized here due to the case's complexity and magnitude.

Key Takeaways

The impact this decision will have on future sequencing matters is unknown yet. Likely, B.C. courts will be more willing to hear pre-certification motions, especially for actions involving complex, expensive and time-consuming proceedings where the prejudice to the defendants of not having determinative preliminary matters dealt with at the outset will be heightened. While a judge will not be required as a matter of law to sequence the parties' jurisdiction simpliciter applications first, when actions are complex, a B.C. court seems likely to hear them first.

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