Canada: A Death Knell For Industry-wide Class Actions in Canada?

In Bouchard v.Agropur et al.,¹ rendered on October 18, 2006, the Quebec Court of Appeal dealt a decisive blow to industry-wide class actions. Speaking for the Court, Justice Pelletier declared that a petitioner can only initiate class proceedings if he or she has a direct cause of action against each of the defendants. A proposed representative cannot simply allege that a fault has occurred pervasively in an industrial, commercial or institutional setting.

The petitioner, André Bouchard, attempted to institute a class action on behalf of consumers who had purchased milk produced by 13 Quebec-based dairies. He claimed that the percentage of fat in the milk sold was less than the amount required under the applicable regulations. Mr. Bouchard further argued that the dairies, aware of this fact, had knowingly engaged in misleading advertising. Invoking breach of contract, unjust enrichment and violations to the Consumer Protection Act, he sought leave to commence an $89 million lawsuit.

The Superior Court refused to authorize the class action.² Pointing out that Mr. Bouchard had only purchased milk from one of the multiple defendants, Justice Viens stated that the motion to institute proceedings failed to disclose a serious colour of right. More specifically, the judge explained that group litigation is a procedural mechanism which does not confer additional substantive rights to the plaintiffs. The absence of any cause of action between the petitioner and the vast majority of named defendants precluded him from initiating class proceedings. Justice Viens also found that Mr. Bouchard lacked a sufficient interest in the prospective suit.

In a unanimous decision, the Court of Appeal upheld the decision of the motion judge. In the first place, it concluded that the deficiencies alleged by the petitioner were, even if proved, too insignificant to constitute a fault. Consequently, the representations made by the dairies on the milk-to-fat ratio of their products could not be construed as erroneous or misleading. The defendants were as accurate as the current technology allowed them to be.

Moreover, the Court of Appeal declared that a class action which targets multiple defendants must disclose a cause of action between the petitioner and the named parties. Class proceedings can only be authorized if a clear demonstration is made that such a connection exists. The Court also explained that if a petitioner cannot commence an action in his own name, he will not have a sufficient legal interest to initiate a class action on behalf of a group. This would seem to resolve the debate over the admissibility of industry-wide class actions. It is not enough to state that a practice is systemic. The would-be class representative must also establish the existence of a legal relationship between himself and the defendant companies.

In addition to its analysis of standing and judicial interest, the Court of Appeal provided helpful instructions on the submission of evidence at the authorization stage of class action proceedings.³ In a conspicuous obiter, Justice Pelletier stated that such evidence can often be helpful in determining whether the conditions for authorization have been met. Although the filing of affidavits is no longer required by the Code of Civil Procedure, judges should look favourably on requests for leave to examine witnesses. These remarks harmonize well with a growing body of cases in which the production of pre-trial evidence has been allowed and deemed to be in the interests of justice.

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