Theme #4: Implications for Class Action Strategy of Supreme Court Decisions

A further theme of 2014 was the potential impact of general litigation decisions on class action practice. In particular, two decisions released by the Supreme Court in 2014 – Hryniak and Sattva – could significantly affect how defendants approach the defence of class actions: Hryniak, by giving defendants a stronger tool for disposing of claims prior to trial, and Sattva, by opening the door to new arguments against certification of issues involving interpretation of contracts.

Hryniak: Summary Judgment Now a Stronger Tool in the Class Action Defendant’s Toolbox

In Hryniak, the Supreme Court lowered the bar for obtaining summary judgment. In a previous blog post, we observed that this would likely affect strategy and outcomes in ongoing and future class actions.

In particular, the strengthening of summary judgment provides a more viable option for defendants to dispose of novel claims without incurring the time and expense of a full common issues trial. Although the Hryniak case concerned the summary judgment rule in Ontario, the Supreme Court did not limit the application of its reasoning to Ontario.

Within a few months of the release of Hryniak, we saw evidence that courts across Canada would apply Hryniak to dispose of issues in class actions efficiently. As we discussed in an earlier blog post, in March 2014, the Alberta Court of Appeal partially overturned a lower court’s dismissal of an application for summary judgment in an environmental contamination class action. In dismissing part of the representative plaintiff’s claim, the Court of Appeal held that Hryniak’s emphasis on promoting timely and affordable access to justice should also be applied to Alberta’s summary judgment rule.

Given the lead time required to bring a summary judgment motion, we anticipate that 2015 will bring more decisions on summary judgment motions in class actions, which will provide more clarity as to how class action defendants can most effectively employ summary judgment.

Sattva: Common Contractual Terms May Not Raise Common Issues

In Sattva, the Supreme Court re-classified the interpretation of contractual terms as a question of mixed fact and law, as opposed to a question of law. In reaching this holding, the Court emphasized the importance of “surrounding circumstances” to the interpretation of contracts. The Court also noted that “the nature of the evidence that can be relied upon under the rubric of ‘surrounding circumstances’ will necessarily vary from case to case.”

The Supreme Court’s comments suggest that it could be argued that the same term in two separate contracts could be interpreted differently, depending on the “surrounding circumstances” in which each contract was made. This argument could potentially be raised to defeat certification of issues concerning the interpretation of standard form contracts, which are often found at the centre of consumer class actions and franchise class actions, among others.

In light of Sattva, in cases where plaintiffs propose to certify issues of contractual interpretation, defendants will have to consider whether they can reasonably argue that, notwithstanding common language in contracts with class members, the interpretation may vary from contract to contract, depending on the surrounding circumstances, and thus the interpretation is not a common issue suitable for certification. We may very well observe such an argument in 2015 as class action defendants consider the implications of Sattva for cases involving common contracts.