When can a defendant appeal from the authorization of a class action? The Québec Court of Appeal rules
The new Code of Civil Procedure, in force since January 1st, 2016, brought important changes to the class action regime. By the introduction of Article 578 CCP, the legislator now allows the defendant* to seek leave to appeal the authorization judgment of a class action. Considering the terseness of Article 578, what is the scope of this new right of appeal? What conditions must the defendant fulfill to convince the Court of Appeal to review the decision of the first judge?
In Centrale des syndicats du Québec c. Allen, 2016 QCCA 1878 (Allen Case), the Québec Court of Appeal defines the scope of the new right of appeal, and more importantly, sets out the test applicable to an application for leave to appeal the authorization judgment of a class action. Before discussing this test, it is useful to review the background of the decision.
Background
The dispute stemmed from a legionella outbreak in Québec city, in the summer of 2012, which outbreak allegedly affected a number of victims, some of whom died. Plaintiff, whose husband died due to an legionella infection, asked the Superior Court to authorize the institution of a class action on behalf of the victims of the outbreak, as well as their spouses, heirs, assigns and family caregivers. According to Plaintiff, Defendants, including various public health stakeholders, are liable for the damages resulting from the outbreak and their deficient management of same.
The Superior Court rendered judgment on February 24, 2016, authorizing the class action. Relying on Article 578, Defendants applied for leave to appeal this judgment.
Test applicable to an application for leave to appeal
At the outset, the Court of Appeal refused to apply either of Articles 30, 31 or 32 CCP, which provide for a right of appeal from a final judgment, a judgment rendered in the course of a trial and a case management measure. The Court concluded that these provisions concerned decisions, the nature of which differed greatly from that of a judgment authorizing a class action. Applying the criteria contained in these provisions would unduly limit the right of appeal of Article 578, thereby creating the risk of allowing class actions that should not have been allowed to proceed.
Thus, Article 578 creates a distinct and independent right of appeal that is subject to its own criteria. The Court acknowledged the intent of the legislator to restore balance between plaintiffs and defendants, but also the intent to maintain a certain asymmetry. This is the reason why plaintiffs can now appeal the judgment dismissing the authorization of a class action as of right, while the defendants must obtain leave to appeal the judgment of authorization.
The Court of Appeal identified three types of errors that would allow defendants, in exceptional cases, to obtain leave:
1)The judgment authorizing a class action seems to contain, prima facie, an overriding error with respect to the interpretation of the authorization criteria listed in Article 575 CCP;
2)The judgment seems to contain, prima facie, an overriding error with respect to the assessment of facts relating to the authorization criteria; or
3)It is a clear case of the Superior Court lacking jurisdiction.
Conclusion
Ultimately, the Court of Appeal refused to grant the leaves sought, as Defendants had failed to demonstrate a palpable error with regard to the authorization criteria. The Court of Appeal also refused to grant leave in the companion cases Énergie éolienne des Moulins, s.e.c. c. Labranche, 2016 QCCA 1879 et Duproprio inc. c. Fédération des chambres immobilières du Québec (FCIQ), 2016 QCCA 1880.
Commentary
In the Allen Case, the Court of Appeal recognized the importance of the authorization process of class actions. This importance justified providing for a genuine, although limited, right of appeal, allowing defendants to challenge an erroneous application of the authorization criteria by the Superior Court.
The Court of Appeal in the Allen Case attenuated, to a certain extent, the comments it made in obiter less than a month earlier in Charles c. Boiron Canada inc., 2016 QCCA 1716 (Boiron Case). In that case, Justice Bich, writing for the Court, severely criticized the current functioning of the authorization process. She even mentioned the possibility of abolishing this process. In its comments, the highest court in the province described as « insaisissables [incomprehensible] » the reasons that brought the legislator to give defendants the right of appeal now provided for by Article 578 (Boiron Case, at para. 72). However, in the Allen Case, the Court of Appeal affirmed the importance of ensuring, through a meaningful prior authorization process, as well as a limited right of appeal, that « [TRANSLATION] a class action does not proceed on erroneous basis, thereby avoiding that the parties be dragged in a long and costly judicial dispute » (Allen Case, at para. 60).
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* Although, technically, Article 578 gives both parties a right to appeal, on leave, a judgment authorizing a class action, this right, in practice, will only be exercised by defendants.