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Fairness and Efficiency in Prospective Class Actions

January 19, 2024

Hoedel v WestJet Airlines Ltd. and Other Developments in Sequencing

In prospective class actions, the issue of sequencing has become a focus for parties and courts. Sequencing refers to the order in which a judge will consider the certification application and other applications, such as those for summary judgment or a stay. The Court of Appeal of Saskatchewan recently released a long-anticipated decision on this issue, Hoedel v WestJet Airlines Ltd. In Hoedel, the Court ruled that sequencing should be determined on a case-by-case basis, taking into account various factors related to fairness and efficiency. Based on this decision, parties and courts will continue to spend excessive resources arguing about the order in which applications should be argued.

In Hoedel, the Plaintiff started a potential class action lawsuit against WestJet Airlines Ltd. and other airlines over baggage fees. The Plaintiff filed his certification application only after the Defendants had filed summary judgment applications to dismiss the Plaintiff’s claim. The Plaintiff and Defendants disagreed on the order in which their applications should be heard. The Case Management Judge decided she would hear the summary judgment applications before the certification application. The Court of Appeal of Saskatchewan upheld the Case Management Judge’s decision, dismissing the Plaintiff’s appeal.

Recent Canadian caselaw and legislation contains three main approaches to sequencing:

  1. Certification First: The certification application must be the first application heard.
  2. Dispositive First: If an application could potentially resolve all or part of the claim, or reduce the issues in the claim, it must be the first application heard.
  3. Discretionary: If an application could potentially resolve all or part of the claim, or reduce the issues in the claim, the judge has the discretion to decide whether they will hear it before, after, or concurrently with the certification application, based on their evaluation of the situation.

Most Canadian courts, including in Saskatchewan, have recently favoured the ‘Discretionary’ approach. In contrast, Ontario adopted the ‘Dispositive First’ approach when it amended its class proceedings legislation in 2020. According to section 4.1 of the Ontario Class Proceedings Act, 1992, a motion that could “dispose of the proceeding in whole or in part, or narrow the issues to be determined or the evidence to be adduced in the proceeding” must be heard and decided before the certification motion, unless the judge decides it should be heard concurrently with certification. Prince Edward Island also recently adopted the ‘Dispositive First’ approach in its legislation (Class Proceedings Act, section 5). It is worth noting that the Law Reform Commission of Saskatchewan is currently preparing a report on whether to recommend changes to Saskatchewan’s Class Actions Act, based on the recent reforms in Ontario.

There was some speculation about whether, in the Hoedel case, the Court of Appeal of Saskatchewan would break from the ‘Discretionary’ approach. This speculation was fueled not only by Ontario’s adoption of the ‘Dispositive First’ approach but also by the fact that the Court, when granting leave to appeal, found the Plaintiff’s argument for the ‘Certification First’ approach compelling enough to justify an appeal.

However, when the Court of Appeal of Saskatchewan decided the Hoedel appeal, it explicitly rejected the ‘Certification First’ approach and did not directly address the ‘Dispositive First’ approach. Instead, it affirmed that the judge should decide the order in which they will hear the certification and other applications, based on a variety of factors. Courts in Saskatchewan and other provinces have used slightly different lists of these factors, but there is considerable overlap. In the Hoedel case, the Court adopted the list of factors from the decision of the British Columbia Court of Appeal in British Columbia v. The Jean Coutu Group (PJC) Inc. (at paragraph 10):

  1. a) any delay by the plaintiff in proceeding to certification;
  2. b) the extent to which a preliminary application may dispose of the whole proceeding or narrow the issues to be determined, taking into account the strength of the applicant’s arguments on the proposed applications and the breadth of the applications;
  3. c) the cost to the parties of participating in pre-certification procedures and the potential to avoid exposing the defendants to costs of a full certification hearing if the matter will be resolved on the basis of the s. 4(1)(a) [multi-jurisdictional] requirement alone;
  4. d) the potential for delay arising from interlocutory appeals;
  5. e) the complexity and interplay of the issues that may arise in and between the pre-certification and certification applications;
  6. f) whether the outcome of the motion will promote settlement;
  7. g) the interests of economy and judicial efficiency (including whether the parties agree the motion will be determinative of the s. 4(1)(a) aspect of the certification motion); and
  8. h) the fair and efficient determination of the proceeding.

The ‘Discretionary’ approach allows judges to make decisions based on what they think will be most fair and efficient in each case. But that flexibility can lead to parties spending significant time and energy trying to persuade the judge to exercise their discretion in favour of their preferred sequence of applications. For instance, in the Hoedel case, almost three years were spent just on deciding the order in which the judge would hear the applications. Considering this, it is clear why the Ontario legislature chose to impose a default sequence. Ontario’s ‘Dispositive First’ approach might cause delays in some cases where it would have been more efficient to hear the certification motion first, but it avoids the lengthy arguments over sequencing encouraged by the ‘Discretionary’ approach. As the Hoedel case shows, the very flexibility of the ‘Discretionary’ approach can sometimes work against its goals of fairness and efficiency.

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