Authors: Jason Mohrbutter, Adryan Toth
This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.
This is the third installment of the Class Action Turf Wars blog series. In our first two blogs, Class Action Turf Wars: BCE Inc. v Gillis, 2015 NSCA 32 and Class Action Turf Wars II: Turner v Bell Mobility Inc., 2016 ABCA 21 we noted that two appellate courts (Nova Scotia and Alberta) as well as two lower courts (B.C. and Manitoba) held that it was an abuse of process for the same class counsel to simultaneously commence virtually identical class actions in the courts of numerous provinces across Canada with no intention of prosecuting all of them. Very recently, the Manitoba Court of Appeal handed down its decision which reaches the same conclusion.
By way of background, in 2004 Merchant Law Group commenced duplicative class actions in nearly every province against virtually every telecommunications company in Canada. The underlying allegation was that it was wrongful for the defendants to charge monthly system access fees (“SAF”).
In 2007, the action was certified in Saskatchewan as a national opt-in class action. Subsequently, there was a change in legislation that allowed class actions in Saskatchewan to be certified on an opt-out basis. Following the change, Merchant Law Group unsuccessfully attempted to have the Saskatchewan courts change the certified action from an opt-in class to an opt-out class.
Following this decision, numerous defendants began successfully moving to stay the SAF actions in various jurisdictions outside Saskatchewan as an abuse of process. Most recently, the Manitoba Court of Appeal upheld the lower court’s decision that found the Manitoba SAF action to be an abuse of process
The Court reviewed the history of the litigation not just in Manitoba, but in some of the other SAF actions as well. It noted and agreed with the reasons of the Nova Scotia Court of Appeal and Alberta Court of Appeal that class counsel’s commencement of duplicative proceedings was abusive, especially since there was no intent to prosecute those duplicative proceedings. The Manitoba action had been commenced some 10 years prior, with no attempts by class counsel to move it forward in any meaningful way. These facts strongly supported a finding of abuse of process (at paras 39-47).
The Court also rejected an argument that the Manitoba action should be allowed to proceed because the Saskatchewan action would not protect the interests of Manitoba residents due to its opt-in nature (at paras 48-57). The Court held that there was no convincing evidence that the Saskatchewan courts did not “have the capacity and willingness to protect the interests of Manitoba residents by ensuring that they will receive adequate and timely notice to choose to opt into the [Saskatchewan] action…” (at para 55). Indeed, to allow the Manitoba action to proceed in the circumstances would offend the principle of comity (at para 57).
In the end, the Manitoba Court of Appeal strongly summed up its decision by reiterating the inappropriate and abusive litigation tactics that had been engaged in:
56 In closing, as other courts before us have said, the SAF litigation commenced by the MLG is a classic example of when it is “necessary and appropriate to look below the surface of class action proceedings in order to preserve the integrity of the administration of justice” (Bear at para 74). We agree with the conclusions of the Nova Scotia and Alberta Courts of Appeal in Gillis and Turner that it is obvious from the record that, currently, the MLG is maintaining the SAF class actions filed outside of Saskatchewan, despite the fact that Frey/Chatfield action is certified and going to trial, as nothing more than a form of insurance for the possibility of an unsuccessful result in that jurisdiction…. That is inappropriate and amounts to an abuse of process.