LAW 270B-003 Civil Procedure Week 9: Complex Litigation Part II

Andrew I. Nathanson March 7, 2013

Introduction

•  “In matters of justice … the benefactor is he who makes one lawsuit grow where two grew before” •  Chafee, “Bills of Peace with Multiple Parties, 45 Harv. L.

Rev. 1297 (1932)

Takeaways

• Types of claims •  Counterclaim, cross-claim, third party claim

• General policy in favour of preventing duplicative litigation •  Advanced by liberal rules permitting joinder of claims and

parties • Values underlying joinder rules •  Joinder may be appropriate where there are common issues

of fact or law, or the person is interested in the relief sought • How to add parties • Consolidation, trial at the same time and severance • Class proceedings will be the subject of separate slides

Joinder of claims and parties

•  Joinder is concerned with which claims and parties may be included in a single proceeding

• There is a general policy in favour of preventing duplicative litigation, advanced by liberal joinder rules •  R. 22-5 •  Law and Equity Act, s. 10 (“avoidance of a multiplicity of

proceedings”) • Fundamentally discretionary

Joinder of claims and parties (cont.)

• The appropriate size and scope of a proceeding is a matter of balance •  Smaller and duplicative litigation can be inefficient and

risks inconsistent results •  Litigation that is too large risks entropy; at a certain size, a

proceeding can become unduly complex or burdensome •  Too complex for rational decision

Values underlying joinder policies

• Efficiency • Economy • Finality • Fairness • Consistency

•  The Cook v. Lewis problem: what if each defendant was sued in a separate proceeding?

• Correctness •  A more complete picture is usually better

• Fundamentally, is joinder just and convenient?

R. 22-5 (“Multiple claims and parties”)

• A person may join several claims in the same proceeding •  R. 22-5(1)

• A person may be started against two or more persons where: •  Common questions of law or fact arise •  A right to relief claimed “is in respect of or arises out of the

same transaction or series of transactions” •  The court grants leave

•  R. 22-5(2) • Persons who claim joint relief or who are jointly liable must be

parties •  R. 22-5(3) and (4)

R. 22-5 (cont.)

• Court may order severance (separate trials or hearings) of claims or involving where: •  Joinder may unduly complicate the trial or hearing •  Joinder is otherwise inconvenient

• Court may also make any other order it considers will further the object of the SCCR •  R. 22-5(6)

• Court may also order consolidation •  R. 22-5(8)

Issues arising with multiple plaintiffs

• Possible conflicts or differences of opinion • General rule is all plaintiffs must be represented by the same

counsel • Circumstances where the defendant counterclaims against

some but not all of the plaintiffs •  Insurance issues

Joinder devices

• Counterclaim •  Claim by defendant against plaintiff (and possibly other

non-parties) • Cross claim

•  Claim by defendant against one or more other defendants •  Brought by third party notice

• Third party claims •  Claim by a party (who is not a plaintiff) against another

person

Counterclaims

• Governed by R. 3-4 • Claim by a defendant against the plaintiff •  If the counterclaim raises questions between the defendant

bringing the counterclaim “and a person other than the plaintiff, the defendant may join that other person as a party” to the counterclaim (“defendant by counterclaim”) •  R. 3-4(2) and (3)

• Court may order counterclaim tried separately •  R. 3-4(7.1)

Counterclaim cases

• Lid Brokerage & Realty Co. v. Budd • Lee v. Globe and Mail (application to strike counterclaim)

Third party claims

• Governed by R. 3-5 • Claim by a party (who is not a plaintiff) against another

person • Object of the rule is to provide a single procedure for the

resolution of related questions or issues OR relief or remedies • The rule:

•  Avoids multiple actions and inconsistent findings; •  Provides a mechanism for the third party to defend the plaintiff’s

claim; and •  Ensures the third party claim may be decided before a defendant

is called on to pay the full amount of any judgment •  McNaughton v. Baker (1988), 25 B.C.L.R. (2d) 17 (C.A.)

Third party claims (cont.)

• Decision reached by the court in the plaintiff’s claim against the defendant binds the third party

• However, third party permitted to participate in the main action and defend not only the third party claim but also the plaintiff’s claim against the defendant

• Third party claims more likely to arise where: •  String of contracts •  Products liability cases •  Contractual rights of indemnity exist

Third party claims (cont.)

• May be brought where: •  Party seeks contribution and indemnity from the third party

“in relation to any relief being sought against that party in the action”

•  Party is entitled to relief from the third party and “that relief relates to or is connected with the subject matter of the action”

•  There is a “question or issue” between the party and the third party that is •  Substantially the same as a question or issue that relates to or

is connected with the relief claimed in the action or the subject matter of the action; and

•  It should be properly determined in the action. •  R. 3-5(1)

Third party claims (cont.)

• A party affected by third party procedure may apply for directions and the court enjoys a broad discretion to impose terms on third party procedure “to limit or avoid any prejudice or unnecessary delay” •  R. 3-5(13) and (14)

• An issue between the party delivering a third party claim and the third party may be tried at the time the court may direct •  R. 3-5(15)

Third party claims (cont.)

• Historically, limited to “flow through recovery” (i.e. claims for contribution and indemnity)

• Now extended, by the terms of the rules, to act as a general joinder device (claims where the subject matter (“question or issue”) or relief sought is connected)

Issues arising in third party claims

• Examples of relationships of indemnity implied by law •  Principal and agent •  Guarantor and primary debtor •  Master and servant

• Examples of rights of contribution implied by law •  Partners •  Co-trustees •  Guarantors •  Joint obligors

Issues arising in third party claims (cont.)

• Rights of contribution created by statute •  Negligence Act creates right of contribution between

concurrent tortfeasors •  See Walker pp. 442-443

Third party claims cases

• R. v. Imperial Tobacco Canada Ltd. • Daniel Industries v. Alberta Energy Co. • Freudmann-Cohen v. Tran

Adding parties

• Governed by R. 6-2(7) • Three categories

•  Person “ought to have been joined” •  A necessary party e.g. a co-trustee, since trustees can only act

jointly •  Person’s participation is necessary to ensure all matters

may be “effectually adjudicated on” •  Person’s participation is more than a mere convenience but

less than a necessity e.g. where their direct interests would be affected by the granting of the relief sought

•  Kitimat (District) v. British Columbia (Minister of Energy and Mines) (2006), 61 B.C.L.R. (4th) 295 (C.A.)

Adding parties (cont.)

• There may exist, between the person and any party, a question or issue relating to or connected with (i) the relief claimed or (ii) the subject matter of the proceeding which in the court’s opinion would be just and convenient to determine •  R. 6-2(7)(c) • General joinder device •  Involves considerations of delay, potential prejudice, and the

degree of connection between the existing action and the new parties and claimed

• Overarching consideration is the interests of justice •  Issue with adding defendants outside limitation period

Adding parties cases

• Hannah v. Canadian General Insurance Co. • Brown v. Mendis • Swearengen v. Bowater Canadian Forest Products Ltd.

Consolidation and trial at the same time

• Governed by R. 22-5(8) •  “Proceedings may be consolidated at any time … or may

be ordered to be tried at the same time or on the same day”

• Also discretionary • Other means of effecting joinder • Avoids inconsistent results by ensuring the same trier of fact,

often with an order that evidence in one action applies in the other and vice versa •  Also promotes efficiency

• Consolidation destroys the separate identity of the different proceedings; trial at the same time preserves them

Consolidation and trial at the same time cases • Mernick v. Mernick • Rae-Dawn Construction v. Edmonton (City)

Class proceedings

• Legislative response to “the problem of many suitors with the same grievance”

• Previously available tools had limitations •  Joinder •  Representative actions

• Now, Class Proceedings Act (B.C.) (“CPA”) •  Similar legislation in most other provinces

Policy objectives of class proceedings

•  Improve access to justice •  Increased judicial efficiency • Behavior modification

•  Deterrence

Why have class proceedings?

•  Allows fixed litigation costs to be divided over a large number of plaintiffs •  Reduces costs •  Promotes access to justice

Why have class proceedings (cont.)?

• By aggregating claims, it avoids unnecessary duplication in fact-finding and legal analysis •  Judicial economy rationale

•  This benefits defendants as well as plaintiffs •  Also avoids the risk of inconsistent results on common

issues •  Recall our Miracle on the Hudson exercise

• Promotes accountability and therefore deterrence

Central features of class proceedings

• Notice to class members • Ability to opt out of the class • Discovery limited to representative plaintiff, except with leave

of court • Settlements and plaintiffs’ counsel’s fees require court

approval

Central features of class proceedings (cont.) • Fee-shifting

•  Different approaches to costs •  In B.C., representative plaintiff only liable for costs in

limited circumstances, such as if action frivolous and vexatious •  This is dealt with in Week 11 (Costs and Access to Justice)

•  Robson v. Chrysler •  Kerr v. Danier Leather

• National classes available

Areas where class proceedings most common • Products liability • Consumer protection • Mass tort • Securities?

•  Despite legislative changes to make secondary market securities class actions easier to bring, still relatively few claims in this area

Specific examples of Canadian class proceedings

•  Blockbuster late fees •  Fairhurst v. DeBeers (conspiracy to inflate diamond prices) •  Fulawka v. Bank of Nova Scotia (unpaid overtime) •  Rumley v. Canada (negligent failure to protect Jericho Hill

schoolchildren from abuse, sexual and otherwise) •  Barbour v. University of British Columbia (parking fees)

Process

• Representative plaintiff or plaintiffs file an intended class proceedings

• Certification application • Certification order

•  Certifies class and common issues • Notice to class members • Trial of the common issues

Certification requirements (CPA, s. 4)

• Central considerations •  Commonality •  Preferability

Certification requirements (cont.)

• Pleadings disclose a cause of action •  Identifiable class of two or more persons • Claims of class members raise common issues

•  Even if individual issues predominate over common issues

Certification requirements (cont.)

•  “A class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues”

• There is a representative plaintiff who •  Would fairly represent interests of the class •  Has a workable plan for the action •  Does not have a conflict with other class members on the

common issues

How is preferable procedure determined (s. 4(2))? • Whether questions of fact or law common to the members of

the class predominate over any questions affecting only individual members

• Whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions

Preferable procedure (cont.)

• Whether the class proceeding would involve claims that are or have been the subject of any other proceedings;

• Whether other means of resolving the claims are less practical or less efficient;

• Whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means.

• All other relevant matters

Class proceedings cases

• Western Canadian Shopping Centres v. Dutton • Hollick v. Toronto (City) • Rumley v. British Columbia

•  Note too the recent SCC indirect purchasers trilogy •  Pro-Sys Consultants v. Microsoft 2013 SCC 57 •  Sun-Ripe Products v. Archer Daniels Midland 2013 SCC 58 •  Infineon Technologies v. Option Consommateurs 2013 SCC

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