Law Times

Law Times • November 11, 2013 COMMENT Plaintiffs score big win in Supreme Court's class action trilogy BY JEAN-MARC LECLERC Page 7 Public sector employee protections watered down under bill C-4 BY BARRY GOLDMAN AND MATTHEW SCOTT For Law Times For Law Times I usually like to wait until a few days after a big Supreme Court of Canada decision comes out to assess its fallout. By this time, virtually every law firm has released its breaking-news client newsletter that summarizes the bottom-line implications only hours after the decision's release. But there are some bottomline implications that have quickly become clear in the court's competition law trilogy last month. In three decisions on Oct. 31, the Supreme Court of Canada concluded that two antitrust cases, Pro-Sys Consultants Ltd. v. Microsoft Corp. and Infineon Technologies AG v. Option consommateurs, could be certified as class actions. But it found against certifying a third matter, Sun-Rype Products Ltd. v. Archer Daniels Midland Co. By now, there have been predictions of different consequences flowing from these decisions depending on people's particular point of view. Some blandly conclude that more class action litigation will occur. This is probably unlikely. Very few people, certainly not among those who practise on behalf of plaintiffs, believe Canadian courts will accept U.S. antitrust doctrines prohibiting indirect purchaser claims. Nor are plaintiffs choosing not to bring certain class actions because of a hesitation about the test applicable to expert evidence. Some point to other avenues of argument arising out of the decision: the eventual proof a plaintiff will need to provide to present a methodology grounded in fact and based on available data; and the complexities that may exist in working through the double-recovery issues addressed in the Supreme Court's decision. There are undoubtedly positive and negative aspects for both plaintiffs and defendants in the Supreme Court's three recent class action decisions. However, a fair assessment of the effects of the decisions is that there are far more gold linings for plaintiffs than there are silver linings for defendants. These are the basic bottom-line implications for class actions from the perspective of someone who practises on behalf of plaintiffs in class actions: • The Supreme Court expressed approval of certification of indirect purchaser claims even while it also recognized their complexity and the difficulty of tracing indirect damages to a level of scientific proof. • Courts in class action certification proceedings should be very reluctant to decide preliminary questions of law. Even the Supreme Court of Canada, which is not reluctant to decide legal issues that are ripe for a determination, declined to rule on every preliminary issue of law except one. • Corporate affiliates can be liable for conspiracy, confirming that foreign parents and domestic subsidiaries can be liable in antitrust cases. • It will be difficult for defendants to advance jurisdictional arguments to defeat certification. Defendants will only succeed if their arguments meet the high standard of being plain and obvious. Canadian courts retain jurisdiction to determine conspiracy claims even if the wrongful conduct occurred abroad. • The standard in class action certification of requiring some basis in fact is not akin to a balance of probabilities. Defendants will point to the Supreme Court's reference to a "meaningful screening device," but it made this statement in the context of distinguishing from mere "symbolic scrutiny," something no plaintiff could credibly argue should have been the standard on certification. • The Canadian approach at the certification stage does not allow for an extensive assessment of the complexities and challenges a plaintiff may face in establishing its case at trial. • Even significant degrees of difference among class members do not preclude a court from finding commonality sufficient to certify a class action. • Resolving conflicts between the experts is an issue for the trial judge, not one to engage in at certification. • Parties cannot use aggregate damages provisions to establish proof of loss and, in turn, liability. However, it is unclear whether this really matters since the Supreme Court also held that regardless of whether the court certifies aggregate damages as a common issue, the ultimate decision as to whether they are engaged is up to the trial judge. There are some obvious areas for future disputes. Expert evidence is one such example. What did the court mean by "meaningful scrutiny" or "sufficiently credible or plausible?" What does it mean to be "grounded in the facts of the particular case?" How can the double-recovery issue be resolved? If there must be some evidence of the availability of the data, how does this occur? Should the defendant have to produce documents about these issues? How can the data be obtained? How will the court evaluate contrary expert evidence if resolving conflicts between the experts is something that should not occur at certification? Although there are excellent factual and legal answers to all of these questions, some will undoubtedly seek to debate these issues in future cases. Overall, a realistic appraisal of the broader import of the trilogy of class action decisions is that the Supreme Court of Canada has reaffirmed basic class action principles and clearly resisted a gradual creep towards more detailed U.S.-style scrutiny of class actions at the certification stage. LT O n Oct. 22, the government of Canada introduced bill C-4, a massive piece of omnibus budget legislation containing reforms and amendments to many existing laws. The amendments affect a number of laws, including the Public Service Labour Relations Act. The bill C-4 amendments to the act would remove many labour rights public service employees are entitled to under current legislation. Sweeping reforms to the definition of essential services, the mandate of the Public Service Labour Relations Board, the right to strike by public servants, and the financial nature of the arbitral and conciliation awards the board may grant would, among other things, effectively neuter the bargaining rights of the affected members of the public sector. The opening volley on bargaining rights is a subtle change to the mandate of the board under s. 13 of the act. Previously, the board had a mandate to provide "adjudication services, mediation services, and compensation analysis and research services" in accordance with the act. But the amendments in s. 295 of bill C-4 dispense with the compensation analysis and research services powers of the board. That means the board could now only provide adjudication and mediation services. The change foreshadows amendments that will dramatically modify the board's powers with respect to arbitral and conciliation awards. The amendments to the act redefine essential services as being "a service, facility or activity of the government of Canada that has been determined under subsection 119(1) to be essential." Under the old language of Division 8 of the act, the employer had only the exclusive right to determine the level at which an essential service could be provided. The employer and employees had to co-operate to determine which employees were affected and then enter into an essential services agreement. Failure to agree would result in intervention by the board. The new language under s. 305 of bill C-4 would give employers the exclusive right to determine if a service, facility, or activity is essential "because it is or will be necessary for the safety or security of the public." It would also give employers "the exclusive right to designate the positions in a bargaining unit that include duties that, in whole or in part, are or will be necessary for the employer to provide essential services, and the employer may exercise that right at any time." These changes would most certainly reduce the ability of federal public servants to strike. Bill C-4 also amends the process for dispute resolution under the act. It says bargaining units in which 80 per cent or more of the employees are designated as essential may not strike and must resolve their disputes through arbitration. Furthermore, bill C-4 would bolster s. 194(2) of the act that prohibits an employee organization such as a union from declaring or authorizing a strike, the effect of which would be to involve the participation of employees designated as essential by the employer. Also, under bill C-4, no officer or representative of an employee organization would be able to counsel or procure the declaration or authorization of a strike with respect to an essential bargaining unit or counsel or procure the participation of those employees in a strike. Given that an employer would be able to designate employees as essential at any time, the change could very well make it significantly more difficult for employee organizations to secure strike votes in the future. After having restricted the ability of employee organizations to engage in concerted labour action, the amendments would also rewrite the rules involving arbitrations and conciliations before the board. Before, under s. 148 of the act, the board had a broad spectrum of factors to consider in making an arbitral award as well as the ability to look at any other factors it deemed relevant. The new amendments strip the board of these broad powers. Now the considerations take the form of preponderant and other factors. The term preponderant factors contains new elements, including consideration of whether the compensation levels are a "prudent use of public funds" and "Canada's fiscal circumstances relative to its stated budgetary policies." Likewise, the term "other factors" is a category to which many of the former considerations under the current act have been relegated. There have also been similar amendments to the conciliation provisions set out in the new s. 175 of the act. And bill C-4 goes even further. If passed, it would allow the chairperson, either by fiat or on the application of either of the parties, to direct the board to review the matter if, in the chairperson's opinion, the decision does not represent a reasonable application of the s. 148 factors highlighted above. This new mechanism can force the board to reconsider decisions it could have made, without internal review, under the current act where it has considered the s. 148 factors but failed to do so in a "reasonable" manner. There's no doubt bill C-4 will have an impact on federal public servants. Although the act was not a perfect piece of legislation regarding the collective bargaining rights of federal public servants, it did afford reasonable protections. The amendments incorporated within bill C-4 have definitely watered down employee powers and protections and, in the process, effectively removed many of those rights. LT u SPEAKER'S CORNER uJean-Marc Leclerc is a partner in the litigation department at Sotos LLP. uBarry Goldman is a partner at Shibley Righton LLP and a member of its labour and employment law group. Matthew Scott is a litigation associate in the firm's Toronto office and is also a member of its labour and employment law group. www.lawtimesnews.com

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