Three Recent Decisions by the Québec Superior Court Dismiss Motions for Authorization to Institute a Class Action

On September 4 and 5, 2013, the Québec Superior Court dismissed no less than three motions for authorization to institute a class action, namely in Jasmin v. Société des alcools du Québec,¹ Mouaikel v. Facebook² and Bélair v. Bayer Inc.³

Flawed Legal Syllogism, Lack of Knowledge of the File by the Petitioner, and Proportionality Criterion Not Satisfied

In Jasmin, the Superior Court refused to allow the bringing of a class action against the Société des alcools du Québec (SAQ) regarding the allegedly excessive prices of products sold by the SAQ compared to their acquisition costs.

The Superior Court concluded that the business practices of the SAQ were not abusive and that it was not at fault in its pricing policy since the allegations of faulty pricing behavior against it were a direct result of the government’s decision to establish a statutory monopoly. Such status was not contested. As a result, the syllogism proposed by the petitioner suffered from a flaw that was ultimately fatal.

Moreover, the Superior Court noted that even in the absence of such a flaw, the authorization of the proposed class action would violate the proportionality rule of article 4.2 CCP.

Finally, the Superior Court stated that it was of the opinion that the petitioner was not able to provide adequate representation of the members of the proposed group since, although this threshold is very low, it must nevertheless be met. In this case, the Superior Court concluded that the petitioner had demonstrated a great lack of knowledge of the file, which showed weakness in his genuine interest to act as representative.

Absence of Jurisdiction

In Mouaikel, the Superior Court declined jurisdiction with respect to the class action that the petitioner wanted to bring against Facebook, its directors and the underwriters that participated in its IPO.

The petitioner wanted to bring a class action before the courts in Québec in connection with losses incurred by Québec investors who purchased shares of Facebook in the context of its IPO on the grounds that, among other things, too many actions had been offered to investors at too high a price, and that some selected investors had obtained insider information.

The respondents filed a motion to dismiss the petitioner’s motion for authorization to institute a class action on the grounds that the Québec Superior Court had no jurisdiction to hear the case, or alternatively, that the Superior Court should decline jurisdiction on the basis of forum non convenience and refer the case to the New York courts. The onus of proving the existence of the jurisdiction of the Québec courts was placed on the petitioner. The Superior Court concluded that the petitioner failed to discharge this burden since none of the criteria of article 3148 CCQ was met.

In the opinion of the petitioner himself, the only criterion that applied was that of article 3138(c) CCQ, namely that damages were suffered in Québec. The Superior Court draws a distinction between cases where a party has suffered damages in Québec only because the party's patrimony is located in Québec and cases where the damages in Québec have been caused by events that occurred in Québec. In this case, no harmful activity or event occurred in Québec and the Superior Court concluded that no damages had been suffered in Québec within the meaning of article 3148 (c) CCQ. As such, the Court declined jurisdiction and dismissed the motion for authorization.

Discontinuance of the Petitioner and Impossibility to Find a Replacement

In Bélair, the petitioner had filed a motion for authorization to institute a class action and to ascribe the status of representative regarding adverse side effects and other risks allegedly caused by antibiotics administered orally.

Afterwards, the petitioner indicated that he no longer wanted to act as representative of the group because he was suffering from health problems. Consequently, he filed a motion for discontinuance. His attorneys were not able to identify another person to act as representative in the proposed action. The Court concluded that it would not be appropriate in these circumstances to simply allow the discontinuance of the petitioner and that it would be contrary to the interests of justice to suspend the proceedings pending the discovery of a potential and hypothetical representation. Because the criterion of 1003(d) CPC was not met, the Superior Court dismissed the motion for authorization to institute a class action.

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¹ 2013 QCCS 4162 (Jasmin).

² 2013 QCCS 4162 (Mouaikel).

³ Unreported judgement annexed to the minutes of the hearing of September 5, 2013, file 500-06-000591-129 (Bélair).