On February 27, 2014, the Supreme Court of Canada granted leave to appeal the decision of the Manitoba Court of Appeal in Meeking v Cash Store Inc, 2013 MBCA 81. Meeking partially enforced an order approving the settlement of a class action by the Ontario Superior Court that determined the rights of Manitoba residents. In reaching this conclusion, the Court of Appeal confirmed that common issues, shared between resident and non-resident class members, can form a presumptive connecting factor for jurisdiction purposes.
On February 27, 2014, the Supreme Court of Canada granted leave to appeal the decision of the Manitoba Court of Appeal in Meeking v Cash Store Inc, 2013 MBCA 81. Meeking partially enforced an order approving the settlement of a class action by the Ontario Superior Court that determined the rights of Manitoba residents. In reaching this conclusion, the Court of Appeal confirmed that common issues, shared between resident and non-resident class members, can form a presumptive connecting factor for jurisdiction purposes.
The Supreme Court’s judgment granting leave to appeal was issued without reasons; however, the Supreme Court’s Office of the Registrar reports that the appeal will engage two jurisdictional questions central to the viability of national class actions, namely:
Does a provincial superior court have a more expansive jurisdiction in a class proceeding than in an ordinary proceeding to determine the rights of residents of another province concerning transactions occurring wholly within that province?
What are the territorial limits under the Canadian Constitution on a provincial superior court’s assertion of jurisdiction in a class proceeding over residents of other provinces?
The history of this action reveals the genesis of these issues.
May 2006 – McCutcheon v The Cash Store Inc (“McCutcheon”) is certified in Ontario
Several years before the Manitoba proceeding was commenced, a class proceeding was filed in Ontario relating to an alleged unlawful collection of broker fees by the defendant, The Cash Store Inc. (“Cash Store”). McCutcheon was certified as a class proceeding on behalf of “[a]ny person in Canada, resident outside the Provinces of British Columbia and Alberta, who borrowed money as a ‘payday loan’ from a Cash Store location […].”1 Justice Cullity, for the Ontario Superior Court, found support for multijurisdictional class actions in nascent appellate jurisprudence from the early 2000s, which held that certified common issues, shared by both intra- and extra-provincial class members, can ground the requisite real and substantial connection.
December 2006 – The McCutcheon settlement is approved in Ontario
The McCutcheon action was settled in Ontario, providing the defendants with a release from all members of the class. By negotiation, the class for the purposes of the settlement was expanded to include customers of Instaloans, including those resident in Manitoba. Notice was provided to prospective class members by first class mail to the last known address of all class members, displayed in every Cash Store location in Canada (except Alberta and British Columbia), referred to in various press releases, published on the websites of class counsel and Cash Store, and delivered to any person who requested it.
April 2010 – Meeking v Cash Store Inc (“Meeking”) is filed in Manitoba
Years later, the Manitoba plaintiff filed a proposed class action against Cash Store, Instaloans, and Cash Store Financial Services Inc. on behalf of “all residents of Manitoba [and] any persons resident outside of Manitoba who have elected to claims in this action, in a manner to be determined by the Court.”2 The plaintiff claimed not to have seen the notice of the McCutcheon settlement, having ignored his mail from Cash Store and failing to observe the notices posted in Cash Store locations. The claims advanced in Meeking were substantially identical to those asserted in McCutcheon.
February 2012 – The Manitoba Court of Queen’s Bench gives partial force to the McCutcheon settlement order
In response to the Meeking claim, the defendants brought a motion for an order recognizing and enforcing the McCutcheon judgment, and thus bringing an end to the Manitoba litigation. The motions judge applied the test for enforcement of settlement orders as it was recently described by the Supreme Court of Canada in Canada Post Corp v Lépine, 2009 SCC 16 (“Lépine”). The Lépine test requires, first, that jurisdiction was validly assumed by the foreign court; and second, that the principles of order and fairness were satisfied in relation to resident class members.3
The motions judge found that the McCutcheon court was properly vested with jurisdiction; however, he applied the second branch of the Lépine test to restrict enforcement of the order to payday loan customers of Cash Store only because of deficiencies in the notice, with particular respect to i) Instaloan customers, and ii) the inclusion of signature and title loans. Accordingly, the settlement was found not to be enforceable against Instaloan customers or those who had taken signature and title loans. The plaintiff and the defendants appealed.
September 2013 – The appeal and cross-appeal are dismissed by the Manitoba Court of Appeal
In determining the appeals of both sides, the Manitoba Court of Appeal scrutinized the decisions of the lower courts of both Ontario and Manitoba, and once again observed that:
“National class actions involve the assumption of jurisdiction by a provincial superior court over a plaintiff class that includes and purports to bind non-residents of that province. Correspondingly, the superior court of the province of the non-resident plaintiff maintains the authority to determine whether any judgment resulting from the assumption of jurisdiction will be recognized and enforced in that province.”4
The Court of Appeal noted that procedural fairness is of foremost concern in these matters, both in leading up to the original approval order and in its consequences.
Accordingly, the first issue examined on appeal asked:
“whether a court in Ontario had jurisdiction to certify a class action and approve a corresponding settlement that purported to be binding on Manitoba residents where the transactions giving rise to the claim occurred wholly within Manitoba.”5
The Court of Appeal noted that, at this phase, procedural fairness is ensured by a valid exercise of jurisdiction. It applied the private international law test for recognition of a new presumptive connecting factor, pronounced by the Supreme Court in Club Resorts Ltd v Van Breda, 2012 SCC 17 (“Van Breda”), reasoning that, “considering the parallel development of constitutional law […] it is appropriate to apply the presumptive connecting factors to situations where the matter at issue is the court’s territorial jurisdiction.”6 As the McCutcheon court had properly claimed jurisdiction over the resident plaintiff and the defendant,7 it maintained presumptive jurisdiction over Manitoba class members based on the issues held in common.
The second issue examined on this appeal asked if:
“the conditions which must be met before the settlement is recognized and enforced in Manitoba.”8
At the recognition and enforcement stage of the inquiry, the Court of Appeal held that fairness is assessed by the adequacy of the settlement’s notice and opt out processes. The deficiencies detected by the motions judge militated against enforcement of the settlement with respect to Instaloans customers as well as signature and title loan borrowers.
February 2014 – Leave to appeal Meeking is granted by the Supreme Court of Canada
The Supreme Court of Canada will now take the opportunity to address the implications of its preceding decisions in Lépine and Van Breda and consider the circumstances in which it is appropriate to certify extra-provincial classes, and to enforce settlement approval orders granted by the court of another province.
Given the wide use and acceptance of the national class by courts and litigants across the country, it is somewhat surprising that the Supreme Court considers it an issue sufficiently controversial to be worthy of its consideration. The national class is undoubtedly an important and useful mechanism for the delivery of access to justice and judicial economy, and so the Supreme Court’s blessing of the reasonable use of the national class will certainly be welcomed by litigants seeking certainty and a rational resolution of their claims.
1 Meeking v Cash Store Inc, 2013 MBCA 81 at para 4.
2 Meeking v Cash Store Inc, 2013 MBCA 81 at para 3.
3 The third branch of the Lépine test, which asks whether a statutory or common law rule prohibits enforcement, was not in issue on this motion.
4 Meeking v Cash Store Inc, 2013 MBCA 81 at para 48.
5 Meeking v Cash Store Inc, 2013 MBCA 81 at para 1.
6 Meeking v Cash Store Inc, 2013 MBCA 81 at para 94.
7 The Court applied the international class action case of Currie v McDonald’s Restaurants of Canada Ltd (2005) 74 OR (3d) 321 (CA), to conclude that, because the defendant carried on business in Ontario, the Court was properly vested with jurisdiction over Ontario class members.
8 Meeking v Cash Store Inc, 2013 MBCA 81 at para 1.