​INTRODUCTION
 
This Class Actions update is the first in a regular series covering class action topics with a focus on Alberta.
 

 
OVERVIEW OF CLASS PROCEEDINGS IN ALBERTA
 
In Alberta, class proceedings continue to be somewhat rare, particularly compared to their prevalence in Quebec, Ontario, and British Columbia. Although Alberta is currently fourth among all the provinces in terms of the number of filed class proceedings (54 since 2000), it significantly lags when compared to Quebec (358), Ontario (188), and British Columbia (101). Nevertheless, the types and complexity of the class proceedings that have recently been filed in Alberta suggest that class proceedings may be a litigation tool that will see increased use in Alberta.
 
 
 
 
The bulk of class proceedings in Alberta fall into one of three general categories, namely:
  1. the purchase and sale of securities and other investments;
  2. the sale and use of pharmaceuticals; and
  3. consumer claims arising under the Alberta Fair Trading Act, and other similar consumer protection legislation.

Class proceedings against the government and hospitals also continue to be popular in Alberta.

 
 
 
Class proceedings in Alberta are creatures of statute. In 2004, the Alberta legislature passed the Class Proceedings Act. Pursuant to section 5 of the Act, in order for a proceeding to be certified as a class proceeding, a court must be satisfied as to each of the following criteria:
  • the pleadings disclose a cause of action;
  • there is an identifiable class of two or more persons;
  • the claims of the prospective class members raise a common issue, whether or not the common issue predominates over issues affecting only individual prospective class members;
  • a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; and
  • there is a person eligible to be appointed as a representative plaintiff who, in the opinion of the court, 
    (1) will fairly and adequately represent the interests of the class; (2) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding; and (3) does not have an interest in respect of the common issue that is in conflict with the interests of other prospective class members.

With respect to multi-jurisdictional class proceedings, section 5(6) of the Act directs that if a class proceeding has been commenced elsewhere in Canada and it involves similar issues as the proceeding being considered for certification in Alberta, a court must determine whether it would be preferable for some or all of the claims to be resolved in the proceeding commenced outside of Alberta. Although in many cases this may mean that Alberta courts will defer to the previously filed proceedings in other provinces, particularly where the bulk of the class members reside in more populous provinces, Alberta courts nevertheless retain the discretion to continue proceedings on the basis that certain claims are best decided by an Alberta judge.

Where a court is satisfied that each of the criteria in section 5 has been met, the court shall certify the proceeding as a class proceeding.
 
In March 2011, the Act was amended to make Alberta an “opt-out” jurisdiction. This means that a suit filed in Alberta automatically includes in the class all persons who meet the criteria to be a class member unless the member opts out of the action, regardless of whether they are resident in Alberta. The change to “opt-out” has made it easier to determine the parameters of a class. The change has also apparently made Alberta more attractive to plaintiffs: as shown below, in 2011 the number of class actions filed in Alberta sharply increased, and filings have been on the rise since then. 
 
 
 Change from opt-in to opt-out jurisdiction
 
 As Alberta courts and litigants become increasingly comfortable with class proceedings, it is likely that Alberta will see more and increasingly sophisticated class proceedings. In the last two years alone, significant class proceedings have been brought by plaintiffs against large pharmaceutical companies on the basis of injuries associated with the use of certain drugs (Epp v. Eli Lilly & Co.), against domestic and international banks on the basis of credit card agreements (1023926 Alberta Ltd. v. Bank of America Corp., Macaronies Hair Club and Laser Center Inc. v. Visa Canada Corporation), product liability claims against clothing manufacturers (Davies v. Skechers USA Inc.), and consumer litigation based on the sale of vouchers (Amery v. Groupon Inc.).
 
Defendants that sell goods or services to Alberta residents must be increasingly aware of and familiar with the Alberta Class Proceedings Act, as well as potential exposure to class litigation in Alberta.
 

 
SPOTLIGHT ON CLASS ACTION WAIVERS
 
On February 14, 2013, the Federal Court of Appeal affirmed the decision of the Federal Court in Murphy v. Amway Canada Corp. In the Federal Court decision, Justice Boivin stayed the proposed class proceeding against Amway on the basis that the action was barred by an arbitration clause and class action waiver in an agreement signed by the parties. In stark contrast to the Federal Court’s decision is the 2012 decision of the Alberta Court of Queen’s Bench in Young v. Dollar Financial Group Inc., wherein Justice Macleod declined to enforce a class action waiver on public policy grounds.
 
In Murphy, Justice Boivin concluded that the decision of the Supreme Court of Canada (the SCC) in Seidel v. Telus Communications Inc. governed the outcome of the case. In Seidel, the SCC held that arbitration clauses should be enforced unless they are prohibited by applicable legislation, but declined to expressly rule on class action waivers. Nevertheless, Justice Boivin went on to hold that class action waivers should also be enforced unless they are prohibited by applicable legislation. The Federal Court of Appeal affirmed Justice Boivin's decision, but did not comment specifically on class action waivers.
 
In Young, Justice Macleod was asked to stay a proposed class proceeding commenced by certain payday loan customers against National Money Mart Co. and Dollar Financial Group Inc. The defendants argued that the action should be stayed because the "Fast Cash Advance" agreements that formed the subject of the action contained an arbitration clause and a class action waiver. Justice Macleod determined that the arbitration clause was prohibited by the Alberta Fair Trading Act as it had not been approved by the Minister of Service Alberta as required under section 16 of the Fair Trading Act. Justice Macleod concluded that, pursuant to Seidel, this lack of approval was fatal to the clauses relied upon by the defendants.
 
Justice Macleod also went one step further than the SCC in Seidel, but in a markedly different direction than Justice Boivin. Though the Fair Trading Act is silent on class action waivers, Justice Macleod declined to enforce the class action waiver on the grounds that enforcing the class action waiver would defeat the underlying purposes of the Alberta Class Proceedings Act, namely, preventing a multiplicity of proceedings, promoting access to justice, and bringing defendants to account for their misconduct.
 
Assuming Justice Macleod’s decision is followed in Alberta, the effectiveness of class action waivers in Alberta has been dramatically limited. As a result, Alberta courts are at a crossroads: they may follow Justice Macleod’s lead and decline to enforce class action waivers on the basis of public policy reasons, or they may determine that Justice Boivin’s reasoning is preferable. As a result of the significant uncertainty in the law in Alberta, companies providing goods and services in Alberta must rethink the way they use class action waivers. Companies considering the use of class action waivers are encouraged to engage sophisticated legal counsel to guide them through this process.
 
For further information, please contact:
 
David Tupper  403-260-9722

Keith Marlowe  403-260-9632

Dalton McGrath 403-260-9654

or any other member of our Class Actions group.
 
We would like to acknowledge the contribution of Caroline Smith, Student-at-Law.