Jim Middlemiss, Financial Post

Wednesday, January 13, 2010

Peter Hogg warns that national class lawsuits may not pass constitutional
muster.

The noted constitutional lawyer, who is scholar in residence at Blake,
Cassels & Graydon in Toronto, suggests that unless a class member has a
"real and substantial connection" to the province whose court is hearing the
case, rulings may not bind people that live elsewhere.

That could throw a wrench into future cases and highlights the need for a
national class-action system.

Mr. Hogg said courts have been certifying cases and settlements and haven't
been "too worried about the constitutional niceties. My argument is that
class actions are really no different than any ordinary civil action ...
[and] you shouldn't be able to expand the jurisdiction of the provincial
court systems by framing the action as a class action."

The problem is "territorial limitation." The superior courts in each
province oversee things like negligence or breach of contract, which form
the basis of class suits.

However, the ability of a court to rule on matters involving a resident in
another province is limited. The Supreme Court has ruled that a provincial
court can seize jurisdiction over a matter if there is a "real and
substantial connection" to the province hearing the case.

However, some jurisdictions have what are called opt-in and opt-out class
action systems. Opt-in means plaintiffs elect to join the suit and agree to
the jurisdiction of the court.

Opt-out means everybody is automatically included unless they ask to be left
out.

Mr. Hogg says meeting the test in that instance is dicier. "A provincial
opt-out class statute will be unconstitutionally extraterritorial if it
authorizes the creation of a plaintiff class that includes non-residents
whose claims, regarded individually, do not have a real and substantial
connection to the forum." In that case, he says, "these purported members of
the class will not be bound by the rulings in the class action, and will not
be barred form bringing their own actions against the defendant in their
provinces of residence...."

Even now, courts are sparring over which provinces should take control of a
case, so it won't be long before constitutional scholars like Mr. Hogg are
called upon to help sort out the mess.

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Coppertone shines A big win for legal teams representing sunscreen
manufacturers last week, after Ontario Superior Court Justice George Strathy
refused to certify a class action against Schering Plough Canada Inc.,
Playtex Ltd., Sun Pharmaceutical Corp. and Playtex Products Inc. Together
they make 126 products, including the popular Coppertone and Bain de Soleil
brands.

Schering was represented by Paul Morrison, Glynnis Burt, Jeffrey Feiner and
Erica Richler, of McCarthy Tetrault, while the Playtex parties were
represented by Alan Mark, Randy Sutton and Katherine Smirle of Ogilvy
Renault.

The proposed suits, brought by Brian Singer, who was represented by Henry
Juroviesky Eli Karp, and Kevin Kaspersz of Juroviesky &Ricci, would have a
class of more than three million people. The suits alleged the defendants
had misleading labels on their products.

A California court refused to certify a similar suit and Justice Strathy saw
it as an attempt to bring a copycat suit here. He wrote, "I must say that
the statement of claim in this action looks as if it has been borrowed from
a U.S. pleading without adequate research of the Canadian regulatory
regime."

Justice Strathy also took exception to Mr. Singer as the proposed
representative plaintiff, noting Mr. Singer "had no apparent complaints
about the defendants' products until Mr. Karp told him about the U.S.
litigation." He added Mr. Singer continues to use the products. "It is hard
to imagine that the litigation holds any significant financial reward for
him."

The judge noted the representative plaintiff must be someone with a "real
interest in the dispute" and "cannot be a mere benchwarmer or a puppet
manipulated by counsel."

He held that the case failed to set out a cause of action and would not be
appopriate for a class lawsuit.

"Far from promoting judicial economy, it would saddle the court with two
massive class actions that have been cobbled together with an insufficient
legal and evidentiary foundation."