The Endean decision of the Supreme Court of Canada promises greater coordination of national class action settlements

In a recent decision, Endean v. British Columbia, 2016 SCC 42 (“Endean”), the Supreme Court of Canada concluded that class action judges in a national class action can sit outside their home provinces to hear and approve class action settlements with judges from other provinces. Prior to the decision, the issue was in doubt, raising constitutional questions and issues about territorial jurisdiction. The Supreme Court of Canada’s decision in Endean clarifies these questions and provides guidance on when these powers can be used. However, limits on the scope of the powers mean that additional efforts will be required if Canada is to obtain a more robust system akin to the U.S. multidistrict litigation (“MDL”) model to manage national class actions. In the U.S. MDL model, similar class actions commenced in different states are transferred and consolidated into one federal court case, which is managed by one judge from beginning to end.

The factual background to the Supreme Court’s decision in Endean involved a pan-Canadian settlement of claims by persons infected with hepatitis C through the Canadian blood supply. Judges in three provinces (B.C., Ontario and Quebec) had jurisdiction over the certified concurrent class action proceedings. Under the agreements, the settlements would only take effect if “materially identical” agreements were approved in each province. Accordingly, class counsel proposed that the settlement approval hearing be heard by the three judges of each province sitting together in one location. A preliminary issue arose regarding whether judges had jurisdiction to conduct hearings outside their province. Appellate courts in B.C. and Ontario reached different conclusions, opening the door for the Supreme Court of Canada to rationalize the law.

The Supreme Court of Canada concluded that class action judges have both statutory and inherent powers to sit outside their provinces. In provinces like Ontario and B.C., which have statutory provisions that permit a judge to “make any order it considers appropriate respecting the conduct of a class proceeding,” the Court strongly endorsed the use of broad powers to efficiently manage class actions, including the power to sit outside a judge’s home province.

In provinces without these statutory provisions, the Supreme Court equally concluded a court could sit outside its home province, relying on the court’s “inherent jurisdiction” powers.

The Court set limits on the power. Approving the settlement did not involve use of a court’s “coercive powers outside their province,” the Court held, because the hearing involved a paper record. In a case involving witness subpoenas, judges could not use the Endean procedure to resolve disputed national class actions. In addition, the case involved litigation “wholly within Canada.” The Court did not consider national cross-border coordination issues.

The Supreme Court of Canada’s decision in Endean promises potential greater efficiency to approve national class action settlements. While it is a good start, limits on the scope of the power make it far from the rigorous U.S. MDL process. Developing legislative or other rules will be needed if Canada is intent on greater coordination of multi-jurisdictional class actions.