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Lawyer says case makes Quebec the most plaintiff friendly jurisdiction
By Lawrence Thacker

June 24 2005 issue

Lawrence Thacker
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The Quebec Court of Appeal in Pharmascience Inc. c. Option Consommateurs [2005] J.Q. no 4770 (“Pharmascience”) has upheld the validity of recent changes to Quebec’s Code of Civil Procedure (“C.p.c.”) that eliminated several hurdles for plaintiffs wishing to commence a class action. The defendants in the case, a group of pharmaceutical companies accused of driving up drug prices in the province, unsuccessfully challenged the C.p.c. amendments on jurisdictional grounds and also argued that the changes violated the Quebec Charter of Human Rights and Freedoms (“Charter”). Unless reversed by the Supreme Court of Canada, the decision will ensure that Quebec will be the most plaintiff friendly jurisdiction in which to bring a class action for some time to come.

The C.p.c. requires plaintiffs to obtain judicial authorization prior to commencing a class action. On a motion for authorization, the plaintiff must satisfy the court that (a) the claims of the proposed class members raise similar factual or legal issues, (b) the facts alleged appear to justify the legal conclusions sought, (c) the proposed class is such that joinder or other procedures would be impractical, and (d) the proposed representative is in a position to properly act for the class.

The recent changes to the C.p.c. alter the procedure on an authorization motion and further distinguish the Quebec class action regime from that of other jurisdictions. Certification motions in common law jurisdictions are often fiercely contested on affidavit evidence and courts have reserved to themselves the discretion of going beyond the allegations in the pleadings in order to make a determination on the certification issues.

The 2003 changes to the C.p.c. removed a requirement that parties seeking authorization swear a written statement in support of the motion. As a consequence, defendants lost the opportunity to conduct an examination of the moving party prior to certification. The amendments also preclude defendants from filing written submissions, such that they can respond only by oral submissions. The question of whether evidence can be adduced on the motion is left to the discretion of the judge. The changes, in effect, lower the bar for Quebec plaintiffs when seeking authorization and make it easier for them to come to the settlement negotiation table with a fully constituted class action.

Shortly after the C.p.c. changes came into effect, they were challenged by the targets of a proposed consumer rights class action. The action arose out of a February 2003 La Presse article in which a journalist had written that certain generic drug manufacturers were providing pharmacists with kickbacks and other benefits. Option Consommateurs, a consumer advocacy group, alleged these practices were illegal and increased the price of drugs sold to the Régie de L’assurance maladie  du Québec which administers the Public Prescription Drug Insurance Plan. Option Consommateurs alleged that conduct drove up Public Drug Insurance Plan premiums and co-insurance charges paid by consumers of the companies’ products. Option Consommateurs proposed a class action to recover these alleged losses on behalf of Quebec consumers.

The defendants opposed the attempt to obtain authorization on jurisdictional grounds, arguing that drug pricing was a political issue, and on the basis that the new procedure violated Quebec’s Charter. The defendants argued that the C.p.c. violated their procedural fairness rights under the Charter because they were not able to insist on and test evidence on an authorization motion. These objections were thwarted at the Superior Court level and the defendants obtained leave to appeal to the Quebec Court of Appeal.

The Court of Appeal rejected the jurisdictional argument and also held that the C.p.c. provision in question did not violate any Charter rights. The court held that the defendants’ argument confused the merits of the proposed action with the issues to be determined on the authorization motion. The merits of the case itself were not at issue on an authorization motion. The court held that the changes ensured that such motions did not degenerate into an inquiry into the merits of the action itself. A court could still hear evidence if necessary. The court held that procedural fairness requirements varied with the circumstances and were not violated in this case. The defendants were still able to conduct a robust defence on the merits as the litigation progressed.

The Court of Appeal’s decision in Pharmascience further entrenches Quebec’s reputation as a plaintiff-friendly jurisdiction. The decision validates changes to the C.p.c. that deny defendants in Quebec many of the opportunities available in the common law jurisdictions to challenge class actions at an early stage. Unless the decision is reversed by the Supreme Court of Canada, Quebec plaintiffs will enjoy bargaining advantages not available elsewhere.

The impact of the decision may even be felt outside Quebec as it provides strong motivation for class counsel to seek authorization of national classes in Quebec courts.

Lawrence Thacker is a partner of the commercial litigation firm Lenczner Slaght Royce Smith Griffin LLP. His practice includes class actions, securities and insolvency litigation. He is also an adjunct professor at the University of Toronto where he teaches International Law.

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