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Class Proceeding (Fed) - Certification - Disclosing Cause of Action [FCR 334.16(1)(a)]. Michel v. Canada (Attorney General)
In Michel v. Canada (Attorney General) (Fed CA, 2025) the Federal Court of Appeal partially allowed an appeal, here from a denied class action certification motion that resulted when "the Federal Court declined to allow the plaintiffs leave to amend their Third Amended Statement of Claim (the Statement of Claim) and to reapply for certification".
Here the court considers the 'cause of action' element for federal class proceeding certification:[34] Turning to the first criterion, the Federal Court correctly noted that the test for ascertaining whether the pleadings disclose a reasonable cause of action for purposes of certification is the same as on a motion to strike, namely, whether it is plain and obvious that the pleading discloses no cause of action. .... . McMillan v. Canada
In McMillan v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal, this from federal class action orders from a motion judge of the Superior Court that "dismissed Mr. McMillan’s motion to certify the action as a class proceeding on the basis that his statement of claim failed to disclose a reasonable cause of action" and refused "leave to amend his statement of claim".
Here the court sets out the appellate SOR for the federal 'failed to disclose a reasonable cause of action' issue [which is the same issue as striking pleadings under Ontario's RCP R21.01(1)(b)]:[56] Whether a pleading discloses a reasonable cause of action is primarily a question of law. Consequently, the standard of appellate review of the Federal Court’s decision on both the motion to strike and the first certification condition is that of correctness: Brink v. Canada, 2024 FCA 43 at para. 40, leave to appeal to SCC refused, 41266 (10 October 2024); Canada (Attorney General) v. Nasogaluak, 2023 FCA 61 at para. 21, leave to appeal to SCC refused, 40734 (14 December 2023); Pioneer Corp. v. Godfrey, 2019 SCC 42 at para. 57; Canada (Attorney General) v. Jost, 2020 FCA 212 at para. 21. On this standard, this Court owes no deference to the Federal Court: Housen v. Nikolaisen, 2002 SCC 33 at para. 8. . McMillan v. Canada
In McMillan v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal, this from class action orders from a motion judge of the Superior Court that "dismissed Mr. McMillan’s motion to certify the action as a class proceeding on the basis that his statement of claim failed to disclose a reasonable cause of action" and refused "leave to amend his statement of claim".
Here the court considers the 'cause of action' element of class proceeding certification under the Federal Rules:(1) Does Mr. McMillan’s Statement of Claim Disclose a Reasonable Cause of Action?
[158] The first requirement for an action to be certified as a class proceeding is that the pleadings disclose a reasonable cause of action: Rule 334.16(1)(a). This is to be assessed on the same standard that applies on a motion to strike a pleading: Brink, above at para. 48; Pro-Sys Consultants Ltd., above at para. 63; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para. 14. In other words, for an action not to be certified, it must be plain and obvious that the claim discloses no reasonable cause of action, assuming the facts pleaded in the statement of claim to be true: Greenwood, above at para. 143. . Brink v. Canada
In Brink v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal from a denial of a Charter s.15 ['discrimination'] class action certification motion, here where the motion judge struck the claim (without leave to amend) on the basis that no Charter claim was made out on the pleadings. The claim was with respect to immigration process fees charged by the government to "non-Canadian born" individuals.
These quotes address the law of striking a claim, which here also resulted in the denial of a class action certification motion:[24] Citing this Court’s decision in Wenham v. Canada (Attorney General), 2018 FCA 199 at para. 29, the Federal Court recognized that its task was not to assess the odds of a cause of action ultimately succeeding. The test was, rather, "“whether a cause of action has been pleaded that is not plain and obvious to fail”": Wenham, above at para. 31. The appellants do not take issue with the test identified by the Federal Court, but rather with its application in this case.
....
[38] The primary issue raised by the appellants is whether the Federal Court erred in law in failing to find that it was at least arguable that being "“non-Canadian born”" could qualify as an analogous protected ground for the purposes of section 15 of the Charter. The appellants further argue that the Federal Court erred in denying them leave to amend their statement of claim.
....
VI. Principles Governing Motions to Strike
[42] As noted earlier, the parties agree that the Federal Court properly identified the principles governing motions brought pursuant to Rule 221(1)(a) of the Federal Court Rules, SOR/98-106 to strike statements of claim on the basis that they do not disclose a reasonable cause of action.
[43] That is, a statement of claim should not be struck unless it is plain and obvious that the action cannot succeed, assuming the facts pleaded in the statement of claim to be true: Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93 at 980; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 63. In other words, the claim must have no reasonable prospect of success: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 17.
[44] The onus is on the party who seeks to establish that a pleading fails to disclose a reasonable cause of action: La Rose v. Canada, 2023 FCA 241 at para. 19; Edell v. Canada, 2010 FCA 26 at para. 5. The threshold that a plaintiff must meet to establish that a claim discloses a reasonable cause of action is a low one: Brake v. Canada (Attorney General), 2019 FCA 274 at para. 70.
[45] Pleadings must, moreover, be read generously, in a manner that accommodates any inadequacies in the allegations that are merely the result of deficiencies in the drafting of the document: see Operation Dismantle Inc. v. The Queen, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441, [1985] S.C.J. No. 22 at 451.
[46] Motions judges should not delve into the merits of a plaintiff’s argument, but should, rather, consider whether the plaintiff should be precluded from advancing the argument at all: Salna v. Voltage Pictures, LLC, 2021 FCA 176 at para. 77. Recognizing that the law is not static, motions judges must also err on the side of permitting novel, but arguable claims to proceed to trial: R. v. Imperial Tobacco, above at paras. 19-25; Mohr v. National Hockey League, 2022 FCA 145 at para. 48, leave to appeal to SCC refused, 40426 (20 April 2023).
[47] That said, it must also be recognized that there is a cost to access to justice in allowing cases that have no substance to proceed. The diversion of scarce judicial resources to such cases diverts time away from potentially meritorious cases that require attention: Mohr, above at para. 50; Coote v. Lawyers’ Professional Indemnity Company, 2013 FCA 143 at para. 13.
[48] Insofar as the appellants’ certification motion is concerned, Rule 334.16(1) of the Federal Courts Rules identifies five conditions that must be satisfied for a proceeding in the Federal Court to be certified as a class proceeding. The first of these requires that the pleadings disclose a reasonable cause of action. This condition is assessed on the same standard that applies on a motion to strike out a pleading: Pro-Sys, above at para. 63; Salna, above at para. 72; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para. 14; Nasogaluak, above at para. 18.
[49] To fail at this stage of the test the claim must be "“bereft of any possibility of success”": Wenham, above at para. 33, citing Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250 at para. 47.
[50] As is the case with motions to strike, there is a heavy burden on a defendant trying to defeat a certification motion on the ground that the statement of claim fails to disclose a reasonable cause of action. Indeed, the burden resting on a defendant in such cases has been described by this Court as "“onerous”": Nasogaluak, above at para. 19; Canada v. Greenwood, 2021 FCA 186 at para. 144, leave to appeal to SCC refused, 39885 (17 March 2022). . Bigeagle v. Canada
In Bigeagle v. Canada (Fed CA, 2023) the Federal Court of Appeal considered the 'cause of action' element of federal class action certification:[22] This Court recently articulated the test as follows in Canada (Attorney General) v. Nasogaluak, 2023 FCA 61:[18] The first certification condition, that the pleadings disclose a reasonable cause of action, is assessed on the same standard that applies on a motion to strike out a pleading. Thus, the question is whether it is plain and obvious, assuming the facts pleaded to be true (unless they are manifestly incapable of being proven), that the pleaded claims have no reasonable prospect of success: Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para. 14; Canada v. Greenwood, 2021 FCA 186 at para. 91, leave to appeal to S.C.C. refused, 39885 (March 17, 2022). A claim that has no reasonable prospect of success will not satisfy the first condition.
[19] No evidence is admissible on this issue. However, the pleading must be read generously, and as it might reasonably be amended to accommodate inadequacies attributable to drafting. Moreover, recognizing that the law is not static, the motion judge must err on the side of permitting a novel but arguable claim to proceed to trial: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at paras. 19-25. This Court has described as “onerous” the burden resting on a defendant seeking to defeat a certification motion on the basis that no reasonable cause of action is pleaded: Greenwood at para. 144. . Jensen v. Samsung Electronics Co. Ltd.
In Jensen v. Samsung Electronics Co. Ltd. (Fed CA, 2023) the Federal Court of Appeal considered whether a 'reasonable cause of action' was pled, here for class action certification purposes:A. Did the Motion Judge err in finding that the statement of claim does not plead a reasonable cause of action?
[44] The crux of the appellants’ argument on appeal is that the Motion Judge improperly considered the merits of the case and stepped beyond his more limited role in a certification motion. Stressing that no evidence may be considered and that the pleadings must be read as a whole, the appellants submit that the Motion Judge erred in applying too high a standard in his analysis. More particularly, the appellants claim that the Motion Judge imposed an inflated standard of particularity, failed to read the pleadings as a whole, failed to presume the pleaded facts were true, and failed to consider the evidence.
[45] The appellants argue that their pleadings met each and every one of the requirements to plead a conspiracy established by the jurisprudence: a description of the parties and their relationship; the agreement between the defendants to conspire; the purpose or objects of the conspiracy; the overt acts alleged to have been done by each of the alleged conspirators in furtherance of the conspiracy; and finally, the injury and damage occasioned as a result. In their view, the Motion Judge’s finding that the statement of claim is "“too sparse in detail”" and does not contain a sufficient description of an unlawful agreement is premised on too high a standard of particularity: Reasons at para. 117. The appellants submit that their pleadings were sufficiently detailed to allow the respondents to identify the agreement in question. When stating that the appellants should have provided material facts to support who was in attendance, what was discussed and whether there was any meeting of the minds at the alleged meetings at trade association events, the Motion Judge applied a virtually impossible standard, claim the appellants. Not only would these details be unavailable to the appellants, but they would emerge during the discovery stage because the alleged conspiracy is secret in nature.
[46] The appellants further submit that instead of assessing the pleadings "“as a whole”", the Motion Judge considered individual allegations and dismissed them gradually. The appellants argue that in approaching the pleadings in a piecemeal way, the Motion Judge failed to consider allegations which he had previously dismissed when assessing a new part of the pleadings leading to incorrect conclusions, including that the appellants pleaded no more than conscious parallelism.
[47] The appellants argue that Justice Gascon limited the presumption of truth by mischaracterizing material facts and refusing to presume the appellants’ allegations as true. First, he misapplied the requirement of particularity, by applying it to individual paragraphs rather than to the pleadings as a whole, and so ignored individual facts that he believed were not sufficiently particular. Next, the appellants argue that Justice Gascon misapplied the test for the reasonable cause of action analysis. In their view, he dismissed the allegation that "“the defendants met and communicated with each other among their senior executives, directly and indirectly, in person, over the phone, and at meetings of the industry’s various trade organizations”" as vague, brief and conclusory because he applied the requirement for authorization of a class action in Québec (as elaborated by the Supreme Court in L’Oratoire Saint-Joseph du Mont-Royal v. J.J., 2019 SCC 35, [2019] 2 S.C.R. 831 and Infineon, instead of those applying in the Federal Court: Appellant’s Memorandum of Fact and Law at para. 62; Reasons at para. 130. Finally, the appellants take issue with the Motion Judge when he claimed that material facts "“cannot be simply constituted of bald assertions of conclusions”" or "“bare allegations”": Reasons, at paras. 77 and 82. In their view, bare allegations of fact are precisely the desired content of pleadings given that Rule 174 prohibits the inclusion of evidence in the pleadings; as a result, material facts can only be rejected as conclusory when the plaintiff pleads only a legal conclusion without pleading the material facts.
[48] Finally, the appellants argue that the Motion Judge considered evidence when determining if the pleadings disclose a reasonable cause of action despite clear guidance from this Court which prohibits doing so. The appellants argue that the Motion Judge overstepped his role by evaluating the incorporated documents in detail to determine if the appellants’ interpretation of them was correct. Moreover, the Motion Judge required an evidentiary basis for the material facts that is prohibited in a motion for certification.
[49] In my view, none of these arguments can succeed and the Motion Judge did not err in finding that the appellants failed to plead a cause of action for conspiracy. In so concluding, Justice Gascon identified the applicable legal principles, and he made no overriding or palpable error in applying them. I also wholeheartedly agree with his general approach with respect to certification motions, which is best captured by the following paragraph of his Reasons:[292] I do not dispute that the class actions are a specific procedural vehicle for litigants and that a certification motion is not the place to focus on the substance and merits of a contemplated class action. However, the certification stage nonetheless remains an important gate-keeping mechanism which must operate as a “meaningful screening device” and which shall not be treated as a “mere formality” (Desjardins at para 74; Oratoire at para 62; Pro-Sys at para 103). Contrary to what the Plaintiffs appeared to suggest, for a court to conduct a rigorous review of a plaintiff’s certification motion and to scrutinize with care the allegations, the material facts and the evidence put forward by a plaintiff on a certification motion does not amount to delving into the merits of the case. As the [Supreme Court of Canada] frequently stated, it is rather part of the courts’ expected role and duty to do more than a rubber-stamping and symbolic review of proposed class actions at the certification stage, and to be satisfied that the certification requirements are effectively met. [50] In their memorandum, the appellants claim that the Motion Judge, despite stating the legal test accurately, nevertheless did launch a full-blown merits analysis. In the very first paragraph of their memorandum, they write that the Motion Judge approached the truth of the conspiracy allegation as "“the determinative issue”", relying for that proposition on his finding that "“[t]he formation and existence of the section 45 conspiracy”" was "“the central issue in dispute between the parties”": Reasons at paras. 5-6. In my view, this is an unfair and distorted reading of the Motion Judge’s Reasons. When read in its totality, it is clear that paragraph 5 of the Reasons is focused on the common issues and stressed the unusual character of the appellants’ claim, as is made clear from a reading of the paragraph in its entirety:The formation and existence of the section 45 conspiracy alleged by the Plaintiffs are the central issue in dispute between the parties, as this core allegation drives the Plaintiffs’ pleadings and provides the backdrop for their proposed common issues. I pause to observe that this is highly unusual in competition law class actions brought under sections 36 and 45 of the Act. In the vast majority of those cases, whether the claims raise common issues concerning an alleged conspiracy is typically not in dispute. The main battleground is instead with respect to the proposed common issues relating to the consequences of the alleged wrongful acts, namely whether there is some basis in fact in the record that the alleged loss or harm can be established on a class-wide basis. More often than not, it revolves around whether there is a credible and plausible methodology to establish loss or harm on a class-wide basis. Not surprisingly, the parties have indeed spent a fair amount of their written and oral submissions on this point.
(emphasis in the original) [51] Contrary to the appellants’ submissions, the Motion Judge undisputedly applied the correct "“plain and obvious”" legal test, the very same test that they advocated at paragraph 58 of their factum. Relying on the jurisprudence of the Supreme Court (Atlantic Lottery at para. 87; R. v. Imperial Tobacco at para. 23) and of this Court (Condon), the Motion Judge stated the criterion as follows:In order to reject a certification motion on the cause of action requirement, the Court must be convinced, while assuming that the pleaded facts are true, that it is plain and obvious that a claim does not exist or has no reasonable chance of success. For this criterion, no evidence may be considered and the analysis is limited to the pleadings…
Reasons at para. 70 [52] In applying this test, the Motion Judge was appropriately guided by Rules 174 and 181, pursuant to which a pleading is to contain a concise statement of the material facts (but not the evidence) on which a party relies, and the particulars of every allegation it contains. Reviewing the jurisprudence on the plain and obvious test, especially with respect to the requirements of sufficient particulars, the presumption that allegations of fact are true, and the contents of the pleadings, the Motion Judge then stated the following well-established principles:a)A plaintiff must plead material facts in sufficient detail to support the claim and the relief sought. In order for allegations in pleadings to be considered as material facts, they must be supported by sufficient particularization when required and must not be bare conclusory assertions or bald legal statements based on assumptions or speculations: Reasons at paras. 75 and 79;
b)The facts alleged in the pleading are presumed to be true. However, this presumption does not extend to matters which are manifestly incapable of being proven, to matters inconsistent with common sense, vague generalization, opinion, conjecture, bare allegations, bald conclusory legal statements, or speculation that is unsupported by material facts: Reasons at paras. 81-82;
c)Documents referred to in the pleadings, whether it is through direct quotes, summaries or paraphrases of the documents, are incorporated by reference and will be considered part of the pleading if they are central enough to the claim to form an essential element or integral part of the claim itself or its factual matrix: Reasons at paras. 85, 87;
d)If the documents referred to in the pleadings do not actually say what the plaintiff alleges they say, or if the plaintiff has ascribed a meaning to those paraphrases and quotes that is not consistent, on a plain reading, with the documents from which they originate, the court cannot consider these allegations as material facts. The certification judge’s task is not to look at these documents in detail to determine whether or not the plaintiff has correctly interpreted them, but can determine whether the references made by the plaintiff accurately reflect what has been expressly stated in the documents: Reasons at paras. 86-87.
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