The Court of Appeal for Ontario released its much-anticipated decision in the Airia Brands Inc. v. Air Canada air cargo price-fixing litigation last week. The Court was asked to determine the test for jurisdiction over non-resident class members and whether the test was met in this case. Siskinds LLP acted for the Plaintiffs/Appellants (non-resident class members), who prevailed on appeal.
In 2006, the Appellants commenced a proposed class action alleging that the Respondent airlines (among others) engaged in a global conspiracy to fix the prices of air freight shipping services for cargo shipments, including shipments to and from Canada. The Appellants pleased common law conspiracy claims and claims under section 45 of the Competition Act.
The Respondents – each of which conduct extensive business in Ontario – brought a motion challenging the Ontario court’s jurisdiction over class members who reside outside Canada, entered into their shipping contracts outside Canada, and suffered their alleged losses outside Canada (i.e. non-resident class members, which the Respondents termed “absent foreign claimants” or “AFC’s”).
The Respondents argued that the “real and substantial connection test” was not the proper test for jurisdiction simpliciter over such class members. Instead, the Respondents argued that the court only had jurisdiction over class members who were present in Ontario or somehow consented to the jurisdiction of the court. The Respondents claimed that this approach was consistent with “order”, “fairness” and “comity”.
The Respondents argued, in the alternative, that if the real and substantial connection test did apply, it was not met; and in the further alternative, that if the real and substantial connection test was met and jurisdiction simpliciter was established, Ontario was forum non conveniens and the court should decline to exercise its jurisdiction.
The motion judge accepted all of these arguments in turn. In short, the motion judge rejected the real and substantial connection test and allowed recognition and enforcement to control her analysis. Her decision throughout was driven by the Respondents’ assertions that any decision reached on the jurisdictional footing of the real and substantial connection test would not be enforced abroad – and would naturally result in re-litigation of those claims and a multiplicity of similar proceedings around the world. For those reasons, she held that the Ontario court did not have jurisdiction simpliciter over non-resident class members, but that if it did, that jurisdiction should not be exercised on the grounds that Ontario was forum non conveniens (as compared to class members’ home jurisdictions).
The motion judge’s decision was entirely and unanimously reversed by the Court of Appeal.
On a most fundamental level, the Court found that the motion judge erred in law in rejecting the real and substantial connection test for jurisdiction (which the Court confirmed – pursuant to Supreme Court authority – is a constitutional imperative). The Court conducted a thorough review of the case law and academic commentary surrounding the real and substantial connection test and its intersection with class actions, and concluded that “the real and substantial connection test has been consistently applied to the question of jurisdiction in class actions.”
In light of this clear legal error, the Court took the opportunity to assess and reconcile the approaches that various appellate courts have taken to the issue of jurisdiction over non-resident class members, particularly in the pre-Van Breda decision of this Court in Currie v. McDonald’s Restaurants of Canada Ltd. and the post-Van Breda decision of the Court of Appeal of Manitoba in Meeking v. Cash Store Inc.
This analysis culminated in the consolidated test for jurisdiction over non-resident class members laid down by the Court at paragraph 107 of its decision (undoubtedly a test awaiting a name of its own!). This test provides that an Ontario court will have jurisdiction over non-resident class members where:
- there is a real and substantial connection between the subject matter of the action and Ontario, and jurisdiction exists over the representative plaintiff and the defendants;
- there are common issues between the claims of the representative plaintiff and AFCs; and
- the procedural safeguards of adequacy of representation, adequacy of notice, and the right to opt out as described in Currie are provided, thereby serving to enhance the real and substantial connection between AFCs and Ontario.
The Court was satisfied that this “framework provides the necessary safeguards to establish that jurisdiction properly exists and ensures the protection of the values of order and fairness.” The Court added that “a positive result of this framework is that the objectives at the heart of class actions are served.”
The Court found that this test was easily met in this case.
On the first branch: all three Respondents carried on business in Ontario and were all present in Ontario; there was presence- or consent-based jurisdiction over each of the representative plaintiffs; and conduct in furtherance of the alleged conspiracy was pleaded to have taken place in Ontario (meetings about the conspiracy) and the tortious conduct was linked to Ontario (as point of origin or destination of the shipments).
On the second branch: the motion judge certified common issues going to the Respondents’ liability and these issues were clearly shared by non-resident class members.
And on the third branch: non-residents had the benefit of an expansive, worldwide notice program (the Respondents argued, but the Court did not agree, that notice could not be considered because it was effected pursuant to settlement agreements with other defendants); and regardless, these class members would have the benefits of the protections afforded by the Ontario Class Proceedings Act.
The Court then went on to consider forum non conveniens. Again, the Court found that the motion judge erred in law because “she failed to ask whether any jurisdiction was clearly more appropriate than Ontario” and instead suggested that non-resident class members could pursue individual actions in their home jurisdictions.
The Court concluded that when the relevant factors in this case were considered – namely the availability of class actions, contingency fees, and deferred costs in Ontario; the potential for multiple proceedings with conflicting outcomes and increased costs if class members were forced to litigate abroad; the low risk of re-litigation given that new claims would likely be time-barred; and uncertainty with respect to applicable law – against the proper test, the Respondents could not meet their onus to show that jurisdiction should not be exercised.
The Court of Appeal’s decision is clear and direct, and provides welcome certainty on the jurisdictional aspects of international class proceedings. It is also a firm step toward providing access to justice for individuals who have been harmed by parties and conduct connected to Ontario, and toward holding the alleged wrongdoers accountable for their actions.