N&C Transportation Ltd. v. Navistar International Corporation

2021 BCSC 246 N&C Transportation Ltd. v. Navistar International Corporation IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: N&C Transportation Ltd. v. Navistar International Corporation, 2021 BCSC 2046 Date: 20211019 Docket: S144960 Registry: Vancouver Between: N&C Transportation Ltd., T&S Transportation Systems Inc., and Pacific Ocean Transports Inc. Plaintiffs And Navistar International Corporation, Navistar Inc., Navistar Canada Inc. and Harbour International Trucks Ltd. Defendants Before: The Honourable Mr. Justice Skolrood Oral Reasons for Judgment Counsel for the Plaintiffs: R. Anderson N. Hooge Counsel for the Defendants: J. Yates P. Williams S. Lepage Counsel for the Attendee, Stayura Well Services Ltd. et al appearing via videoconference: J.J. Foreman J. Rochon Counsel for the Attendee, R & A Trans. Corp. appearing via videoconference: A. Grass Counsel for the Attendee, 4037308 Canada Inc. appearing via videoconference: A. Grass Counsel for the Attendee, Brown appearing via videoconference: A. Tibbs I. Brar Place and Date of Trial/Hearing: Vancouver, B.C. October 13, 2021 Place and Date of Judgment: Vancouver, B.C. October 19, 2021 Introduction [1] These are my Reasons for Judgment on the plaintiffs' application to amend the certification order and to have this action certified as a multi-jurisdictional class proceeding. As I advised counsel at the close of the hearing on October 13, 2021, given the pending hearing in Quebec scheduled for October 20, 2021, I have endeavoured to provide these reasons in a timely manner and, as such, they may be more circumscribed than might otherwise have been the case. [2] On November 16, 2016, I issued Reasons for Judgment in this action (indexed at 2016 BCSC 2129) certifying it as a class proceeding under the Class Proceeding Act, R.S.B.C. 1996, c. 50 [CPA]. [3] On August 1, 2018, the Court of Appeal dismissed the defendants' appeal and allowed the plaintiffs' cross-appeal in part, ordering the addition of certain common issues addressing the plaintiffs' claims of negligent and/or fraudulent misrepresentation (2018 BCCA 312). [4] A further application for leave to appeal to the Supreme Court of Canada was dismissed on March 28, 2019. [5] As noted, the plaintiffs now seek an order amending the certification order to provide that the action is certified as a multi-jurisdictional class proceeding pursuant to s 4.1 of the CPA. This section, and the provisions dealing with multi-jurisdictional class proceedings, were added to the CPA by way of the Class Proceedings Amendment Act, S.B.C. 2018, c. 16. Procedural Background and Other Related Proceedings [6] The underlying litigation involves the design, manufacture and sale by the defendants of heavy-duty diesel truck engines equipped with a specific type of exhaust control system developed to meet regulatory standards introduced in 2010 to reduce nitrous oxide emissions. [7] This action was commenced on June 24, 2014 and was the first proposed class proceeding dealing with these claims. [8] While this action has wound its way through the courts, there have been a number of other proceedings commenced that have some bearing on this application: a) On November 28, 2014, an action was commenced in Quebec under the style of cause 4037308 Canada Inc. v. Navistar Canada Inc. (the "Quebec Action"). Counsel for the plaintiff in that matter is Mr. Orenstein of the Consumer Law Group ("CLG"); b) On September 8, 2015, an action was commenced in Ontario under the style of cause Stayura Well Services Ltd. v. Navistar Canada Inc. et al. (the "Ontario Action"). Counsel for the plaintiff in that case are Foreman and Company and Rochon Genova LLP; c) CLG also commenced an action in Alberta on November 10, 2014 under the style of cause Andes Transport Inc. v. Navistar Canada Inc. (the "Alberta Action") and a second action in Ontario on February 17, 2015 under the style of cause R & A Trans. Corp. v Navistar Canada Inc.; d) On August 15, 2014, an action was commenced in Manitoba under the style of cause Brown v. Navistar Canada Inc. and Navistar International Corporation (the "Manitoba Action"). Counsel for the plaintiff in that action is the Merchant Law Group; and e) A number of individual actions were commenced in the United States as well as one putative class action (the "US Action"). [9] In terms of the various Canadian actions, in 2019 counsel in the Quebec and Alberta Actions, the Ontario Action and this action agreed to coordinate their efforts with a view to presenting a common front to the defendants. Pursuant to that agreement, settlement discussions were entered into with the defendants. [10] Notwithstanding this agreement, in March of 2021, Mr. Orenstein of CLG advised other counsel that he intended to proceed on his own with the Quebec Action. As I will return to in a moment, Mr. Orenstein subsequently negotiated proposed settlements with the defendants in both the Quebec and Alberta Actions. The defendants rely heavily on the existence of those proposed settlements in support of their position opposing the plaintiffs' application. [11] I pause here to note that CLG denies that it breached a cooperation agreement with other counsel or that such an agreement was ever finalized. It is beyond the scope of this application to determine that question. The US Settlement [12] Before turning to the Quebec and Alberta Actions, it is useful to address the US Action. A settlement was reached in that action, which was approved by Judge Gottschall of the United States District Court for the Northern District of Illinois Eastern Division on January 3, 2020 (the "US Settlement"). Under the US Settlement, class members have three options for compensation: a) A cash option, where class members receive up to $2,500 per class vehicle; b) A rebate option, where class members receive a rebate of up to $10,000 per class vehicle; or c) A prove-up option, where class members can recover up to $15,000 in proven costs specified in the Agreement per class vehicle. [13] The US Settlement creates two funds to compensate class members, pay representative plaintiff awards, pay class counsel and administer the settlement: a) A $50 million rebate fund covers the rebate option; and b) An $85 million cash fund covers everything else. [14] The US Settlement contains a "waterfall" provision that allows money to move between the rebate fund and the cash fund if one is oversubscribed. [15] As I will touch on in a moment, the US Settlement served as the model for the proposed settlements in the Quebec and Alberta Actions. The parties to this application have different views on the adequacy of the US Settlement. [16] The defendants submit that it is a beneficial settlement for class members that was achieved after a number of years of litigation that involved extensive document production and discovery. The defendants say that the settlement accounts for the numerous risks faced by the plaintiffs in proving their case. These risks were reviewed by Judge Gottschall in her decision approving the settlement, where she described the risks as "substantial". The defendants point to Judge Gottschall's conclusion where she stated: given the likely expense, costs of risks of further litigation, the settlement represents an excellent compromise and recovery for class member. [17] The plaintiffs submit that the US Settlement is less than advantageous and does not serve as a proper model for settlement in Canada. In particular, they say: a) The law in Canada is more favourable to the plaintiffs, particularly in terms of claims for economic loss; b) The amounts provided for in the US Settlement are low, given the very expensive price tag attached to the vehicles in question. This is exacerbated in the proposed Canadian settlements in that similar amounts are used, with no adjustment for the US-Canadian dollar exchange rate; c) The total pool of funds is likely to be exhausted as a result of the number of claims; and d) The pay out process is extremely slow. For example to date no money has been paid out under the US Settlement. [18] Both parties addressed the US Settlement in some detail in their submissions, largely because it again forms the basis for the proposed Canadian settlements. However, I agree with the defendants that it is not for this Court to pass judgment on whether the US Settlement represents a good or proper settlement. That issue is not before me nor would the evidentiary record permit such a review in any event. The Quebec and Alberta Actions [19] Dealing with the Quebec and Alberta Actions, it is useful to delve further into the procedural background in each that led to the proposed settlements. [20] Starting with the Quebec Action, as noted it was commenced on November 28, 2014. It appears that in or around 2018, the case was stayed pending the defendants' application in this case for leave to appeal to the Supreme Court of Canada. Then, as I have also referred to, in March 2021, CLG advised that it was proceeding with the Quebec Action. [21] In May 2021, the defendants agreed to a settlement with the plaintiff in the Quebec Action. On June 18, 2021, an application was brought in Quebec Superior court to authorize certification of the Quebec Action for the purposes of settlement. On June 22, 2021, Mr. Justice Gagnon issued his decision authorizing the class proceeding. Subsequently, notices advising of the proposed settlement were sent to class members. A further hearing has been scheduled for tomorrow, October 20th, at which time the parties will seek approval of the settlement. [22] I am advised, and indeed there is evidence in the record to indicate, that Gagnon J. is aware of this proceeding, including the fact of the present application. I am also advised that counsel for the plaintiffs herein are seeking leave to intervene in the settlement approval hearing. [23] In terms of the Alberta Action, it again was commenced on November 10, 2014. It is apparent from the record that virtually no steps were taken in the Alberta Action after commencement until the proposed settlement was reached with the defendants on September 15, 2021. [24] There are a number of points to note about the Alberta Action and the proposed Alberta Settlement: a) The named plaintiff in the Alberta Action, Andes Transport Inc., was dissolved on January 15, 2019. As such, there is in fact no valid representative plaintiff in the action; b) The defendants say that an application will be made to substitute a Mr. Edmund Zechel dba Zechel Trucking to replace Andes Transport as the representative plaintiff, however that has not happened nor was I advised that such an application is even scheduled; c) The Alberta Action has not been certified as a class proceeding, nor again is there any indication that a certification application has been scheduled; d) The proposed settlement agreement purports to settle the claims of all class members resident in Canada, except those in Quebec and British Columbia. [25] As I have indicated, the proposed Quebec and Alberta settlements are modelled on the US Settlement, with certain modifications. As with the US Settlement, the defendants say that the settlements are reasonable and fair, whereas the plaintiffs say that they are inadequate. [26] As is also the case with the US Settlement, it is not for this Court on this application to pass judgment on the appropriateness of the two proposed settlements. [27] Rather, determination of this application turns on the interpretation and application of the provisions of the CPA. Legislative Framework [28] The plaintiffs bring this application under s. 4.1 of the CPA which was added to the statute in 2018. That provision states: 4.1 (1) The court may make any order it considers appropriate in an application to certify a multi-jurisdictional class proceeding, including an order (a) certifying the proceeding as a multi-jurisdictional class proceeding, if (i) the requirements in section 4 (1) are met, and (ii) the court determines, having regard to section 4 (2) and (3), that British Columbia is the appropriate venue for the multi-jurisdictional class proceeding, (b) refusing to certify the proceeding, if the court determines that it should proceed as a multi-jurisdictional class proceeding in another jurisdiction, or (c) refusing to certify a portion of a proposed class, if that portion of the class contains members who may be included within a proposed class proceeding in another jurisdiction. (2) If the court certifies a multi-jurisdictional class proceeding, it may (a) divide the class into resident and non-resident subclasses, (b) appoint a separate representative plaintiff for each subclass, and (c) specify the manner in which and the time within which members of each subclass may opt out of the proceeding. [29] "Multi-jurisdictional class proceeding" is defined in s. 1 to mean: "a proceeding that is brought on behalf of a class of persons that includes persons who do not reside in British Columbia". The effect of the amendments to the CPA is that where an action is certified as a multi-jurisdictional class proceeding, members of the class who reside outside of BC must opt out of the class if they do wish to proceed. Prior to the amendments, such individuals only became members of the class if they elected to opt in. [30] Determination of whether an action should be certified as a multi-jurisdictional class proceeding is governed by subsections 4(2),(3)and (4): (2) In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, the court must consider all relevant matters including the following: (a) whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members; (b) whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions; (c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings; (d) whether other means of resolving the claims are less practical or less efficient; (e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means. (3) If a multi-jurisdictional class proceeding or a proposed multi-jurisdictional class proceeding has been commenced elsewhere in Canada and involves the same or similar subject matter to that of the proceeding being considered for certification, the court must determine whether it would be preferable for some or all of the claims of the proposed class members, or some or all of the common issues raised by those claims, to be resolved in the proceeding commenced elsewhere. (4) When making a determination under subsection (3), the court must (a) be guided by the following objectives: (i) to ensure that the interests of all parties in each of the relevant jurisdictions are given due consideration; (ii) to ensure that the ends of justice are served; (iii) to avoid irreconcilable judgments, if possible; (iv) to promote judicial economy, and (b) consider relevant factors, including the following: (i) the alleged basis of liability, including the applicable laws; (ii) the stage that each of the proceedings has reached; (iii) the plan for the proposed multi-jurisdictional class proceeding, including the viability of the plan and the capacity and resources for advancing the proceeding on behalf of the proposed class; (iv) the location of class members and representative plaintiffs in each of the proceedings, including the ability of representative plaintiffs to participate in the proceedings and to represent the interests of class members; (v) the location of evidence and witnesses. [31] The transitional provisions found in s. 44(2) of the CPA are also relevant: 44 (2) If a proceeding was certified as a class proceeding before the coming into force of this section, the court may, on application by a party to the proceeding, (a) amend the certification order so that persons who would have been members of the class, but for not being resident in British Columbia, are included as members of the class, and (b) order that notice of the amended certification order be given to members of the class who are not resident in British Columbia. [32] This permits a party to apply to essentially convert a class proceeding commenced before the amendments came into force to a multi-jurisdictional class proceeding. This was confirmed by the Court of Appeal in Tucci v. Peoples Trust Company, 2020 BCCA 246 at para. 98. The Parties' Positions [33] The plaintiffs submit that British Columbia is the appropriate forum for a multi-jurisdictional class proceeding. They note that the class definition previously approved includes "all persons resident in Canada" who purchased one of the specified Navistar EGR Trucks. Based upon this class definition, the plaintiffs say that the BC proceeding already meets the definition of a multi-jurisdictional class proceeding. As such, converting it to an opt out proceeding within the meaning of the new provisions should follow virtually as a matter of course. [34] The plaintiffs submit further that the Court should not permit the proposed Quebec and Alberta settlements to stand in the way of certifying the action as a multi-jurisdictional class proceeding. They submit that the defendants and CLG have engaged in a "reverse auction" whereby the defendants have effectively shopped the case around and have landed on the lowest bidder in terms of potential settlement partners. [35] The plaintiffs cite Kutlu v. Laboratorios Leon Farma, SA, 2015 ONSC 7117 where Justice Perell observed at paras. 10-11: [10] Much worse than carriage fights, which ultimately may serve the best interests of class members, where there are rival national class actions, there is the unseemly prospect that the defendant may be able to engineer a sort of reverse auction and settle the certification motion or the class action with the least formidable foe or the lowest bidder. The defendant then can rely on the releases in one class action to fend off a rival national class action. [11] In practice, the internecine warfare among rival national class actions is often avoided by the lawyers forming a consortium and agreeing that one proposed class action will proceed and the others will formally or informally be stayed to be revived as necessary. [36] I note that the plaintiffs here thought they had put in place the practical approach suggested by Justice Perell by way the cooperation agreement amongst counsel. [37] The plaintiffs also cite Winder v. Marriott International Inc., 2019 ONSC 5766, another decision of Perell J., where he said at para. 58: multiple class actions raise the adverse prospect of the corruption of settlements and of extra-territorial judgment enforcement proceedings because for example, where there is more than one rival national class action, the defendant has an opportunity to shop around for a bargain settlement causing difficulties for courts across the country about whether to approve the settlement or to facilitate the enforcement of a judgment reached in another jurisdiction. [38] See also Kirsh v. Bristol-Myers Squibb, 2020 ONSC 1499 at paras. 126-127. [39] The defendants deny that they have engaged in a reverse auction. They submit that the plaintiffs here let this action languish for years without taking meaningful steps and now seek to block reasonable settlements similar to what has been characterized in the US Action as an "excellent compromise". They submit that it should be left to the Courts in Quebec and Alberta to determine the appropriateness of the proposed settlements. [40] The defendants submit that by not proceeding expeditiously, the plaintiffs assumed the risk that this action would be overtaken by another similar action. They cite Silver v. IMAX, 2013 ONSC 1667, where Justice van Rensberg said at para. 179: [179] It is not the function of this court to seek to jealously guard its own jurisdiction over a class proceeding that has been certified here. Such an approach is inconsistent with the principles of comity. It is also not the function of the court to favour or protect the interests of class counsel within this jurisdiction, knowing that they have invested time and resources into the litigation, and that their compensation will depend on the size of the judgment or settlement they are able to achieve.[81] As I have already noted, class action counsel assume significant risks, including the potential that the court may certify a smaller class than that requested. In pursuing an action when there are existing parallel proceedings in another jurisdiction, class counsel are aware that the other action might move more quickly or reach a determination before their own case is decided or resolved. Discussion [41] The arguments of the parties I have just referred to reflect their respective "big picture" positions as to why the present application should or should not be granted. However, as I have alluded to, the matter ultimately turns on the application of the relevant provisions of the CPA. [42] Under s. 4.1(1)(a), the first criterion for certification as a multi-jurisdictional class proceeding is that the requirements of ss. 4(1) and 4(2) are met. Section 4(1) sets out the requirements for certifying a class proceeding generally and 4(2) identifies factors that inform the analysis of whether a class proceeding is the preferable procedure. The plaintiffs submit, and I agree, that these criteria have been satisfied by virtue of the fact that this proceeding has already been certified. [43] Section 4.1(a)(ii) then requires the Court to assess whether BC is the appropriate venue for the multi-jurisdictional class proceeding. This requires consideration of the factors set out in s. 4(3) and by reference 4(4). [44] Section 4(4)(a) identifies certain key objectives that are intended to guide the preferability analysis and then 4(4)(b) identifies specific factors to consider. [45] I will consider the objectives collectively then will address each of the enumerated factors. [46] The objectives set out in s. 4(4)(a) are what might be considered general, systemic considerations in that they are concerned with broad principles such as the interests of justice, promoting judicial economy and avoiding irreconcilable judgments. [47] In my view, these objectives generally favour a single multi-jurisdictional class proceeding. Currently, there are a number of potentially competing class actions which is antithetical to the concept of judicial economy and gives rise to the specter of inconsistent and/or irreconcilable judgments. In contrast, a unified multi-jurisdictional class proceeding permits a single common issues trial that would be binding on all class members and would deal with most if not all of the claims in the various competing actions. [48] I now turn to the factors enumerated in s. 4(4)(b). In applying these factors, it is necessary to consider the Quebec and Alberta Actions separately as different considerations apply to each. I appreciate the point made by counsel for the defendants that this is not a carriage motion; nonetheless, those actions are relevant to the analysis of whether BC is the preferred forum. The alleged basis of liability, including the applicable laws (s. 4(4)(b)(i)) [49] None of the parties took me through a detailed analysis of the pleadings in the various actions, however the relevant pleadings are contained in the chambers record. It is apparent that there is considerable factual overlay between all of the actions in that all focus on the defendants' alleged defective design of the exhaust system in the subject trucks. Further, the causes of action alleged in all of the common law jurisdictions are also very similar in that they are largely rooted in claims of negligence, negligent and/or fraudulent misrepresentation, breach of warranty and breach of the Federal Competition Act, R.S.C. 1985, c. C-34. [50] The Quebec Action differs somewhat in that the legal bases underlying the claims appear to be primarily based upon the Quebec Civil Code. I say apparently because again I was not taken in detail to the pleadings, however I accept the representation of counsel that this is the case. In this regard, there is considerable force to the submission of the defendants that litigating civil law and common law claims alongside one another in the same proceeding would add undue complexity to the matter. The stage that each of the proceedings has reached (s. 4(4)(b)(ii)) [51] The plaintiffs submit that this factor strongly favours the BC proceeding. It was the first action commenced and the plaintiffs here, through the efforts of class counsel, successfully attained certification then defended that decision at the Court of Appeal and through the Supreme Court of Canada leave process. They also prevailed upon the Court of Appeal to certify common issues that had initially been rejected. They note that none of the other proceedings in Canada have even reached the certification stage, apart from Quebec where the certification application went unopposed solely for the purposes of settlement. The plaintiffs also note that within their consortium, considerable work has been done to prepare and advance the case, including obtaining strong expert reports. [52] The defendants submit that the Quebec and Alberta Actions are further advanced in that they have proceeded to the point of a proposed settlement. They stress the inaction of the plaintiff in the BC proceeding and argue that the Quebec and Alberta courts should be permitted to consider the respective settlements before there is consideration of a multi-jurisdictional proceeding. [53] I agree with the defendants that there has been no explanation put forward by the plaintiffs for the relative inaction on this matter between 2019, following dismissal of the leave application in the Supreme Court of Canada, and the spring of 2021, including an explanation as to why this application was not brought on sooner. [54] That said, the defendants' characterization that the plaintiffs have "done nothing for years" overstates the case and ignores the significant steps taken to advance the claim. I think it fair to say that the Quebec and Alberta Actions, including the proposed settlements therein, only got to the stage they are at because of the efforts of the plaintiffs here in successfully applying for certification and then defending that decision through the appellate courts. Had the defendants prevailed at any one of those stages, it is unlikely that any of the other proceedings would have gotten off the ground. [55] Having said that, the stage at which the Quebec Action is at currently weighs in favour of that action continuing. As noted, Gagnon J. has authorized the class proceeding, notices of the proposed settlement have been circulated and a hearing has been set to consider the proposed settlement. I agree with the defendants that the proper forum to consider the proposed Quebec settlement is the Quebec Action before Gagnon J. [56] The same cannot be said for the Alberta Action. At a simplistic level, it might be argued that it has advanced to the same stage as the Quebec Action in that there is a proposed settlement. However, that ignores the significant uncertainties surrounding the Alberta Action, some of which I have already touched upon. Again, there is currently no proper representative plaintiff and no scheduled application to appoint one. The action has not been certified nor is there a certification application pending. There has been significant delay on the part of the plaintiff there to advance the case, given that it again was commenced in November 2014. In light of that delay, it is entirely speculative that the Court will even consider certifying the matter, even for the purposes of settlement. [57] In the circumstances it cannot credibly be argued that the Alberta Action is at a more advanced stage than the BC action. The plan for the proposed multi-jurisdictional class proceeding including the viability of the plan and the capacity and resources for advancing the proceeding on behalf of of the proposed class (s. 4(4)(b)(iii)) [58] The plaintiffs submit that they have a valid and workable plan in place to advance the claim and the interests of the class members. They point to the fact that they are working in conjunction with experienced Ontario counsel in the Ontario Action and that together they have marshalled considerable evidence, including expert evidence, in support of the claims. [59] The defendants submit that the plaintiffs' plan is inadequate in that it does not contain a workable methodology for determining liability. [60] Frankly, it is difficult for me to assess the plaintiffs' plan because I was not taken to it in any detail during the hearing. That said, I do accept that between BC and Ontario counsel, considerable work has been done to prepare and advance the case in the interests of the class members. [61] I note as well that there was no indication at the hearing of the application that there is a better or more workable plan in place in any of the other proceedings. Again, the Alberta Action does not even have a representative plaintiff in place. The location of class members and representative plaintiffs in each of the proceedings, including the ability of representative plaintiffs to participate in the proceedings and to represent the interests of class members (s. 4(4)(b)(iv) [62] This factor is largely neutral, although I tend to agree with the plaintiffs that a co-ordinated national approach in a single multi-jurisdictional proceeding provides a greater opportunity for class members to participate than if there were a myriad of different proceedings. The location of evidence and witnesses (s. 4(4)(b)(iv) [63] Both parties agree that this factor is neutral. Conclusion [64] In summary, considering all of the circumstances and the relevant factors identified in the CPA, I find that this action should properly be certified as a multi-jurisdictional class proceeding with the class comprising all residents of Canada who meet the class definition, except those resident in Quebec. I order that the certification order be amended accordingly. I agree with the defendants that the Quebec process must be permitted to run its course, however this order will be without prejudice to the plaintiffs' right to apply to further amend the certification order to include residents of Quebec, depending upon the outcome of the Quebec settlement hearing. [65] The plaintiffs' notice of application sought additional relief including directions about the opt out deadline and procedure, the appropriate form of notice, approval of the plan of dissemination of notice, the appointment of an administrator, an order for production of contact information for class members, approval of the litigation plan and an order requiring the defendants to pay the costs of dissemination. [66] None of these matters were addressed in any detail at the hearing and it was generally agreed that they could be dealt with at a future hearing, depending upon the determination of the principal issue. [67] In my view, the best course of action is to set a further judicial management conference at which time the parties and the Court can consider a plan for moving forward. [68] Those are my Reasons. "Skolrood J."