Lexpert US Guides

www.lexpert.ca | LEXPERT • December 2014 | 33 INTERNATIONAL CLASS ACTIONS to the claim occurred outside Ontario; and (6) the damages were sustained outside Ontario. Accordingly, order and fairness would not be served by assuming jurisdiction over the claims of persons outside Ontario. Query then, why would the court decline jurisdiction over Cana- dian class members asserting a statutory cause of action granted to them by Ontario legislation (BP), when it had already found that the appropriate jurisdiction in which to prosecute a claim to enforce a statutory cause of action is the forum in which that statute was enact- ed? (McNaughton). In Morrison, Justice Scalia confirmed that there is a presumption against the extraterritorial effect of American legis- lation: "It is a "longstanding principle of American law 'that legisla- tion of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.' … When a statute gives no clear indication of an extraterritorial application, it has none." Why then the Court of Appeal would consider it to be an issue of comity to defer to the American courts on the issue of whether BP had breached Canadian securities legislation in respect of its communications with Canadians in Canada is not clear. As a matter of comity, it is arguable that the US courts would defer to Canada on the question of whether BP was off-side the Canadian leg- islation. That issue is of no particular concern to the US legislators or judicial system. A similar, arguably anomalous, result also arose in the Court of Appeal's decision in Prince v. ACE Aviation Holdings Inc., 2014 ONCA 285 (CanLII) (leave to appeal to the SCC denied October 23, 2014). In Prince, the plaintiffs alleged that Air Canada had im- properly collected US excise taxes from US and Canadian ACE pas- sengers who bought their tickets in Canada. The Court of Appeal stayed the plaintiffs' claims on the grounds of forum non conveniens, placing particular emphasis on the principle of comity. It is understandable that in Prince the court wished to defer rul- ing on the claim, given the precarious position in which Air Cana- da could find itself if an Ontario court concluded that the applica- tion of the US law was overreaching, while it remained bound by its obligations to comply with the US law. Air Canada would also lose the benefit conferred to it under the US law which provides immunity from suit to the tax collecting intermediaries/withhold- ing agents, such as Air Canada. Obviously, if the IRS ruled in fa- "THE US TAXING legislation includes an administrative process by which an individual can make a claim for a refund of an overpayment of tax. This was characterized by the Court of Appeal as 'part of a complete system for the effective administration of taxes in the U.S.' The court concluded that it was preferable for the US authorities to fi rst rule on whether the impugned application of their law was in fact infringing on Canadian sovereignty." vor of the class, this would be a "win" for everyone. However, that result is far from certain. Stepping away from the sympathy that one might feel for Air Canada, Prince appears to be another case where the court has given undue deference to the foreign jurisdiction given the task put to it by the proposed class proceeding. As the Court of Appeal identified, its task was to "decide whether the collection of the taxes is a violation of the principles governing the conduct of sovereign states, and an extra-territorial application of US law in Canada." The issue (inter- pretation and application of Canadian law) is not one where comity should result in pushing the complainants into the foreign jurisdic- tion to litigate their complaint that the foreign jurisdiction is acting contrary to Canadian law. Whether these recent decisions from the Court of Appeal are the precursors of a trend leading towards a more insular approach to class certification remains to be seen at this early juncture. Leave to ap- peal to the Supreme Court of Canada has also been sought in BP. Should leave be granted in that case, the appeal will undoubtedly focus on the comity issues relied upon by the Court of Appeal, and in particular whether comity should play any significant role in the jurisdictional analysis when the cause of action asserted in the claim is to enforce laws unique to this country. Margaret Waddell is a senior partner of Paliare Roland Rosenberg Rothstein LLP, and leader of its Class Action practice group. She has particular experience and expertise in this specialized fi eld, where she acts for both plaintiff s and defen- dants. Waddell has appeared as counsel in a number of precedent-establishing and well-known class actions. Waddell is regularly requested to appear as a lecturer at both substantive and practical skills continuing legal education programs. Waddell is a Trustee of the Toronto Lawyers' Association, an Executive Member of the Ontario Bar Association Class Action Subgroup, a member of the Law Commis- sion of Ontario's Advisory Committee on Class Action Reform, and is a former Director of e Advocates' Society, where she was Chair of its Subcommittee on Advocacy and Practice. Margaret L. Waddell Paliare Roland Rosenberg Rothstein LLP Tel: (416) 646-4329 Fax: (416) 646-4301 marg.waddell@paliareroland.com

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