On December 3, 2012 the Québec Court of Appeal rendered its decision in the case of Schmidt v. Johnson & Johnson Inc. 2012 QCCA 2132 ("Schmidt"), in which it formally nuanced Québec's so-called "first-to-file" rule under which the first lawyer to file a class action alleging a given cause of action against a defendant would receive carriage of the matter over all similar class actions filed subsequently. This rule had arisen in order to efficiently deal with competing class actions filed by different plaintiff law firms, a common occurrence in highly publicized cases. In many other Canadian provinces, the issue of competing class actions is dealt with by carriage motions, where the competing law firms battle for carriage of the file by convincing a court that they are the most competent and experienced, and that their proceedings are the most comprehensive and clearest formulation of all the potential claims on behalf of the class.

Mr. Justice Dalphond, writing for the Court of Appeal in Schmidt, acknowledged the efficiency of the first-to-file rule, while recognizing its disadvantages, insofar as the rule often creates a stampede of plaintiff's counsel to the courthouse in high-profile cases, and may result in ill-considered or poorly-drafted proceedings whose only merit is that they are the first to arrive at the courthouse door, at the expense of the class members they purport to represent. Choosing a middle path between the starkness of the first-to-file rule and the sometimes inefficient and unseemly battles between competing plaintiff's counsel in carriage motions, Dalphond J. in Schmidt institutes a more flexible rule to deal with competing class actions, as follows:

  1. the first motion to be filed with the clerk of the court is, in principle, the one that will be heard in priority;
  2. subsequent class actions will be stayed and will be heard, in the order they were filed, only if the preceding class action is ultimately dismissed;
  3. the priority of the first class action filed may be challenged by the attorneys responsible for any subsequent class actions filed; and
  4. the party challenging the priority of a previously filed class action has the burden of establishing that the prior class action is not in the best interests of the putative members, but rather constitutes an abuse of the first-to-file rule such that the subsequent action should proceed instead.

In order to avoid the harsh, personalized rhetoric that sometimes accompanies the contest between counsel competing for the mandate to represent the proposed class during carriage motions, Mr. Justice Dalphond proposes that the matter be decided solely on the basis of the written proceedings filed by each plaintiffs' counsel firm, and not on the relative personal merits or experience of the individual attorneys involved.

It is difficult to predict what the outcome of the decision in Schmidt will be on future class action proceedings. One question raised by Schmidt, but left unresolved, is how amendments to class proceedings will be dealt with where one party seeks to amend to "improve" their class action prior to a carriage challenge from a subsequently-filed competing class action that is more comprehensively researched and better drafted. One thing appears certain, however: by nuancing the former bright-line test of the first-to-file rule, practitioners in Québec can expect to see more contested motions for carriage of class action mandates between putative counsel for the plaintiff class. On the other hand, this process is likely to produce higher quality written proceedings by plaintiffs, and possibly, better class action counsel backing them up.

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