Class action plaintiffs were dealt yet another blow in Quebec recently. In a huge victory for Equifax, the Quebec Superior Court declined to certify the class action brought against it in that province stemming from a massive 2017 data breach.
In his October 21st decision, Justice Donald Bisson stated that the representative plaintiff, Daniel Li, did not establish a right of action nor was he adequately representative of the class he sought to represent.
The Quebec Rules of Civil Procedure list four requirements for class certification:
- the claims of the members of the class raise identical, similar or related issues of law or fact;
- the facts alleged appear to justify the conclusions sought;
- the composition of the class makes it difficult or impracticable to apply the rules for mandates to take part in judicial proceedings on behalf of others or for consolidation of proceedings; and
- the class member appointed as representative plaintiff is in a position to properly represent the class members.
Justice Bisson found that Li failed on requirements (2) and (4).
Hypothetical Harm Not Enough
The Court agreed with Li that Equifax had failed to take necessary measures to protect Li’s personal information or preventing it from falling into the hands of third parties without his consent. It also found Li successfully demonstrated a violation of his right to privacy, reputation, and non-disclosure. The problem for Li, however, was proving that he had actually suffered damages. In this respect, the Court found that the facts alleged did not appear to justify the conclusions sought.
The Court grouped the compensatory damages Li sought into three categories: (i) expenses, troubles, and inconveniences arising from the data breach, including the cancellation of credit cards and arranging for credit monitoring, (ii) moral prejudice, and (iii) “other losses”.
Li had not been a victim of identity theft, had not yet paid for credit monitoring, and had not suffered inconveniences like having to cancel credit cards or arrange for credit monitoring. The Court, following its reasoning from Zuckerman v Target Corporation, concluded that the mere risk of Li suffering any of the above, was insufficient to sustain his claim. The court was equally unpersuaded by Li’s claims of “mental distress” and “other losses.”
Punitive Damages Under Quebec Charter Require Intent, Disregard
Li also sought punitive damages on the basis that Equifax had unlawfully interfered with his and other class members’ right to respect for private life and right to non-disclosure of confidential information protected by Quebec’s Charter of Human Rights and Freedoms. Quebec’s Charter allows plaintiffs to seek punitive damages in cases where illicit and intentional conduct leads to a breach of one’s Charter rights.
But justice Bisson found Li’s statement of claim failed to establish sufficient allegations that Equifax’s conduct merited punitive damages. For a court to award punitive damages under Quebec’s Charter, the person who committed the unlawful interference must have had a state of mind that implies a desire or intent to cause the consequences of the wrongful conduct, or to have acted with full knowledge of the immediate or extremely probable consequences of the conduct. Justice Bisson held that Li’s statement of claim was too light on details to back up such allegations and only stated there was an “unlawful” breach.
Lastly on the subject of punitive damages, justice Bisson found that the fact there was a settlement in an American class action brought against Equifax for the same data breach did not make a difference to the Quebec class action nor the allegations brought by Li.
No Interest, No Representation
To be certified as a representative plaintiff for a class under Quebec law, three factors are considered:
- the interest pursued;
- the representative plaintiff’s competence; and
- the absence of conflict between the representative plaintiff and the other class members.
While the Court appeared not to take issue with the second and third factors, it found that since Li failed to show he had suffered damages, he had no interest to pursue.
This case makes clear that claimants in any future data breach class action in Quebec will need to show they have suffered actual damages. Hypotheticals just won’t work. And if seeking punitive damages under Quebec’s Charter, claimants must bring allegations showing intent to bring about the consequences of the bad conduct or a willful disregard of the consequences.
Also of note is that the Quebec action is not necessarily closed, as another plaintiff who has suffered damages could come forward and successfully persuade the Court to certify the class. This occurred in Belley v TD Auto Finance Services Inc. Belley was the second attempt to authorize a class action against TD, following an attempt that failed on similar grounds to Equifax. Belley achieved class certification after bringing an arguable case to the Court that he was the victim of identity theft immediately following TD’s loss of his and other customers’ personal information. It now remains to be seen: is there a Belley-in-waiting for Equifax?