Quenneville v. Volkswagen, 2016 ONSC 7959

CITATION: Quenneville v. Volkswagen, 2016 ONSC 7959

COURT FILE NO.: CV-15-537029-CP

DATE: 20161220

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Matthew Robert Quenneville, Luciano Tauro, Michael Joseph Pare, Therese H. Gadoury, Amy Fitzgerald, Renee James, Al-Noor Wissanji, Jack Mastromattei and Jay MacDonald, Plaintiffs

AND:

Volkswagen Group Canada Inc., Volkswagen Aktiengesellschaft, Volkswagen Group of America Inc., Audi Canada Inc., Audi Aktiengesellschaft, Audi of America Inc. and VW Credit Canada Inc., / Defendants

BEFORE: Justice Edward P. Belobaba

COUNSEL: Charles M. Wright and Harvey T. Strosberg for the Plaintiffs

Robert Bell and Cheryl M. Woodin for the Defendants

HEARD: December 19, 2016

Proceeding under the Class Proceedings Act, 1992

CERTIFICATION FOR SETTLEMENT PURPOSES

[1] The automotive scandal involving Volkswagen’s installation of a “defeat device” in many of its diesel-engined automobiles and the flurry of regulatory investigations and class action filings that ensued have resulted in settlements in both the U.S. and Canada. The value of the American settlement, achieved earlier this fall, is about $15.3 billion; the Canadian settlement, reached last week, is about $2.1 billion.

[2] The implementation of the Canadian settlement requires two further steps: certification of the proposed class action for settlement purposes, and judicial approval of the settlement itself. Here, the plaintiffs focus on the first step. They seek certification for settlement purposes. They also ask that the court approve the notice plan and appoint RicePoint Administration Inc. as the notice administrator and opt-out/objection administrator. The settlement approval hearing will proceed on March 31, 2017.

[3] For the reasons set out below, the plaintiffs’ motion for certification and notice approval is granted in its entirety.

Background

[4] On September 18, 2015 the U.S. Environmental Protection Agency ("EPA") announced that:

VW manufactured and installed defeat devices in certain model year 2009 through 2015 diesel light-duty vehicles equipped with 2.0 litre engines. These defeat devices bypass, defeat, or render inoperative elements of the vehicles' emission control system that exist to comply with CAA [Clean Air Act] emission standards.

[5] On November 2, 2015, the EPA made a second announcement about a similar issue related to VW vehicles equipped with 3.0 litre engines. I will refer to the 2.0 L and 3.0 L diesel allegations as the Diesel Allegations.

[6] The plaintiffs commenced this proposed class proceeding relating to the Diesel Allegations on September 22, 2015 (the “Quenneville Action”). Sutts Strosberg LLP entered into a consortium agreement with seven other firms to work together: Siskinds LLP, McKenzie Lake Lawyers LLP, Koskie Minsky LLP, Rochon Genova LLP, Roy O'Connor LLP, Branch MacMaster LLP, and Camp Fiorante Matthews Mogerman LLP. These firms are collectively referred to as “Class Counsel”.

Related proceedings

[7] Three other firms, Merchant Law Group (“MLG”), Kim Orr Barristers P.C. and Campisi LLP filed proposed class proceedings in Ontario relating to the Diesel Allegations: Jessica Lancaster v. Volkswagen Aktiengesellschaft et al. (OSCJ File No. CV-15-5369624) filed by MLG; Korey Gregory Kilpatrick et al. v. Volkswagen Aktiengesellschaft et al. (OSCJ File No. CV-15-538736-00CP) filed by Kim Orr Barristers P.C; and Shaun Reginald Breedon v. Volkswagen Group Canada, Inc. et al. (Fed. Ct. File No. T-1607-15) filed by Campisi LLP. A related class action has also been commenced in Quebec, Option consommateurs & Francois Grondin v. Volkswagen Group Canada Inc., File No. 500-06-000761 ( the “Option consommateurs Action”).

[8] On December 4, 2015, on an uncontested motion, I granted carriage of the Ontario class proceedings relating to the Diesel Allegations to Class Counsel in the Quenneville Action.

[9] In Alberta, Class Counsel’s actions in Martin v Volkswagen, ACQB File No. 1503-14556, and Hunter v Volkswagen, ACQB File No. 1501-11729 and MLG’s action in Rogers v Volkswagen AG, ACQB File No. 1503-14810 have been stayed.

[10] In Saskatchewan, Class Counsel’s action in Mitchell-Walker v Volkswagen Canada Group Inc. et al, SKQB File No. 2903 and MLG’s action in Sawatsky v Volkswagen Canada Group Inc. et al, SKQB File No. 2415 were the subject of carriage and stay applications. The decisions remain under reserve. MLG has also filed four actions in Saskatchewan on behalf of some 530 individual plaintiffs resident in provinces across Canada. Applications to stay the MLG individual actions were heard in June, 2016. The decisions on these applications also remain under reserve.

Certification requirements satisfied

[11] The requirements set out in s. 5(1) of the CPA have been satisfied.

[12] The pleadings disclose a cause of action. The plaintiffs allege that the settling defendants: (a) intentionally or negligently misrepresented the characteristics of the vehicles in question, inducing the plaintiffs and class members to purchase or lease the vehicles; (b) conspired to conceal the “defeat device” resulting in the deception of plaintiffs and class members and their purchase/leasing of the vehicles at inflated prices; (c) breached their warranties to the plaintiffs and class members; (d) were negligent in the engineering, design, manufacture, sale and importation of the vehicles for sale and use in Canada; and (e) violated certain provisions in the Canadian Environmental Protection Act, 1999, S.C. 1999 c.33, as amended; the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched A; the equivalent provisions in the related provincial consumer protection statutes; and the federal Competition Act, R.S.C. 1985, c. C-34.

[13] There is an identifiable class. The settlement class as defined in the settlement agreement consists of the national settlement class and the Quebec settlement class. The proposed national settlement class is defined as:

All persons (including individuals and entities), except for persons included in the Quebec Settlement Class and Excluded Persons, who (a) on September 18, 2015, were registered owners or lessees of, or, in the case of Non-VW Dealers, held title to or held by bill of sale dated on or before September 18, 2015, an Eligible Vehicle; or (b) after September 18, 2015, but before September 30, 2018, become registered owners of, or, in the case of Non-VW Dealers, hold title to or hold by bill of sale dated after September 18, 2015, an Eligible Vehicle and continue to be the owners as at the Purchaser Transaction Date.

[14] There is ample evidence of commonality – both with regard to the existence and the class-wide reach of the proposed common issue:

Did software installed in settlement class members’ vehicles allow those vehicles to operate one way when recognizing driving in NOx emissions laboratory testing and in a different way when the vehicles were in road operation and did class members suffer damages as a result of such conduct?

[15] I am satisfied that a class action is the preferable procedure. A class action would provide a fair, efficient and manageable method of determining the common issue and would advance the proceeding in accordance with the goals of judicial economy, access to justice and behaviour modification. In the absence of a class-based litigation, it is unlikely that the majority of the claims would be advanced.

[16] Finally, I am satisfied that the ten proposed representative plaintiffs would fairly and adequately represent the interests of the national settlement class members. There is no evidence or even suggestion of any conflict of interest.

[17] In short, I have no difficulty granting certification for settlement purposes. I turn next to this court’s jurisdiction to certify a national class.

Jurisdiction to certify a national class

[18] There are a number of reasons why this action should be certified as a national class action. Of the various “defeat device” proceedings commenced across Canada, the Quenneville Action, in conjunction with the Option consummateurs Action, is by far the most advanced. The proceedings are appropriately centered in Ontario, given that Volkswagen Canada and Audi Canada are both located in this province. And, more of the impugned vehicles were sold in Ontario than in any other province.

[19] In circumstances where the court has territorial jurisdiction over both the defendant and the representative plaintiff in a class action proceeding, the common issues linking the claim of the representative plaintiff and that of non-resident plaintiffs provide a presumptive connecting factor, sufficient to give the court jurisdiction over the non-resident plaintiffs. Meeking v Cash Store Inc., 2013 MBCA 81, at para 97.

[20] Also, as Chief Justice Hinkson of the B.C. Supreme Court recently noted, “The Ontario Superior Court of Justice not only can, but will protect the interests of British Columbia class members, as there is no distinction between settlement class members from the different provinces. This is not only an efficient use of scarce judicial resources, but also a preservation of comity within the Canadian legal space.” McKay v Air Canada, 2016 BCSC 1671, at para 33

[21] The same approach is apparent in the many examples of courts in one province effectively deferring to class proceedings in other provinces: Englund v. Pfizer Canada Inc., 2007 SKCA 62; Meeking v. Cash Store Inc. et al., 2013 MBCA 81; Drover v. BCE Inc., 2013 BCSC 1341; Ammazzini v. Anglo American PLC, 2016 SKQB 53; and Sauer v. Canada (Attorney General), 2010 ONSC 4399.

[22] In sum, I agree with the plaintiffs that in the circumstances of this case, the certification of a national class is appropriate.

Notice approval

[23] The proposed notice program consists of a comprehensive notice plan including direct and indirect English and French communications using print, digital and social media and a dedicated settlement website that will advise members of the national settlement class about the basic terms of the settlement agreement and their right to participate in the settlement approval hearing.

[24] The notice program contemplates that a press release will be issued by RicePoint Administration in a manner that will provide national coverage. The press release will, among other things, indicate that settlement class members may receive direct notice by email or mail, and will make reference to the settlement website.

[25] As I told counsel at the hearing yesterday, the overall comprehensiveness of the proposed notice program is unprecedented in Canadian class action case law. The notice program is easily approved.

Disposition

[26] The Quenneville Action is certified as a class proceeding for settlement purposes. The proposed notice and notice program is approved in full. RicePoint is appointed notice administrator and opt-out/objection administrator.

[27] Order to go as per the draft Order signed at the hearing on December 19, 2016.

Belobaba J.

Date: December 20,2016