Court File and Parties

COURT FILE NO.: CV-16-550271-00CP

DATE: 20180409

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Yogesh Kalra, Plaintiff

– AND –

Mercedes-Benz Canada Inc., Daimler AG, Mercedes-Benz USA, LLC and Mercedes-Benz Financial Services Canada Corporation, Defendants

BEFORE: EM Morgan J.

COUNSEL: Andrew Skodyn, James Sayce and Brian Kolenda, for the Plaintiffs

Steven Rosenhek, Caroline Youdan and Vera Toppings, for the Defendants

HEARD: April 9, 2018

Case management – SCHEDULING SUMMARY JUDGMENT

[1] This action was certified as a class proceeding by Order of Belobaba J. dated June 29, 2017. The certification Order identified fourteen common issues, all surrounding the controversy over an emissions ‘Defeat Device’ that the Plaintiff alleges the Defendants installed in Mercedes vehicles and that they imported into Canada, marketed and sold to Canadian consumers.

[2] Class counsel has proposed a discovery plan, which envisions rather extensive documentary production and discovery of all of the Defendants extending over a number of months. It is class counsel’s view that the question of the Defeat Device and the marketing of the Defendants’ automobiles in Canada are intimately intertwined. They contend that the way their claim is framed and the common issues are defined, discovery of all Defendants and understanding their interrelationship in terms of product design, manufacturing, marketing, financial, regulatory, and corporate management and strategic issues will be necessary to a proper prosecution of the action.

[3] Counsel for the Defendants has indicated that prior to discoveries they plan to bring a summary judgment motion on behalf of the non-Canadian Defendants, Daimler AG, Mercedes-Benz USA, LLC, and Mercedes-Benz Financial Services Canada Corporation (the “Foreign Defendants”). It is Defendants’ counsel’s view that the claims against those entities are discrete from the main issues in the case. They concede that the first common issue – whether some or all of the vehicles contain a Defeat Device – will require production by and discovery of the Foreign Defendants. However, they make the point that an early decision extracting the Foreign Defendants from the action will save them having to respond to the parts of the claim dealing with the importation, marketing and advertising of the vehicles in Canada, the disclosure and other dealings with Canadian regulators, the application of the Canadian Environmental Protection Act, and waiver of tort damages in respect of the Foreign Defendants’ profits.

[4] It is class counsel’s position that prior to discovery the record will not be complete and a partial summary judgment motion in respect of the Foreign Defendants will not be appropriate. It is also class counsel’s view that an early summary judgment motion will cause unnecessary delay, and that if unsuccessful and further appealed it will effectively put off the progress of the action for a number of years.

[5] It is Defendants’ counsel’s position that if the partial summary judgment motion is put off until after discoveries are complete it will become a pointless exercise, since the substantial burden of making full production on all issues will have already been borne by the Foreign Defendants. It is also Defendants’ counsel’s view that an early summary judgment motion will be more efficient since excluding the Foreign Defendants will have the effect of significantly streamlining the discovery process.

[6] Counsel for Defendants submits that it is for the moving party to determine at what stage in the action to bring its motion, and that in asking to put the motion over to a later stage the Plaintiff is in effect seeking a stay of proceedings. They cite Ghaffari v Asiyaban, 2012 ONSC 2724, at para 13-14 for the proposition that a party served with a premature summary judgment motion “should have the option of moving to stay or dismiss the motion”, and that “only in the clearest of cases should the court impose a stay.”

[7] Class counsel submits that it has not served a motion to stay and that this issue arises at a case conference prior to the Foreign Defendants’ summary judgment record being served. They state that as case conference is a less formal proceeding and that there is no particular onus on any side; rather, they indicate that the function of a case management judge is to take into account the overall context of the action in order to ensure that the proceedings move ahead in as efficient a way as possible for all sides.

[8] In some sense, both sides here are right. Generally, a moving party gets to decide when to bring its motion. For summary judgment, it is a well-known requirement that the moving party must put its best foot forward; the penalty for bringing a premature motion is that it will not be in a position to do so will not succeed. That said, a responding party can certainly move to derail or delay the motion, but it generally will bear the onus of establishing grounds for doing so.

[9] For a case managed matter, and especially in the context of scheduling a summary judgment motion, the Supreme Court of Canada has admonished judges to take into account “the consequences of the motion in the context of litigation as a whole”: Hryniak v Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at para 60. As my colleague Firestone J. put it in Griva v Griva, 2016 ONSC 1820, at para 22, the point of the exercise is to “serve the principles of proportionality, timeliness and affordability [in] schedul[ing] the requested motion for partial summary judgment.”

[10] The problem here is that each side’s counsel proceeds on the assumption that it will win the motion. Class counsel is concerned that an early, pre-discovery motion will do little more than delay the balance of the action, while Defendants’ counsel is concerned that a later, post-discovery motion will cause it to pointlessly bear the burden of full discoveries. Class counsel does not want to address the efficiency of having an early determination of the Foreign Defendants’ lack of liability any more than Defendants’ counsel wants to consider the need to move as expeditiously as possible through discoveries in order to proceed to a full trial of all claims.

[11] In my view, the only way to serve the goal of efficient scheduling and timeliness, while at the same time preserving the necessary level of disclosure and fairness to all parties, is to proceed at this point with the Foreign Defendants’ partial summary judgment motion, but to ensure that the mutual productions, examinations, and cross-examinations in that motion are as extensive as necessary for all parties. The record on the motion will eventually form part and parcel of the pre-trial documentary exchange and examinations for discovery.

[12] I am cognizant of the fact that cross-examination is not typically as wide-ranging as examination for discovery and for each party’s strategic reasons may not cover all of the ground of full-scale discoveries: 227913 Ontario Inc. v Blue Falls Manufacturing Ltd., 2015 ONSC 7982, at para 15. However, it is often a prelude to discoveries and can substantially shorten the eventual discovery process. As is the case in many such situations, ultimately “[t]he discovery process…would be supplemental to the disclosure and cross-examinations that will no doubt be conducted pursuant to the summary judgment motion”: Stantec Consulting Ltd. v Altus Group Ltd., 2014 ONSC 6111, at para 19.

[13] The motion brought by the Foreign Defendants is therefore to be heard prior to discoveries taking place. In order to ensure the fairness of this process, I would expect the disclosure to be expansive; indeed, in the event that any controversy arises as to what should be produced by the Foreign Defendants who seek to remove themselves from the action, I would expect them to err on the generous side. The materials exchanged between the parties and the examinations and cross-examinations conducted in the course of the motion will form part of the discovery in the action once the motion has been heard and decided. In that way, the motion will proceed on the basis of as much disclosure as possible without unduly delaying the balance of the action.

[14] Defendants’ counsel has indicated that the parties will likely be in a position to argue the motion in one year’s time. If, as indicated above, the process of mutual disclosure leading up to the motion covers a substantial part of what would in any case be covered in the discovery process, a year is not an unduly long period of time. I would suspect that full discovery of all named parties would take at least that long.

[15] Although the action is two years old and has gone all the way through certification, the Defendants have not yet served their pleadings. Rule 20.01(3) of the Rules of Civil Procedure makes summary judgment available to a Defendant only after it has served a Statement of Defense. Defendants’ counsel indicated at the case conference that the Defendants will be ready to serve their pleadings within two weeks. Until that time, it is premature to actually schedule a date for the Foreign Defendants’ motion.

[16] Once the Defendants have served their Statements of Defense, I would ask both sides’ counsel to coordinate and schedule a conference call with me through my assistant. At that time we can canvass specific dates for the motion next year.

[17] I suspect that after going through a very extensive motion for certification, class counsel has an inkling of what positions will be taken in the various Statements of Defense. That said, if there is something that class counsel finds unexpected in the Defendants’ pleadings that impacts on the timing issue discussed here, this can be raised with me during the conference call.

Morgan J.

Date: April 9, 2018