Class Action Grounded: Court Finds Insufficient Factual Basis for Airline Capacity Constraint Suit

En anglais

The Ontario Superior Court recently refused to certify a class action against four international airlines. The plaintiff alleged that the airlines conspired to constrain capacity for transborder travel between the United States and Canada. In dismissing the plaintiff’s motion to have the case certified as a class action, the Court found that the plaintiff’s claims failed to plead a cause of action and lacked a sufficient factual basis. Davies acted for one of the defendant airlines.

Background

Gifford v Air Canada is the latest in a series of cases arising from allegations that airlines conspired to restrict capacity for air travel in the United States. In this case, the plaintiff claimed that four airlines conspired to illegally stifle the supply of air travel across the Canada-U.S. border. The plaintiff alleged an unusual “supply suppression” price-fixing agreement.

A case can proceed as a class action only if the plaintiff can meet a series of statutory requirements. The focus in Gifford was on whether the plaintiff had properly pleaded a cause of action and whether the evidence demonstrated some basis in fact that the alleged conspiracy existed.

The Plaintiff Failed to Plead a Reasonable Cause of Action

For the purpose of determining whether a plaintiff has pleaded a reasonable cause of action, a court will assume that the facts alleged by the plaintiff are true unless patently incapable of proof. In a case such as Gifford, where a plaintiff alleges an anticompetitive conspiracy, the plaintiff must plead the specifics of the defendants’ intentions in the alleged conspiracy.

In Gifford, the Court found that the plaintiff failed to allege with sufficient particularity (or at all) who acted in furtherance of a conspiracy, what actions they took, and when they entered into their agreement. The Court noted in particular that although the plaintiff suggested that public statements made in 2015 were evidence of a conspiracy, none of those statements related to transborder air travel – divorcing the alleged facts from the plaintiff’s overall theory of its case.

The Court’s decision confirms the law in Ontario: plaintiffs seeking to have their class action certified must plead sufficient details of their allegations against the defendants in a logical and consistent manner.

The Court Applied the Two-Step Approach to the Common Issues Test

Plaintiffs seeking to have a class action certified in Ontario must satisfy a court that, among other things, their claims raise common issues among class members. This screening mechanism prevents the certification of frivolous cases, and ensures that only appropriate cases proceed as a class proceeding.

The Gifford decision is part of a growing body of case law holding that it is not enough for the plaintiff to demonstrate that the proposed common issues can be resolved on a class-wide basis; a plaintiff must also show “some basis in fact” that the common issues actually exist – in other words, that the alleged wrongdoing actually might have occurred. Both the Ontario Court of Appeal and the Federal Court of Appeal have previously approved of this so-called two-step approach to commonality.

The Court Rejected the Plaintiff’s Reliance on a Related U.S. Class Action

The plaintiff in Gifford relied on a decision of a U.S. court that dismissed the defendants’ motion for summary judgment in a similar class proceeding alleging a conspiracy to constrain the supply of domestic U.S. air travel. The Court held that this motion for summary judgment did not establish some basis in fact for the existence of a Canadian conspiracy concerning transborder air travel. The U.S. decision made no findings of fact, addressed a different market and involved a separate alleged conspiracy. The Court therefore affirmed the importance of plaintiffs advancing a theory of the case and supporting evidence that is specific to Canada.