In Wittman v. Blackbaud, Inc., 2021 BCSC 415, Madam Justice Jasmin Ahmad acknowledged that the combined reading of section 8(1) of the International Commercial Arbitration Act, RSBC 1996, c 233 and Rule 9-6(2) of the Supreme Court Civil Rules, BC Reg 168/2009 presented a “dilemma” to Defendants wishing to apply for both a stay in favour of arbitration and summary judgment. Defendants must apply for a stay before submitting their first statement on the substance of the dispute but must serve such statement prior to applying for summary judgment. Ahmad J. pointed out that section 8(1) did not expressly prevent Defendants from filing their statement after applying for a stay but anticipated that “a cautious defendant would not file a response”. Though Defendants suggested Ahmad J. could grant them leave to file a response while relying on section 8(1), Ahmad J. observed that Defendants had taken no such steps to obtain such leave. Ahmad J. also addressed how the International Commercial Arbitration Act’s limited the court’s discretion on sequencing decisions under the Class Proceedings Act, RSBC 1996, c 50, observing that “in most cases, an application for stay pursuant to the ICAA should be heard in advance of the certification hearing”.
Proposed representative plaintiff (“Plaintiff”) sought authorization under the Class Proceedings Act, RSBC 1996, c 50 (“CPA”) to institute a class action against Blackbaud, Inc. (“Blackbaud US”) a U.S. based cloud software company and its wholly-owned subsidiary, Blackbaud Canada, Inc. (“Blackbaud Canada”). Blackbaud US provides data management for organizations engaged in philanthropic activities and Blackbaud Canada markets Blackbaud US’s products and services in Canada without hosting or managing the data collected.
When donating money to a B.C. client of Blackbaud U.S. (“Foundation”), Plaintiff provided personal information including his age, address, e-mail address and credit card number. In July 2020, Plaintiff learned from the Foundation that cybercriminals had accessed Plaintiff’s personal information in a May 2020 ransomware attack. Upon learning of the cyberattack, Blackbaud U.S. expelled the cybercriminal from its environment, ensured that the cybercriminal had deleted any data accessed and provided the Foundation with information regarding the cyberattack.
Plaintiff filed his action on August 11, 2020 and communicated his certification materials(“Certification Application”) to Blackbaud U.S. and Blackbaud Canada (“Defendants”) on November 23, 2020. Defendants had filed no response to Plaintiff’s claim.
At an initial December 14, 2020 case management conference, Defendants advised that they intended to present certain applications and wished to have them heard prior to the certification hearing which the parties set for September 20-23, 2021. Since that case management conference, Blackbaud U.S. filed a challenge to the B.C. court’s jurisdiction.
Blackbaud U.S. applied for three (3) orders to:
(i) stay the action pursuant to the International Commercial Arbitration Act, RSBC 1996, c 233 (“ICAA”) (“Stay Application”);
(ii) dismiss or stay the action against Blackbaud US on the basis that the B.C. court has no jurisdiction over it, pursuant to Rule 21-8 of the Supreme Court Civil Rules, BC Reg 168/2009 and the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 (the “Jurisdiction Application”); and,
(iii) grant summary judgment in dismissing the action pursuant to Rule 9-6 (the “Summary Judgment Application”).
Ahmad J. convened the parties to a sequencing hearing at which the parties submitted their preferred order in and dates on which the Stay Application, Jurisdiction Application, Summary Judgment and Certification Application would be heard.
Defendants suggested that the Stay Application, the Jurisdiction Application and the Summary Judgment Application be heard and determined at one time before the Certification Application. Plaintiff disagreed. Though Plaintiff proposed to consent to have the Stay Application precede certification, he did not concede that doing so was as of right for Defendants. Plaintiff further disputed having the other applications heard prior to certification but offered to consent to have one (1) but not both of the Jurisdiction Application and the Summary Judgment Application heard with his Certification Application.
Ahmad J. identified three (3) questions to decide:
(i) Is it appropriate that the Stay Application be heard prior to the Certification Application;
(ii) Should the Jurisdiction Application and the Summary Judgment Application be heard prior to the certification application with the Stay Application on May 6, 2021; and,
(iii) If no to (ii), when should the Jurisdiction Application and the Summary Judgment Application be heard?
Sequencing decisions – Referring to Kwicksutaineuk/Ah-Kwa-Mish First Nation v. British Columbia (Agriculture and Lands), 2009 BCSC 1593 para. 59 and Watson v. Bank of America Corporation, 2012 BCSC 146 (see paras 18-19), Ahmad J. observed that case law dealing with sequencing acknowledges that “as a general starting point, certification should be the first procedural matter determined in a proposed class proceeding”. See also Haghdust v. British Columbia Lottery Corporation, 2011 BCSC 772 paras 11-16.
Ahmad J. qualified that acknowledgement by asserting the court’s discretion to hear applications if doing so is “just and efficient”, referring to Pantusa v. Parkland Fuel Corporation, 2020 BCSC 1988 para. 14 and Gill v. Yahoo! Canada Co., 2018 BCSC 290 paras 14 and 16-18. Ahmad J. tempered that discretion by adding that an applicant must show “compelling reasons or exceptional circumstances” before the court exercises that discretion.
Turning to a prior, recent instance in B.C. in which the court addressed whether to exercise its discretion when the proposed application involved an agreement to arbitrate, Ahmad J. pointed to Williams v. Amazon.com, Inc., 2019 BCSC 1807 para. 33 as shared acknowledgement that the court’s discretion is “more limited with respect to applications for a stay pursuant to the [International Commercial Arbitration Act, RSBC 1996, c 233]”. Ahmad J. clarified that “I take that to mean that in most cases, an application for stay pursuant to the ICAA should be heard in advance of the certification hearing”.
Ahmad J. reminded that the exercise of discretion rested on the facts of each case, providing Strohmaier v. British Columbia (Attorney General), 2014 BCSC 2078 as an example, and at para. 25 reproduced from Cannon v. Funds for Canada Foundation, 2010 ONSC 146 a non-exhaustive list of factors for deciding the “most fair and efficient” sequence of applications.
The parties before her agreed that the Stay Application would proceed before the Certification Application and Ahmad J. confirmed her agreement that to do so was appropriate.
Ahmad J. next considered whether the Summary Judgment Application could be heard with the Stay Application and, in light of the clear wording in section 8(1) of the ICAA, held that joining them was not possible. Section 8(1) imposes a limitation on an applicant when presenting its application for a stay.
“8(1) If a party to an arbitration agreement commences legal proceedings in a court against another party to the agreement in respect of a matter agreed to be submitted to arbitration, a party to the legal proceedings may, before submitting the party’s first statement on the substance of the dispute, apply to that court to stay the proceedings”.
In contrast, Rule 9-6(2) requires that a applicant for summary judgment must have submitted a statement on the substance of the dispute before applying for summary judgment.
“Rule 9-6(2) In an action, a person who files an originating pleading in which a claim is made against a person may, after the person against whom the claim is made serves a responding pleading on the claiming party, apply under this rule for judgment against the answering party on all or part of the claim”.
Ahmad J. pointed out that section 8(1) of the ICAA did not state whether a party can submit a statement of the substance of the dispute after it applied for a stay but noted that Defendants have not filed such statement and did not intend to do so.
Ahmad J. recognized that Defendants’ decision not to file a response to the civil claim “creates a dilemma” for them which Defendants also acknowledged.
“The prohibition that the response cannot be filed to proceed with the Stay Application and the requirement that a response must be filed to proceed with the Summary Judgment Application are diametrically opposed”.
Defendants suggested that the dilemma be resolved by Ahmad J. granting them leave to file a response while still allowing them to rely on section 8(1) of the ICAA. Ahmad J. observed that, despite their suggestion, Defendants had not yet sought leave and, for the purpose of making that observation, put aside whether the court had jurisdiction to grant that type of leave. Ahmad J. closed by observing that, until Defendants file a response, they “are not in a position to proceed with the Summary Judgment Application either with the Stay Application on May 6, 2021 or at all”.
In the balance of her reasons covering paras 42-95, Ahmad J. next considered how best to sequence the Jurisdiction Application and whether that application should proceed at the same time as the Stay Application before certification. Applying the factors set out in Cannon v. Funds for Canada Foundation, 2010 ONSC 146, and despite arguments for and against each of the parties’ respective positions, Ahmad J. at para. 95 concluded that “the balance tips in favour of not allowing the Jurisdiction and Summary Judgment Applications precede the certification hearing”.
urbitral notes – First, for ease of reference, Madam Justice Karen Horsman in Williams v. Amazon.com, Inc., 2019 BCSC 1807 elaborated on her care not to undermine the Arbitration Act.
“[31] In my view, and in light of the case law I have reviewed leading to the Supreme Court of Canada’s judgment in Seidel, Amazon has a substantive right to apply for a stay of proceedings under the Arbitration Act in respect of the non‑Consumer Act claims prior to the certification motion. That right cannot be defeated simply on the basis of the plaintiff’s procedural choice, exercised unilaterally, to pursue his claims as a class action.
[32] It is a term of the plaintiff’s contractual relationship with Amazon that “any dispute or claim” relating to Amazon’s products or services will be resolved by binding arbitration. Without prejudging the outcome of Amazon’s stay application, it is at least arguable that the arbitration clause applies here and precludes the plaintiff’s access to the courts to resolve the non‑Consumer Act claims. Pursuant to s. 15 of the Arbitration Act, Amazon is entitled to apply for a stay of proceedings before filing a response or “taking any other step in the proceeding” to enforce what Amazon says is its contractual entitlement.
[33] I agree with Amazon that the usual discretion exercised by the court on a sequencing application is inapplicable where the interlocutory application in issue is brought under s. 15 of the Arbitration Act. While I would not go so far as accepting that a court has no discretion over the timing of a stay application in these circumstances, as Amazon has argued, I do agree that any discretion must be exercised in a manner that does not undermine the policy of the Arbitration Act. The policy includes giving effect to contractual arrangements the parties have freely entered which limit the jurisdiction of the superior court.
[34] In my view requiring Amazon to wait until a certification hearing to argue its stay application would undermine the Arbitration Act and Amazon’s substantive right under that statute to bring an application for a stay before taking a step in the proceeding. Through the mechanism of a sequencing motion, the plaintiff seeks a direction that would require Amazon to file a response to civil claim, prepare for and argue a four‑day certification motion and respond to any interlocutory applications that may arise in connection with the certification application. These are not small steps in the proceeding. They would require a significant amount of time and effort by Amazon to litigate matters in this court that Amazon says the parties have agreed not to litigate in this court”.
Second, in Kwicksutaineuk/Ah-Kwa-Mish First Nation v. British Columbia (Agriculture and Lands), 2009 BCSC 1593 para. 59, the court discerned the legislative intent to prioritize the certification by reference to delays in the legislation.
“[59] As a general rule, the certification motion ought to be the first procedural matter to be heard and determined in an intended class proceeding: Attis v. Canada (Minister of Health) (2005), 2005 CanLII 10884 (ON SC), 75 O.R. (3d) 302 at para. 7 (S.C.J.); Baxter v. Canada (Attorney General), [2005] O.J. No. 2165 (S.C.J.); Gay v. Regional Health Authority 7, 2009 NBQB 101 at para. 13, 343 N.B.R. (2d) 331. This rule is premised in part on the basis that the brief 90 day period for bringing a certification application in class proceedings legislation is indicative of a legislative intent that certification precede other preliminary motions. This legislative intent underpins section 2(3) of the [Class Proceedings Act, RSBC 1996, c 50]: Consumers’ Association et al. v. Coca-Cola Bottling Company et al., 2005 BCSC 1042 at paras 67-68, 46 B.C.L.R. (4th) 137”.
Third, for a sampling of additional cases on pre-certification motions in B.C. and other jurisdictions, see the cases listed at paras 61-63, 68 and 71-72.