Federal Court of Appeal Revives the Certification of a Reverse Class Action in File-Sharing Copyright Infringement Case

On September 8, 2021, Canada’s Federal Court of Appeal (FCA) in Salna v. Voltage Pictures, LLC, 2021 FCA 176, unanimously reversed the Federal Court’s (FC) decision dismissing Voltage Pictures, LLC’s (Voltage) motion for certification of a reverse class action proceeding alleging file-sharing copyright infringement. The FCA acknowledged the novelty of the proposed reverse class action and noted that "the law must adapt to the evolving digital environment, the channels through which artistic endeavour is expressed and the means by which copyright may be infringed".

The dispute relates to allegations by Voltage and other production companies against a proposed class of defendants for copyright infringement in their films, through making those films available for download on peer-to-peer file sharing protocol site BitTorrent. Voltage brought a motion to certify its claim as a class action against unidentifiable defendants (known as a reverse class action). The FC dismissed Voltage’s certification motion finding that none of the five criteria for certifying a class proceeding were met, as previously reported by the E-TIPS® Newsletter here. Voltage appealed the dismissal of that motion.

The issue on appeal was whether the FC made a reviewable error in refusing to certify the class action pursuant to Rule 334.16 of the Federal Court Rules. The FCA found that the FC made reversible errors in relation to each of the five criteria.

First, the FC erred in its finding that Voltage’s pleadings did not disclose a reasonable cause of action by drawing conclusions on the merits of the claim. The correct approach is to consider whether the pleadings disclosed a reasonable cause of action, assuming that the facts as pleaded are true. The FCA held that Voltage’s pleadings disclosed a reasonable cause of action with respect to direct and authorizing infringement claims, but not for its secondary infringement claim.

Second, the FC erred in concluding that Voltage did not establish an identifiable class of two or more persons. The FCA found that the FC incorrectly applied the civil standard of evidence to this criterion. The FCA applied the correct evidentiary standard and concluded that there was “some basis in fact” to support the existence of a class of two or more people.

Third, the FC erred in its analysis of whether the resolution of a proposed question is common to the proposed class members. The FC improperly focused on how the outcomes of various questions may be different for various proposed class members. The FCA noted that the class proceeding rules are flexible in providing numerous avenues to manage and resolve individual issues, for instance through creating subclasses based on similar fact scenarios and offering court-supervised individual assessment process.

With respect to the remaining two criteria (i.e. if a class proceeding is the preferable procedure and whether there is a suitable representative respondent), the FCA held that the FC’s reasons are insufficient for appellate review and sent these two questions back to the FC for redetermination.

Accordingly, it remains to be seen whether the case will move ahead as a reverse class action.

Summary By: Anna Troshchynsky