Quebec Court of Appeal sends Target data breach class action jurisdiction application back to lower courts

This post is in: November 25, 2015

Quebec courts do have jurisdiction over the case, but judge considered irrelevant factors

After the Superior Court of Quebec dismissed the putative class action against Target in connection with its recent data breach (2015 QCCS 1285), the Quebec Court of Appeal in Zuckerman c. Target Corporation, has reversed the decision, sending it back for reconsideration. The lower court was considering the question of whether Quebec has appropriate jurisdiction to hear the case, based on Article 3148 of the Quebec Civil Code. The Court of Appeal summarizes the finding of the Superior Court in the first paragraphs of the decision:

[2] In essence, the judge agreed with Respondent that the fact pattern is a United States situation involving a cyber attack in that country where personal information of consumers having provided their contact information or purchased from Respondent in the United States using a credit or debit card, was compromised.

[3] The judge’s analysis of the criteria of jurisdiction set forth in article 3148 C.C.Q. led him to the following analysis. Respondent is not domiciled in Quebec. The judge agreed that it does not have an establishment or any activities here despite that notice of the cyber attack was communicated to Canadian consumers through Target Canada’s web address as argued by Appellant. The judge also held that no fault was committed in this jurisdiction as any failings of Respondent to safeguard consumers’ personal information occurred in the United States.

However, the Court of Appeal held that on an application regarding whether to decline jurisdiction under this portion of the Civil Code, the judge had considered factors that were irrelevant for this inquiry and included matters that are relevant only for the question of whether to certify the class action. Among the criteria for the jurisdiction argument is whether injury was suffered in Quebec. However, the judge delved into the merits of the alleged injuries, which the Court of Appeal determined was not permitted at this stage. From paragraph 6 of the decision:

... The allegation of damage was sufficient upon which to base jurisdiction; an analysis of the quality of the damage applying Mustapha [v. Culligan of Canada Ltd] was not appropriate. It could have been an appropriate inquiry had the [application to decline jurisdiction] been heard together with the [application to certify the class action]. Be that as it may, at the [jurisdiction] stage, we think that the judge committed an error.

The Court of Appeal held that the Court should not have concluded that it lacked jurisdiction on the basis of Article 3148 of the Code, but should have considered the secondary arguments on whether it should choose to decline jurisdiction on the basis of forum non convieniens.