Now, the last thing I'd like to do is dissuade anyone from persuing a lawsuit against Air Canada, but here's my take...
If a lawsuit is successful (and I suspect if it actually happens, it will be) then what's the best that can happen? Everyone who purchased a pass before a certain date will be able to run out that pass with the last available seat upgrade. And then what?
AC is going to change the T&C come hell or high water, so the next time you buy a pass it will be with the reduced and restricted upgrade ability. So in the long run (i.e. 12 or even 6 months from now) it won't really matter. J2=J0 will be the new reality.
They only way that will change is if people stop buying the passes. They won't. Like trained sheep, they'll just keep eating that salami, one slice at a time. Eventually the passes will cost 12 times the price of the highest Latitude fare but only give ewe 7½ flight segments, won't be upgradable under any circumstance, will book into S class, and will not be changeable or cancellable. 'Cause whether it be frogs, lobsters, or Kool-Aid drinking airline passengers, as long as the heat is turned up slowly, no one will ever notice.