Features and Problems of Canadian Class Action Regimes
| Author | Craig Jones |
| Pages | 117-153 |
CHAPTER
SEVEN
Features
and
Problems
of
Canadian
Class
Action
Regimes
A.
FEATURES
OF
CANADIAN
CLASS
ACTIONS
Canadian class proceedings
are
patterned
on the
basic template
of
Rule
23,
although
the
statutes
are of the
more linear design favoured
here.
They foresee
mostly opt-out actions launched
by a
representative
plaintiff,
and
establish for-
mal
requirements
and
processes
for
certification
and
notice similar
to
those
in the
United
States,
and
similarly provide
an
active role
for the
court
in
overseeing
notice
and
settlement. There
are
however, some important differences that make
a
Canadian class action potentially very
different
from
those launched
in the
U.S.
I
discuss some
of the
differences
in
this chapter,
and
others
in
Chapters
8
through
10
in the
course
of my
discussion
of
options
for
system design.
(1)
Certifying
the
Class
The
most significant step
in a
Canadian class action
is
certification, which
defines
the
class
and
sets
the
boundaries
of the
action.
The
certification hearing
is
common
to all
Canadian legislative regimes
and the
Dutton1
representative
1.
Western
Canada
Shopping
Centres Inc.
v.
117
—
Theory
of
Class
Actions
—
action,
but is not
universal.2
Practically speaking, certification
may be
disposi-
tive
of the
action,
as the
vast majority
of
certified class actions
are
settled before
trial.3
Plaintiffs
may
seek certification
and
press their case
on to
trial; frequently
though,
plaintiffs
and
defendants approach
the
court together
and
seek
to
certify
a
class
for the
purposes
of
obtaining
a
court-approved settlement. This latter type
of
class
is
known
as a
"settlement
class,"
and its
associated problems
are
dis-
cussed
at
some length
in
Part
IV
below.
There
are
three possible types
of
classes, named
for the
mechanism
of
their
imposition upon class members:
opt-in,4
opt-out,5
and the
"mandatory" class.
It
is not
uncommon
for a
certification
to
include more than
one
type
of
class,
for
instance
an
"opt-out" class
for
resident
plaintiffs,
and an
"opt-in"
class
for
non-
resident
plaintiffs
as
provided
for
under
the
B.C. Act.
As I
will discuss later, there
has
not yet
been
a
true "mandatory" (i.e.
no
opt-out) class certified
in
Canada,
though
it
might
be
possible
to
conceive
of one
under
the
statutes
as
they
are
writ-
ten.6
In
Ontario
and
Quebec,
as in the
U.S.,
any
person
may be
part
of a
class with-
out
regard
to
residency.7
In
British Columbia, only
a
resident
may
commence
a
class proceeding.
So
far, only
the
Ontario courts have certified
"opt-out"
national
classes involving residents
from
all
provinces.8
B.C.'s statute,
and the
ULCC
Model
Act,9
provide only
for
"opt-in"
non-resident
classes.
2.
The
federal
Australian
scheme
does
not
have
a
certification
requirement,
based
upon
the
recommendations
of the
Australian
Law
Reform
Commission,
which
found
that
there
is "no
value
in
imposing
an
additional
costly
procedure,
with
a
strong
risk
of
appeals
involving
further
delay
and
expense,
which
will
not
achieve
the
aims
of
protecting
parties
or
ensuring
efficiency.":
The Law
Reform
Commission,
Grouped
Proceedings
in the
Federal
Court,
Report
No. 46
(Canberra:
Commonwealth
of
Australia,
1988)
at
para.
147.
3.
See
generally
Ward
K.
Branch
and
John
C.
Kleefeld,
"Settling
a
Class
Action
(or
How
to
Wrestle
an
Octopus)"
Presented
to the
Canadian
Institute
Conference
on
Litigating
Toxic Torts
and
Other
Mass
Wrong
(Toronto: December 4-5, 2000).
4. In
this
most
straightforward
type
of
action,
only
those
defendants
who
formally
join
the
lawsuit
may
benefit
and are
bound
by any
decision
or
settlement
in the
action.
In
this
sense
the
class
action
is
nothing
more
than
a
type
of
voluntary
join-
der;
no
non-party
is
bound
by the
decisions
of the
court.
5. In an
"opt-out"
action,
any
potential
member
of the
class
who did not
formally
decline
to
participate
in the
lawsuit
is
deemed
to be a
member
of the
class
and may
benefit
from
and be
bound
by any
decision
or
settlement
within
the
action.
6.
This
topic
is
canvassed
more
thoroughly
in
Part
IV,
below.
7.
Subject
to
rules
governing
jurisdiction.
8.
Nantais
v.
Telectronics
Proprietary
(Canada)
Ltd. (1995)
127
D.L.R.
(4th)
552
(Ont.
Gen.
Div.),
leave
to
appeal
denied
(1995),
129
D.L.R.
(4th)
110
(Gen.
Div.),
leave
to
appeal
denied (1996),
28
O.R. (3d)
523n,
7
C.P.C. (4th)
206
(C.A.);
Bendall v. McGhan Medical Corp. (1993), 106 D.L.R. (4th) 339 (Ont. Gen. Div.)
118
—
Features
and
Problems
of
Canadian
Class
Action Regimes
—
Perhaps
the
most controversial aspect
of the
U.S. Rule
23 has
been
the
"mandatory
classes,"
whose members have
no
right
to
withdraw.10
Mandatory
actions were designed
to
assist when allowing opt-outs would jeopardise unac-
ceptably
the
interests
of
other class members. While opt-out rights
are
required
in
a
23(b)(3) action because
it is
only those actions
in
which
the
interests
of the
individuals
in
pursuing their
own
lawsuits
may be so
strong
as to
outweigh
the
necessity
of
collective adjudication, mandatory classes
are
used where
it is
appropriate
to
diminish individual control because
the
collective approach
is
nec-
essary, even
if it may not be
universally desired within
the
class.
In
either case,
it is the
interests
of the
absent potential plaintiff which might
be
seen
to
justify
the
procedure. Because
the
efficiency
of
class actions depends
on
optimal aggre-
gation
of
classable
claims,
mandatory
classes
are of
considerable
interest
to
sys-
tem
design theorists,
and
they
are
discussed
at
some length
in
Part
III
below.
As
described
earlier,
the
U.S. Rule
23
requires that
the
representative
party
must
demonstrate that
the
class
is not so
numerous that joinder
of all
parties
is
impractical, that there
are
questions
of law or
fact
common
to the
class, that
the
claims
or
defences
of the
representative party
are
typical
of the
claims
or
defences
of the
class,
and
that
the
representative party will fairly
and
adequately
protect
the
interests
of the
class.
The
class must also
be
defined with
sufficient
specificity
in
order
to be
ascertainable.
The
Canadian legislation
is
somewhat different, requiring that there
be an
identifiable
class
of two or
more persons that would
be
represented
by the
repre-
sentative plaintiff.
The
precise
numbers
or
identities
of the
class
members need
not
be
known before certification will
be
granted. Moreover, there
is no
explicit
"numerosity"
requirement such
as
exists
under U.S. Rule
23."
According
to the
B.C.
and
Ontario
Acts,12
the
determination
of
whether
the
plaintiffs
have satisfied
the
requirements
for
certifying their action
as a
class
pro-
ceeding raises
the
following questions:
• Do the
pleadings disclose
a
cause
of
action?
• Is
there
an
identifiable class
of two or
more persons?
at
345;
Carom
et
al.
v.
Bre-X
Minerals
Ltd.
et
al
(1999),
44
O.K.
(3d)
173
(Sup.
Ct.
J.);
Webb
v.
K-Mart
Canada
Ltd. (1999),
45
O.K.
(3d)
389
(Gen. Div.)
and
Wilson
v.
Servier
(2000),
50
O.R. (3d)
219
(Sup.
Ct.
J.).
The
national
class
is
discussed
more
thoroughly
in
Part III, below.
9.
Ruth
Rogers,
A
Uniform
Class
Actions
Statute,
1995 Proceedings
of the
Uniform
Law
Conference
of
Canada, Appendix
O,
section 16(2).
10.
Rule
23(c)(2) sets
out
requirements
of
notice
to opt
out,
but
applies
only
to
actions
under
(b)(3). Thus
the
combination
is
read
to
imply
the
possibility
that
where
the
conditions
of a
(b)(l) action
are
met,
no
right
to opt out is
required.
11.
Peppiatt
v.
Nicol
(1993),
20
C.P.C. (3d)
272
(Ont. Gen. Div.)
12.
B.C.
s.
4(1); Ontario
s.
5(1).
119
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