Some Emerging Issues Regarding Class Actions
| Author | Jamie Cassels - Craig Jones |
| Pages | 360-394 |
8. Some Emerging Issues
Regarding Class Actions
A. IS DETERRENCE THE MOST IMPORTANT BENEFIT OF
CLASS LITIGATION?
At the time of the adoption of Rule 23 in the United States, little thought
went into the question of the class action’s role in society beyond a rather
simple ambition to provide a mechanism of benefit to individuals who
were otherwise without recourse to the courts.1Despite the experience of
almost forty years of class actions, it is still not unusual to find modern
scholars discussing the purposes of aggregate litigation in essentially these
terms. In a comprehensive article on developments in civil litigation, for
instance, the Harvard Law Review in 2000 discussed the “two important
functions” of “the modern class action”: “… first, it provides individuals
with injuries insufficient to justify the cost of a lawsuit an economically fea-
sible avenue of redress; second, it helps relieve the burden on court dock-
ets … arising from mass torts …”2Only somewhat later does this article
discuss deterrence, and it does so only as an aspect of “procedural fair-
360
1 See generally Arthur A. Miller,“Of Frankenstein Monsters and Shining Knights:
Myth, Reality, and the ‘Class Action Problem’” (1979) 92 Harv. L. Rev. 664.
2 “Developments — The Paths of Civil Litigation” (2000) 113 Harv. L. Rev. 1752 at
1806–7.
ness,” focusing again on “widespread, but individually minimal harm.”3
This pervasive emphasis on the class action’s deterrent effect on numerous
low-value claims has taken deep root in Canada,4where the goal of access
to justice is described as overarching.5
Despite the significant differences between the U.S. and Canadian
statutes, Canadian courts often rely on U.S. literature to divine their pur-
poses, as the Supreme Court of Canada did in Western Canadian Shopping
Centres Inc. v. Dutton,6where it minimized the role of deterrence by listing
it third behind, purely procedural ambitions, and emphasized deterrence
principally with respect to such numerous low-value claims:
27 Class actions offer three important advantages over a multiplicity of
individual suits. First, by aggregating similar individual actions, class
actions serve judicial economy by avoiding unnecessary duplication in
fact-finding and legal analysis. The efficiencies thus generated free judi-
cial resources that can be directed at resolving other conflicts, and can
also reduce the costs of litigation both for plaintiffs (who can share litiga-
tion costs) and for defendants (who need litigate the disputed issue only
once, rather than numerous times) ….
28 Second, by allowing fixed litigation costs to be divided over a large
number of plaintiffs, class actions improve access to justice by making
economical the prosecution of claims that would otherwise be too costly
to prosecute individually. Without class actions, the doors of justice
remain closed to some plaintiffs, however strong their legal claims. Shar-
ing costs ensures that injuries are not left unremedied ….
29 Third, class actions serve efficiency and justice by ensuring that actu-
al and potential wrongdoers do not ignore their obligations to the public.
Without class actions, those who cause widespread but individually minimal
harm might not take into account the full costs of their conduct, because for any
one plaintiff the expense of bringing suit would far exceed the likely recovery.
Cost-sharing decreases the expense of pursuing legal recourse and accordingly
Some Emerging Issues Regarding Class Actions 361
3Ibid. at 1809–10.
4 See, for instance, Dean F. Edgell, Product Liability Law in Canada (Toronto: Butter-
worths, 2000) at 179 (describing the “reason” for class proceedings as related to
claims that are “uneconomic to pursue” and “not [individually] viable”).
5 See, for instance, Ontario Law Reform Commission, Report on Class Actions,3 vols.
(Toronto: Ministry of the Attorney General, 1982) [hereinafter Ontario Report (1982)]
at 139 (“effective access to justice is a precondition to the exercise of all other legal
rights.”)
deters potential defendants who might otherwise assume that minor wrongs
would not result in litigation …. [Emphasis added.]7
This is not to suggest that the Supreme Court is unaware of the basic
economic principles of negligence law, which hold that optimal deterrence
will be achieved when the full costs of harm are “internalized” by the
wrongdoer.8Yet, throughout Anglo-Canadian jurisprudence and commen-
tary (and indeed through much of the American), the goal of deterrence is
referred to generally with respect to individually non-viable claims.9In
cases involving both individually viable and non-viable claims, deterrence
is regarded as something of a serendipitous side-effect of class litigation,
not without value but subservient to procedural ambitions. The Ontario
Law Reform Commission report, for instance, discussed deterrence as an
“essentially inevitable, albeit important byproduct of class actions [involv-
ing a diversity of claims values].”10
It remains to be seen whether Canadian courts will recognize the reg-
ulatory, or “public law,” role of class actions through an increasing empha-
sis on deterrence. In our view, such recognition is appropriate and helpful
to the development of mass tort law generally, and would permit courts to
make better and more realistic decisions when weighing the preferability
of class actions at the certification stage and when assessing the appropri-
ateness of ensuing settlements.11
THE LAW OF LARGE-SCALE CLAIMS362
7Ibid. at paras. 27–29. See also Hollick v. Toronto (City), 2001 SCC 68 at para. 15.
8 Indeed, in Hollick, ibid. at para. 15, another class action certification case decided in
2001, the Court recognized that deterrence required that “actual and potential wrong-
doers modify their behaviour to take full account of the harm they are causing, or
might cause, to the public.”
9 Lord Woolf spoke of providing “access to justice where large numbers of people have
been affected by another’s conduct, but individual loss is so small that it makes an
individual action economically unviable”: Lord Woolf, Access to Justice (Final Report,
1996) at para. 2. In the report that provided the foundation for Ontario’s present leg-
islation, deterrence was featured a little more forcefully, with the Act serving to pro-
vide a “sharper sense of obligation to the public by those whose actions affect large
numbers of people.”: Report of the Attorney General’s Advisory Committee on Class
Actions Reform (Toronto: Attorney General of Ontario, 1990).
10 Ontario Report (1982),supra note 5 at 145–46.
11 An example of a settlement giving appropriate regard to deterrence principles was that
announced in August 2004 by CIBC (subject to court approval). The plaintiffs alleged
that some CIBC VISA transactions involving foreign currency resulted in an undis-
closed or inadequately disclosed mark up. The Bank agreed to settle for $16.5 million.
Because it was not possible to determine which cardholders had incurred the over-
charge, all CIBC VISA customers at the relevant times were given pro-rated rebates
credited to their accounts, expected to total over $13 million. In order to account for
those customers who no longer had accounts, CIBC agreed to pay $1 million, plus any
undistributed portion of the main award, to the United Way as a cy pres settlement.
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