Strategies to Avoid Or Mitigate Class Action Litigation

AuthorIan F. Leach
Ian F. Leach*
When it comes to class actions, efforts to avoid or mitigate the effects of such
litigation clearly depend on one’s perspective.
There are reasons why plaintiffs and their counsel may be indepen-
dently motivated to steer clear of class proceeding litigation and look for
alternative, effective options. For example, a sufficiently funded individual
with a meritorious claim, able to litigate in the absence of a class action
dimension, may very well want to avoid the following four irritants: (1) add-
ing inevitable delay to resolution of his own claim by treading the minefield
of extended certification proceedings and appeals, waiting for notices to be
published and opt out periods to expire, or waiting for relief for the entire
class to be determined and distributed prior to receiving any individual
entitlements; (2) galvanizing the full litigation resources of a defendant or
insurer which otherwise might have been inclined to discuss early settle-
ment of a much smaller individual claim; (3) taking on the added work and
responsibilities of a representative plaintiff; and (4) risking added exposure
to adverse cost awards in the event of failure (at least in Ontario).1
A plaintiff in that situation may stick to litigation of her individual
claim, particularly if it can be done in a way that effectively benefits all
similarly placed claimants anyway (for example, by way of a test case or a
request for injunctive relief that will benefit all those in a similar situation).
For most plaintiffs, however, class proceedings offer economy of scale,
settlement leverage, safety in numbers, and corresponding incentives for
* Ian F. Leach, B.A. (Toron.), LL.B. (Reg.), LL.M. (Cantab.), B.C.L. (Oxon.), is a
partner with Lerners LLP. This paper was prepared with helpful and much appre-
ciated research assistance and input provided by Jason Squire, Jason Schmidt, and
Ken Fraser, all with Lerners LLP.
1 For a more extended discussion of the possible disadvantages to plaintiffs con-
sidering a class proceeding, see Ward Branch, Class Actions in Canada, looseleaf
(Aurora: Canada Law Book, 2009) at 6.100–6.150.
plaintiff counsel involvement, all of which often combine to make litigation
feasible where it otherwise could not have been pursued.2 For such litigants
and their counsel, the obvious goal is to maximize a defendant’s exposure
and the scope of the class proceeding.
In short: only defendants focus on how to avoid or mitigate class action
exposure risk and, viewed solely from their perspective, being targeted by
a class action is something of a nightmare. Such a claim usually presents
a sudden and severe threat to a defendant’s well-being. Rare today is the
class action not seeking millions or several hundred millions, and not every
defendant has access to that kind of insurance or asset portfolio. Regardless
of whether the claim ultimately lacks merit, or whether the numbers set
forth in the statement of claim are inflated beyond reason, it will have to be
noted as a contingent liability and explained to financiers, shareholders, and
other investors. The fallout from bad publicity today will rarely be offset by
vindication months or years down the road.
In the meantime, many safeguards and protections normally available
to defendants seem to fall away in the face of class litigation. In Ontario, at
least, the normal rules of court are supposed to apply to a class proceed-
ing.3 It also has been said many times4 and emphasized in recent years by
the Supreme Court of Canada5 that the class proceeding statutes are sup-
posed to be procedural only, and will not create any new causes of action.
However, a defendant facing a class action may feel, with some justification,
that it really does not enjoy the same rights, tools, and treatment extended to
2 For a more extended discussion of the comparative advantages of class proceed-
ings, see Branch, ibid. at 6.10–6.90.
3 Class Proceedings Act, 1992, S.O. 1992. c. 6, s. 35 [CPA].
4 Bendall v. McGhan Medical Corp. (1993), 14 O.R. (3d) 734 (Gen. Div.), motion
for leave to appeal dismissed, [1993] O.J. No. 4210 (Gen. Div.) [Bendall]; Peppiat
v. Nicol (1993), 16 O.R. (3d) 133 (Gen. Div.); Campbell v. Flexwatt Corp. (1997),
44 B.C.L.R. (3d) 343 (C.A.), leave to appeal to S.C.C. refused (1998), 228 N.R.
197n; Ragoonanan v. Imperial Tobacco Canada Ltd. (2000), 51 O.R. (3d) 603
(S.C.J.) [Ragoonanan].
5 See Bisaillon v. Concordia University, [2006] 1 S.C.R. 666 at paras. 17–18 (“The
class action is . . . a procedural vehicle whose use neither modifies nor creates
substantive rights . . . . It cannot serve as a basis for legal proceedings if the vari-
ous claims it covers, taken individually, would not do so . . . . Thus, unless other-
wise provided, the substantive law continues to apply as it would to a traditional
individual proceeding.”) [Bisaillon]. See also Dell Computer Corp. v. Union des
consommateurs, [2007] 2 S.C.R. 801 at paras. 105–7 [Dell] (“The class action is a
procedure, and its purpose is not to create a new right . . . . [The] class action is
clearly of public interest. However . . . as important as it may be, the class action
is only a legal procedure . . . . The notion that the class action procedure does not
create new rights has been reiterated on numerous occasions . . .”).

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