The Problem with Preferable Procedure

• Author: Dawn Robertson
• Pages: 193-216

193

THE PROBLEM WITH PREFERABLE

PROCEDURE

Dawn Robertson1

A. INTRODUCTION

Certification has become the major battleground in class action regimes

in Canada.2 Plaintiffs must satisfy a series of requirements to have their

case certified before it can be adjudicated through the specialized proce-

dures reserved for large scale claims. Plaintiffs and defendants will spend

a significant portion of their resources on the certification motion as the

outcome of the motion can be a significant factor in the final resolution of

the case. For plaintiffs, a certification order results in a strong bargaining

position in settlement negotiations with the defendant or the opportunity

to have their claim heard in court. For defendants, a failed certification

motion means that there is a good chance the claim will disappear.

If certification is the major battleground, the preferable procedure test

is the most important skirmish in that battle. A prerequisite under both

the Ontario Class Proceedings Act, 19923 and the British Columbia Class

Proceedings Act,4 the preferable procedure test requires courts to consider

whether a class action is the preferable procedure for resolving the com-

mon issues in the dispute. Preferability has become “the principal analyti-

cal threshold for class actions.”5 It is “very often the most contentious and

difficult [question] that arise[s] on a motion for certification.”6

The definition of the preferable procedure test (or other similar tests)

has been the subject of debate in many jurisdictions. In this paper, I will

1 Dawn Robertson will receive her LL.B. from Osgoode Hall Law School in May

2006. She will article at Fasken Martineau DuMoulin LLP in Toronto.

2 Garry D. Watson, “Class Actions: The Canadian Experience” (2001) 11 Duke J.

Comp. & Int’l L. 269 at 279.

3 S.O. 1992, c. 6 [Ontario CPA].

4 R.S.B.C. 1996, c. 50 [B.C. CPA].

5 Craig Jones, Theory of Class Actions (Toronto: Irwin Law, 2003) c. 7.

6 Cloud v. Canada (Attorney General) (2003), 65 O.R. (3d) 492 at 512 (Div. Ct.)

[Cloud].

194 THE CANADIAN CLASS ACTION REVIEW

explore the roots of the preferable procedure test, consider the recent for-

mulations of the test in Ontario and British Columbia, and evaluate the

appropriateness of the test both practically in the battle for certification

and analytically in support of the values of the class proceedings regime.

Case law shows that the preferability test in both Ontario and British

Columbia is suffering from the same pitfalls as its counterpart in the U.S.

The test is open to too much discretion, meaning that class actions are

being denied for the wrong reasons, sometimes even where there is no

other option available for the resolution of the class members’ claims.

Instead of serving the underlying goals of class actions, the test has

become a tool for defendants to defeat certification motions. Although

some of the most recent cases suggest that the courts are beginning to

recognize this failure, significant action by the courts or the legislature is

needed to remedy the situation.

B. THE ORIGINS OF PREFERABLE

PROCEDURE

1) Rule 23 of the U.S. Federal Rules of Civil Procedure

In 1982, the Ontario Law Reform Commission’s Report on Class Actions

set out a proposal for a comprehensive class proceedings statute.7 The

OLRC Report drew heavily from U.S. experience with Rule 23 of the

Federal Rules of Civil Procedure.8 Rule 23 has been in place since 1966;

accordingly, its provisions have undergone significant application and

interpretation and the success of the procedural scheme has been the

subject of assessment.

Under Rule 23, a representative action can become a class action

when it meets all four of the requirements in section 23(a) and at least

one of the requirements in section 23(b). Of the options in section 23(b),

the third option contains what are known as the predominance and supe-

riority tests:

23(b) Class Actions Maintainable

An action may be maintained as a class action if the prerequisites of

subdivision (a) are satisfied, and in addition …

7 Ontario Law Reform Commission, Report on Class Actions (Toronto: Ministry of

the Attorney General, 1982) [OLRC Report].

8 Fed. R. Civ. P. 23 [Rule 23].