In a class actions lawsuit, one or more plaintiffs sue one or more defendants on behalf of a larger group of individuals who allege to have suffered the same type of loss from the defendants. In order to initiate a class actions lawsuit, a representative plaintiff (or several representative plaintiffs) is selected to pursue the claim on behalf of the said larger group.
Often times there are several counsels engaged in a class actions lawsuit, which necessitates a carriage motion. Once a decision is made as to who will have carriage of the matter, the parties begin preparing for certification. In order for a class action to proceed, a judge must be satisfied that the claim meets the requirements set out under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”). Specifically, whether the claim:
- discloses a cause of action;
- contains an identifiable class;
- proposes issues common to the class;
- is the preferable procedure for resolving the complaint; and
- has an appropriate representative plaintiff.
The claim is not assessed based on its merits. The plaintiff(s) need only show that it is not plain and obvious that no claim exists and that there is some basis in fact to meet the requirements set out under the CPA. The test is not a difficult one to meet. It is applied in a purposive and generous manner and historically the courts have been more inclined to certify class proceedings.
If a class action, however, is not certified then the process is at an end. If the action is certified and all appeals have been exhausted, notice is given to class members advising that the class action has been certified and any members of the class who do not wish to be a part of the class may opt-out. The action then proceeds through the stages of litigation including disclosure, discovery, and a common issues trial.
While class actions lawsuits have the potential to further societal goals by providing access to justice for litigants and promoting the efficient use of judicial resources, the process is long and cumbersome and a judgment can take several years. There are also limitations to what the class members can recover. Even if the plaintiffs are successful on the common issues, liability might not be proven and aggregate damages will not be awarded. There are several other scenarios in which aggregate damages may also not be awarded. In such cases, individual plaintiffs likely would have benefited from bringing an individual action as recovery might be higher and more efficient.
While there is generally a significant amount of publicity relating to class actions and the prospects might be appealing, the risks and benefits must be weighed prior to opting out of a class action.
From a defence perspective, engaging counsel as promptly as possible is key to developing a strong and viable defence and mitigating the effects of adverse publicity.
Bell Temple LLP has a specialized class action group and is engaged in several high-profile matters. Please contact Partner Andrew K. Lee at [email protected] for further information.