By Azra Alagic
Class action case law continues to grow. This month’s blog explores some of the most important Canadian decisions of 2019 due to their impact on present and future class members.
#1 Umbrella Purchasers – Expanding the Class Definition and Cause of Action
In September 2019, the Supreme Court of Canada released its decision in Pioneer Corp v Godfrey and confirmed that umbrella purchasers have a cause of action under section 36 of the Competition Act. Umbrella purchasers are those people who bought a product (for example, a DVD player) that was the subject of the price-fixing scheme, but from a manufacturer or supplier who was not a part of the conspiracy. The United States has generally rejected the idea that umbrella purchasers can be included as class members within class actions. However, the Supreme Court of Canada agreed with the theory that it might be possible to show umbrella purchasers also overpaid because a price-fixing scheme can raise the price of all DVD players. Whether plaintiffs can prove harm will have to be decided at trial, but the Court’s decision makes it easier to certify large classes of purchasers in price-fixing cases. The focus now will be on discovery and the merits of the case, and less on the certification stage in a price-fixing scheme action.
#2 Privacy Breaches – What’s the Harm?
Breaches of privacy continue to be of increasing concern not only for individuals who have social media accounts, but also for companies and the information they store digitally. Casino Rama’s data system was hacked in 2016. Customers’ personal information was compromised after the casino refused to pay the hacker’s ransom, who then posted the information online. The casino alerted authorities and the affected customers. They also took steps to take down the information from the internet. The affected customers initiated a class action, but in May 2019, the court denied certification. In Kaplan v Casino Rama, Justice Belobaba emphasized that the hackers, not the company who held the information, were responsible for the breach of confidence and publicity given to private life He noted that their lack of reasonable security measures did not translate to legal liability. He also found that there was no evidence that any vulnerable party had experienced “fraud or identity theft as a result of the cyber-attack” or “any compensable financial or psychological loss.” As mentioned by commentators, the certification stage has been a challenge for proposed privacy breach class actions, as seen where Justice Belobaba struggled with the commonality for cause of action in Kaplan, where he denied certification on the ground of common issues. Moreover, if no identity theft occurs, what is the actual harm of accessing personal information? As stated by Justice Belobaba, “the fact that there are no provable losses and that the primary culprit, the hacker, is not sued as a defendant makes for a very convoluted class action.”
#3 Overcharging Consumers – Arbitrate or Litigate?
The Supreme Court of Canada’s decision in Telus Communications Inc. v Wellmanconfirmed that business customers are bound by the arbitration clause in their contracts and cannot be included in a class action. Telus’ practice of overcharging in the context of rounding up to the nearest minute on a phone call was not disclosed in their contracts. Telus argued successfully that the business (non-consumer) contracts included an enforceable arbitration clause that precluded certification of a class action on their behalf. Non-consumers cannot fall back on the consumers’ argument that arbitration clauses are not binding. Ultimately, it is up to the legislature to exempt non-consumers from the enforcement of the arbitration agreements. Small businesses and other class members caught by a mandatory arbitration clause may try to pursue group arbitration or class arbitration instead, as some commentators have suggested.
#4 Forced Mediation – Taking the Action from Canada to the Netherlands
Can Uber require its drivers to arbitrate their disputes in the Netherlands? The Ontario Court of Appeal decided Uber cannot do so in Heller v Uber Technologies Inc. The Court held that if Uber drivers are employees under the Employment Standards Act, the arbitration clause violates the Act. Uber drivers were forced to pay a fee up front to be able to make any claim regarding their contract.The clause was held unconscionable due to the imbalance of bargaining power inherent in the standard form contract. The Court in Heller recognized Uber’s contract requirement for an Ontario worker to arbitrate in the Netherlands was unenforceable. As stated by Justice Nordheimer, “In other words, as an Ontario resident he is statutorily entitled to the minimum benefits and protections of Ontario’s laws. He should not be left in a situation where those benefits and protections are set by the laws of another country.” Uber has appealed the decision to the Supreme Court of Canada, which commentators believe will provide a better understanding to parties who contract on the basis of arbitration clauses.
#5 The Right to Appeal Decisions by Claims Administrators – When Can the Court Intervene?
JW suffered sexual abuse by a nun at a residential school while he would wait in line to take a shower. He brought a claim for compensation in accordance with the Indian Residential Schools Settlement Agreement (IRSSA). However, his claim was rejected by the adjudicator through the Independent Assessment Process (IAP) as there was no evidence that the nun had done the act for a sexual purpose. Although sexual intent was not an explicit part of the test, the internal reviewer affirmed the initial adjudicator. The class member eventually appealed to the Supreme Court of Canada in JW v Canada, asking the Court to find that decisions of IAP adjudicators are subject to judicial review and that the court’s supervisory role includes the power to overturn incorrect interpretations of the settlement agreement. The majority of the Court found that the Court can intervene only in exceptional circumstances, but disagreed as to whether JW’s case raised such exceptional circumstances. Justice Abella, Chief Justice Wagner and Justice Karakatsanis found that they did because the adjudicator failed to apply and implement the terms of the Agreement, as there was no language that indicated the sexual intent of the perpetrator is relevant or required for “any touching”. Justice Côté and Justice Moldaver found that the exceptional circumstance in the case was due to a gap in the agreement, where the Chief Adjudicator of the IRSSA is unable to reopen claims that were wrongly decided, which is in place to ensure consistency of decisions. JW illustrates the importance of protecting class members’ interest at the settlement approval stage to ensure fair outcomes and an ability to review unfair claims decisions.
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