Ontario the Outlier: How Changes to the Class Proceedings Act Might Make Certification More Difficult in Ontario than Anywhere Else

By Jasminka Kalajdzic

In December 2019, the Government of Ontario introduced Bill 161, Smarter and Stronger Justice Act, 2020, omnibus legislation that effects changes in the Class Proceedings Act, 1992 [CPA] among other statutes. The Class Action Clinic largely supports the amendments that aim to improve transparency and efficiency of the class action regime. Two proposed changes to the certification test, however, would undermine any improvements to the Act. The day after the Bill was introduced, I wrote a blog about my initial concerns with the new predominance and superiority requirements. The Clinic made written submissions to the Standing Committee on Justice Policy in March, setting out more detailed arguments against the amendments. On June 12, 2020, I testified before the Standing Committee to make additional submissions, and asked that the additions to the certification test be removed from the Bill.

What follows is the text of my prepared remarks, with some revisions for length and added hyperlinks for sources:

You have our written submission which contains detailed arguments about why we think the superiority and predominance clauses will result in Ontario having the most restrictive class action regime in the country. Having considered the language of the Bill further, and having looked at US jurisprudence more closely, I have three additional points to make. The first is to explain why our courts will inevitably rely on American jurisprudence and what that means for the new predominance requirement.

AMERICAN CASE LAW IS RELEVANT AND WILL BE CONSIDERED

AG Downey stated in his introduction of the Bill that it will be up to Ontario judges to interpret “predominance” in the specific context of the CPA’s evidentiary standard and will lead to a different interpretation. While the evidentiary standard may be different, the Bill introduces two additional steps to the certification test that must be proven. What do those new provisions mean? Defendants will undoubtedly be relying on American case law to interpret language that is so similar to American rules. In fact, our courts do this already.

In Caputo v. Imperial Tobacco Ltd., the court said that despite differences in our two certification tests, “the American experience can, nevertheless, provide guidance. American jurisprudence has to date been considered by the Ontario courts in several class proceedings”.

How do American courts, then, approach the predominance test in Federal Rule 23(b)(3)?

The US Supreme Court has described the predominance test as a demanding prerequisite that will not be established merely because the majority of contested issues are common. In Wal-Mart v Dukes, the US Supreme Court held, “[w]hat matters to class certification … is not the raising of common ‘questions’ – even in droves – but, rather, the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation” (at 9-10).  

There is no one approach to predominance in the various Circuits. In the US, some courts interpret predominance to mean that the common issues will resolve the litigation. Other courts state that common issues must dwarf the individual issues in number or importance. Some courts interpret predominance to mean that the common issues make up the majority of contested issues. This ambiguity is a warning signal – there will be a lot of energy spent by litigants and courts as they try and determine what to make of this new requirement.

What is known for certain is that the requirement makes certain types of mass wrong difficult or impossible to litigate as class actions. Comparing the case law gives us examples.

  • Tainted blood. Not certified in the US. Certified in Canada.
  • Defective medical devices. Not litigated as class actions in the US but certified in Canada. For example, the Dalkon Shield litigation was not certified in the US because the 9th Circuit appeals court said that even though the questions of whether and when defendants knew or should have known of the dangers of the Dalkon Shield to its users and the facts surrounding defendants’ design, production, etc. of the Dalkon Shield were all common, each woman had to prove that the manufacturer’s breach of duty proximately caused her particular injury. We routinely certify medical device cases like this one, such as silicone breast implant cases.
  • Employment discrimination. Gender discrimination case against Wal-Mart not certified, no recourse. In contrast, gender discrimination case against the RCMP certified and settled.

So, for Ontarians with a tainted blood claim, or a defective drug or medical device, or an employment harassment or unpaid overtime case, they will either have to engage lawyers to launch cases, with the added risk of being potentially liable for costs if they are not successful (as class members they don’t face that risk), or, more likely, they swallow their losses, they suffer the harm without redress, they get no justice. Neither of these results is good for Ontario. Neither of them can be the intended goal of this Bill.

IMPORTING JUST THESE TWO PIECES OF THE FEDERAL RULE IS CHERRY-PICKING

There is another reason why I worry the predominance requirement will actually be worse for Ontarians than Americans, and this is my second point. The clause was cherry-picked from a lengthy Rule 23 and dropped into our statute. But Federal Rule 23 is very different from our certification test.

The most important difference is that there are provisions that specifically allow for limited issue class actions. In those situations where a case does not meet the predominance test in Rule 23(b)(3), Rule 23(c)(4) provides that “an action may be brought or maintained as a class action with respect to particular issues.” Limited issue certification under this Rule seeks to isolate an issue (or certain issues) for class treatment even if class members’ claim for liability or recovery might ultimately be adjudicated individually. This other rule allows a class action to move forward even when it would not pass the predominance test.

Bill 161 does not have any provision like Rule 23(c)(4). Under our CPA, either a case gets certified or it doesn’t. There are no ‘limited issue class actions’ that do not need to meet the predominance test. So in this way, Bill 161 makes certification harder in Ontario than even in the US Federal Rule.

RULE OF LAW ARGUMENT

Some of you might be asking, ‘So what if there are fewer class actions?’ This brings me to my third point. Two things can happen if cases cannot proceed as a class action. (1) People with big losses hire lawyers to bring multiple lawsuits. How are dozens or hundreds of lawsuits better for the justice system than one class action? (2) Much more likely, people don’t sue at all. They swallow their losses. The big company that price gouged, or violated their privacy, or broke their contracts, gets away with the bad behaviour because the people who were harmed did not lose enough to warrant suing on their own. Worse, that company knows that if it got away with not paying for that wrongful conduct, it has little incentive to do better next time, to take better care, to ensure it abides by best practices. This is the concept of deterrence that class actions were designed to facilitate. Deterring rule-breakers is necessary for the rule of law.

In our society, rules are necessary – to make safe consumer products, for example, or for the protection of the capital markets.

Those rules need to be enforced. It is not fair to consumers that they have to suffer the consequences of corporate malfeasance. It is also not fair to the businesses that operate fairly that those who don’t abide by the rules, get away with it. This, at its core, is what we mean when we talk about the rule of law.

How do you enforce rules? Either the government does it, or you have private enforcement. The Attorney-General who introduced class action legislation in 1992 saw a role for private enforcement – that it would relieve some of the pressure off of resource-strapped government agencies. Private enforcement, specifically civil litigation, is an important way to encourage compliance with the law, and thus to promote the rule of law. This is actually a conservative principle. Let the private market (in this case, lawyers) do the enforcing, rather than the government.

CONCLUSION: THESE TWO CHANGES CONTRADICT THE AIMS OF THE BILL

The proposed changes to the CPA have been described repeatedly as modernizing Ontario’s class action regime. Respectfully, there is nothing modern about importing two American principles that were drafted in 1966.

Much of the Bill aims to improve efficiency of the justice system. But these two changes do the opposite. In the short term, they create uncertainty, the need for more evidence, more proceedings to sort out the new requirements, and more upheaval in the law.

In the long term, because the requirements will almost certainly lead to a far more restrictive certification test than any other jurisdiction in Canada, these two provisions will make Ontario the outlier. It is a regressive move at a time when all provinces, regardless of political party, are making court processes more accessible to residents.

.           .           .           .           .

Bill 161 is currently in Third Reading. The Standing Committee issued revisions to the Bill on June 23, 2020; the controversial changes to the certification test remained intact. Predominance and superiority are almost certain, therefore, to become the law of Ontario, and are the new hurdles on the path to justice for Ontarians.

Jasminka Kalajdzic / Associate Professor, Windsor Law / Director, Class Action Clinic / Co-principal researcher and co-author of the LCO Class Action Report

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