Intervening for Extended Opt-Out Rights: Johnson v. Ontario

By Katie Pfaff, MSW, JD.

On March 30, 2022, the Class Action Clinic intervened at the Ontario Court of Appeal in the case of Johnson v Ontario, 2022 ONCA 725. The Clinic advocated for a new test to extend a class member’s time to opt-out after the designated deadline. These submissions were largely accepted by the Court of Appeal. Now, not only do individuals have an opportunity to pursue their own course of justice when they did not get notice of the class action, but class action judges in Ontario have a framework for considering when to grant a class member the opportunity to opt-out after the deadline expires.

The Facts

On August 23, 2016, a class action was certified on behalf of individuals who were incarcerated at the Elgin-Middlesex Detention Centre for alleged negligence and violations of sections 7 and 12 of the Charter against the Province of Ontario for the management of the Centre (the “EMDC Action”). A second class proceeding was commenced to extend the applicable class period; the two actions were then consolidated. The class definition ultimately captures those who were incarcerated at Elgin-Middlesex Detention Centre between January 1, 2010, and May 18, 2017.

Following the EMDC Action’s certification, notice was published in two newspapers in London, Ontario, posted on Class Counsel’s website, and sent to the “last known address of each class member” by mail. In order to opt out and not be included in the class action, a class member had to complete and return a form by June 20, 2018.

Mr. Donald Parker was an inmate at EMDC during the class period and therefore was a member of the class. He sustained significant injuries to his arm in 2016; because he was not given prompt medical treatment, he suffered permanent damage. After he was released from custody in 2019, he began legal action against the Province for compensation caused by the EMDC’s alleged negligence. The Province responded that he could not sue individually as he was bound by the class action. It was at this point that he first learned of the existence of the class action.

Notice of the class action had been sent to Mr. Parker’s last place of residence – his father’s address. Despite the Province being aware that he was in federal custody, notice was not sent to his custodial address. Because Mr. Parker was not aware of the class action, he did not opt out by the deadline. Once made aware of the EMDC Action, Mr. Parker moved to be granted an extended opt-out in order to continue his individual action. His motion was dismissed. There was also speculation that Mr. Parker would not have opted out had he received notice and that the notice “should have come to his attention” (Johnson at para 28). Mr. Parker appealed the decision to the Ontario Court of Appeal.

The Class Proceedings Act, 1992

While nothing in the Class Proceedings Act, 1992 (the “CPA”) specifically governs opt-out procedure in class actions, section 12 gives the court broad discretion to “make any order it considers appropriate respecting the conduct of a proceeding under [the CPA] to ensure its fair and expeditious determination”, which would encompass extending the period to opt out.

The Proposed Test

In February, 2022, the Court of Appeal granted the Clinic intervenor status on the basis that it would “offer a framework, derived from a principled analysis of the role of courts as guardians of related rules, that will focus on the factors that a judge should consider when adjudicating a class member’s motion for an extended opt-out.” Mr. Parker’s counsel argued that the motion judge applied the wrong principles for determining whether to allow Mr. Parker to opt out. The Clinic urged the Court to formulate a general test for extending the deadline in all circumstances.

The test proposed by the Clinic led with an initial review of the adequacy of the original notice plan. Assuming the notice was adequate, the judge would consider two other factors:

  1. Did the notice actually reach the class members captured by the action; and
  2. Even where notice was received, was there an impediment to a class member making an informed decision whether to remain a member of the class.

It was the Province’s position that if an extended opt-out period was contemplated by the Legislature, such a provision would have been captured by the 2020 amendments to the CPA. The Province also asserted that interpreting section 12 to give judges the authority to extend the opt-out period would fundamentally change the class action regime. The Province expressed concerns over class members taking a “wait and see” approach: waiting until a settlement is proposed before requesting an extended opt-out, which would then make it more difficult to assess the size of the class and for defendants to achieve finality.

The Outcome – The Excusable Neglect/No Prejudice Test

The Ontario Court of Appeal agreed that a framework for determining the extension of opt-out deadlines was needed. Justice Zarnett relied on earlier authorities to create a definitive test:

  1. The party seeking an extension to opt out must prove that the entire period of delay, from the missed deadline to opt out through to the making of a request for an extension, was the result of excusable neglect. Excusable neglect is an “elastic concept”. Even in circumstances of carelessness and omissions within a class member’s control, the failure to meet the deadline is excusable  as long as they acted in good faith and had a reasonable basis for not abiding by the opt-out deadline (Johnson at para 40); and
  2. A judge must assess whether any prejudice will accrue to participating class members, the defendant, or the integrity of the process, from permitting the late opt-out.

Thus, the new “excusable neglect/no prejudice” test was introduced to the Ontario class action landscape. The intention of this test is to strike a balance between ensuring class members with a justifiable case are given the opportunity to pursue their own litigation while respecting the process of class action proceedings. The Court emphasized the importance of the opt-out right to class members:

“As the intervener aptly puts it, [t]he opt-out mechanism legitimizes a procedure that would otherwise be contrary to basic procedural fairness and principles of natural justice: it is the only way a person can exclude themselves from litigation that affects their rights but over which they have no control.”

Ultimately, Mr. Parker satisfied this new test. He did not receive notice and had a reasonable explanation for the delay in requesting to opt out, and there was no prejudice to any party as no judgment has been made in the EMDC Action, nor has a settlement been reached.

The Clinic is grateful for the opportunity to be involved in the Johnson appeal and will continue to seek to intervene in other appellate cases that implicate the interests of class members across Canada.

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