One Step Forward, Two Steps Back: Commentary on Proposed Changes to Ontario’s Class Proceedings Act

By Jasminka Kalajdzic

Two years ago, the Law Commission of Ontario (LCO) embarked on an extensive two-year study of class actions, the first review of the Class Proceedings Act (CPA) in its history. The LCO consulted with stakeholders across Ontario’s justice system and conducted well over 100 interviews. It received 30 written submissions from industry, both sides of the bar, and not-for-profit organizations. In July 2019, it released its final report, making more than 40 recommendations to update the CPA to reflect current best practices and to improve the system for its users. 

The LCO is Ontario’s leading law reform agency.  It engages in rigorous evidence-based research in the public interest. It is independent and committed to public engagement. 

So it was gratifying to see the Ontario government take the LCO’s work seriously when it embarked on its own review of the CPA in the fall of this year. On December 9, 2019, the Attorney-General of Ontario introduced legislation to amend the CPA. Bill 161, Smarter and Stronger Justice Act, is omnibus legislation that amends almost two dozen statutes that affect the delivery of legal and court services in the province, including the CPA. Most of the LCO’s recommendations were, in fact, adopted.

For instance, the proposed amendments will: 

• create more streamlined appeal routes from certification; 
• introduce explicit procedures for multi-jurisdictional class actions that are consistent with several other provinces; 
• provide for quicker determination of carriage when there are competing class actions;
• require that court-approved notices be written in plain language and be disseminated electronically where feasible; 
• mandate registration of all class actions to create a more orderly, comprehensive database of cases;
• require parties to file formal reports with the court at the end of a settlement in order to make lawyers and administrators accountable for settlement monies; 
• ensure that the Public Guardian and Office of the Children Lawyer are given early notice of cases that affect those they represent; and 
• strengthen language around fee approval.

All of these recommendations come from the LCO’s Report, and are welcome from the perspective of ordinary Ontarians. They increase transparency, efficiency and accountability in these complex lawsuits.

Because so much of Bill 161 is about modernizing the justice system, it is especially troubling, then, to see one provision in the Bill that would take class actions backward. The amendments radically change the test for certification in two ways: by creating a more demanding ‘superiority’ test and by introducing the ‘predominance’ requirement in certification. 

First, the Bill stipulates that a judge may only allow the action to proceed as a class action if “it is superior to all reasonably available means of determining the entitlement of the class members to relief”. While this language may, at first blush, appear to be synonymous with the current “preferable procedure” test, it is much more demanding. It requires that a judge not only be satisfied that the class action would be “the preferable procedure for resolving the common issues”, as is currently required, but also that the class action be the superior method for “resolving class members’ entitlement to relief”or for “addressing the impugned conduct of the defendant” – in other words, resolving the class members’ claims entirely. A class action currently need not resolve the case to be considered the best way forward. So long as the common issues form a substantial ingredient of the class members’ claims, a class action can still be preferable, despite the need for individual issues trials down the road.

Moreover, the enumerated list of other “reasonably available means” in the superiority provision suggests that the onus is on the plaintiff to prove none of the other procedures are superior. This is a subtle but important shift from current jurisprudence which puts the onus on the defendant to show there are better alternatives to a class proceeding.

Second, the new test would require that “questions of fact or law common to the class predominate over any questions affecting only individual class members.” This language is identical to the predominance requirement in US Federal Rule 23(b)(3). In a 2013 antitrust case brought by consumers against a cable provider, the US Supreme Court described predominance as a “demanding” requirement that merits a “close look”. 

While there is variation between US courts as to how predominance is assessed, it is clearly more exacting than any certification test in Canada. According to a primer prepared for an American Bar Association seminar for corporate counsel, “[p]redominance will not be established merely because the majority of contested issues are common (i.e., capable of classwide proof) rather than individual (i.e., requiring factual evidence from each class member or a separate legal analysis of each class members’ claims).” Unless the common issues will resolve the litigation or dwarf them in number or importance, an action will not be certified.  

The new superiority and predominance tests are conservative American principles that make many types of mass wrong impossible to litigate as class actions. There is a reason that mass torts – like defective medical devices or pharmaceutical cases – are not litigated as class actions in the US. Successful cases in Canada that could not have been pursued as class actions if the predominance test existed, because they involved one or only a few common issues and many individual issues, include:

• Indian Residential Schools 
• Walkerton 
• The tainted blood supply litigation
• Insurer’s unilateral amendments to health insurance plans
• Unpaid wages and overtime

This is a major step back for Ontarians. The CPA was drafted specifically to avoid the restrictive analysis used by American courts. Where the US court frames class actions as the “exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only”, the Supreme Court of Canada has repeatedly stated that the CPA “should be construed generously to give full effect to its benefits”. The proposed changes to the certification test are inconsistent with the long-standing Canadian approach to mass harm redress.

Almost none of the stakeholders who contributed to the LCO Class Action Project advocated for the predominance test. The only exception: a  joint submission by the Canadian Bankers Association and the Canadian Life and Health Insurance Association. They recommended it on the basis that it was a less radical change than others requested by defendant and corporate groups. It is a change, however, clearly intended to reduce access to class actions on the part of consumers. The two organizations decried that “Ontario courts are certifying class actions that would require an individual trial for each class member to establish any entitlement to damages.” If individual trials following a common issues trial are problematic, then trials of individual lawsuits would be equally so. Unless, of course, individual litigation never occurs at all, for all of the reasons that class action legislation was enacted to address in the first place. 

There is a lot of good in the changes that have been proposed to the CPA, many of them taken from the LCO Class Action Report. Making the certification test harder, however, disrupts 30 years of Supreme Court of Canada jurisprudence, and positions Ontario as the outlier in a more or less consistent national approach to class certification. It is a big move, in the wrong direction.