Weighing The Proposed Changes To Ontario’s Class Actions Legislation

Written By: Jordan Assaraf, Associate & Lawyer

 

On December 9, 2019, the Ontario government introduced Bill 161: the “Smarter and Stronger Justice Act, 2019.”  Among the many significant proposed reforms to the justice system, this omnibus legislation sets out a series of ambitious changes to the Class Proceedings Act, 1992 (CPA).  Bill 161 addresses many of the issues that the Law Commission of Ontario (LCO) examined in its two-year review of class proceedings, resulting in its report of July 17, 2019 (“Class Actions: Objectives, Experiences and Reforms”).  In making extensive recommendations to improve class action procedures and practices, the LCO consulted with various participants and stakeholders in Ontario’s justice system.  Although many of those recommendations have been incorporated in Bill 161’s CPA amendments, the legislation also exceeds the LCO’s proposals by creating controversial new tests for certification of class actions.

 

Tightening The Certification Process

Bill 161 alters the test for certification in two ways that will fundamentally recast the landscape for Ontario’s class action proceedings.  First, the imposition of a much more stringent “superiority test” will significantly narrow the basis on which a class proceeding would be deemed to be the “preferable procedure”.   Second, the adoption of a mandatory “predominance requirement”—wherein certification would be granted solely in those instances in which “the questions of fact or law common to the class members predominate over any questions affecting only individual class members”sets much more restrictive criteria for class certification.

Although the LCO’s report identified several sources of delay and inefficiency associated with certification, instituting a superiority test and adopting the predominance requirement were not included in its recommendations to improve the efficiency of the process.  By making the predominance requirement mandatory, Bill 161 aims to establish a certification process which mirrors that which is in place in the United States.  Given the extent to which superiority and predominance are invoked in denying the certification of American class proceedings, the plaintiff’s bar will undoubtedly respond negatively to the implementation of these provisions in Ontario.  In light of the American experience, a variety of types of class proceedings—including product liability, institutional abuse, and discrimination claims, amongst others—will be much more difficult, if not impossible, to certify in Ontario.

Jasminka Kalajdzic, a law professor at the University of Windsor, served as the co-principal researcher and co-author of the LCO Class Action Report.  While she applauds the Ontario government’s incorporation of many of the report’s more than 40 recommendations as furthering the LCO’s objective of modernizing the process, Professor Kalajdzic characterizes the adoption of the superiority test and predominance requirement as being “especially troubling” regressive measures.  She opines that these changes represent the institution of “conservative American principles that make many types of mass wrong impossible to litigate as class actions”.

At first glance, the superiority test may appear to be synonymous with the existent “preferable procedure” test.  However, Professor Kalajdzic cautions that the superiority provision imposes a much more demanding standard.  Under the current test, a judge need only be satisfied that, in “resolving the common issues,” the class action is the preferable procedure.   By contrast, Bill 161 requires that, in addition, the judge must find that the class action is the superior process for “resolving class members’ entitlement to relief” or for “addressing the impugned conduct of the defendant”.  Essentially, applying the more exacting standard demands that the class action must resolve the class members’ claims in their entirety.  As Professor Kalajdzic points out, the current system recognizes that a class action may be the preferred course, as long as class members’ share common issues, while allowing for the possibility that members may have to pursue legal actions to resolve their individual issues.  Further, she notes that, in considering other “reasonably available means”, the superiority provision shifts the onus from the defendant (under the current system) to the plaintiff —who must prove that none of the alternative procedures are superior to a class proceeding.

Professor Kalajdzic notes that the language defining the predominance requirement in Bill 161 is identical to that which appears in U.S. Federal Rule 23(b)(3).  She allows that the U.S. courts have differed in their determinations of how predominance is assessed but, nonetheless, she asserts that it is clearly much more demanding than any Canadian test.   The impact of the predominance requirement, Professor Kalajdzic argues, has resulted in the absence of mass torts —such as those involving pharmaceutical cases or defective medical devices—being litigated as class proceedings in the United States.  She adds that, in considering the impact of adopting the predominance requirement, it is sobering and instructive to realize that the following high-profile Canadian class actions would not have been pursued: the Aboriginal Residential School case, the Walkerton water supply matter, and the tainted blood supply litigation.  In each of those cases, Professor Kalajdzic explains, there existed many individual issues within and few common issues amongst the class members.  As a result, the existence of the predominance requirement would have precluded the certification of each of those class actions.

 

Some Recommendations Adopted From The LCO’s Report

Amongst the many LCO recommendations adopted, Bill 161 authorizes dispositive motions and motions that would narrow the issues to be heard by the Courts in advance of certification.  In addition, a new provision would impose a deadline of one year on plaintiffs to file certification materials, or to establish a timetable that the Court agrees to or fixes.  Failure to do so would result in automatic dismissal of the class action.  In furthering the goal of minimizing delays, Bill 161 introduces reforms to carriage motions by stipulating that they must be brought with 60 days of the first action being issued.  Further, the legislation provides the test for deciding carriage motions, and it makes such decisions final—as they cannot be appealed.

As the LCO determined in its consultations, the existence of multi-jurisdictional class actions—class proceedings dealing with the same matters being pursued in different provinces—constituted a problem begging for reform.  Bill 161 provides procedures intended to address the unnecessary duplication involved, and to resolve jurisdictional conflicts reasonably and expeditiously.  The bill also does away with the existing imbalance in appealing certification decisions.  Whereas plaintiffs are currently granted the right to appeal directly to the Court of Appeal, defendants are required to seek leave to appeal to the Divisional Court and, if unsuccessful, then appeal to the Court of Appeal.  Bill 161 allows plaintiffs and defendants alike to appeal certification decisions to the Court of Appeal.

Bill 161 also contains several LCO recommendations to protect and further class members’ interests.  It requires that class action Notices be drafted in plain language, and it contains several provisions aimed at making the settlement approval process more transparent to both class members and judges.  The proposed legislation also allows for cy-près orders in those instances in which it is not possible to compensate class members directly.  Finally, the bill also establishes provisions for ensuring that proposed settlements are fair, reasonable, and in the class’s best interests.

 

LCO Recommendations That Were Not Adopted

The LCO identified adverse costs awards as the single most important factor denying Ontario residents access to justice through class proceedings.  Despite the LCO’s recommendation that Ontario adopt a no costs system—similar to that in British Columbia and the Federal Court—Bill 161 does not alter the existing costs rules on certification motions.  Further, although the LCO also recommended allowing the Class Proceedings Fund to partially fund legal fees in certain circumstances, there are no such provisions in Bill 161.  Finally, the LCO recommendation regarding case management conferences—that they should be conducted with 60 days of the claim being served on the last defendant—is not enacted in the bill.

 

What Next?

Given that Bill 161 may be given Second Reading and then proceed to committee as early as mid-January, 2020, the plaintiff bar will undoubtedly be involved in urgent discussions regarding its response to the proposed legislation.  The potential ramifications of the proposed changes to the certification process will almost certainly ensure that the debating of these issues will be lively and intense.

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