Collective Redress & Class Actions 2024

Last Updated November 07, 2024

Canada

Law and Practice

Authors



Baker McKenzie has established a leading presence within Canada’s class action defence bar, having defended and advised on an array of high-profile class action matters, including cases relating to competition and antitrust, securities law violations, fraud, banking and mortgage matters, consumer protection, privacy law, employment law and product liability. The firm is known for delivering practical class-action defence advice, tailored to the specific dynamics of a given case. The Canadian team is fully integrated with the firm’s North American and Global Dispute Resolution practices, which operate in more than 70 offices worldwide. Clients rely on Baker McKenzie’s distinct ability to harness this network to develop, co-ordinate, and implement efficient cross-border defence strategies – an integral capability given the increasing globalisation of class actions.

Legislative Reform

Forms of representative or “class” proceedings can be traced to the 19th century English courts, and rudimentary class procedures have been available under Ontario civil procedure since 1881. However, the modern form of class proceedings in Canada arose from a series of legislative reforms in the late 1970s and 1980s.

In 1978, Quebec passed class action legislation. However, since Quebec has a civil law system, this reform was not consequential for the Canadian common law provinces.

In 1979, the Ontario Court of Appeal granted leave for several plaintiffs to bring a class action in Naken v General Motors of Canada Ltd [1979] OJ No 4013 reversed [1983] 1 SCR 72. Canada’s Supreme Court overturned this decision in 1983, holding that the class procedures under Ontario’s rules of court were “totally inadequate” for such a complex action. The Supreme Court acknowledged some potential value of a class action regime but deferred to the legislature for reform.

Around the same time, the Ontario Law Reform Commission published the Report on Class Actions. The Commission recommended legislative reform to enable class proceedings. The introduction of class proceedings was intended to advance three objectives:

  • judicial economy;
  • access to justice; and
  • behaviour modification.

In 1989, the Ontario Attorney General’s Advisory Committee on Class Action Reform issued a report that heavily relied on the Report on Class Actions, and wrote a proposed bill setting out the legislation that would become Ontario's Class Proceedings Act, 1992. When it came into force in 1993, Ontario became the first common law province with class action legislation.

Changing Court Attitudes

While Canadian courts had initially been reluctant to embrace class actions, the resistance largely subsided when the Supreme Court of Canada released a seminal trilogy of cases in 2001:

  • Western Canadian Shopping Centres v Dutton 2001 SCC 46;
  • Hollick v City of Toronto 2001 SCC 68; and
  • Rumley v British Columbia, 2001 SCC 69.

The Court acknowledged the growing importance of class actions and adopted the three objectives of class proceedings (ie, judicial economy, access to justice and behaviour modification). The Court endorsed a flexible and expansive approach to class action procedure and even provided a framework for certification to those provinces without class action legislation. Canada’s three territories continue to rely on this framework today.

Subsequent Developments

Since the passing of Ontario’s legislation, all ten Canadian provinces have adopted class proceedings legislation, with Prince Edward Island being the last in 2022. Parties can also bring class actions in the Federal Court if the subject matter of the underlying case falls within the Federal Court’s jurisdiction.

Class proceedings are now widespread in Canada, with many specialist plaintiff law firms prosecuting claims across the country and defence counsel typically being drawn from established firms. Canadian courts frequently hear motions for class action certification (or, in Quebec, authorisation) and other substantive and procedural motions and applications arising from class proceedings; however, trials remain relatively rare.

While Canadian class action legislation initially drew some elements from American legislation, Canada’s overall regime is unique. For example, the requisite elements for class action certification originated in certain American statutes but were interpreted differently over time by Canadian courts. More recently, however, amendments to Ontario’s Class Proceedings Act, 1992 have incorporated the concepts of superiority (ie, a class action must be a superior means of advancing issues common to the class) and predominance (ie, common issues must predominate over individual issues) into the certification analysis, bringing the Ontario test closer to American certification requirements.

Another key distinction is that certification in Canada occurs before discovery and involves a limited evidentiary record, while certification in the USA typically occurs after extensive depositions have been conducted and, therefore, involves a more expansive evidentiary record.

The EU Collective Redress Regime has not been implemented in Canada.

Each of Canada’s ten provinces has separate class action legislation, and a separate federal statutory scheme governs class actions brought under the jurisdiction of the Federal Court. Canada’s three territories do not have explicit class action legislation but follow common law procedures. Class action regimes across Canada’s common law jurisdictions are largely similar, with some important procedural differences. Canada’s lone civil law province, Quebec, follows substantially different class action procedures.

The relevant statutes are:

  • Alberta – Class Proceedings Act, SA 2003, c C-16.5;
  • British Columbia – Class Proceedings Act, RSBC 1996, c 50;
  • Manitoba – Class Proceedings Act, CCSM c C130;
  • New Brunswick – Class Proceedings Act, RSNB 2011, c 125;
  • Newfoundland and Labrador – Class Actions Act, SNL 2001, c C-18.1;
  • Nova Scotia – Class Proceedings Act, SNS 2007, c 28;
  • Ontario – Class Proceedings Act, 1992, SO 1992, c 6;
  • Prince Edward Island – Class Proceedings Act, RSPEI 1988, c C-9.01;
  • Quebec – Act respecting the Fonds d’aide aux actions collectives, CQLR c F-3.2.0.1.1;
  • Saskatchewan – The Class Actions Act, SS 2001, c C-12.01; and
  • Federal Courts Rules (SOR/98-106), Part 5.1.

Class actions are procedural mechanisms that could be applied to cases touching on most areas of the law.

Class actions are frequently pursued in disputes concerning product liability, securities law, competition law, consumer protection, privacy law, employment issues, aboriginal/First Nations redress, environmental law, personal injury, human rights, and other areas of law.

“Class actions” or “class proceedings” are generally defined as court proceedings that have been “certified” or “authorised” by the court to advance defined common issues on behalf of a defined class of similarly situated persons or entities. Before the certification/authorisation motion, the action will be referred to as a “proposed class action”.

Each of Canada’s ten provinces and three territories has a separate court system, which is the default court for most actions including class actions. Canada also has a parallel Federal Court system that hears actions touching on statutorily defined subject matters, including most areas of intellectual property, most proceedings against the Crown, tax, admiralty law, immigration and other areas.

Commencing a Class Action

The first step in launching a class action is filing a pleading in court. The pleading must indicate that the proceeding is being brought as a proposed class action. In addition to the various forms of relief and damages typically sought in civil pleadings, class action pleadings also seek certain procedural relief unique to class actions, including an order certifying the proceeding as a class action.

Certification

Next, the plaintiff will bring a motion/application to certify/authorise the action as a class proceeding. The court will determine, after the certification motion, whether the case is appropriate for certification as a class action.

In common law jurisdictions, subject to some variation across provinces, a party seeking to certify a class action bears the burden of establishing that:

  • the pleading or the notice of application discloses a cause of action;
  • there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
  • the claims or defences of the class members raise common issues;
  • a class proceeding would be the preferable procedure for the resolution of the common issues; and
  • there is a representative plaintiff or defendant who:
    1. would fairly and adequately represent the interests of the class;
    2. has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class, and of notifying class members of the proceeding; and
    3. does not have, on the common issues for the class, an interest in conflict with the interests of other class members.

The standard of proof is low. For the first requirement, the court needs to be satisfied that it is not “plain and obvious” that the pleadings fail to disclose a cause of action, even assuming the facts pleaded are true. For the remaining factors, a plaintiff needs to meet a slightly higher standard and show that there is “some basis in fact” that the requirement is fulfilled. Both standards are lower than the balance of probabilities standard that would be applied at trial.

In Quebec, a party seeking authorisation of a class action only needs to show that an “arguable case” exists. The court will assume that the facts alleged are true. There is no requirement to file any affidavit evidence in Quebec, and the defendant has to apply for leave of the court to cross-examine on any affidavit.

If the plaintiff prevails, the court will certify a class definition that describes which persons are represented in the class proceeding. The court will also certify a list of common issues to be addressed at trial.

Notice to Class Members

Once a class action has been certified and all appeals have been exhausted, the class members will be notified of the certification. The court has discretion to determine the form of the notice. Usually, it involves advertising in newspapers, on social media and law firm websites, or through direct notification to class members.

Class members are entitled to opt out of (or, in some limited circumstances, opt in to) the proceeding during a time period set out in the notice. If persons or entities captured by the class definition fail to opt out, they will be bound by the result of the lawsuit.

Discoveries

Next, the parties will engage in a documentary discovery process where they are usually obliged to disclose all relevant documents in their power, possession or control.

The parties will conduct examinations for discoveries in which each party can ask a representative of the opposing party about facts relevant to the issues in dispute. Usually, parties can only examine one witness per corporate party; however, the court has discretion to order additional examinations.

Common Issues Trial

Following discoveries, the parties will proceed to a trial of the certified common issues. Class actions usually settle after certification, and trials are relatively rare.

Individual Issues Trial

It is possible that individual issues remain to be determined following a common issues trial. In that circumstance, individual trials or hearings to resolve the remaining issues for individual class members can be carried out in court or through an alternative dispute resolution mechanism.

Any legal person can pursue a class proceeding. This includes individuals and corporations. The person must fall within the definition of the proposed class and cannot have conflicts of interest that collide with the proposed class members. If a class proceeding is certified, the court will appoint one or more representative plaintiffs.

While class proceedings involving representative plaintiffs are far more common, certain provinces permit class proceedings pursued by defendants. For instance, Ontario’s class proceedings legislation permits any party to a proceeding against two or more defendants to bring a motion to certify the proceeding as a class proceeding and appoint a representative defendant. The certification requirements are the same irrespective of whether a plaintiff or a defendant seeks certification.

When certifying/authorising a class proceeding, the court will issue a class definition setting out the persons included in the class action. The class must contain two or more class members, but there is no upward limit on the size of the class.

The court will prescribe an opt-out period during which persons captured by the class definition can choose not to be bound by the result of the trial or settlement. Certain Canadian jurisdictions have opt-in procedures for non-residents; however, those have largely been eliminated, except in New Brunswick and Newfoundland and Labrador.

Defendants in a class proceeding can cross-claim against an existing defendant or bring a third-party claim to introduce a new party into the proceeding.

Multiple Proceedings

If multiple persons bring two or more class proceeding concerning the same or similar subject matter, plaintiff’s counsel may bring a carriage motion/application asking the court to stay the other proceedings. In making this determination, the court decides which class proceeding best advances the claims of the class members efficiently and cost-effectively. The court will consider, among other factors, the theory of the cases being advanced, the relative likelihood of success of each proceeding, the expertise and experience of counsel, and the funding strategy for each proceeding. In many cases, plaintiff firms co-operate to avoid overlap by restricting class definitions to particular provinces or by voluntarily staying one action in favour of another.

A defining feature of class actions is the high degree of judicial supervision and case management exercised by the court.

Generally, the same judge hears all motions before a common issues trial. Depending on the jurisdiction, the same judge could also hear the common issue trial.

The case management judge has broad, statute-based discretion to make any order he/she considers appropriate, respecting the conduct of a proceeding to ensure its fair and expeditious determination; for this purpose, it may impose such terms on the parties as it considers appropriate. This broad discretion can be applied in respect of, among other things, pre-certification motions, granting leave for the discovery or examination of non-representative parties, sequencing of motions, carriage motions, the form of the notice of certification and opt-out mechanisms, how class members participate, settlement approval, and staying or severing related proceedings.

The length and timeframe for class proceedings depend on the individual case, the nature of the claim, and the jurisdiction in which the class action is commenced.

Many factors influence the length and timeline of a class action, including the size of the class, the number of defendants, the complexity of the legal issues, the timing of potential summary judgment motions and court availability.

A class action’s life cycle will also depend on whether and when a class action is settled. Settlements are common after class actions are certified. The timing of settlements will also depend on the class size and the timing for the court’s approval of the settlement.

In some provinces, a defendant can move for a mandatory dismissal of a class action proceeding for a delay if the certification motion is not brought within a specified timeframe.

Class actions can, and often do, take years to resolve.

Summary judgment motions are available to plaintiffs and defendants in class actions to dispose of the class action without trial. The party bringing the motion bears the burden of satisfying the court that there is no genuine issue requiring a trial to grant summary judgment. Such motions have been brought before, during and after certification, and even after discovery.

Other preliminary motions can impact the life cycle of a class action, including jurisdictional challenges, motions to disqualify experts and motions to strike pleadings.

Delays are common in class proceedings. Certain legislative reforms have been enacted to minimise delays. For example, in Ontario, unless the parties agree or the court orders otherwise, a class action will be automatically dismissed for delay unless, within one year of being commenced, the proposed representative plaintiff has filed a complete certification motion record.

Class actions involve risk and high expenses for all parties. In some provinces, this risk is exacerbated due to adverse cost awards against the unsuccessful party. Mechanisms for class action funding, such as contingency fees and third-party litigation funding, are available but subject to court approval.

Costs

In Canada, a losing party usually bears a portion of the winning party’s legal costs, including in class actions in most provinces. This rule applies to each contested step within the proceeding.

The amount of costs ordered is generally within the discretion of the court. For example, in Ontario, a court may reduce the cost award if the proceeding was a test case, raised a novel point of law, or involved a matter of public interest. Still, cost awards can be significant.

Some provinces deviate from the general “loser-pays” rule in class actions. For example, British Columbia has legislated that, subject to a few exceptions, each party to a class proceeding bears their own costs.

Cost awards do not usually apply to class members, except in respect of individual hearings or if they take an individual step in the proceeding, such as objecting to a settlement. Representative plaintiffs are typically indemnified by class counsel or third-party funders.

Contingency Fees

Contingency fees are often employed in class proceedings. Class counsel and the representative plaintiff will usually set out the contingency fee in a retainer agreement. Some provinces, such as Alberta, explicitly mandate that contingency fee arrangements be set out in writing, witnessed and formally served on the representative plaintiff.

Class counsel’s legal fees are subject to court approval. Courts will consider several factors in determining class counsel fees, including the complexity of the case, the risk undertaken by class counsel for bringing the case, the degree of responsibility assumed by class counsel, the monetary value of the matters in issue, the importance of the matter of the class, the results achieved, the ability of the class to pay, and the degree of skill and competence demonstrated by class counsel.

Third-Party Litigation Funding

Third-party litigation funding is permitted and increasingly popular in Canada. Several providers offer to indemnify plaintiffs against adverse cost awards and provide funding for disbursements like expert witness fees. In Quebec and Ontario, class action funding is also available through public sources.

Third-party litigation funding is subject to court approval. For instance, in Ontario, the court will not approve a third-party funding agreement unless it is satisfied that:

  • the agreement, including indemnity for costs and amounts payable to the funder under the agreement, is fair and reasonable;
  • the agreement will not diminish the rights of the representative plaintiff to instruct the solicitor or control the litigation, or otherwise impair the solicitor-client relationship;
  • the funder is financially able to satisfy an adverse cost award in the proceeding, to the extent of the indemnity provided under the agreement; and
  • any prescribed requirements and other relevant requirements are met.

The funding agreement also needs to be subject to:

  • the same confidentiality requirements in respect of confidential or privileged information in the proceeding to which the representative plaintiff would be subject; and
  • the deemed undertaking rules established by the rules of court, as if the funder were a party to the proceeding.

A court will also consider whether the representative plaintiff received independent legal advice regarding the agreement.

Discovery Process

The process for documentary disclosure in class actions is similar to the procedure for normal civil proceedings.

During the certification process, the representative plaintiff and the defendants are not subject to broad disclosure obligations. Typically, the parties will produce evidence and documents that support their position on the certification motion. This evidence is exchanged in the form of affidavits along with supporting documents. Depending on the jurisdiction, parties either have the right to cross-examine the opposing parties' affiants or may do so on consent or with leave from the court.

As discussed in 4.2 Overview of Procedure, once a class action has been certified, the parties are obligated to disclose all relevant documents in their power, possession or control and submit to examinations for discovery.

The discovery process will often involve confidential information. Parties can apply for protective orders from the court to request that certain confidential information be prohibited from public disclosure.

Privilege

Evidence in class proceedings is subject to several forms of privilege, including the following.

  • Solicitor-client privilege – this privilege applies to communications between a lawyer and client in connection with providing legal advice.
  • Litigation privilege – this privilege applies to communications between lawyers, clients and third parties where the dominant purpose of the communication is to prepare for current or reasonably contemplated litigation.
  • Settlement privilege – this privilege applies to communications between the parties and their representatives in contemplation of resolving the dispute.
  • Common interest privilege – this privilege concerns communications between parties with a common interest in actual or pending litigation. It is common in complex multiparty class actions that several defendants enter into a “joint defence agreement” or a “common interest privilege agreement” to formalise their claims to privilege.

In theory, all remedies available in individual proceedings are also available in class proceedings, including common law, statutory and equitable relief.

The court has broad discretion in determining the monetary damage award. In appropriate circumstances, the court may award aggregate damages for the whole class without looking at the individual circumstances of individual class members. In most Canadian jurisdictions, courts can consider statistical evidence to determine the amount and distribution of an aggregate damage award as appropriate.

The court cannot award aggregate damages if proof of damages is required from individuals. In those circumstances, the court may make a class-wide finding of liability and then order streamlined individual trials to determine the loss of each class member.

Plaintiffs regularly seek punitive damages. A court will only award punitive damages following a trial of common issues where the defendant’s conduct was sufficiently “malicious, oppressive, and high handed [such] that it offends the court’s sense of decency”.

Mediation

Mediation is well-established in Canada, including in class proceedings. Following certification, it is common for class action parties to engage in mediation as a means of seeking a resolution, particularly where the class action involves complex legal and factual issues.

Settlement

Most class proceedings are resolved by settlement. The timing of settlements varies. In some cases, defendants will consent to certification as part of an overall settlement agreement. In other cases, an adverse result at certification may compel one or more of the parties to settle. At other times, parties may settle after discoveries when the evidentiary record is clearer.

Settlements of class actions are subject to court approval. A settlement will not be binding unless the court has approved it as fair, reasonable and in the best interests of the class. Courts will consider many factors, including the likelihood of recovery or likelihood of success, the amount and nature of discovery, evidence or investigation, and the proposed settlement terms and conditions. A court also needs to approve class counsel fees.

If a court rejects a settlement agreement due to specific concerns, it is common for the parties to renegotiate the settlement agreement to address the court’s concerns and seek court approval again. Courts will not rewrite or amend settlement agreements on the settling parties’ behalf.

Usually, if there are multiple class actions across several provinces, defendants will require the settlement agreement to cover all proceedings. These settlement agreements will be conditioned on the approval of each settlement agreement in each court.

Following a trial on the common issues of the class action, a court will render a judgment.

A final judgment on the merits of the class action is binding on all class members and sub-class members, except for those who have opted out (or failed to opt-in).

A judgment on common issues of a class or sub-class only binds the relevant class or sub-class members to the extent that the judgment determines common issues that:

  • are set out in the certification order;
  • relate to claims or defences described in the certification order; and
  • relate to relief sought by or from the class or subclass as stated in the certification order.

Courts have discretion to distribute amounts awarded in class action judgments. Courts may order that:

  • the defendant distributes directly to class members the amount of monetary relief to which each class member is entitled by any means authorised by the court, including abatement and credit;
  • the defendant pay into court or some other appropriate depository the total amount of the defendant’s liability to the class until further order of the court; and
  • any person other than the defendant distributes directly to class members the amount of monetary relief to which each member is entitled by any means authorised by the court.

Provincial legislations regularly update their class action regimes.

In 2019, the Law Commission of Ontario released the Class Actions Objectives, Experiences, and Reforms Final Report, calling for sweeping changes to Ontario’s Class Proceedings Act. The Report listed 47 recommendations addressing pre-certification delay, class management, carriage, certification, settlement approvals, settlement distributions, fee approval, third-party litigation funding and appeals.

Ontario lawmakers have adopted some but not all of these recommendations and significantly amended Ontario’s class action regime in 2020. For example, Ontario introduced modifications to the certification test, mandatory dismissals for a delay to certify the class action within a specified time-frame, and changes to the appeal routes of certification decisions.

Other provinces are reviewing their class action regimes. For example, in 2021, the Law Reform Commission of Saskatchewan published a consultation report that identified several areas of potential reform in light of the Ontario Report.

Similarly, in 2021, Quebec began a public consultation with a view to class action reform following a September 2019 report by the l’Université de Montréal Class Action Laboratory, which called for more active case management and a review of the authorisation (Quebec’s equivalent of certification) regime.

A common theme among the proposed reforms is addressing delays in class actions. The COVID-19 pandemic has exacerbated a significant backlog in Canadian courts, which continues to persist. Reform proposals intend to increase the efficiency of the class action process, eliminating dormant class proceedings and resolving cases more expeditiously.

With regard to the legislative reform in progress or foreshadowed in respect of the matters mentioned in the foregoing sections, see 5.1 Policy Development.

Class actions related to environmental, social and governance issues are expected to become increasingly popular.

Class action claims for environmental damages have been common for years in Canada. Numerous class actions have sought redress for mistreatment of First Nations and Aboriginal groups, systemic discrimination and harassment by the police and armed services, “greenwashing” and other environmental, social and governance issues.

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Trends and Developments


Authors



Baker McKenzie has established a leading presence within Canada’s class action defence bar, having defended and advised on an array of high-profile class action matters, including cases relating to competition and antitrust, securities law violations, fraud, banking and mortgage matters, consumer protection, privacy law, employment law and product liability. The firm is known for delivering practical class-action defence advice, tailored to the specific dynamics of a given case. The Canadian team is fully integrated with the firm’s North American and Global Dispute Resolution practices, which operate in more than 70 offices worldwide. Clients rely on Baker McKenzie’s distinct ability to harness this network to develop, co-ordinate, and implement efficient cross-border defence strategies – an integral capability given the increasing globalisation of class actions.

Key Developments in Canadian Competition, Privacy and Securities Class Actions

Class actions are frequently brought in Canada across a variety of legal areas. This publication will focus on significant recent developments in competition, privacy and securities law class proceedings.

Competition class actions

Competition class actions have become commonplace in Canada. Many actions alleging anti-competitive activity have been certified or authorised to proceed as class proceedings. However, none have gone to trial. There has never been a contested competition class action trial on the merits in Canada to date. Competition class actions that make it past the certification stage are usually settled. Therefore, while Canadian certification procedures and evidentiary requirements are well developed, there is no binding guidance from the case law about the evidentiary standards required for a finding of liability in a competition class action.

The causes of action advanced in competition class actions are usually drawn from the criminal offences in Part VI of the Federal Competition Act, namely, criminal conspiracies (Section 45), foreign directives (Section 46), bid rigging (Section 47) and deceptive marketing (Section 52). Common law causes of action, such as the tort of conspiracy, may also be advanced.

Although the Competition Act is a federal statute, competition class actions can be brought in the provincial superior courts or the Federal Court of Canada. Procedure is governed by class action legislation and the rules of the particular court.

Several types of parties can bring competition class actions, including direct purchasers, indirect purchasers (who are one or more purchasing levels removed from the misconduct) and umbrella purchasers (who purchased products or services that were never the direct subject of anti-competitive activity but which had an overcharge resulting from anti-competitive activity directed at similar products or services).

In recent years, competition class actions have been subject to significant jurisprudential and legislative developments, as highlighted below.

Certification as a more robust gate-keeping function

For years, all manner of competition class actions were regularly certified by Canadian courts despite strenuous resistance put forward by defendants. However, a series of recent appellate decisions have rejected certification motions for competition class actions and exercised their important gate-keeping function to eliminate unmeritorious cases. Through these appellate decisions, the courts have signalled a trend towards tighter scrutiny at the certification stage of proposed competition class actions.

Jensen v Samsung Electronics, 2023 FCA 89

In Jensen, the Federal Court of Appeal upheld the dismissal of a certification motion on the basis that the plaintiff failed to plead a reasonable cause of action and did not satisfy the low evidentiary standard required at certification.

The indirect purchaser end-consumer plaintiffs alleged that the defendant manufacturers of dynamic random access memory (DRAM) chips conspired to limit the global supply and raise the price of DRAM chips in breach of the Competition Act.

The Federal Court dismissed the certification motion, finding that the plaintiffs’ allegations were “not anchored in material facts, are speculative and boil down to bald assertions” and that the plaintiffs fell “well short of providing the minimal evidentiary basis required to support the existence of the alleged conspiracy”. With unusually robust wording, the Court held that there was “not a scintilla of evidence on the record” to support the plaintiffs’ allegations of direct communications between the defendants to suppress DRAM chip supply. As a result, the plaintiffs failed to meet the very low evidentiary threshold for establishing at certification the statutory causes of action under the Competition Act, and they also failed to establish some basis in fact for the conspiracy-related common issues.

The Federal Court of Appeal upheld the lower court’s decision, finding no error with the conclusion that the plaintiffs failed to plead a reasonable cause of action and provide some basis in fact for the conspiracy-related common issues. This decision is the final word in this case because, in January 2024, the plaintiffs were denied leave to appeal to the Supreme Court of Canada.

Lilleyman v Bumble Bee Foods LLC, 2024 ONCA 606

In Lilleyman, the Ontario Court of Appeal upheld the dismissal of a certification motion alleging a conspiracy to fix the price of canned tuna sold in Canada.

The plaintiff’s claim followed American antitrust proceedings, which found that three market-dominating US entities conspired to unlawfully fix the price of tuna sold in the USA between 2011 and 2013. In the Canadian lawsuit, the plaintiff alleged that the defendants engaged in a related or similar conspiracy to fix prices of tuna sold in Canada.

The Ontario Superior Court of Justice dismissed the certification motion. The first-instance court found that the plaintiff had failed to plead sufficient material facts to disclose a reasonable cause of action and also failed to satisfy the low evidentiary standard to show some basis in fact that the common issues existed. Furthermore, the plaintiff failed to demonstrate that a class proceeding would be the preferable procedure to resolve the common issues.

The Ontario Court of Appeal upheld the denial of the certification motion, finding no errors in the judge’s approach. The appeal court found that the claim wrongly “assumed that a proven price-fixing conspiracy involving the sale of tuna in the United States could simply be extended to Canada, even though the Canadian and US markets for tuna were entirely separate”. Moreover, the “fundamental problem was that the evidence relied upon by the plaintiff had nothing to do with Canada and concerned conduct that occurred only with respect to the US, which had an entirely separate market for tuna”.

Recent amendments to the Competition Act introduce a novel form of group action for civilly reviewable conduct

On 20 June 2024, Bill C-59, The Fall Economic Statement Implementation Act (“Bill C-59”) became law. Bill C-59 is the latest and perhaps most significant step in the Federal Government’s efforts to overhaul Canada’s competition legislation.

Among its various significant changes, Bill C-59 introduced a new form of group action to challenge civilly reviewable conduct, including refusal to deal, price maintenance, exclusive dealing, tied selling, market restriction, abuse of dominance and civil agreements. Once in effect, the Competition Tribunal will have the discretion to order a disgorgement of profits up to the value of the benefit derived from the conduct to be distributed among the applicant and other persons affected by the conduct. The Competition Tribunal will be able to establish a payment, claims and notice process akin to the powers available to courts in Canadian class actions. The amendments will come into effect on 20 June 2025.

Privacy class actions

Class actions arising out of data breaches are frequently pursued in Canada.

Privacy law in Canada derives from federal and provincial statutes, as well as common law. Recent appellate decisions have grappled with the potential class action exposure of corporations that have fallen victim to data breaches by third-party hackers. Plaintiffs in these situations often seek damages, including for alleged breaches of torts under privacy legislation, negligence and the common law tort of intrusion upon seclusion.

The British Columbia Privacy Act, the relevant statute in the cases discussed below, states that it “is a tort, actionable without proof of damage, for a person, wilfully and without a claim of right, to violate the privacy of another”.

Canadian law also recognises a common law tort of inclusion upon seclusion, which has the following elements:

  • the conduct requirement – the defendant must have invaded or intruded upon the plaintiff’s private affairs or concerns, without lawful excuse;
  • the state of mind requirement – the conduct that constitutes the intrusion or invasion must have been done intentionally or recklessly; and
  • the consequence requirement – a reasonable person would regard the invasion of privacy as highly offensive, causing distress, humiliation or anguish.

G.D. v South Coast British Columbia Transportation Authority, 2024 BCCA 252

In G.D., third-party hackers caused a data breach for the defendant company that allegedly impacted approximately 39,000 employees and related individuals. The plaintiffs claimed that third-party hackers accessed payroll information including the social insurance numbers, banking information and addresses of current and retired employees, as well as those of some of their spouses and beneficiaries, through a successful “phishing” scheme.

The plaintiffs, former employees of the defendant, brought a proposed class action alleging numerous causes of action, including statutory and common law claims. The chambers judge dismissed the application for certification, concluding that the claims were bound to fail and finding that a data custodian could not be liable under British Columbia’s Privacy Act for a data breach caused by a third-party hacker.

The British Columbia Court of Appeal overturned the decision, holding that it was at least arguable that defendants who fail to adequately safeguard personal information in a data breach could be held liable for the statutory privacy torts. The court directed the question of whether the action should be certified back to the trial level to determine the remaining certification criteria.

Del Giudice v Thompson, 2024 ONCA 70 and Campbell v Capital One Financial Corporation, 2024 BCCA 253

Del Giudice and Campbell arise from similar facts, but their progression through the British Columbia and Ontario courts have diverged. In both cases, a hacker accessed and downloaded the personal financial information, including names, addresses, annual income, banking information, credit scores, credit limits and payment history, of current and former customers of a major bank.

In Del Giudice, the Ontario action, the motion judge dismissed the plaintiffs’ certification motion, concluding that their case was “doomed to fail”. The Ontario Court of Appeal upheld this holding. By contrast, in Campbell, the British Columbia action, the lower court certified the class action, albeit not for all causes of action. The British Columbia Court of Appeal upheld this decision.

The Ontario and British Columbia courts both found that the tort of inclusion upon seclusion would not be available to plaintiffs. In 2022, the Ontario Court of Appeal released a highly anticipated trilogy of decisions on this point (Owsianik v Equifax Canada Co, 2022 ONCA 813; Obodo v TransUnion of Canada, Inc, 2022 ONCA 814; and Winder v Marriott International, Inc, 2022 ONCA 815), in which the court ruled that that corporate defendants could not be held liable for the tort of intrusion upon seclusion when information stored on their computer servers was accessed by unknown, third-party hackers.

The Ontario court also rejected the statutory claims advanced by the plaintiff. In contrast, the British Columbia court in Campbell, as well as in G.D. mentioned above, found there to be an at least arguable claim that the defendants were liable for statutory torts.

The courts differed in their interpretation of “wilfully” under their respective privacy legislation. The Ontario Court of Appeal held that “wilful” excluded “negligent” or “reckless” conduct. The British Columbia Court of Appeal in G.D. explicitly rejected the Ontario court’s interpretation, holding that it was not plain and obvious that the defendant company whose data was accessed by a third party hacker could never wilfully violate the privacy of persons whose personal data they store. In Campbell, the British Columbia Court of Appeal clarified that the statutory and common law tort “bear numerous similarities” but are not “mirror images of each other”. In particular, the Court cited a previous British Columbia Court of Appeal decision that the ‘consequence requirement’ under the common law tort establishes a more stringent requirement than provided for under the statutory tort”.

The Supreme Court has yet to weigh in on the above issues and declined to grant leave to appeal in the Ontario trilogy. That said, the diverging appellate jurisprudence between Ontario and British Columbia suggests that Canada’s highest court may soon engage these issues.

Securities class actions

In Canada, securities litigation can take place in many forms and is regularly certified or authorised to proceed as class actions. While Canadian provinces have their own securities regimes, securities legislation and regulation is significantly harmonised between jurisdictions. Canadian securities litigation often has cross-border aspects, with issuers commonly trading on both Canadian and US exchanges.

Secondary market purchasers routinely bring securities class actions for alleged misrepresentations – including in prospectuses, capital expenditures and the offering memoranda – or alleged failures to make timely disclosures of material changes. Generally, plaintiffs prefer to bring statutory misrepresentation claims because they do not need to demonstrate individual reliance on the misrepresentation, which is an element of common law negligent and fraudulent misrepresentation.

Clarifying evidentiary principles in secondary-market-manipulation class actions

A plaintiff seeking to bring a secondary market misrepresentation claim under Ontario’s securities legislation must first obtain leave of the court. In Drywall Acoustic Lathing and Insulation (Pension Fund, Local 675) v Barrick Gold Corporation, 2024 ONCA 105, the Ontario Court of Appeal clarified the principles to consider on leave applications and held that judges have a “robust” and “important gatekeeping role” in leave applications under Section 138.3(1) of Ontario’s Securities Act.

The plaintiffs alleged that the defendant mining company had made material misrepresentations about a complex mining project in Chile and Argentina. While the plaintiffs obtained leave to pursue a limited scope of misrepresentations in two previous leave hearings, this appeal concerned two issues: first, a denial for leave to advance claims that the defendant made certain capital expenditure and production schedule misrepresentations; and, second, that the motion judge erred in identifying potential public correction dates for the alleged misrepresentations for which leave had been granted.

The Ontario Court of Appeal dismissed the appeal. The Court explained that there are two statutory prerequisites to obtaining leave: (1) the action must be brought in good faith; and (2) there must be a reasonable possibility that the action will be resolved at trial in the claimant’s favour. Only the latter requirement was at issue in Drywall. The Ontario Court of Appeal explained that a plaintiff must offer a plausible analysis of the applicable legal provisions and adduce “sufficient evidence to persuade the court that there is a reasonable possibility that the action will be resolved in the claimant’s favour”. The purpose of the requirement is to prevent lawsuits with little prospect of success.

The Ontario Court of Appeal further explained that evidence is not assumed to be true or taken at face value. The court is to consider the credibility, reliability and, within limits, comparative strength of evidence adduced by both parties to determine whether the claimant will be successful. If the defendant’s evidence is so compelling that there is no possibility of the claimant’s success at trial, leave should be denied.

In addition, the court clarified that a judge should not treat a leave application as an improper mini-trial. The court should not assess the case on the balance of probabilities, attempt to resolve realistic and contentious issues arising from the limited evidence on the application, nor treat the evidence on the application as full or complete evidence for and against the claim.

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Law and Practice

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Baker McKenzie has established a leading presence within Canada’s class action defence bar, having defended and advised on an array of high-profile class action matters, including cases relating to competition and antitrust, securities law violations, fraud, banking and mortgage matters, consumer protection, privacy law, employment law and product liability. The firm is known for delivering practical class-action defence advice, tailored to the specific dynamics of a given case. The Canadian team is fully integrated with the firm’s North American and Global Dispute Resolution practices, which operate in more than 70 offices worldwide. Clients rely on Baker McKenzie’s distinct ability to harness this network to develop, co-ordinate, and implement efficient cross-border defence strategies – an integral capability given the increasing globalisation of class actions.

Trends and Developments

Authors



Baker McKenzie has established a leading presence within Canada’s class action defence bar, having defended and advised on an array of high-profile class action matters, including cases relating to competition and antitrust, securities law violations, fraud, banking and mortgage matters, consumer protection, privacy law, employment law and product liability. The firm is known for delivering practical class-action defence advice, tailored to the specific dynamics of a given case. The Canadian team is fully integrated with the firm’s North American and Global Dispute Resolution practices, which operate in more than 70 offices worldwide. Clients rely on Baker McKenzie’s distinct ability to harness this network to develop, co-ordinate, and implement efficient cross-border defence strategies – an integral capability given the increasing globalisation of class actions.

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