Class actions have become a popular mechanism for pursuing legal claims on behalf of a large group of individuals similarly affected by a particular issue. In Ontario, class actions have been recognized as a valuable tool for ensuring access to justice for those who might not otherwise be able to pursue legal action on their own. However, defendants in class action lawsuits (often mid to large-sized businesses) have several defences available, potentially limiting or defeating the plaintiffs’ claims. It is, therefore, crucial for both plaintiffs and defendants in class action lawsuits to understand the various defences that may be raised.
In this blog post, we will explore the defences that defendants can use in class actions in Ontario.
Class Action Legislation in Ontario
In Ontario, the legislation that provides for the certification of class action lawsuits is the Class Proceedings Act, 1992. This legislation includes criteria required for class actions to proceed, including the specifications of a “class” and the necessity of having a “common issue”. It also sets out the procedural rules that apply to class actions, such as the notice requirements for class members and the procedures for settlement and distribution of any damages awarded.
Common Defences to Class Actions in Ontario
In addition to the legislation, Ontario has a substantial body of case law that has developed the law surrounding class actions, mainly concerning class action defence.
No Identifiable Class
One of the most common defences to a class action in Ontario is that there is no identifiable class. Under the Class Proceedings Act, 1992, a class must be defined in a way that is clear and objective. If the proposed class definition is too broad or vague, the court may refuse to certify the class action.
For example, in the case of Caputo v. Imperial Tobacco Ltd., the Superior Court of Justice did not find an identifiable class because the proposed class definition was too broad and lacked cohesion. The plaintiff’s proposed class included “all residents of Ontario, whether living or deceased, who have ever smoked cigarette products manufactured, marketed, or sold by the defendants.” After allowing the plaintiffs to amend the class several times, the Court eventually found that any modifications to such a broad class were “arbitrary exclusions of ‘some people who share[d] the same interest in the resolution of the common issue’ as the people who would remain in the class.” Therefore, the Court found that this class definition was too ambiguous, and the class definition did not exist.
No Common Issue
Another common defence to a class action in Ontario is that there are no common issues among the proposed class members. The Class Proceedings Act, 1992 requires there be common issues that can be resolved for all class members in a single proceeding. If there are no common issues, then a class action may not be the appropriate way to pursue the claims.
In the case of Pro-Sys Consultants Ltd. v. Microsoft Corporation, the plaintiffs sought certification for a class action on behalf of all indirect purchasers of Microsoft software in Canada. However, the defendants argued there were no common issues among the proposed class members because each purchaser would have different experiences and damages. The Supreme Court of Canada ultimately certified the class and found common issues. This finding was based on the expert methodology in the case, which:
“… must be sufficiently credible or plausible to establish some basis in fact for the commonality requirement — it must offer a realistic prospect of establishing loss on a class‑wide basis so that, if the overcharge is eventually established at the trial of the common issues, there is a means by which to demonstrate that it is common to the class.”
In other words, the success of this defence relies on the quality of expert methodology and whether it can realistically establish a common issue.
The defence of contributory negligence can also be raised as a defence to class actions in Ontario. Contributory negligence refers to a situation where the plaintiff’s actions contributed to the harm they suffered. In a class action context, a defendant might argue that the plaintiff class members were partially responsible for their injuries and should not be entitled to full damages.
Contributory negligence can be a complex defence to prove, as it requires the defendant to demonstrate that the plaintiff’s actions were a direct cause of their injuries. An example can be gleaned from the case of Kherani v. Bank Of Montreal, which involved an investment scheme for a teeth whitening product, which was eventually discovered to be fraudulent. It was alleged that the Bank of Montreal “knowingly received the fraudulent funds and/or was negligent in its receipt of these funds.”
As part of their defence, BMO argued that the investors committed contributory negligence by getting involved in this scheme without proper advice or due diligence. The Ontario Superior Court of Justice disagreed, rejecting this defence on the grounds that “contributory negligence is not a defence to intentional torts” and “contributory negligence could not be alleged when the plaintiff… had acted based on fraudulent misrepresentations made to it.”
Contact Milosevic & Associates for Leading Class Action Advice in Toronto
Class action lawsuits are some of the most complex legal proceedings and can be challenging to defend. It is crucial to rely on the knowledge of skilled class action lawyers, like the team at Milosevic & Associates. We have extensive experience defending clients against class action claims and know how to streamline even the most extensive files efficiently and cost-effectively. To schedule a consultation, please contact us online or call 416-916-1387.