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Lecture 9

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Ryerson University
Law and Business
LAW 525
Gil Lan

Law 525 Lecture 9 • Class actions now can be used with regulatory law • A civil lawsuit brought by one or more persons on behalf of a larger group of similarly situated persons (the class members) • It seeks to have common or similar claims resolved in a single proceeding with the result binding on all class members and opposing parties Goals • improved access to justice -- furthered through special rules to encourage the assertion of “individually non-viable” claims • judicial economy – advanced by avoiding the duplication in fact finding and legal analysis inherent in the repeated trial of issues common to similar claims if such claims were litigated individually (group together actions) • behaviour modification – successfully concluded class actions and the very threat of class actions should act as deterrent to wrongdoers Class actions deter unlawful acts • Without class actions businesses or others that are the subject of class actions might feel inclined to engage in unlawful or harmful activities, thereby inflicting harm on large numbers of persons who would otherwise be unable or disinclined to seek redress individually • By forcing wrongdoers to bear the cost of illegal or harmful activities, class actions encourage increased compliance with the law Critisims of class actions • Class actions are often expensive to undertake and provide very little compensation to individual class members while generating relatively large fees for lawyers. It is said that the prospect of large fee awards creates perverse incentives for lawyers to bring unmeritorious actions • The prospect of large and unpredictable jury awards and the availability of punitive damages create strong pressures on defendants to settle an action regardless of the merits of the action • Potential for conflict of interest in the settlement process between lawyers and the class they represent Class Proceedings Act (CPA) Application • In Ontario, CPA applies to both plaintiff (s. 2) and defendant (s. 3) class actions • class proceedings may be brought against government, employers, neighbours, others to address many non-business-consumer issues • Class proceedings can also be brought by consumers against businesses • Ontario Consumer Protection Act, 2002 has important provisions re: CPA • Illegal to prohibit a consumer to take part in class act • Ocpa Can engage in a class action even if you signed away right, different than CPA • Between consumer and business relationship • Business protected from business through a franchising legislation (small business ppl need help against) Features of class action • Judicial screening and approval (certification) of claims – s. 5 (you have to go to court(plaintiff and defendant lawyers) and certify that the class action is allowed to stop misuse) (certified to allow to go to trial) • Opt in opt out capability – s. 9 • Notice to members of class whose interests are affected – s. 17 - 22 • Special rules re: funding of class actions– class proceedings fund • Special judicial powers to shape litigation – s. 12 • Provisions for determinations of common issues – s. 11 • Rule re: assessment/distribution of compensation– s. 24, 26 • Provisions re: settlement/discontinuance – s. 29 • Provisions re: discovery and appeals– s. 15, s. 30 Approval for certification (Section 5) • All class actions are Civil actions , (not an offence) (no jail) , is on a balance of probabilities instead of beyond a reasonable doubt • Only proceed if judicially approved • The pleadings need to disclose a cause of action • A class of two or more persons must be identified • The claim must raise common issues • Class proceeding must be the preferable procedure for resolving the claim • The representative plaintiff would fairly and adequately represent the interests of class members, no conflicts, and have workable plan Case Example certification • Bendall v. McGhan – product liability action • Plaintiffs were recipients of allegedly defective silicone breast implants • Plaintiffs sought damages for negligence, breach of contract, breach of warranty and negligent misrepresentation • Action was certified as class action because it is “the only way a large number of women can access a legal system that would otherwise be denied to them” Case example Certification: cause of action • Example: Peppiatt v. Nicol (misrepresentation re: sale of shares in golf club) • Negative test: it has not been shown to the court beyond doubt that the plaintiffs could not succeed in the present action • Hybrid test: the allegations of fact here are not ridiculous or incapable of proof and are capable of establishing, if proven, that there was negligent misrepresentation made by (Nicol) to the class, and also that there was a breach of the fiduciary duty owed to the class Case example identifiable class • Example: Bywater v. TTC (subway fire) • While the class as a whole must be identifiable, not all class members need to be identified at the certification stage. • The purpose of the classification is threefold: (a) it identifies those persons who have a potential claim for relief against the defendant; (b) it defines the parameters of the lawsuit so as to identify those persons who are bound by the result; and (c ) it describes who is entitled to notice • Thus, for the mutual benefit of plaintiff and defendant the class definition ought not to be unduly narrow nor unduly broad Certification common issues • Defined in CPA (s. 1) as “common but not necessarily identical issues of fact” or “common but not necessarily identical issues of law that arise from common but not necessarily identical facts.” • Common issues need only move the litigation forward, they don’t have to be determinative of liability • The mere fact that it might be necessary to determine a number of individual issues does not necessarily destroy the advantage of a class action • Might be a sub class (employee vs customer) but there is only 1 piece of litigation for that damage Certification preferable procedure • Example: Nantais v. Telectronics – defective pacemaker leads (connecting wires). Although the leads in majority of cases had not yet failed, experts predicted they would. Plaintiffs claimed damages as a result of negligence in design, manufacture and distribution of leads. With respect to preferable procedure, court held that CPA was designed for cases like this: the financial burden of such a case would make it difficult for individual plaintiffs to bring action. Cost spreading makes it possible for plaintiffs to bring the action. • “Not only is the class proceeding preferable, it is the only procedure whereby …the class will have ….access to the courts” Certification: adequacy of representative plaintiff • Must be someone who is committed to not only advancing his/her own interests, but also those of class as whole. • Must be prepared to provide evidence and be subjected to cross-examination, and to provide instructions to counsel, and may be subject of adverse cost awards • Workable plan: assists court in determining whether the class proceeding is preferable, and allows court to determine whether litigation is manageable. Plan must be comprehensive and provide sufficient detail Section 5 certification not barred solely if • The relief claimed includes a claim for damages that would require individual assessment after determination of the common issues • The relief claimed relates to separate contracts involving different class members • Different remedies are sought for different class members • Number or identity of class members is not known; or • The class includes a subclass whose members have claims or defences that raise common issues not shared by all class members Opt- in/ OPT-out • Persons who do not wish to be part of a certified class proceeding and be bound by its result must take active steps to opt out of the proceeding, otherwise, regardless of where they reside, they w
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