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LCO Class Actions Report – Key Themes and Recommendations

5 minute read

On July 17, 2019, the Law Commission of Ontario (the “LCO”) released its Class Actions Report (the “Report”). The Report was highly anticipated since the project was announced in September 2017. The Report considered three major questions:

  • Are class actions in Ontario fulfilling their three objectives: access to justice, judicial economy, and behavior modification?
  • Does the CPA reflect contemporary class action issues and practice?
  • Does the CPA reflect contemporary priorities in Ontario’s justice system?

The Report is the first of its kind in Ontario undertaking an empirical study of class actions over the last 27 years. The Report includes 47 recommendations to reform the Class Proceedings Act, 1992 (the “CPA”) and the practice of class actions law in Ontario.

Themes

The major themes of the Report as indicated by the LCO include:

  • The CPA needs wide-ranging reforms to better fulfill class actions’ promise to improve access to justice, foster judicial economy, and promote behaviour modification;
  • The CPA should be amended to reflect contemporary class action issues and practice;
  • The speed and cost of class actions should be improved significantly;
  • Dormant, copycat, de minimis and extortionate class actions should be weeded out;
  • Class member’s interests should be better protected;
  • Counsel fees and settlements should be scrutinized and justified more effectively;
  • Certification should become more streamlined and decided quickly and efficiently;
  • Class action cost rules should be amended;
  • The justice system – and the public – needs new tools to ensure class actions are effective, transparent and legitimate.

Statistics

There have been approximately 1,500 class actions initiated in Ontario between 1993 and February 2018. The Report notes that in the last 7 years, approximately 100 class actions have been filed each year. Approximately 73% of contested certification motions are eventually granted, in whole or in part. The top two grounds cited for denying certification were a lack of common issues and failure to show that a class action is the preferable procedure. The types of cases include Competition Act, consumer protection, Crown liability, employment and pension-related matters, environmental issues, franchise issues, insurance, mass torts, privacy, negligence, securities and product liability.

Recommendations

The Report contains 47 recommendations to reform both the CPA and the practice of class actions generally. The Report is divided into 12 chapters: (1) Introduction, (2) Class Actions, An Empirical Profile, (3) Managing Class Actions, (4) Carriage, (5) Multijurisdictional Class Actions, (6) Certification, (7) Settlement Approval, (8) Settlement Distributions and Class Actions Outcomes, (9) Fee Approval, (10) Costs,  (11) Behaviour Modification, and (12) Appeals. Chapters 3 to 12 outline the recommendations related to each chapter. All 47 recommendations are contained in the List of Recommendations at Appendix A.

Some of the key recommendations in each chapter include:

  • Managing Class Actions: Establishing a 1 year deadline for which the certification motion must be scheduled to replace the 90 day rule contained in section 2(3) of the CPA;
  • Carriage: To eliminate the delay caused by carriage motions, to amend the CPA to specify that an order determining which firm has carriage for the case are final and cannot be appealed;
  • Multijurisdictional Class Actions: To amend the CPA to add provisions consistent with the legislation in Alberta, British Columbia, and Saskatchewan for the management of multijurisdictional class actions;
  • Certification: While no specific amendments are proposed, the LCO recommends the use of summary judgment motions pre-certification to dispose of the action or narrow the issues;
  • Settlement Approval: Multiple recommendations to section 29 of the CPA are recommended including specifying that proposed settlements be “fair, reasonable and in the best interests of the class” and setting higher evidentiary standards for parties seeking settlement approval;
  • Settlement Distributions and Class Actions Outcomes: Making amendments to the notice requirement in section 17 of the CPA to include a plain language requirement and to provide for publication of notices using digital technology;
  • Fee Approval: Amending section 32 and 33 of the CPA to give the court discretion to hold back a percentage of proposed counsel fees pending a final report on the outcome of the proceeding in the appropriate cases;
  • Costs: Shifting from the two-way cost regime to adopt a no-cost regime for certification and ancillary motions, the two-way cost regime would apply to all other aspects of the action (summary judgement motions, disputes about jurisdiction, de-certification motions and trial);
  • Behaviour Modification: Mandatory class actions outcome report that includes information about behavior modification outcomes; and
  • Appeals: Amending section 30 of the CPA to provide both plaintiffs and defendants with a right of appeal to the Ontario Court of Appeal from certification orders rather than the current process which requires appeals to go to the Divisional Court and did not provide an automatic right of appeal to both parties.

The Report can be viewed online here.

Conclusion

The Report provides a helpful overview of the development of class actions law since the introduction of the CPA almost 30 years ago. Many of the recommendations are in line with the three goals of class proceedings: (1) access to justice; (2) judicial economy; and (3) behaviour modification. It is important to remember right now these are only recommendations. The LCO is soliciting feedback from stakeholders on the 47 recommendations, whether any or all of these recommendations are ultimately adopted by the Ontario legislature is yet to be determined.

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Jacqueline M. Palef

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