Class Action Statement of Claim

A Class Action Statement of Claim discloses the relevant facts and the remedies sought in the legal proceeding. The five crucial elements that all Statement of Claims should have are: a) an introduction; b) identification of the parties; c) fact sequence; d) cause of action/analysis; and e) demand for relief.

Class Action Certification

A legal action in Canada may not progress as a Class Proceeding without certification of the court.

The test for certification of a Class Action in Canada is generally consistent across the various provincial regimes, and requires the Lead or Representative Plaintiff to establish the following elements:

1. The pleading discloses a legal cause of action;
2. There is an identifiable class of two or more persons;
3. The claims (or defenses) of the class members raise common issues;
4. The class proceeding would be the preferable procedure for the resolution of the common issues; and
5. There is a Representative or Lead Plaintiff who (a) would fairly and adequately represent the interests of the class, (b) has produced a workable plan for advancing the proceeding as a class action (c) does not have an interest which might conflict with that of other class members, and (d) has a valid cause of action against each defendant named in the pleading.

With respect to common issues, the Canadian test for certification does not require that the common issues “predominate” over the individual issues. In general, the certification test in Canada contemplates that there will likely be a mixture of common issues and individual issues, and the test simply requires that the claim raises one or more common issues. In analyzing the common issue requirement, generally the court will consider whether allowing the suit to proceed as a representative one will avoid duplication of fact finding or legal analysis.

An issue will be “common” where its resolution is necessary to the resolution of each class member’s claim, but it is not essential that the class members be identically situated vis-à-vis the defendant or that resolution of the common issue would be dispositive of each class member’s claim. Essentially, if the resolution of the common issue would advance the litigation to a legally material extent, this requirement will likely be met (even if it leaves individual issues to be litigated in subsequent separate proceedings).

Representative / Lead Plaintiff: Pros and Cons

The "Representative or Lead Plaintiff" is one whose case will speak for that of the whole class. His or her case would then be tried in a court of law on behalf of the class. Any issues which are resolved favorably to the Representative Plaintiff would benefit all class members, not just the individual plaintiffs. As well, any issues which are found adverse to the Representative Plaintiff would similarly affect the whole class.

For the most part, the Representative Plaintiff has the right to choose their counsel, direct the prosecution of the lawsuit, and participate in important decisions regarding the lawsuit. However, there is a downside to being a “Representative Plaintiff”.  In some Canadian provinces (such as Ontario), the rule on costs is a discretionary one, in both regular lawsuits and class actions. Generally, the losing party is ordered to pay the winning party’s costs. This presents a dilemma for a Representative Plaintiff in a class action suit. If the plaintiff loses his or her class action, he or she may be ordered to pay the defendant’s costs (if not indemnified in some way). This is a major disincentive to act as a Representative Plaintiff since an individual’s potential loss could be large, while the individual pay out in the event of success may be quite small.

Settlement / Trial

Whether a Class Action will ultimately be settled or whether it will go to trial is a question that can only be answered after considering and analyzing the following: potential defenses and their legal sufficiency, remuneration and damages sought by the Class Members, the enormous costs of litigation and the chances of recovering such costs, the potential exposure to huge judgments and the negative publicity associated with high profile cases.

A benefit of settlement is that a settlement which has been approved by the Court binds the entire class (subject to the “Opt-Out” provisions). This means that res judicata can be invoked on future claims. For many corporate defendants, the fear of what may lurk around the corner is greater than what is staring them in the face.

A downside to settlement is the “Opt-Out” provisions in the Settlement Agreement.  For the same reason that settlement is appealing in terms of barring further claims, the “Opt-Out” provisions can provide a disincentive to settle a case. For example, if a large number of potential claimants are entitled to “Opt Out” of the class and thereby preserve their right to proceed individually against the defendant, the benefits of settlement are substantially reduced.