Editorial: Resist the urge to settle

Are the courts too lenient in certifying class actions in Canada?

As Law Times reported recently, business groups certainly think so. In a joint statement from the Canadian Chamber of Commerce and the U.S. Chamber Institute for Legal Reform, the two organizations decried the courts’ “lax class certification standards” and the resulting cost to business. In their view, the threshold for certification is too low with plaintiffs essentially guaranteed a win as a ruling on that issue in their favour virtually guarantees the parties will go on to settle.

But a ruling this month in Sankar v. Bell Mobility offers another perspective. In that case, Superior Court Justice Edward Belobaba awarded Bell Mobility Inc. $110,000 in costs after dismissing a class action on summary judgment over the company’s seizure of unused prepaid wireless credits. While Bell had sought partial indemnity costs of $154,000, Belobaba’s willingness to award $110,000 — an amount he noted the Law Foundation of Ontario would cover — is significant.

Many of the business groups’ concerns are valid. It’s true that while the lower courts may sometimes reject certification, the plaintiffs will often have more success on appeal. The overtime class actions are cases in point.
In many of those cases, the lower courts initially rejected certification with the Ontario Court of Appeal later deciding otherwise. But as with many things, the truth is often somewhere in the middle. In McCracken v. Canadian National Railway Co., for example, the appeal court overturned an earlier decision granting certification.
And in Brown v. Canadian Imperial Bank of Commerce last year, it upheld lower court decisions refusing to
certify. Both cases dealt with the issue of misclassifying employees as ineligible for overtime as opposed to other matters that involved more systemic issues around the defendants’ overtime policies.

Sankar, then, demonstrates that companies that are willing to defend class actions can prevail, in this case on summary judgment rather than at trial. So while there’s probably room for a more restrictive approach to certifying class actions and the plaintiffs in Sankar have filed a notice of appeal of Belobaba’s summary judgment decision, it’s clear the burden in many cases falls on the defendants to resist the urge to settle even in the face of the legal and reputational risks. And as Sankar also shows, they can get some of their costs back.
Glenn Kauth

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