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Posted on March 1st 2009 in Legal Articles

The Making of a Class Action

The Making of a Class Action

Although Ontario’s Class Proceedings Act, 1992 has been around for 15 years, class actions are still a relatively new phenomena in Ontario. A class action is a proceeding that allows a large group of plaintiffs, who have suffered a similar wrong at the hands of the same defendant, to sue in a single proceeding rather than having to each sue individually.

The Goals
The Class Proceedings Act seeks to achieve three principle goals.
o Judicial economy by promoting a single cause of action instead of a multitude of individual cases.
o Access to justice by reducing the costly monetary barriers of individual actions.
o The modification of the future behaviour of the defendants.

Both Dara Fresco, the CIBC plaintiff, and Alison Corless, the KPMG plaintiff, could have commenced their own individual actions against their respective employers. They chose the class action route since they each assert that they are only one of hundreds of employees who have worked unpaid overtime. At least on the surface, these cases would seem to be exactly why the Class Proceedings Act was brought into being.

Certification
While the filing of Ms. Corless and Ms. Fresco’s lawsuits made front page news, unless the actions are successfully certified, they will end before they get started. Unlike a regular lawsuit that is started by a plaintiff simply filing and issuing a statement of claim, a class action cannot proceed until it has been certified (i.e. officially approved) by the court.

To successfully certify a class action, the would-be plaintiffs must establish to the court’s satisfaction that a class action is the best way to proceed with the claim. Although it sounds straightforward, certification of a class action is not easily granted. A lawsuit will be certified as a class proceeding if the following conditions are met.
1. The pleadings or the notice of application discloses a cause of action.
2. There is an identifiable class of two or more persons that would be represented by the representative plaintiff.
3. The claims of the class members raise common issues.
4. A class proceeding would be the preferable procedure for the resolution of the common issues.
5. There is a representative plaintiff who would fairly and adequately represent the interests of the class and who has produced a plan for the proceeding.

Both the CIBC and the KPMG cases seem to meet all five of these criteria. In both instances, the cause of action is the overtime worked but not compensated. The proposed class in the CIBC case would be made up of current and former CIBC tellers and account managers and the common issue is the unpaid overtime. In the case of KPMG the proposed class includes lawyers, non-chartered accountant staff and other employees who worked more than 44 hours a week without extra pay.

If Ms. Fresco and Ms. Corless are correct that there are thousands of employees in a similar situation, then this would certainly be the preferable way to proceed. And finally, both women seem to be plaintiffs who would fairly and adequately represent the interests of the classes.

Help from the Ontario Court of Appeal
The Ontario Court of Appeal recently ruled on a certification application, which could make the certification process easier for would-be plaintiffs. The case of Markson v. MBNA Canada Bank could also significantly increase the number of plaintiffs in a class. Mr. Markson filed a class action lawsuit against the MBNA Canada Bank claiming that the bank has been charging cardholders an illegal interest rate for cash advances.

The motions judge refused to certify the action, in part because it would be impossible to determine a class, since not all cardholders would have been charged an illegal rate or taken a cash advance.

The Court of Appeal disagreed and certified Markson’s action. The appellate court based its decision on the fact that the Class Proceedings Act permits statistical sampling-meaning proof of individual losses is not needed in every case. This interpretation of the law could prove important in the CIBC and KPMG cases, since there may be employees who have not worked overtime or who were compensated.

Looking at the results of previous class actions, it seems apparent that certification is key, not just because the law requires it for an action to proceed, but because there is a strong correlation between certification and settlement.