It’s a familiar story: a business makes a defective product or does something that harms a group of people. Such a “mass wrong” can be met with a class action.
What you should know
A class action is a lawsuit that groups people with a common claim together against the same defendant. Otherwise, all the claims would be separate lawsuits. Mass production and marketing of consumer goods and services mean that a single mistake or wrongful act at any stage of design, production or distribution can harm many people in a similar way. A class action is one response to these injuries or losses (also called mass wrongs).
Often, injured people won’t sue individually because the money they seek is less than their legal costs. And it’s often not practical for just one buyer of a defective product to sue a large business. But the total loss or damages suffered by many injured people or buyers may be very large. Class actions make lawsuits more affordable by allowing all the victims of a mass wrong to share the cost of a lawsuit. Class actions are mass-produced lawsuits for mass-produced wrongs.
Class actions work well in “product liability” cases. These cases involve a manufactured item, like a drug or a vehicle, that is defective and injures many people. Class actions are also common against governments (for overpayment of taxes), against financial institutions (for illegal service charges), and against companies trading on the stock market (for misrepresentations). Class actions may also work against businesses for price fixing, monopolizing the market, and misleading advertising. They can work to fight systemic discrimination against governments or businesses. Whenever a mistake or wrongful act affects many people, a class action may be effective. Class actions have been possible in British Columbia since 1996.
The Class Proceedings Act lets one person sue in BC Supreme Court for a group of people if they have similar claims against the same wrongdoer. The Federal Court of Canada also allows certain class actions involving federal law and the federal government.
A person who has been hurt or suffered loss can apply to BC Supreme Court to be the representative plaintiff in a lawsuit for a group of people. The representative plaintiff must also ask the court to certify the lawsuit as a class proceeding.
Once the court certifies a lawsuit, it appoints the lawyer for the representative plaintiff as class counsel. This lawyer is then the lawyer for all the class members.
A defendant in two or more cases can also ask the court to convert the cases into a class action.
Many class actions that are certified are eventually settled. If a court doesn’t certify a class action, the members of the group can usually sue individually, as if the class action had never started.
The court must certify the lawsuit as a class action if the following five criteria are met:
- The document the plaintiff files in court (called the “notice of claim”) shows a legally valid claim based on a mistake or wrongful act.
- The court can identify two or more people as a class, who are then the class members. The class is easily defined, so people can easily tell if they fit into the class. (In some cases, classes are again divided into subclasses.)
- There are common issues in the claims of the class members.
- A class action is the best way to fairly and efficiently resolve the common issues.
- There is a representative plaintiff — someone to represent all the members of the class.
A representative plaintiff must:
- fairly represent the interests of the class members,
- have a plan to run the class action for the class members and notify them of the lawsuit, and
- not have an interest that conflicts with interests of other class members on the common issues.
In almost all cases, the representative plaintiff must live in BC. If appropriate, the court will appoint a non-BC resident to represent a class of people who do not live in BC.
Some class members must live in British Columbia, but (in certain cases) not all class members have to live in BC. If there are both resident and non-resident class members, the court will certify a separate class of non-residents.
Non-residents must formally opt in to the class action, meaning they must choose to be part of it. That’s not true for BC residents — they are automatically in unless they opt out (as explained shortly). When the court certifies a class action, it will state how and by when non-residents can opt in to the class action.
Advertising to find potential class members
People can advertise to find potential class members to start a class action. The law does not deal with advertising. But it’s usually not necessary because only two or more people are needed to form a class. Any advertising would have to be careful not to promise financial gain for joining the class action.
Class members must be informed of a class action
Many class members wouldn’t know if a class action has been started and certified by the court. To protect these people, the representative plaintiff, through the class counsel, must notify the class members of the class action in a way the court approves. This notice can be by letter if the class members are known; otherwise, it will most often be done by newspaper or magazine advertising. Class members must also be notified of any decision on the common issues and any settlement.
Class members can drop out (or opt out) of a class action
Class members can choose not to be part of a class action (or opt out of it) if they want to sue on their own. The court sets a deadline for people to opt out. To do that, people must usually fill out a form or write a letter to the court or the class counsel. People who don’t opt out by the deadline must accept the result of the class action.
Even if class members know about a class action, most of them probably won’t be in court. To protect them, a judge supervises every stage of the class action. The judge looks out for the best interests of the class as a whole, not just the representative plaintiff, to ensure both the process and results are fair.
If the representative plaintiff settles the class action, the judge will ensure that a notice to class members is published and that the settlement is fair, reasonable and in the best interests of the class as a whole. That does not mean all class members get the same amount. Different members in different situations may receive different amounts.
The court can decide on compensation for the whole class, without proof of individual claims. It may use statistical evidence to calculate the amount. Then the court can award individual class members compensation as a proportion of the total amount, or it can decide their compensation individually.
People who are thinking of using a class action should consider the following things:
- Has a class action dealing with the same issues already been started?
- Is a class action a fair and efficient way to resolve the common issues?
- Are the common issues more important than the individual issues?
- Is a lawsuit the best way to resolve the claims? Has the defendant come up with other ways to compensate class members?
- What type of lawsuit is best for the case — class action or individual?
- Is a class action too complicated?
For example, a class action is not appropriate if individual issues would overwhelm any benefit from settling the common issues. In these cases, there is a risk of long and complex individual trials after the common issues are settled.
In class actions, an unsuccessful representative plaintiff in BC doesn’t usually have to pay part of the defendant’s legal costs (which can happen in individual lawsuits). So starting a class action is not as risky as starting an individual lawsuit. This “no costs” system tries to increase people’s access to justice. Not all Canadian provinces operate on a “no costs” basis.
Yes, any member of the class may appeal an order that certifies a lawsuit as a class action, a refusal to certify a lawsuit, or a judgment on a common issue. And defendants can also appeal an order that certifies a class action or a judgment on a common issue.
Who can help
The trend towards more frequent class actions will probably continue as every Canadian jurisdiction now has class action laws. The Canadian Bar Association offers a searchable National Class Action Database. It gives lawyers and the public easy access to court documents for class action lawsuits across the country.