Class Actions in British Columbia

What is a class action lawsuit?

Mass production and marketing of consumer goods and services means 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 (called mass wrongs). It’s a lawsuit that groups people with a common claim together against the same defendant. A class action deals with several claims that would otherwise be separate lawsuits.

Often, injured people won’t sue individually because the amount of money they seek is too small compared to their legal costs. And it’s often not practical for just one buyer of a defective product to sue a large manufacturer. 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 allow mass-produced lawsuits for mass-produced wrongs.

What kinds of cases can use a class action?

Class actions work well in product liability cases when a manufactured item, like a drug or a vehicle, is defective and injures many people. Class actions are also common against governments, banks, and businesses related to the stock market—for overpayment of taxes, illegal service charges, misrepresentations, and even systemic discrimination. Class actions may also work to sue companies for price fixing, monopolization, and misleading information. Whenever a mistake or wrongful act affects many people, a class action may be effective.

What court hears a class action?

Class actions have been possible in British Columbia since 1996. The Class Proceedings Act lets one person sue in the 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.

How do you start a class action?

Under BC law, a person who has been hurt or suffered loss can apply to the BC Supreme Court to be the representative plaintiff in a lawsuit for a group of people. These people also have to ask the court to certify the lawsuit as a class proceeding. The lawyer for the representative plaintiff becomes the lawyer for all the class members. A defendant to two or more proceedings may also ask the court to convert those proceedings to a class proceeding.

Almost all 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.

What does a court need to certify a class action?

The court must certify the lawsuit as a class action if the following five criteria are satisfied:

1. The document that the plaintiff files in court (called the Notice of Civil Claim) shows a legally valid claim based on a mistake or wrongful act.
2. 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 they fit into the class. (In some cases, classes are again divided into subclasses.)
3. There are common issues in the claims of the class members.
4. A class action is the best way to fairly and efficiently resolve the common issues.
5. There is a representative plaintiff—someone who can represent all the members of the class.

Three requirements a representative plaintiff must meet A representative plaintiff must:

1. fairly represent the interests of the class members.
2. have a plan to run the class action for the class members and notify them of the lawsuit.
3. not have an interest that conflicts with interests of other class members on the common issues.

How do you decide whether to start a class action?

People who are thinking of using a class action should consider the following things:

1. Has a class action dealing with the same issues already been started?
2. Is a class action a fair and efficient way to solve the common issues?
3. Are the common issues more important than the individual issues?
4. Is a lawsuit the best way to solve the claims? Has the defendant come up with other ways to compensate class members?
5. What type of lawsuit is best for the case: class action or individual?
6. 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.

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 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 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 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 lawyer of the representative plaintiff. People who don’t opt out by the deadline must accept the result of the class action.

A judge supervises the lawsuit for all class members

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 that all class members get the same amount. Different members in different situations may receive different amounts.

How does a court decide what class members get?

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.

Having to pay the defendant’s legal costs is not usually a risk

In class actions, an unsuccessful representative plaintiff in BC doesn’t usually have to pay part of the defendant’s legal costs (that 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.

Can you appeal a class action?

Yes, any member of the class may appeal an order to certify a proceeding as a class, a refusal to certify a proceeding as a class, or a judgment on a common issue.

Class actions are becoming more common

The trend towards more frequent class actions will probably continue because all 13 Canadian jurisdictions now have class action laws. The Canadian Bar Association has a searchable National Class Action Database. It gives lawyers and the public easy access to court documents for class action lawsuits across the country. In BC, registration with the Database is mandatory.

Summary

Class actions are complicated, but they’re often a good way to make several claims collectively against one or a few wrongdoers. If you think a class action may be best in your case, speak to a lawyer. If you get notice of a class action that might affect you, you should see a lawyer to find out if you should take part in the lawsuit.

[updated April 2015]

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