Preliminary Motions In Class Proceedings: Certification And Other Contenders

Article by Ian F. Leach1

1. INTRODUCTION

   This paper is intended to compliment that submitted by Ward Branch, and his colleagues at Branch MacMaster (Vancouver), for presentation and discussion at the Canadian Institute's 5th Annual National Forum on "Litigating Class Actions" (2004). It accordingly limits its discussion to developments insofar as they relate to Ontario, and litigation advanced under Ontario's Class Proceedings Act, 19922.

2. COMPETING PRIORITIES: CERTIFICATION FIRST?

   Ten years into the life of the CPA, one would think people might at least agree on the general process to be followed in litigating a class proceeding in Ontario. One would be wrong.

   As it turns out, plaintiffs and defendants still can not even agree on the first step to be taken in a class proceeding. Plaintiffs insist that certification be dealt with first; everything else can be dealt with later, in the fulness of time. Defendants argue that preliminary motions challenging the claim must be dealt with first, as there may then be nothing left to certify.

   And so it goes. The same "chicken and egg" arguments and strategies, action after action, year after year3. Perhaps not surprisingly, this continues because both sides of the debate have merit, and may be stronger or weaker depending on the facts of each case.

   The Plaintiff Perspective

   For representative plaintiffs and their counsel, the road to a successful class proceeding usually runs entirely uphill. The way is fraught with the risk of unrecovered financial burdens, (in the form of wasted disbursements and docketed time), and the imposition of more, (in the form of adverse cost awards). The journey will never be worth it unless the ultimate rewards are substantial, and the defendant has the means to pay them. Yet the higher the stakes, the harder the defendant will fight. The wealthier the target, the bigger its war chest.

   Realistically, few representative plaintiffs or law firms will assume those burdens for long without some early assurance that it may all be worth it. Without that assurance, there will no increased access to justice, and therefore no behaviour modification or judicial economy.4

   Early hearing of a certification motion provides that assurance. Representative plaintiffs and their counsel learn, as soon as possible, whether they are fighting for millions of dollars on behalf of a collective, or advancing an individual action not worth pursuing even in the Small Claims Court. They also know whether they will be given the settlement leverage that goes hand in hand with certification5, thereby increasing the prospects of contained expense and early recovery.

   Accordingly, from the plaintiff perspective, nothing should delay or postpone the certification hearing. Preliminary motions undermine the goals of the CPA, and play into the hands of defendants determined to wear down the resolve and resources of plaintiffs and their counsel.

   A review of the structure and content of the CPA supports the view that the Legislature regarded certification as an immediate priority. Apart from a few opening definitions, certification is the first matter dealt with in the Act. Moreover, for plaintiff class proceedings at least, the Act clearly intended that resolution of the certification issue generally would occur within a few months of a proceeding's commencement, whatever the state of defence pleadings.6

   Additional authority supports this view.

   The Manual For Complex Litigation, Third7, emphasizes that early and timely case management of class proceedings is important, and that a timetable for certification should be set at the first case management conference:

   21.213 Class Actions

   When actions include claims by or against a class, the court should consider the appropriate procedure for dealing with the certification issues. In most cases, a schedule should be set at the initial conference for an early ruling on class certification. Class certification or the denial thereof will usually have a substantial impact on further proceedings in the litigation, including the scope of discovery, the definition of issues, the length and complexity of trial, and the opportunities for settlement . . . [Emphasis added.]

   Similar sentiments have been expressed by courts in Ontario.

   In Moyes v. Fortune Financial Corporation8, Justice Nordheimer deferred hearing of the defendant's motion for summary judgment and held that certification ordinarily should be the immediate priority in class proceedings:

   The rationale for having the certification motion determined first is that it fulfills the objective of having an early determination of whether the action is going to move forward as a class proceeding, with the consequent binding effect on the members of the class, or whether the action will constitute and determine only the claim of the named plaintiff. . . .

   I do not wish to be seen as attempting to lay down any general rule that does not allow for exceptions. I recognize that there are some preliminary motions which may necessarily need to be determined in advance of a certification motion. The most obvious is a motion under Rule 21 for a determination that the claim does not disclose a reasonable cause of action. . . . There may also be situations where motions must be brought regarding the proper evidence to be put before the court on the certification motion. With those exceptions, however, I am of the general view that the first order of business in a proposed class proceeding ought, in the normal course, to be the hearing and determination of the certification motion. [Emphasis added.]

   The same sentiment was repeated by Justice Nordheimer in Ward-Price v. Mariners Haven Inc.9.

   From the plaintiff perspective on the "chicken or the egg" debate, if certification motions are "the chicken", they therefore must come first.

   The Defence Perspective

   Defendants to class proceedings invariably are alleged to owe vast sums as a result of manufacturing or distributing defective products, engaging in illegal activity, violating contractual obligations, or committing some other form of negligent or deliberate misconduct. They almost always are alleged to have done this at the expense of those who are inherently weak and vulnerable, insofar as the victims are said to have no effective remedy as individual claimants.

   It matters not that the allegations may be without merit. Service of such a claim casts an instant shadow over such defendants. The publicity is adverse and immediate, and will take its toll regardless of ultimate vindication. The potential liability must be noted in financial statements for as long as the claim persists, with a detrimental impact on share values and investment. Effective defence of the claim will require substantial legal expense, and disclosure of information and documentation that otherwise would remain private and confidential. The pressure to settle even baseless class proceeding claims is enormous.

   From the defence perspective, a proceeding without merit therefore must be attacked and dismissed as quickly as possible, using the various Rules of Civil Procedure expressly designed for that purpose. Those rules have intrinsic merit and a legitimate purpose, or they would not be on the books. They also have highly developed safeguards to prevent their abuse. If the CPA really was not intended to derogate from the substantive rights of parties10, there is no justification for effectively denying class proceeding defendants the rights and remedies available to any other defendant, particularly when their exposure is usually that much greater than the ordinary litigant.

   In short, if an intended class proceeding can be ended or curtailed quickly, efficiently and properly, through preliminary motions brought pursuant to the normally available Rules of Civil Procedure, it benefits neither the parties nor the court system to drag things out through an expensive and fiercely contested certification motion. Preliminary motions can and should be determined before a motion for certification.

   This competing view is also supported by the CPA.

   In particular, section 35 of the Act makes it absolutely clear that the "rules of court apply to class proceedings". This effectively incorporates, into the procedural scheme of the CPA, such diverse matters as Rule 25.10 motions for particulars, (which generally must be brought before the filing of defence pleadings11), Rule 21 motions to determine issues of law, jurisdiction, capacity or abuse of process, and/or to strike out pleadings, (all of which generally are to be brought without delay if at all12), and Rule 20 motions for summary judgment on the basis there is no genuine issue for trial, (which also are to be brought as quickly as possible if they are to serve their purpose of "rejecting, promptly and inexpensively, claims and defences that are bound to fail at trial"13).

   There is also substantial judicial support, (both express, and implicit in procedures actually followed), for the view that preliminary motions can and often should be heard prior to motions for certification.

   As Justice Cumming emphasized in Holmes v. London Life Insurance Co.14:

   In my view, there is not any provision in the CPA which requires that the certification motion be heard first when the representative applicant (or plaintiff) so requests. Rather, discretion is conferred by s.12 on our court respecting the conduct of the proceeding, with the objective...