Proposed Class Action Found To Be "Too Big To Certify"

• Published date: 25 June 2021
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Class Actions, Dodd-Frank, Consumer Protection Act
• Law Firm: CLC (Canadian Litigation Counsel)
• Author: Mr Rajit Mittal (Whitelaw Twining) and Edmond Chen (Whitelaw Twining)

Introduction

In Kett v. Mitsubishi Materials Corporation¹, the Supreme Court of British Columbia found that some class actions can indeed be too large and too fragmented to proceed under s. 5 of the Class Proceedings Act.²

In this case, Branch J. denied certification of a proposed class action against several Japanese automotive part suppliers, declaring that the proposed proceeding would be too unwieldly to certify and that it risked devolving into "a hydra... with more and more heads emerging as the court fought to finish off the last"³.

The decision also raised additional legal issues, including "whether a parts supplier can be held liable to end users for wrongdoing towards a manufacturer of a consumer product" under the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 [BPCPA].⁴

Background

The defendants, Mitsubishi Materials Corporation ("Mitsubishi") and several of its subsidiaries, produce a wide variety of vehicle components, such as metal plates, wires, connectors and other such components which are used by other suppliers in the automotive supply to chain to produce finished parts for installation in vehicles manufactured by Japanese automakers, including Toyota, Honda, Subaru, Mazda and Mitsubishi itself. The defendants' components are accordingly found in millions of vehicles around the world.

In 2018, it was revealed that the defendants had manipulated their quality control data and, in some cases, even forged test results, which resulted in components which were non-conforming or outside the required specifications to be delivered to their customers. The defendants were charged with offenses in Japan under the Japanese Unfair Competition Prevention Act and were subsequently fined.

A class action was brought in British Columbia on behalf of all Canadians who had purchased automobiles from automobile manufacturers who had used components which could be traced back to the defendants. The class action sought compensation under the BPCPA, unjust enrichment, and the unlawful means tort.

Test for Certification

The test for class certification is set out s. 4 of the CPA, which includes three of the decisive factors considered by the Court in Kett: whether the pleadings disclose a cause of action; whether there are common issues raised in the class' claims; and whether the class proceeding would be the preferable procedure for determining such common issues.

Disclose a Cause of Action

In considering whether the pleadings disclosed a...