Class Actions in British Columbia
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What is a class action?
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 injure or cause loss to many people in a similar way. One response to these injuries or losses (called “mass wrongs”) is a “class action” – 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.
A class action is cost effective
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, in effect, share the cost of a lawsuit. You might say that class actions allow “mass-produced lawsuits” for “mass-produced wrongs.”
What kinds of cases are suitable for a class action?
Class actions are often used 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 be brought against companies for price fixing, monopolization and providing 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 part of the legal landscape in British Columbia since 1996. They are governed by the Class Proceedings Act. It lets one person sue in the BC Supreme Court on behalf of 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 is a class action started?
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 on behalf of 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.
Certification is the most important stage in a class action
Almost all class actions that are certified go on to be 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’s needed to get a court to certify a class action?
The court must certify the lawsuit as a class action if the following five criteria are satisfied:
- 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.
- The court can identify two or more people as a class, who are then called class members. The class is easily defined, so individuals can readily identify whether they fit into the class. (In some cases, classes are further 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 who can represent all the members of the class.
There are three requirements for the representative plaintiff
A representative plaintiff:
- Must fairly represent the interests of the class members.
- Must have a plan to run the class action for the class members and notify them of the lawsuit.
- Must not have an interest conflicting with interests of other class members on the common issues.
How do you decide whether there should be a class action?
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 filed?
- Is a class action a fair and efficient way to solve the common issues?
- Are the common issues more important than the individual issues?
- Is a lawsuit the best way to solve 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 when individual issues that have to be determined would overwhelm any benefit from determination of the common issues. In these cases, there is a risk of long and complex individual trials after the common issues are determined.
Class members must be notified 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 approved by the court. 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 determination of common issues and any settlement.
Can class members 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. To opt out, they 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 have to 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 their interests, a judge supervises every stage of the class action, from start to end. 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 agrees to settle 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.
How is a judgment made?
The court can assess compensation for the class as a whole without proof of individual claims. It may use statistical evidence when assessing the amount. After this assessment, the court can award individual class members compensation as a proportion of the total amount, or it can decide their compensation individually.
Paying the defendant’s legal costs is usually not a risk
With 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” regime in BC is meant to increase people’s access to justice. Not all Canadian provinces operated on a “no costs” basis.
Can you appeal a class action?
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 now that all 13 jurisdictions in Canada have class action laws. The Canadian Bar Association hosts a National Class Action Database, designed to give lawyers and the public easy access to court documents submitted in relation to class action lawsuits currently underway across the country. In BC, registration with the Database is mandatory. You can search the Database at www.cba.org/CBA_ClassAction/Search.aspx.
Class actions are complicated, but they’re often an effective way to make several claims collectively against one or a few wrongdoers. If you think a class action may be best in your case, you should speak to a lawyer. If you get notice of a class action that might affect you, you may also want to see a lawyer to find out whether you should participate in the lawsuit.
[updated April 2013]
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