Part C - Criteria for Certification
Section 4 (1) of the proposed British Columbia Class Proceedings Act contains the Act's certification criteria. That section states:
4.(1) The court must certify a proceeding as a class proceeding if:
(a) the pleadings disclose a cause of action;
(b) there is an identifiable class of two or more persons;
(c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members,
(d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, and
(e) there is a representative party who:
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class members and of notifying class members of the proceeding, and
(iii) does not have, on the common issues, an interest in conflict with the interests of other class members.
Contained within this section are various elements that make up the certification criteria. They are numerosity, commonality, the adequacy of representation, a preliminary merits test, superiority and typicality. These elements will be discussed individually.
(a) Numerosity 5
Prior to the passage of the Act, Rule 5 (11) of the British Columbia Supreme Court Rules allowed a representative proceeding to be brought where "numerous" persons have the same interest. This rule provided that, where numerous persons have the same interest in a proceeding, one or more of them may commence the proceeding as representing all or some of them. Other jurisdictions tie the requirement for numerosity to the difficulty or impracticality of joining parties in one action (Federal Rule 23 and the Quebec Code) or require a minimum number of named plaintiffs. The Ontario L.R.C. rejected these two options as too inflexible and recommended the maintenance of the "numerous persons" test. It is not clear from the case law what number of plaintiffs is required to meet this test, but courts interpreting former Ontario Rule 75 have held that classes of two, four and five members are not "numerous".
The Ontario Act clarifies the issue by providing for a slightly different test. That act requires an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant. The British Columbia Act adopted the model of the Ontario Act. The intent of the "two or more persons" test is to avoid litigation on what constitutes "numerous persons" while facilitating certification through a minimal numerosity threshold. The Australian legislation requires that there be seven or more persons.
Generally, class action legislation provides some form of common questions test. Such a test usually provides that the action must raise questions of fact or law common to the members of the class in order to qualify as a class action. The debate centres around whether or not common questions should predominate. That is, should common questions out number or be more significant than the individual issues raised in the action. The Ontario L.R.C. recommended that the predominance of the common questions should not be required as part of this test. However, it did recommend that the predominance of common questions be considered as a component of the superiority test, which is discussed below. The Quebec Code has a slightly different test: "the recourse of the members raises identical, similar or related questions of law or fact." In Quebec, common questions need not predominate. 6
Under the Ontario Act the predominance of the common questions is not a factor to be considered by the court. The Act provides merely that the claims or defences of the class members must raise common issues. Despite this, in Abdool et al v. Anaheim Management Ltd. et al (1993) 15 O.R. (3d) 39 (Ont. Gen. Div.), Mr. Justice Montgomery appeared to import a "common questions predominate" requirement into section 5 (1) (c) of the Ontario Act. The phrase "whether or not those common issues predominate over issues affecting only individual members" was included in the British Columbia Act to steer a clear course around such an interpretation of the decision in Anaheim. 7
(c) Adequacy of Representation
Class actions are unique in that they allow the determination of the rights and interests of individuals who are not parties to the litigation. This means that special provisions are needed to protect absent class members. One such measure is a requirement that the representative party adequately represent the class.
Article 1003 (d) of the Quebec Code requires that the member to whom the court intends to ascribe the status of representative is in a position to represent the members adequately.
Section 5 (e) of the Ontario Act provides that there must be a representative party who
(i) would fairly and adequately represent the interests ofthe class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying the class members of the proceeding, and
(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members.
The British Columbia Act adopts this model.
A more controversial component of the adequacy test, recommended by the Ontario L.R.C., would allow the court to consider whether provision has been made for competent legal representation. This recommendation was based on a recognition of the critical role played by the lawyer in a class action. This test is not part of the Ontario Act, the Quebec Code nor Federal Rule 23, although some commentators have claimed that the single most important factor considered by the American courts in determining the adequacy of representation has been the calibre of the class lawyer.
The requirement in the Ontario Act that the representative plaintiff produce a plan for the action - a criterion not discussed by the L.R.C. - may have been adopted in lieu of direct scrutiny of the adequacy of the class lawyer. British Columbia did not incorporate an adequacy of legal counsel component. The drafters of the legislation felt that the Legal Profession Act and the Law Society Rules contained sufficient protection to ensure competent legal representation and, further, that governance of the legal profession was within the jurisdiction of the Law Society of British Columbia.
(d) The Representative Plaintiff and Membership in the Class
The Ontario Act provides that only class members may commence proceedings on behalf of a class. In Quebec, however, nonprofit corporations and employee associations are given limited rights to act as class representatives. In accordance with article 1048 of the Code of Civil Procedure, three legal persons may request representative status. 8 The experience in Quebec has shown that no abuse has resulted from this provision.
While recognizing that an "ideological advocate" may be an adequate class representative, the Ontario L.R.C. did not endorse the Quebec model. Their failure to do so appears to have been based both on American case law, under which class representatives generally must have individual standing, and their reluctance to make changes to the law of standing pending the release of their report on standing.
Section 2 (4) of the British Columbia Act allows a court to certify a person who is not a member of the class as the representative plaintiff if it is necessary to do so in order to avoid a substantial injustice to the class. That provision was included in the act on the belief that a particular non-member individual or group may possess special ability, experience or resources that would allow them to be not only an adequate class representative, but also, the most appropriate class representative.
(e) Preliminary merits test
The Ontario L.R.C. recommended more rigorous scrutiny of the merits of class actions at the certification stage than is available for ordinary actions. They recommended an action be certified only if it has been brought in good faith and there is a reasonable possibility that the material issues of fact and law common to the class will be resolved at trial in favour of the class. Under article 1003 (b) of the Code of Civil Procedure, the judge must conclude that the facts alleged "seem to justify" the conclusions sought. 9 Neither the Ontario Act nor the British
Columbia Act includes a preliminary merits test. Instead, these acts merely require that the pleadings disclose a cause of action. It should be noted that the use of a preliminary merits test for interlocutory applications has been rejected by the courts because of the difficulty of conducting a mini-trial on the merits at this stage of the proceedings.
In a certification proceeding, the plaintiff carries the onus of meeting all the criteria for certification, including any preliminary merits test. An alternative to a preliminary merits test would be to shift the onus to the defendant to show that there is not a reasonable probability that issues will be resolved in favour of the class or that the action is not brought in good faith.
(f) Superiority and Cost Benefit
Many class action acts include a requirement that the action be superior to other procedural alternatives in order to be certified. In some jurisdictions, the court may also consider whether the adverse effects of the action on the class members, the court or the public outweigh its benefits. The Ontario L.R.C. endorsed both provisions and lists five factors for the court to consider in making its determination as to superiority (the predominance of common questions, an individual's interest in controlling the litigation, the existence of other proceedings, whether other proceedings are less practicable or efficient, and whether the administrative difficulties of the class action would be greater than those in other types of proceedings). The Ontario Act requires that the class action be the "preferable procedure for the resolution of the common issues" and does not list any factors the court must consider in making its determination. It does not include a specific power to consider the broader cost benefit issue. The Quebec Code does not include a superiority test, but merely requires that other specified procedures be difficult or impracticable in order for the class action to be certified. The experience in Quebec has shown that it is often more effective to proceed by means of a class action than by a multitude of individual actions.
Section 4 (2) of the British Columbia Act follows the Ontario L.R.C. model. Unlike the Ontario Act, the British Columbia legislation provides the court with a list of factors to consider in determining whether a class proceeding is the "preferable procedure". That section reads as follows:
In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, the court must consider all relevant matters including
(a) whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members,
(b) whether a significant number of members of the class have a valid interest in individually controlling the prosecution of separate actions,
(c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings,
(d) whether other means of resolving the claims are less practicable or less efficient, and
(e )whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means.
Subsection (c) includes a common questions predominate test but only as one of various factors that the court must weigh when assessing superiority. This follows the recommendation of the Ontario L.R.C.
Under Federal Rule 23, the claims of the representative parties must be typical of the claims of the class. The Ontario L.R.C. pointed out that this requirement tends to overlap with the common questions and the adequacy of representation tests. Since the L.R.C. recommended inclusion of both of those tests in legislation, they took the view that a typicality requirement was unnecessary. No Canadian legislation contains such a test.
*An application for certification should be granted by the court where:
(a there are two or more persons in the class whose class raises common issues;
(b) the representative plaintiff will fairly and adequately represent the interests of the class;
(c) the pleadings disclose a cause of action; and
(d) a class action is the superior or preferable procedure in the particular case.
*Predominance of common questions should not be a separate test that must be met before a class action will be certified. Instead, it should be one of the components of the superiority test.
*As a general rule the class representative should be a member of the class. The court should have the discretion to appoint a non-member as the class representative to avoid a substantial injustice to the class.
*The plaintiff should not be subject to a preliminary merits test.
*There should be no separate "typicality" test in the certification process.
2. Certification Hearing
In Quebec, a class action cannot be brought without the prior authorization of the court and the class action must be brought within three months of authorization. In most other jurisdictions, however, a certification application must be filed within a specified period after the defendant files its appearance. The period ranges from 30 to 90 days. The 90 day period is recommended by the Ontario L.R.C. and adopted in the Ontario Act and the British Columbia Act.
The Ontario L.R.C. bill and the Ontario Act differ significantly with respect to the evidence required at the certification hearing. The inclusion of a preliminary merits test in the L.R.C. draft bill necessitated a requirement that the plaintiff and defendant file affidavits containing the material facts on which they intend to rely. The Ontario Act, which does not contain a preliminary merits test, merely requires the parties to file affidavits regarding the size of the class. Aside from this requirement, the general rules dealing with evidence in interlocutory proceedings apply.
On a motion for authorization the Quebec Code requires that an affidavit be filed that supports the allegations of fact in the motion. The Rules of Practice of the Superior Court sets out a detailed list of documents that must be filed in support of the motion.
In British Columbia, the certification application proceeds by way of affidavit. Section 5 (5) of the British Columbia Act requires that a person filing a certification application must:
(a) set out the material facts on which the deponent intends to rely at the hearing of the application;
(b depose that the deponent knows of no fact material to the application that has not been disclosed in the deponent's affidavit or in the affidavits previously filed in the proceedings, and
(c) provide the person's best information on the numbers of members in the proposed class
The inclusion of subsections (a) and (b), over and above the Ontario requirements, is designed to help clarify and focus the arguments in the certification hearing.
(c) The Certification Order
There is wide variation in class action legislation in the degree of detail required in the certification order. Federal Rule 23 does not deal with the contents of the order while the Ontario Act requires that the order describe the class, state the names of the representative parties, the nature of the claims and relief sought, the common questions and the method for opting out. The Act also gives the Court the discretion to amend the certification order or to decertify the class if the criteria for certification are not met, on the motion of a party or class member. Under the Quebec Code, the order describes the class, identifies the common questions and states the method for opting out; it must also require the publication of notice to the members of the class. The Ontario Act allows the court to make a separate order dealing with notice.
Section 8 of the British Columbia Act sets out the requirements of the certification order. Like Ontario, the British Columbia Act allows the court to make a separate order for notice. Section 8 requires that the certification order describe the class, appoint a representative plaintiff, state the nature of the claims and the relief sought, set out the common issues for the class and state the method for opting out. The Ontario Act, the Quebec Code and the British Columbia Act also permit the court to amend an order certifying or authorizing a class proceeding.
*Class action legislation should address the issues of timing, evidence and contents of the certification order. This legislation should be based on the following premises:
(a) authorization from the court to proceed as a class action should be required prior to or within a short time after the action is commenced;
(b) evidence to be filed on the motion should be set out in Rules of Court; and
(c) the certification order should include a description of the class, the names of the representative plaintiffs, the nature of the claims and relief sought, common questions and method for opting out.
3. Substantive Barriers to Class Actions
The "same interest" test in British Columbia Supreme Court Rule 5 (11) that governs representative actions has been narrowly interpreted to preclude claims for which a single measure of damages does not apply, claims arising out of separate contracts, or claims for which different remedies are sought. If the goal of expanding class actions is to be met, these substantive barriers to bringing class actions need to be reduced.
The Ontario L.R.C. draft bill, the Ontario legislation and the British Columbia Act each provides that the court shall not refuse to certify a class action solely on the grounds that the relief claimed includes damages that may require individual assessment or arise out of separate contracts. The Ontario Act deals with the matters that are not to bar certification in the following way.
Certain matters not bar to certification
6. The court shall not refuse to certify a proceeding as a class proceeding solely on any of the following grounds:
1. The relief claimed includes a claim for damages that would require individual assessment after determination of the common issues.
2. The relief claimed relates to separate contracts involving different class members.
3. Different remedies are sought for different class members.
4. The number of class members or the identity of each class member is not known.
5. The class includes a subclass whose members have claims or defenses that raise common issues not shared by all class members.
The British Columbia Act follows the Ontario model with the following exception.
Section 6 of the Ontario Act includes the word "solely" between "proceeding" and "on" in the first line. The decision was made not to include "solely" in the British Columbia legislation in order to ensure that the presence of more than one of the elements listed in (a) to (e) would not bar certification. The Quebec Code does not have an equivalent provision.
*Class actions legislation should enumerate factors that the court is not to consider when determining whether an action should be certified as a class action. The legislation should state that the following factors are not a bar to certification:
a) the class action will require individual assessment of damages;
b) the class members have claims arising out of separate contracts;
c) there are different remedies sought for different class members;
d) the number or identity of all class members is not known; and
e) the class includes one or more subclasses.