Understanding class-action lawsuits
By Tony Poland, AdvocateDaily.com Associate Editor
Singer, who heads the Commercial and Civil Litigation Practice Group with Diamond & Diamond Lawyers LLP, says his firm is receiving “thousands of calls a day” inquiring about the lawsuit.
“We’ve been getting calls for weeks now, where people are saying, ‘I was affected by the Capital One database breach, I know you’re running the case, can I come in and retain you?’” he tells AdvocateDaily.com.
Global News reports that the Diamond & Diamond suit seeks compensation for Canadians who applied for Capital One credit cards from between 2005 and 2019. As many as six million Canadians may have been affected by the breach, Global says.
According to Global, Singer said in a statement that the stolen information could pose a risk to identity theft for years.
“What makes this breach so egregious is that it includes identifying information such as someone’s name and social insurance number that cannot be changed,” Singer said in the release.
The statement of claim seeks that the lawsuit be certified as a class action, and is calling for more than $350 million in financial compensation and other forms of relief, Global reports.
Singer says they are adding more claimants to their database every day, but explains that it is not necessary for people to call and add their name to the file.
“People don’t realize that they don’t have to come in and meet with us,” he says. “They don’t have to retain us. Unless they opt out, they are automatically part of the class.”
Using the Capital One case as an example, Singer says when a class action suit is filed, it starts with a representative claimant.
More than one law firm may decide to file a claim, which has to be certified by a judge, who essentially decides if the case has merit and which firm will take the lead, he says.
“There are many factors that apply to certifying a claim, but the primary one is that there has to be some commonality between all of the potential class members, and there has to be some real prospect of damages,” Singer says.
He says once the case begins, anyone affected is automatically added.
“Whether they call my firm and provide us with their contact information or not, it doesn’t matter. They are part of the class,” Singer says. “If they want updates, then they can call us and get their name and contact information on the database.”
When the case is certified, a person can choose to opt out and retain their own lawyer, he says.
The advantage to a class-action suit is there is no cost or risk to claimants, Singer says, noting that the law firm takes on the burden.
While the typical fee may be 25 to 33 per cent of the total settlement, it’s not necessarily the big payday for lawyers that some might assume, he says.
“People don’t realize that law firms take insanely high risks, more so than any other type of case,” Singer says. “The cost to run a class action is more expensive than on any other type of civil proceeding. They’re very complicated because you’re dealing with very sophisticated defendants who pay millions of dollars in legal fees to defend these things.”
Singer says the “sheer amount of work that goes into these files,” can make them costly endeavours.
“Typically, for example, these are cases where you’re going to have to have an expert report. In my case, I am going to need a report on cybersecurity and that could be $25,000-$50,000,” he says.
“My firm is paying, and if we are successful, we’ll recover that, but it is entirely possible that a matter won’t get certified or you lose the case. They are a huge risk and require huge upfront costs for the firm.”
Singer says, in the end, it is up to a judge to decide what fee the law firm deserves.
“Whether a judge approves 33 per cent or knocks it down to 20, that is entirely up to the court, and that decision is often based on how much time the firm has put into the file,” he says.
Singer says class-action lawsuits are effective for claims where the potential for damages is not significant.
He explains that if a company manufacturers a faulty product that causes harm, a person would not necessarily go through the time and expense of suing when all they could reasonably expect to recover is a few thousand dollars.
“It’s not going to make any sense for you to hire your own lawyer because you’re going to pay out of your pocket and it’s going to be difficult to find a lawyer willing to take the case anyway,” Singer says.
He cites a recent settlement involving an energy drink manufacturer as an example.
According to CBC News, Canadians who consumed or bought the drink between January 1, 2007 to July 23, 2019 may be entitled to up to $10 in compensation.
CBC reports the company allegedly violated Quebec’s Consumer Protection Act by “failing to inform consumers of the inherent dangers concerning the ingestion of its caffeinated energy drinks.”
“It’s a perfect example of where class action makes sense,” Singer says.
“Nobody is going to go and hire their own lawyer, and no lawyer is going to take the case to sue for $10,” he says. “Class actions are very effective in cases where the individual recovery for one person wouldn’t be significant enough to justify their own lawsuit, but it makes sense here because you’ve got multiple claimants.”
Singer says compensation is not the only reason to file a class-action suit.
“The other is behaviour modification,” he says. “It’s another way that you can hold these corporations’ feet to the fire.”