Tips for successfully defending against class actions
By AdvocateDaily.com Staff
Toronto civil litigator John Campion has been defending institutions against class actions almost from the inception of Ontario’s class proceedings regime more than 25 years ago.
Campion, partner with Gardiner Roberts LLP, has acted in such headline-grabbing cases as Bre-X Minerals and the disappearing gold, Guidant Corporation and the faulty pacemakers, and the Walkerton, Ont., tainted-water inquiry.
The scope of actions that Campion has defended also includes negligent misrepresentation in financial statements, abuse cases, mass torts in the form of train derailments, interpretation of insurance policies in the “salvage” litigation.
During the past two decades, he has seen cases become more and more unwieldy, and at the same time the courts have effectively narrowed the range of defences envisaged in the original legislation, Campion tells AdvocateDaily.com.
“The Court of Appeal and to a lesser extent the Supreme Court of Canada have progressively limited the answers to certification,” he says. “Institutions have become less and less successful in avoiding certification.”
There are five major criteria for certifying a class proceeding: the disclosure of a cause of action; an identifiable class; the existence of issues common to all proposed class plaintiffs; whether a class action is a preferable procedure; and whether the proposed representative is appropriate. While defence lawyers have made credible arguments regarding each of the five certification criteria, the Court of Appeal has leaned toward approving certification despite credible defence answers to the five criteria, Campion says.
Given the court’s approach to certification of class proceedings, and the fact that most cases are settled after certification and before trial, he says, "it remains important to mount a rigorous answer to certification as it can reduce the legal scope of the action, the size of the class and the procedure to be adopted for both the trial and damage analysis."
Based on his years of experience, he offers three key pieces of advice to lawyers defending institutions against class-action suits.
Go the extra mile to know your facts
Bre-X was Campion’s first prominent class proceeding. He acted for investment firm Nesbitt-Burns after a supposed significant gold discovery by Bre-X in Indonesia turned out to be illusory, and investors lost their shirts.
Fighting claims of negligent representation against Nesbitt-Burns, and with certification motions ongoing, Campion and colleagues flew to Australia to attend mining school, visited Indonesia to observe fire-assay testing for gold, and while there even flew in the same helicopter from which a Bre-X geologist either jumped or was pushed to his death.
"The mining site was in the middle of the Indonesian rain forest at the equator," he says. "The extreme heat, remoteness and difficult terrain gave the lawyers important insights into what actually occurred at the mining site.
“To have in mind the physical mining site and the remote fire assay laboratory used to identify the gold which together allowed for the gold to be 'declared to be there' — and to further identify how it was later discovered that there was no gold — allowed counsel a clear vision of the facts required to shape a defence that could be sustained all the way to the Supreme Court,” Campion says. “When you have such a comprehensive view of the facts on the ground before pleading, counsel has the ability to advance a practical and compelling defence.”
Never stand alone in a negligence case
In 2005, Campion defended a commercial landlord whose tenant had caused a massive explosion through improper handling of tanks of propane.
“The explosion shook Toronto, and the flames could be seen in Buffalo,” he recalls. “I argued from the start that there’s no way a commercial landlord would ever be found guilty of negligence unless they knew about the dangers and didn’t do anything about it.
At the early stages of the certification, Campion informed counsel for the plaintiff and the court that a number of persons identified in the fire marshall’s report, including the Ontario regulator, must be made defendants for the plaintiff was not acting as an appropriate representative for the class.
"This was done on the theory that no defendant should ever stand alone in a complex proceeding in that the defendants who were actually served often come forward to provide significant evidence and settlement monies," he says.
“We defended against all five causes of action at the certification stage," Campion adds. "We were successful in avoiding certification in the first round of certification, but the plaintiffs were granted leave to amend the causes of action pleaded. But for one cause of action, we were successful in the second certification motion in avoiding four causes of action pleaded. The landlord appealed to the Court of Appeal seeking to overturn the last surviving cause of action and avoid certification."
Settlement discussions occurred in two tranches involving eight or more parties and their insurers, he says.
"Justice Winkler was appointed the mediator. Because of the application of the principle that a single defendant ought never to stand alone, all eight defendants were asked to contribute to the settlement. My client refused to offer any settlement because of its strong defence. After the second round of settlement, the case settled. The Ontario regulator ended up paying a large portion of the damages with contributions from all of the other parties except my client, the landlord. The landlord made no contribution to settlement," Campion says.
Be prepared to go all the way
“If you aren’t willing to take the certification and the action all the way to the trial and appeal, counsel cannot properly defend and where appropriate settle a class action,” he says.
In defending against class actions, there are two types of strategies employed by defendants, Campion says.
“Those who want to consent to certification and settle early in the proceedings — a good strategy in certain circumstances — and those defendants who declare that: ‘I’m going to fight this every step of the way including avoiding certification at the outset,’” he says.
While the class-actions regime has been an important regulator of corporate conduct, cases have become too complex and expensive, Campion says.
“We are at a crossroads where policy decisions have to be made,” he says. “One of the central policies is whether society wants alleged institutional misconduct to be subject of private litigation through class actions? While there are regulatory bodies that could effectively govern large-scale institutional misconduct, I remain of the view that private litigation through class actions is an essential tool to regulate misconduct in a complex consumer society.
“The private bar has more resources and initiative to bring actions alleging institutional misconduct than publicly funded regulatory bodies," Campion says. "Assuming that class actions are here to stay for this and other reasons, there are many other procedural changes that may render class proceedings more efficient and less costly. Some of the law reform commission issues raised in its July 2019 report include more efficient carriage criteria, effective management of multi-jurisdictional class actions, stronger application of certification criteria, more rigorous evidence in settlement approvals, scrutiny of fee arrangements, limited abolition of loser-pay rules, changes to third party funding and simplification of appeal routes.”