Class Actions: The Canadian Experience

In the last seven years, Canada has developed a vigorous class action regime. Before outlining that regime, I would like to address the question: Why have Class Actions? I. WHY HAVE CLASS ACTIONS? A foundational document in Canada on class actions is the Ontario Law Reform Commission's (OLRC) Report on Class Actions (1982).(1) It is an excellent three volume report that bases its recommendation of the introduction of class actions in Ontario on three underlying policy objectives. The first, and most important objective, is to afford greater access to justice. Litigation has become so expensive that claims of modest amounts, and even those of significant amounts, are not economically feasible to pursue on an individual basis. In class action terminology, these are referred to as non-viable claims. There are many more individually non-viable claims in Canada than in the United States for several reasons: (1) Canada has ceilings on damages for pain and suffering in personal injury cases, and relative to awards in the United States, these ceilings are very low;(2) (2) Canadian courts rarely award punitive damages,(3) (3) the vast majority of civil actions in Canada are tried by judges sitting alone rather than being tried by relatively uncontrolled juries as in the United States;(4) and (4) Canada has a fee shifting rule (generally the losing party must pay a large part of the winning party's legal fees), which is a major deterrent to litigation.(5) The second policy objective is to improve judicial efficiency. Where the alternative to a class action is repetitive litigation relating to the same events, the result is judicial inefficiency. For example, when class action certification was refused for claims against Canada's blood system relating to transfusion-related AIDS transmission,(6) more than eighty such cases were filed in Ontario alone. The filing of individual claims resulted in three very long trials without significant plaintiff-wide settlements.(7) Such individual actions often cover the same ground time and again; they are not only inefficient, but can lead to inconsistent decisions. It is noteworthy that the judicial efficiency rationale really only comes into play where the claims asserted are individually viable; permitting class actions for individually nonviable claims brings about litigation which would, without class actions, never be brought. This may increase the judicial workload and thereby decrease judicial efficiency. The third policy objective is to achieve behavioral modification. When manufacturers and other entities can inflict small amounts of damage on a large number of people who cannot afford to litigate individual claims, the deterrent function of the law, such as tort law, is lost. Hopefully, subjecting potential defendants to the risk of a class action will modify their behavior. Canadian courts refer to the above social or policy objectives constantly when interpreting class action legislation.(8) II. ARE THERE WORKABLE ALTERNATIVES TO CLASS ACTIONS IN THE CANADIAN CONTEXT? For certain types of personal injury claims, Canada has non-class action solutions. These, however, are not tailored specifically to widespread injury problems. First, part of Canada's social safety net is a national, government-run medicare system. The medicare system provides health care for all Canadians, including the medical and hospitalization expenses of injured persons.(9) Second, some Canadian provinces have introduced automobile accident insurance schemes that provide accident victims with benefits on a no-fault basis and without having to sue in court.(10) Third, for several decades, all provinces have had worker's compensation legislation, providing persons suffering from work-related injuries with compensation on a no-fault basis and forbidding resort to the courts in relation to such injuries. This explains why Canada, unlike the United States, has not had asbestosis litigation. …

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