Class actions remain steady

Sectors that are now ripe for litigation include cannabis, Big Tech and long-term care facilities; privacy, secondary market misrepresentation and predominance of common issues are also in the foreground
Class actions remain steady

In September, a proposed class action lawsuit was filed in the Supreme Court of British Columbia against Google and its parent company, Alphabet Inc. Filed on behalf of millions of Canadians, the suit alleges that Google collects and profits from users’ personal information without their consent.

The proposed suit may be the latest salvo in actions launched against Big Tech firms alleging privacy violations for use of user data or for security breaches causing data to be stolen.

Big Tech firms are facing enhanced scrutiny for two reasons: data protection and data security, says Matthew Fleming, a partner in the litigation and dispute resolution group of Dentons Canada LLP in Toronto.

While data breaches have caught the attention of the plaintiffs’ class action bar, the concept of individuals owning their personal information and companies using that information for profit or other reasons that the individuals did not agree to has caused an uptick in the number of proposed class proceedings in the area of data protection, including against big technology giants such as Google,  Facebook and Amazon.

Increasingly, Fleming adds, he has seen lawyers and firms bringing class actions where they previously weren’t practising in that area and has seen several instances in which certain firms acting on the defence side have now shown up on the plaintiffs’ side.

Céline Légendre, a partner at Osler Hoskin & Harcourt LLP’s Montreal office, says there has been a rise in class actions over the past couple of years but it’s been steady in the past few months. And the targets of class actions “will change depending on the situation,” says Légendre, citing COVID-19-related suits that have been filed.

Other sectors where class actions are rising include cannabis and — related to the novel coronavirus pandemic — nursing homes, airlines and events, as well as those related to societal issues such as solitary confinement and systemic abuse in schools by religious orders.

“People are more in tune as to what can be accomplished in a class action . . . in a civil context, on behalf of a group,” says Légendre. “That’s starting to be more prevalent as well.”

Fleming also notices an increased focus on claims against the government, whether it be for the management of a pension fund or Indigenous peoples bringing claims against the government for historical wrongdoings or prisoners complaining of their conditions.

“Not all class actions are motivated purely by financial goals . . . but are based on treatment that individuals have received through government programs or government institutions,” he says. “Class actions [are] increasingly seen as a tool to remedy unfair treatment, not just to recover damages.”

In the cannabis sector over the past year or so, several claims have been commenced against various participants and, although the majority of claims have been filed in the U.S., they have also been filed in Canada, principally in the securities and product liability areas, says Fleming.

“There was obviously a significant growth phase in that industry,” he says, which is now in a period of retrenchment, “where we’ve left the heady days behind leading up to legalization, and now that the market is settling in, that has uncovered certain
issues with some of these companies.”

These include problems with public disclosure and some irresponsible players, and there has been debate as to whether companies had the underlying assets or resources to support the share prices that they were commanding. “There was a lot of speculation in the industry. Now that the market has settled in and developed, people are taking a second look at the industry, including plaintiff-side class action lawyers.”

Several law firms have launched class actions for negligence against long-term care homes and even against provinces where residents have contracted and died from COVID-19. In June, Koskie Minsky LLP notified the province of Ontario that it would file a class action lawsuit against it alleging the province was negligent in its oversight of nursing homes. That same month, Public Health Ontario reported 1,825 confirmed cases among residents in long-term care facilities, including 1,465 deaths for an overall case fatality rate of 28.4 per cent.

Rochon Genova LLP launched a class action in July on behalf of residents of the 96 long-term care homes in Ontario that experienced COVID-19-related outbreaks as well as their family members and estates, and Howie Sacks & Henry LLP announced it was bringing claims “against the owners of any long-term care homes and retirement homes in Ontario where we believe there have been inadequate pre-emptive or responsive measures, made by the administration, to the COVID-19 outbreak.”

“We started tracking across a variety of sectors, and the one that’s generated the most class actions across Canada have been nursing homes” in the number of claims made, says Fleming, who estimates that more than 10 have been commenced in Canada against long-term care facilities as a result of COVID-19 illnesses and deaths.

“That’s a lot of class actions and a lot of time focused on [that] particular industry.”

In the common law provinces, Craig Lockwood expects to see more and more privacy class actions.

“Particularly, you’ve got the tort of intrusion upon seclusion, and the law is still a little unsettled around that,” says Lockwood, a partner in Osler, Hoskin & Harcourt LLP in Toronto. “So I think you’ll see a lot of activity around the parameters” of that and whether claims “can be brought on a class-wide basis and the issue of damages.”

On the securities side, whenever a publicly reporting company has to make an adjustment to its financial records, it must issue a financial restatement to investors. In the past five to seven years, Lockwood says, all the provinces have adjusted their securities acts to allow for secondary market misrepresentation, and it may be assumed that clients have relied on a misstatement in the initial public document and can deem reliance on secondary market provisions. As a result, “almost any time there’s a restatement, it’s likely that you’re going to see a securities class action follow immediately” after.

Another issue, he notes, is the predominance requirement to certify a class action. Amendments to Ontario’s Class Proceedings Act came into force on Oct. 1 and require that common issues predominate over individual ones; many are speculating that this will raise the bar for certification and that plaintiffs will be loath to bring actions in Ontario.

“I don’t know [that] that’s necessarily the case,” he says, “but at this stage, very rarely do you see a class action in Canada that’s not national,” meaning that counsel from different firms in various provinces are co-ordinating and liaising with each other. “So, I feel the amendments to the Ontario act may not be as big as people think.”

These were the first significant amendments to Ontario’s act since the class action legislation was adopted in 1992, and “they are truly significant,” says Fleming. “They have raised the bar for plaintiffs at the certification stage [and] have encouraged preliminary motions, which dispose of all or part of the claim at an early stage of the proceedings.” The amendments also promote the early resolution of potential jurisdictional issues and imposed tighter timelines to provide for the dismissal for delay of claims that do not proceed in a timely fashion, he says.

In Quebec, conditions for class authorization (or certification) are considered less stringent. The province is also unusual — and has been seen as more efficient — in having its own class actions chambers.

“We’ve been under a regime for close to a decade where the conditions are quite liberal,” says Yves Martineau, a partner at Stikeman Elliott LLP in Montreal. “That’s good for lawyers, but . . . the consequence of having such a liberal interpretation of the conditions for authorization are that some cases that should have been weeded out were in fact authorized” and went to trial.

That said, Martineau praises how Quebec courts have handled class actions during the pandemic. “They have been very impressive and efficient,” he says. “While we’ve seen other areas slowed down, these cases in Quebec are all case managed” with one judge per case. A small team in the class action chamber in Montreal has held several virtual hearings and has been “very efficient in not slowing down too much and reminding [lawyers] we must all do our best in pushing cases forward. . . . They had to be flexible and adapt, which they did.”

Looking ahead, the tip of the pandemic’s iceberg is still at some distance, say Osler’s Lockwood and Légendre.

“The reality is, we haven’t seen the . . . knock-on effects and economic repercussions” of the pandemic, says Lockwood. In the privacy sphere, there are already questions about whether the COVID-19 apps are properly protecting consumers’ data.

“Almost every sector is dramatically impacted by these things, [and] the class action regime lends itself to adjudication of a lot of these issues.”

Légendre likewise sees many more consumer privacy class actions coming, especially as consumers are using apps and online platforms so much more.

“Whether it be an app [or other technology], it just prompts that many more questions that people will have to resolve through class actions,” she says.