Numerousity and social utility in class actions

This month, Ontario Superior Court Justice Paul Perell certified a class proceeding on behalf of customers of the web site alleging that Expedia Inc. wrongfully charged service fees for which it was not entitled. Perell’s reasons emphasized the procedural nature of the certification motion which is designed to ensure an action conforms to the requirements set out in the Class Proceedings Act. This motion is not a forum to debate the merits or the utility of the action, and the certification judge’s role as gatekeeper is limited to a juridical exercise in screening claims that are not appropriate for class action treatment.

In Magill v. Expedia, the representative plaintiff Tim Magill brought an action against Expedia Inc. and Expedia Canada Corp. on behalf of 1.5 million Canadian customers who annually book hotel rooms on the website. Magill alleged the defendants collected hidden profits subsumed under the title of service fees in addition to excessive taxes.

In resisting certification of the proposed class proceeding, Expedia argued Magill failed to satisfy the identifiable class criterion of the Class Proceedings Act. In order to certify a class proceeding, s. 5(1)(b) of the act requires the existence of an identifiable class of two or more persons that would be represented by the representative plaintiff.
The defendants argued the identifiable class requirement should be used as a gatekeeper mechanism to filter out class actions that provide no social utility.

Since Magill did not file evidence from anyone other than himself seeking to assert a claim, argued the defendants, there appeared to be too few putative class members interested in achieving access to justice or the behaviour modification of the defendants. As the gatekeeper, the defendants urged the judge to deny certification because the class proceeding lacked social utility.

Perell rejected the notion that numerousity could be used as a proxy for social utility. For example, where class members have very small claims, class members may be indifferent, which might be reflected by a dearth of evidence from other class members. Nevertheless, behaviour modification will remain a strong rationale for a class action.

Perell also rejected the defendants’ submission that social utility should play a role at the certification stage. It is improper for a certification judge to engage in an exercise of weighing utility in order to filter out class actions that fall below a certain utility threshold. As Perell stated, social utility is not a juristic element and is more a matter of policy or political debate.

In addition, measuring social utility would be difficult and would be inconsistent with the design of the certification criteria, which are not for probing the social utility of any particular class proceeding any more than they are to probe the merits of the proposed class action. Although the certification motion is an important screening mechanism to protect defendants from being unjustifiably embroiled in complex and costly litigation, it may do so only by weeding out claims that are not appropriate for class actions. This careful screening process highlights the gatekeeping role of the court to ensure a claim meets the technical and procedural elements of certification.

It was never intended that judges take a “holistic approach” that would measure whether a “good” class action should be certified or whether a “bad” class action would not service the purposes of the class proceedings legislation and should not be certified. Nor was it ever intended that judges look at the proposed case to see if enough people have complained about the issue to make a class action worthwhile.

The certification test contains the tools judges need to weed out cases that are not suitable for class action treatment. They do not need to resort to or invent other tools, especially at the request of defence counsel.

This characterization of the certification test is in the best interests of both the plaintiff and the defendant, as it will result in lower costs to the parties as well as the expeditious resolution of this stage of the proceedings, which is what the drafters intended.

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