Last May, Ontario Superior Court Justice Paul Perell certified a class proceeding under the Class Proceedings Act on the condition that the representative plaintiffs plead a fresh as amended statement of claim with revisions to the proposed class definition and proposed common issues. This decision was overturned by the Divisional Court on the basis that the defendant would be denied an opportunity to make submissions in respect of the amended statement of claim.
With respect, the Divisional Court erred in overturning Perell’s conditional certification order. Appropriate case management involves the wide discretion of a motions judge to advance the proceedings and to avoid the potentially prohibitive costs and excessive delays associated with certifying a class proceeding. In the circumstances, Perell was merely exercising this discretion to modify the proposed class proceeding to accord with the CPA.
In Brown v. Canada (Attorney General), the representative plaintiffs claimed compensation on behalf of approximately 16,000 aboriginals who alleged to have suffered the loss of their aboriginal identity as a result of having been placed in foster care or in adoptive homes under child welfare legislation in place from 1964 to 1984.
Perell held that, as pleaded, the plaintiffs’ case was uncertifiable. However, with amendments to their statement of claim, revisions to the proposed class definition and proposed common issues — all of which the judge provided — and subject to the preparation and approval of an adequate litigation plan, Perell granted the motion to certify.
On the leave to appeal and appeal motions, the Divisional Court criticized Perell’s approach on the basis that he “predetermined” that a cause of action would emerge as long as the fresh pleading was prepared in accordance with his reasons. The Divisional Court held that Perell had denied an opportunity to the defendant to argue the elements of s. 5(1) of the CPA, since he did not give the defendant an opportunity to make submissions respecting whether the new pleading disclosed a reasonable cause of action. The Divisional Court held that Perell should have struck out the representative plaintiffs’ pleadings with leave to amend.
With respect, the Divisional Court erred in its decision to overturn certification, mischaracterizing the certifiable causes of action outlined by Perell as emerging only from the proposed amended pleadings. The Divisional Court then criticized Perell on the basis that these new pleadings were not served on the defendant, who was ostensibly denied an opportunity to argue the elements of s. 5(1).
However, in his reasons Perell specifically held that “with amendments, the class action that may go forward is found within the existing statement of claim, but is a pruned or focused class action that emerges from the current pleading.” The representative plaintiffs’ pleadings contained the requisite elements of the breach of fiduciary duty and negligence claims. Perell was simply modifying the proposed class definition and common issue, as contemplated in Williams v. Mutual Life Assurance Co. of Canada. In providing a legitimate target or focus of the certifiable class action, Perell was simply exercising discretion that fell significantly short of descending “into the arena” with the parties to the motion.
In many cases, it is appropriate for the court to grant conditional certification on the basis that the plaintiff will alter or amend a proposed cause of action, class definition, or class period in order to satisfy the elements of a certifiable class proceeding. Of course, the court should not “perform the role of class counsel by making wholesale changes” to a proposed representative plaintiff’s claim. Perell’s proposed amendments fell well short of wholesale change and did not alter the entire theory of the case; they simply focused on the pleadings in order to create a certifiable class proceeding.
Justice Katherine Swinton distinguished Justice Maurice Cullity’s conditional certification in 2007’s Heward v. Eli Lilly & Co. on the basis that the deficiency in the statement of claim in that action related to a derivative claim. Swinton’s distinction was arbitrary — the deficiencies that required amendment for conditional certification in Heward related to a proposed representative plaintiffs’ cause of action, and without amendment, the cause of action was inadequate and uncertifiable. Swinton failed to offer any reasonable basis to distinguish between the treatment of derivative and primary claims for conditional certification, and to distinguish why the former was open to conditional certification while the latter was not.
The fluid nature of class proceedings necessitates a motion judge’s discretion to promote discussion between the parties to arrive at proper pleadings. The cost and delay of interlocutory appeals can be avoided by addressing the representative plaintiff’s full compliance with s. 5(1) after the certification motion through case management. This maintains the motion judge’s role as gatekeeper while adapting the procedure to the exigencies necessitated by the class proceedings framework. Perell ultimately concluded that, subject to the amendments to the pleadings, all the criteria for certification would be satisfied. Adjournment under s. 5(4) or striking the pleadings with leave to amend was unnecessary in the circumstances, and would have resulted in further cost and delay to the proceedings with no discernible benefit to anyone.
Appropriate case management in class proceedings will take into account the substance of a proposed representative plaintiff’s claim in order to determine whether or not the claim is certifiable. A motion’s judge is given wide discretion to look at the pleadings to determine whether the constituent elements of a certifiable cause of action are present, and to amend the definition of the class or the common issues. Conditional certification is an important mechanism to ensure lower costs and expeditious resolution of certification motions. In the circumstances, Perell properly exercised his discretion in granting the conditional certification.
With respect, the Divisional Court erred in overturning Perell’s conditional certification order. Appropriate case management involves the wide discretion of a motions judge to advance the proceedings and to avoid the potentially prohibitive costs and excessive delays associated with certifying a class proceeding. In the circumstances, Perell was merely exercising this discretion to modify the proposed class proceeding to accord with the CPA.
In Brown v. Canada (Attorney General), the representative plaintiffs claimed compensation on behalf of approximately 16,000 aboriginals who alleged to have suffered the loss of their aboriginal identity as a result of having been placed in foster care or in adoptive homes under child welfare legislation in place from 1964 to 1984.
Perell held that, as pleaded, the plaintiffs’ case was uncertifiable. However, with amendments to their statement of claim, revisions to the proposed class definition and proposed common issues — all of which the judge provided — and subject to the preparation and approval of an adequate litigation plan, Perell granted the motion to certify.
On the leave to appeal and appeal motions, the Divisional Court criticized Perell’s approach on the basis that he “predetermined” that a cause of action would emerge as long as the fresh pleading was prepared in accordance with his reasons. The Divisional Court held that Perell had denied an opportunity to the defendant to argue the elements of s. 5(1) of the CPA, since he did not give the defendant an opportunity to make submissions respecting whether the new pleading disclosed a reasonable cause of action. The Divisional Court held that Perell should have struck out the representative plaintiffs’ pleadings with leave to amend.
With respect, the Divisional Court erred in its decision to overturn certification, mischaracterizing the certifiable causes of action outlined by Perell as emerging only from the proposed amended pleadings. The Divisional Court then criticized Perell on the basis that these new pleadings were not served on the defendant, who was ostensibly denied an opportunity to argue the elements of s. 5(1).
However, in his reasons Perell specifically held that “with amendments, the class action that may go forward is found within the existing statement of claim, but is a pruned or focused class action that emerges from the current pleading.” The representative plaintiffs’ pleadings contained the requisite elements of the breach of fiduciary duty and negligence claims. Perell was simply modifying the proposed class definition and common issue, as contemplated in Williams v. Mutual Life Assurance Co. of Canada. In providing a legitimate target or focus of the certifiable class action, Perell was simply exercising discretion that fell significantly short of descending “into the arena” with the parties to the motion.
In many cases, it is appropriate for the court to grant conditional certification on the basis that the plaintiff will alter or amend a proposed cause of action, class definition, or class period in order to satisfy the elements of a certifiable class proceeding. Of course, the court should not “perform the role of class counsel by making wholesale changes” to a proposed representative plaintiff’s claim. Perell’s proposed amendments fell well short of wholesale change and did not alter the entire theory of the case; they simply focused on the pleadings in order to create a certifiable class proceeding.
Justice Katherine Swinton distinguished Justice Maurice Cullity’s conditional certification in 2007’s Heward v. Eli Lilly & Co. on the basis that the deficiency in the statement of claim in that action related to a derivative claim. Swinton’s distinction was arbitrary — the deficiencies that required amendment for conditional certification in Heward related to a proposed representative plaintiffs’ cause of action, and without amendment, the cause of action was inadequate and uncertifiable. Swinton failed to offer any reasonable basis to distinguish between the treatment of derivative and primary claims for conditional certification, and to distinguish why the former was open to conditional certification while the latter was not.
The fluid nature of class proceedings necessitates a motion judge’s discretion to promote discussion between the parties to arrive at proper pleadings. The cost and delay of interlocutory appeals can be avoided by addressing the representative plaintiff’s full compliance with s. 5(1) after the certification motion through case management. This maintains the motion judge’s role as gatekeeper while adapting the procedure to the exigencies necessitated by the class proceedings framework. Perell ultimately concluded that, subject to the amendments to the pleadings, all the criteria for certification would be satisfied. Adjournment under s. 5(4) or striking the pleadings with leave to amend was unnecessary in the circumstances, and would have resulted in further cost and delay to the proceedings with no discernible benefit to anyone.
Appropriate case management in class proceedings will take into account the substance of a proposed representative plaintiff’s claim in order to determine whether or not the claim is certifiable. A motion’s judge is given wide discretion to look at the pleadings to determine whether the constituent elements of a certifiable cause of action are present, and to amend the definition of the class or the common issues. Conditional certification is an important mechanism to ensure lower costs and expeditious resolution of certification motions. In the circumstances, Perell properly exercised his discretion in granting the conditional certification.
