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Evidence of commonality on applications to certify class actions: the burden is on the plaintiffs.
This article was written by Michael Dew, a Vancouver lawyer who practices civil litigation. Click here for contact information and further details about Michael’s practice. This article provides only information, not legal advice. If you require legal advice you should consult a lawyer.
Sat, 2008-04-05 20:40 — Michael Dew
Research articles :
Introduction
Class actions are a procedural tool that allow many plaintiffs who have similar claims to band together to share the costs of litigation.
Class actions provide an effective means for plaintiffs to bring individually small, but meritorious, claims; claims which would not be worth litigating in isolation. The key battle in class action litigation is the certification application. It is at that hearing that the court decides whether the plaintiffs’ claims should be certified (which will likely prompt serious settlement negotiations) or dismissed (which will likely be the end of the case).
Sensitive of the pressure exerted on defendants when a large number of claims are grouped together, the class action legislation in each of the provinces in Canada requires the plaintiffs’ claims to be truly similar. For certification, there must be common issues which, when certified and then decided, will result in efficiencies by allowing the result decided with respect to the representative plaintiff to be extrapolated to other members of the class. Unless deciding an issue will resolve issues in a large number of cases, the court will refuse certification and require the claims to be individually litigated.
In Ernewein v. General Motors of Canada Ltd., 2005 BCCA 540 [Ernewein], the British Columbia Court of Appeal confirmed that there is a significant evidentiary the burden on the plaintiff when applying for certification of a class action. Focussing on decisions that have cited Ernewein, this article reviews the evidentiary burden courts expect plaintiffs to meet when applying for certification of class proceedings.
Legislative provisions
The burden is on the plaintiff at the certification hearing to show that there are common issues and that a class action is the preferable procedure for the litigating the claims. Although there are differences in the legislation from province to province, the requirement for commonality is universal. Section 4 of the Class Proceedings Act, R.S.B.C. 1996, c. 50 sets out the requirements for certification in British Columbia:
4(1) The court must certify a proceeding as a class proceeding on an application under section 2 or 3 if all of the following requirements are met:
(a) the pleadings disclose a cause of action;
(b) there is an identifiable class of 2 or more persons;
(c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members;
(d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues;
(e) there is a representative plaintiff who
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and
(iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members.
(2) In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, the court must consider all relevant matters including the following:
(a) whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members;
(b) whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions;
(c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings;
(d) whether other means of resolving the claims are less practical or less efficient;
(e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means.
It is with regard to s. 4(1)(c) in particular that the plaintiffs are required to provide evidence of commonality.
The decision in Ernewein
Facts of the case in Ernewein
The plaintiff in Ernewein owned a General Motors truck which was designed with its fuel tank positioned outside the truck’s rails (i.e. the fuel tank was outside the structural frame, or chassis). The plaintiff claimed that the exposed positioning of the fuel tank created a risk of harm in the event of side-impact collisions. Twenty-eight different models of trucks were alleged to be negligently manufactured by General Motors between 1973 and 1991. The plaintiffs in the proposed class action claimed damages for the diminished value of their trucks because of the negligent manufacture, and sought punitive damages from General Motors.
The plaintiffs relied on a report titled "Engineering Analysis EA 92-041 General Motors Pickup Truck Defect Investigation" prepared by Mr. Pena, the U.S. Secretary of Transportation. That report was written after an investigation by the Office of Defects Investigation ("ODI") of the U.S. National Highway Traffic Safety Administration. The report concluded that the fuel tanks outside the rails posed an increased risk due to post-crash fires.
The defendant provided an affidavit sworn by a statistician who had analyzed “real world accident data”. That affidavit indicated that the risk of post-crash fires was not greater for the GM pickups than for other pickups. The defendant also submitted affidavit evidence, sworn by a GM engineer, to the effect that the different GM pickups had different fuel system designs and that depending on the model of truck, other elements of the vehicles, apart from the frames, provided protection to the fuel tanks. The report said: “it is impossible to generalize on how such vehicles will perform in particular crashes”. The defendants relied on that affidavit to argue that a finding that one plaintiff’s truck design posed an increased risk of harm could not be extrapolated to other truck designs.
Certification by the British Columbia Supreme Court
The British Columbia Supreme Court judge certified the action as a class proceeding because he found that the common issues between the individual plaintiffs predominated over issues affecting the individual members. He relied upon a report that claimed the location of the fuel tanks on all of the plaintiffs’ different trucks created a common risk.
The British Columbia Supreme Court judge accepted that the report tendered by the plaintiffs was not admissible as evidence because it was not tendered through an expert, but said that he had to decide the question before him “upon an assumption that the facts [pleaded] are true… Thus, the report … for the purposes of this stage may be presumed to be true. The proof of those asserted facts is for a later stage.”
Certification quashed by the British Columbia Court of Appeal
In a unanimous judgment delivered by Newbury J.A., the British Columbia Court of Appeal held that the report that the judge relied upon to establish there were common issues between the plaintiffs was not “evidence”, and so should not have been relied on.
Having ruled the report inadmissible, the Court held that the plaintiffs had failed to establish an evidentiary basis for the commonality of issues between them. The only real evidence before the court was the expert evidence presented by General Motors to the effect that the different trucks all had different designs, and that generalizations about the risks inherent in the designs could not be made. This weighed against certification.
Regarding the requirement for evidence on certification proceedings, the Court said the following:
Although it is clear that no assessment of the merits of the claim takes place at the certification stage, it is equally clear that an “evidentiary basis” is required for each of the certification requirements other than that the pleadings disclose a cause of action. The phrases “evidentiary basis” and “basis in fact” were used by the Supreme Court of Canada in Hollick, (supra, at paras. 24-26) in such a manner as to be synonymous with “evidence”, and as the Chief Justice pointed out, the requirement arose from the statutory obligation placed on the plaintiff in a class proceeding in Ontario to file “one or more affidavits setting forth the material facts” to be relied upon. The British Columbia legislation is similar in this regard: s. 5(1) of the Act requires an applicant for certification to file an affidavit containing the items specified at s. 5(5), and the recipient of the notice of motion may also file affidavit material: s. 5(4).
(Ernewein at para. 25).
Applying that principle to the facts of Ernewein, the court said the following:
[W]hat “evidentiary basis” did the plaintiffs provide on the question of commonality? Certainly the conclusions reached by Mr. Pena set out above at para. 7 would, had they been properly adduced as expert opinion evidence, have provided a basis for a court to conclude that a series of common questions had been raised with respect to the design of motor vehicles with fuel tanks outside their frame rails. But as has been seen, the Chambers judge acknowledged that Mr. Pena's report was “not evidence”, and no challenge to that ruling is made by the respondents on this appeal. Despite the robust approach taken by Canadian courts to class actions, I know of no authority that would support the admissibility, for purposes of a certification hearing, of information that does not meet the usual criteria for the admissibility of evidence. A relaxation of the usual rules would not seem consonant with the policy implicit in the Act that some judicial scrutiny of certification applications is desirable, presumably in view of the special features of class actions and the potential for abuse by both plaintiffs and defendants: see the discussion at paras. 31-52 of Epstein v. First Marathon Inc. (2000) 41 C.P.C. (4th) 159 (Ont. Sup. Ct. J.).
Accepting, then, that Mr. Pena's report was “not evidence”, no proper basis was advanced for the proposition that the location of fuel tanks outside the rails of the subject vehicles raised a question common to all the plaintiffs, the resolution of which question would significantly advance the litigation. Rather, the only evidence is that of the defendants' expert, Mr. Sinke, to the effect that because the C/K pick-ups between 1973 and 1991 incorporated “a number of unique fuel system designs”, one cannot “generalize on how such vehicles will perform in particular crashes beyond stating that all the designs are reasonably safe and meet all applicable federal safety standards.” The ability to generalize, or extrapolate, from one plaintiff's vehicle to another, is crucial to the existence of a common issue… Having provided no "evidentiary basis", the plaintiffs did not meet this requirement in this case.
[T]he plaintiffs failed to establish an evidentiary basis; i.e., to adduce admissible evidence, for the proposition that the determination of the real common issues - whether the fuel system design(s) employed by the defendants breached the applicable standard(s) of care and created an unreasonable risk of harm to the plaintiffs - would advance the litigation in a meaningful way.
(Ernewein at paras. 31-33).
Plaintiffs must provide “evidence”
The first lesson from Ernewein is that plaintiffs must provide real evidence. In other words, it is only “evidence” if it is sworn. Furthermore, the evidence must be tailored to the issues in dispute in the action the plaintiff seeks to certify as a class action. An affidavit sworn by a solicitor merely for the purpose of placing a generic expert report before the court is not considered sworn evidence and will not, alone, be adequate to establish commonality.
In Punit v. Wawanesa Mutual Insurance Co. [2006] O.J. No. 3685 (QL), before the certification hearing, the defendant applied for an order striking out certain paragraphs of affidavits filed in support of the plaintiffs’ motion for certification. The class action in that case involved claims relating to the use of non-original equipment (“non-OEM”) in the repair of automobiles which had been involved in accidents.
The court allowed the application to strike the affidavits, saying that expert evidence put forward for the truth of its contents, either factual or opinion, had to be first-hand knowledge:
If, however, the evidence of experts or from the Illinois action is put forward for the truth of its contents either factual, or opinion, then it must be capable of being tested by cross-examination. As such, it must meet the test of being first-hand knowledge.
The choice of what evidence is tendered to meet the sufficiency test of certification is that of the plaintiff. It is not for a motions judge to dictate that it be in any particular form. (See Caputo v. Imperial Tobacco (1997), 148 D.L.R. (4th) 566 at 571-2 (O.C.G.D.)).
Following oral submissions, counsel for the defendants provided me with a copy of the recent decision of the British Columbia Court of Appeal in Ernewein v. General Motors of Canada Ltd., [2005] B.C.J. No. 2370: I adopt the statement of Newbury J.A. at paragraph 31…[para. 31 from Ernewein set out in full].
(Punit at paras. 16-18)
The plaintiffs in Punit were fortunate in that they were granted leave to replace or amend their affidavits.
The case of Risorto v. State Farm Mutual Automobile Insurance Company (2007), 38 C.P.C. (6th) 373 (Ont. Sup. Ct. J.) involved an application for certification of a class action alleging that the defendant insurance company instructed that repairs to motor vehicles to be done using parts of inferior quality i.e. parts not of "like kind and quality" to those made by the original equipment manufacturer for the vehicle.
The plaintiff claimed that using “non-OEM” parts was a breach of the statutory conditions incorporated into the automobile policies of the members of the proposed class.
Regarding the need for evidence on commonality, Cullity J. said:
The specific fact of which some evidence is required for the purpose of proposed common issue (f) is that non-OEM parts are always, and necessarily, inferior to OEM parts because of deficiencies inherent in the design and production processes employed by all non-OEM parts manufacturers.
(Risorto at para. 51).
However, Cullity J. found that the evidence tendered by the plaintiff was not admissible because the plaintiff’s expert was not suitably qualified to give expert evidence on that subject.
In relation to other evidence tendered by the plaintiff, Cullity J. said:
I see no basis for treating the unsworn and unaffirmed opinions of the witnesses in another case as admissible to provide an evidential foundation for the common issues. The comments of Newbury J.A. in Ernewein are again directly in point.
(Risorto at para. 72).
The plaintiff’s application for certification in Risorto was dismissed, and this case confirms the importance of the plaintiff providing sworn affidavit evidence tailored to the issues in the particular case.
In Stewart v. General Motors of Canada Limited, [2007] O.J. No. 2319 (Ont. Sup. Ct. J.) (QL) [Stewart] the plaintiffs were able to successfully defend an application by the defendant to strike the affidavit of the plaintiffs’ expert. In that case, the plaintiffs’ claimed that the defendant negligently designed intake manifold gaskets installed in their vehicles, and that the gaskets degraded prematurely causing coolant to leak causing damage to the vehicles and danger to the occupants of the vehicles.
Cullity J. distinguished Ernewein and found that the plaintiffs’ expert affidavit was admissible, and should not be struck out. Although the plaintiffs’ expert’s affidavit referred to evidence in another case, it then explained how that evidence was applicable to the present case. Thus, unlike in Ernewein where the lawyer’s affidavit was simply a means of providing a generic report to the court, the affidavit in Stewart provided sworn evidence in relation to the issues before the court.
The foregoing indicates that plaintiffs must provide admissible evidence i.e. sworn evidence tailored to the issues in dispute in the certification hearing.
The evidence must address the issue of commonality
The following cases consider the quality of evidence required to establish commonality.
Parsons v. Coast Capital Savings Credit Union, 2007 BCCA 247.
The plaintiff applied for certification of a class action to recover “unlawful overdraft fees” charged by the defendant, Coast Capital Savings Credit Union. The plaintiff alleged that overdraft fees in excess of $5 charged by Coast Capital were criminal interest rates contrary to s. 347(1) of the Criminal Code, R.S.C. 1985, c. C-46.
The British Columbia Court of Appeal found that the calculation tables provided by the plaintiff’s expert would allow extrapolation to determine whether other members of the class had been charged interest at a criminal rate, and so there was evidence of commonality. Thus, the Court upheld the certification of the class proceeding by Madam Justice Morrison
Knight v. Imperial Tobacco Canada Limited, 2006 BCCA 235
The plaintiff applied for certification of a class action alleging that in the course of marketing cigarettes Imperial engaged in deceptive acts or practices contrary to the Trade Practice Act, R.S.B.C. 1996, c. 457 and the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2.
The trial judge certified thirteen common issues. The British Columbia Court of Appeal held that seven issues were properly certified, that two of them could only be certified in relation to a segment of the general class, and that the others should not have been certified at all.
Regarding the requirement for evidence on commonality, Hall J.A., for the Court, said the following:
It is necessary that the statement of claim disclose a cause of action, but the certification stage is not a test of the merits of the action. What the certification stage focuses on is the form of the action. The key question is whether the suit or portions of it are appropriate for the trial of common issues.
To answer that often difficult question requires determining whether claims of the proposed class raise common issues. The proposed class must be capable of definition and it ought not to be unnecessarily broad. In the case of [Hollick v. Toronto (City), [2001] 3 S.C.R. 158, 2001 SCC 68] at p. 174, the Chief Justice noted a requirement that the class representatives should come forward with sufficient evidence to support certification and, of course, the opposing party has an opportunity to respond with evidence of its own on this issue. Deficiency in information may result in the court not being able to find sufficient facts to enable it to determine that certification of certain common issues ought to be granted: Caputo v. Imperial Tobacco Ltd. (2004), 236 D.L.R. (4th) 348, 44 C.P.C. (5th) 350 (Ont. S.C.J.) [Caputo] and Ernewein v. General Motors of Canada Ltd., (2004), 135 A.C.W.S. (3d) 994, 2004 BCSC 1462, reversed (2005), 143 A.C.W.S. (3d) 634, 2005 BCCA 540, leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 545 (QL) [Ernewein]. There is a duty lying upon a class representative to establish an evidentiary basis for certification.
(Knight at para. 20-21)
Thus, Knight confirmed the need for the plaintiff to provide convincing evidence of commonality.
Benning v. Volkswagen Canada Inc. et al., 2006 BCSC 1292
The plaintiffs in Benning applied for certification of a class action claiming that the locking mechanisms of Jetta and other Volkswagen and Audi motor vehicles were defective, making it easy to break into those cars.
Gropper J. said the following regarding the need for evidence on commonality:
The plaintiff’s claim is premised on whether the locking system is defective….
In order to demonstrate that, there must be evidence to show that the members of the proposed class have experienced an attack on their vehicle similar to that made upon the plaintiff’s vehicle. The defendants’ evidence shows that the success or failure of such an attack varies with duration and intensity. There are many methods which third parties may employ to break into a vehicle including many methods of attack on a locking system.
I agree with the defendants that there is no evidence from which I can conclude that the nature of the attack on the plaintiff’s vehicle bears any similarity to that of any other class member. The results of the analysis cannot be extrapolated.
As a result, I conclude that the claims of the proposed class are not sufficiently common to meet the requirements of s. 4(1)(c).
(Benning at paras. 83-86)
Thus, Benning is a case where certification failed because the plaintiffs did not provide sufficient evidence of commonality.
Roberts v. Canadian Pacific Railway Company et al., 2006 BCSC 1649
In Roberts the plaintiff sought certification of a class action in relation to coal dust that was escaping from rail cars on a 1200 kilometre length of railway track running from Sparwood, British Columbia, to Roberts Bank, British Columbia. The plaintiff claimed nuisance, negligence, and breach of the rule in Rylands v. Fletcher.
The proposed class included all persons who had owned or resided on property within the “Class Area”, which was a 1km wide, 1200 km long, strip of land along the route of the railway tracks.
The plaintiff submitted surveys detailing the dust that had been deposited on properties adjacent to the railway line, but those surveys were rejected by Madam Justice Ross because they were not sworn:
The first difficulty is that there is no evidence of complaints within the Class Area other than in three relatively small areas involving residences located quite close to the tracks. The plaintiff’s affidavit exhibits a number of surveys, all of which were dated prior to the date in the Proposed Class definition. These surveys originate from residences bordering the same stretch of track as the plaintiff, one used only by CP and not by CN. Furthermore, the surveys pre-dated the installation by CP of a supplementary spray station on that stretch of track.
The surveys are unsworn. The defendants submit, correctly in my view, that the surveys do not meet the standards of admissibility for the purposes of a certification hearing; see Ernewein et al. v. General Motors of Canada Ltd. et al. (2005), 260 D.L.R. (4th) 488 at para. 31, 2005 BCCA 540.
(Roberts at paras. 24 - 25).
Madam Justice Ross found that there was no basis to conclude that exposure to coal dust was even on all properties within the Class Area. Rather, she said that the evidence suggested that coal dispersion was variable and that some properties may not have been exposed to coal dust at all:
In the type of case where an identifiable class of persons with a common issue is not obvious, as it would be for example in the case of a single incident mass tort, the proposed representative plaintiff must show that the proposed class is defined sufficiently narrowly by leading evidence on the certification application…
(Roberts at para. 21)
Madam Justice Ross further explained the inadequacy of the plaintiff’s evidence as follows:
There is no evidence of the scope of the harm. The plaintiff’s evidence involves complaints from residences in Kamloops, Hope and Chilliwack all originating from properties located quite close to the tracks. There is no evidence of patterns of coal dispersion within and throughout the Class Area. There is likewise no evidence of the impact of contamination throughout the Class Area.
The undisputed evidence is that the Class Area contains significant diversity in ecosystem, patterns of settlement and land use. While CN specifically denies the assertion that coal dust escapes from CN trains along the Class Route, it has filed expert evidence from an engineer with expertise in air emissions, Mr. Peter Sagert. Mr. Sagert has provided expert opinion evidence that there are several factors that can affect the possibility of coal dust emissions from trains including:
(a) differences in coal type (thermal or metallurgical);
(b) procedures employed by coal mines to load trains and procedures employed at coal ports to unload trains;
(c) speed of the train;
(d) existence of supplemental spray systems along the track;
(e) meteorological conditions; and
(f) dispersion factors.
This evidence was not disputed.
It is also clear and undisputed from the expert evidence filed by the defendants that, because of the significant variability along the Class Route of the factors that affect coal dust emissions from trains, it is not possible to draw an inference from the complaints in evidence that coal dust from the defendant’s trains is being dispersed throughout the Class Area.
(Roberts at paras. 29-31).
Acknowledging the variation of dust along the class route, Madam Justice Ross said at para. 51 that the there was no evidence that the Class Area being 1 km one was anything other than arbitrary, and that a finding that coal dust settled on any particular property could not be extrapolated throughout the Class Area. Madam Justice Ross also commented that the plaintiff had not presented any evidence on whether the dust was noxious:
The plaintiff has provided no evidence to support the proposition that any particular amount of coal dust is dangerous or noxious. The inference that one must draw in the circumstances is that whether or not coal dust is dangerous or noxious will depend on the nature and amount of dust to which one is exposed and the result of the exposure.
(Roberts at para. 67).
In the result, Madam Justice Ross found that the plaintiff had not provided an evidentiary basis to support the scope of the proposed class. This case should be a stern warning to plaintiffs regarding the quality and exhaustiveness of evidence required to establish commonality.
Poulin v. Ford Motor Company of Canada (2006), 35 C.P.C. (6th) 264 (Ont. Sup. Ct. J.)
The plaintiff in Poulin applied for certification of a class action claiming that the door latch mechanisms in certain Ford motor vehicles were defective and would cause the car doors to remain closed in the event of rollover accidents or side impact collisions.
Mackenzie J. noted that the claim in Poulin was similar to that in Ernewein:
As in the present case, the nature of the damages sought by the plaintiff [in Ernewein] on behalf of himself and proposed class members was a loss of value in the subject vehicles plus punitive damages, there being no damages for personal injury or damage to property.
(Poulin at para. 62).
Mackenzie J. then explained the ratio of Ernewein on the issue of commonality as follows:
The court stated that the ability to generalize or extrapolate from one plaintiff’s vehicle to another is crucial to the existence of the common issue.
(Poulin at para. 63).
Mackenzie J. went on to find that the plaintiff had failed to provide sufficient evidence to establish that despite the different door latch mechanisms on the affected vehicles, the issue of whether the locking mechanisms were safe was a common issue.
The plaintiff’s application for certification in Poulin was dismissed, providing another illustration of the burden on the plaintiff to provide convincing evidence of commonality.
Conclusion
The foregoing indicates that there is a significant evidentiary burden on plaintiffs when applying for certification of a class action. Certification will only be granted when there is evidence of commonality such that resolution of the common issues will advance the claims of all plaintiffs in the proposed class by allowing the findings made with respect to the representative plaintiff to be extrapolated to the other members of the class.
