U.S. Trends
In the U.S. class action litigation has included Agent Orange, asbestos, the Dalkon Shield, Bendectin breast implants and the Bjork-Shiley heart value. In addition, U.S. mass torts have included major disasters such as the MGM Grand Hotel fire and the Hyatt skywalk collapse. In Canada such claims have included the Toronto subway disaster and the Walkerton water contamination. The scope of class actions has considerably expanded over the years.
In the United States there has been an ebb and flow as the courts have warmed and cooled to class proceedings. In the 1980’s the Federal Courts were reluctant to certify mass tort claims but a contrary trend developed in the late 1980’s and early 1990’s as the courts dealt with a multitude of asbestos cases. Indeed, in 1987 the Second Circuit went so far as to uphold the certification of the Agent Orange class action. Furthermore, class actions developed an impetus as defendants began to appreciate that properly structured class settlements could insulate them from continuing claims over a protracted period.
More recently the U.S. courts have retrenched and restricted the ubiquitousness of class actions. In Amchem Products Inc. v. Windsor, 521 U.S., 117 S. Ct. 2231 (1997), the U.S. Supreme Court validated the continuing efforts of the Circuits Courts of Appeals since 1995 limiting certification of class proceedings. In the U.S. these recent trends have led to a new development in class action litigation in which plaintiffs bring claims for “diminished value”. In these claims, plaintiffs sue for economic loss based on contractual claims rather than personal injury or property damage. Nonetheless, diminished value claims have also been brought involving legal theories such as negligence, strict liability, breach of expressed and implied warranties, fraud and misrepresentation.
Notwithstanding recent judicial trends, the American Tort Law Reform Association and others, including the U.S. Chamber of Commerce, continue to press, for statutory restrictions on class actions in the U.S.. The Class Action Fairness Act of 2001 was introduced as a bill on June 27, 2001 with a view to circumventing state courts and reducing the amounts of judgments and legal fees.
The Class Action Fairness Act of 2005 was pushed through by President Bush in February 2005 and ensures that class actions in the United States involving at least $5,000,000 are dealt with in federal court, which is
more sympathetic to defendants than many local state courts. It appears likely, however, that this law may only result in multiple class actions being commenced in different federal courts across the country. These will then likely be consolidated in a single Federal District Court pursuant to the multiple district litigation rules.
The Class Action Fairness Act of 2005 only expressly addresses lawyers’ fees in “coupon settlement”, in which plaintiffs receive discounts on future purchases by way of settlement. The law requires lawyers’ fees to
be based on the value of coupons redeemed rather than coupons issued.
Canadian courts generally apply a more liberal certification standard than in the U.S.. The Supreme Court of Canada has recently endorsed class actions even in jurisdictions such as Alberta which at the time did not have any class proceedings legistation. See Western Shopping Centres Inc. v. Dutton, [2001] S.C.R. 534, reasons delivered July 13, 2001, Hollick v. Toronto, [2001] 3 S.C.R. 158 and Rumley v. British Columbia, [2001] 3 S.C.R. 184. Class proceedings legislation has now been introduced in most other provinces.
In the U.S. the tide may have turned back somewhat in favour of the plaintiffs’ bar. See the discussion under the heading “securities” elsewhere on this website.
A recent cause for concern is evidenced by the decision of Cullity J. in Parsons v. McDonald’s Restaurants of Canada Ltd., 45 C.P.C. (5th) 304. Justice Cullity applied the decision of the Supreme Court of Canada in Beals v. Saldanha, [2003] S.C.C. 72. In Parsons, while the settlement order of an Illinois court in a corresponding U.S. class action was found not to bind Ontario residents, the decision was based on the fact that inadequate steps had been taken to notify potential class members in Canada. Accordingly, it appears open for Canadian residents to be bound by the decisions of U.S. courts in class actions with a substantive connection to Ontario or other provinces where proper steps have been taken to bring the settlement to the notice of the Ontario residents.
On February 16, 2005 the Ontario Court of Appeal in Currie v. McDonald’s Restaurants of Canada Ltd. confirmed the finding of Justice Cullity that foreign class action judgments, which include Canadian plaintiffs as class members, may be recognized and enforced in Ontario so long as proper procedural safeguards are followed in the foreign action. In this case, however, the Court of Appeal confirmed that the notice given in the United States to the Canadian plaintiffs was inadequate.