A guide to class actions

Class actions: you read about them in the newspaper or hear about them on television, but beyond the headlines and soundbites, what is a “class action” and how can a class action help you? This blog post unpacks the world of class proceedings, including the advantages, common types, and the typical steps (from start to finish…finish being money in your bank account). 

Contents

• What is a class action?
• What are the advantages of a class action?
• What are the common types of class actions?
• How long does it typically take for a class action lawsuit to progress from initiation to resolution or settlement?
• Takeaways

What is a class action?

A class action is a type of civil litigation that allows one or a few individuals to sue one or more defendants—commonly, large companies or government bodies—on behalf of a large group of people who experienced a similar type of harm.

Class proceedings are a “procedural vehicle”—they do not alter the content of the rights and protections that Canadians have under the law. Rather, class proceedings empower many people to sue the same defendant(s) for a common wrong in one action, as opposed to filing hundreds, or even thousands, of separate civil proceedings.

Much like personal injury law actions, class proceedings are litigated on a “contingent” basis. Contingency means that the plaintiffs and class members do not pay counsel unless they received money from the defendant(s) by way of a settlement or, less commonly, a court judgment.

What are the advantages of a class action?

According to the Supreme Court of Canada, there are three primary advantages to class actions:

1. Access to justice: litigation (i.e., suing a person or company) is time-consuming, expensive, and stressful.
   
   It is practically impossible for one person to sue a large company: businesses have deep-pockets and can afford to hire sophisticated legal teams to defend their interests throughout the lifetime of the litigation. By grouping similar claims together, class actions spread the cost of litigation across many people, thus making it possible for wronged individuals to bring an action against well-funded defendants.
   
2. Judicial economy: there are only so many judges.
   
   In a world without class actions—where multiple individuals may attempt to sue a company or the government based on the same events—a judge may be required to hear essentially the same case over and over again. Class actions prevent this potential duplication of effort, allowing judges to devote more resources to hearing other cases.
   
3. Behavioural modification: if you do something bad and never face consequences for your actions, it may be tempting to continue doing bad things.
   
   The same logic applies for corporate wrongdoing. If a corporation does something illegal that generates profit while causing widespread harm—but will likely never face any repercussions because the legal system is complex and expensive—will the corporation modify its behaviour by its own volition? Even the most optimistic amongst us with likely say: no, probably not. Insert the class action: if the same corporation faces the prospect of a multi-year lawsuit where they may have to pay millions of dollars to the people it harmed, will the corporation reconsider its action? Yes, it may. Simply put, the prospect of facing a class action acts as a deterrent to engaging in illegal conduct.

What are the common types of class actions?

Given that class actions are a “procedural vehicle”, any wrongdoing can be the subject of a class action provided the potential class members experienced a shared harm. That said, common types of class actions include:

• securities: provincial securities legislation, such as the Ontario Securities Act, require public companies (i.e., a company that sells stock on an exchange, like the Toronto Stock Exchange) to disclose certain information publicly, so that potential investors can make informed investment decisions. Generally, securities class actions concern publicly listed companies that have either disclosed incorrect information (a “misrepresentation”) or failed to disclose information that they were obligated to disclose. Siskinds has been at the forefront of securities class actions in Canada, including as co-counsel in the securities action against SNC-Lavalin which settled for $110 million dollars in 2018.
  
• competition: competition class actions involve a contravention of Canada’s Competition Act. For example, a plaintiff may bring a class action against a group of companies that agree to conspire together to raise the price of a good, such as batteries or chocolate.  (i.e., price-fixing). Competition class actions may also encompass allegations of misleading pricing practices, such as Siskinds’ current action against SiriusXM for “drip pricing”—adding a surprise fee at the end of the purchasing process.
  
• consumer protection: class actions in this area focus on corporations that charge undisclosed fees, impose terms that are unfair to consumers, or make false and misleading representations, among other illegal acts. These actions are generally brought under provincial consumer protection legislation, such as the Ontario Consumer Protection Act. Consumer protection class proceedings involve a wide variety of subject matter, from software used by car manufacturers to cheat on emissions tests, to E. coli food poisoning, to penalties for mortgage prepayment, among other issues.
  
• humanitarian and institutional abuse: a growing focus of class litigation, class proceedings in this domain often concern abuse in institutional setting, such at schools, group homes, and correctional facilities. Siskinds currently represents the plaintiff in a class proceeding against Hatts Off, a Hamilton-based group home. In this action, the plaintiff alleges that Hatts Off and others were negligent in their operation of the home and breached fiduciary obligations to the children and youth in their care.
  
• pharmaceutical and medical devices: class proceedings in this arena focus on whether pharmaceutical companies and corporations that manufacturer medical devices properly disclosed the risks of those drugs or devices to the patients, their treating physicians, and other healthcare providers. Siskinds is co-counsel in the settled pharmaceutical class action against Purdue Pharma and various affiliated entities. This action compensates individuals for the injuries they suffered because of the addictions that they developed from using OxyContin and OxyNeo.

Other common types of class actions include environmental class actions, privacy breach, employment law, and product liability class actions.

How long does it typically take for a class action lawsuit to progress from initiation to resolution or settlement?

Litigation, generally, takes a long time. Class actions, even more so. More procedurally complex than standard litigation—with extra procedural steps and potentially protracted settlement negotiations, among other time-consuming elements—class proceedings may take several years to well over a decade to reach full resolution.

At the outset of the litigation, it is difficult to say how long a class action will take. The length of the action is influenced by factors such as the complexity of the matter, concurrent class proceedings in the United States, and the receptivity of defendants to mediating the dispute or negotiating a settlement agreement.  For example, Siskinds and other Class Counsel filed the OxyContin class action claim in 2007, the settlement agreement was fully approved in 2022, and the deadline to submit claims closed on June 27, 2024. The claims administration phase of this proceeding—where a third-party decides who is eligible to receive compensation under the terms of the settlement agreement between the plaintiffs and the defendants—is ongoing.  On the other hand, the XL Foods beef recall class action settled within three years of being commenced. 

Takeaways

If you and a large group of people have been harmed in a similar way, a class action can help you seek redress in a cost-effective manner. While the process may take some time, participation in a class action can benefit you financially, benefit the justice system, and hold corporations and government bodies accountable for wrongdoing that would otherwise go unchecked.

Now that you know what a class action is, what the advantages of a class action are, what types of class actions are commonly litigated, and the approximate timeline for the resolution of a class action, explore further posts:

• Steps of a class action;
• Starting a class action;
• I am affected by a class action. What are my options?; and
• Class action settlements and notice.