Commencing a class action can be a powerful way of seeking compensation for people impacted by a large-scale wrong. Class actions bring together claims that would be uneconomical to bring on an individual basis. In this sense, class actions level the playing field and hold companies accountable for their wrongdoing.
This article outlines how a class action is started. It also provides some key considerations to keep in mind throughout the process.
Contents
- Determining whether there is a plausible class action
- Considerations for choosing a law firm
- What is the role/responsibilities of the representative plaintiff?
- Are there any costs to starting a class action?
- I want to start a class action – what should I do?
Determining whether there is a plausible class action
Because we pursue class actions on a contingency fee basis (meaning we are only paid if successful), we are careful about what class actions we bring. When assessing whether we will take on a matter as a class actions, we will consider factors such as:
- Do the alleged wrongs give rise to a legal claim? Not all bad conduct gives rise to a valid legal claim.
- Did the alleged wrongs impact a large group of people? If only a handful of people are affected, it might be more efficient to pursue the claims through other judicial mechanisms, such as small claims court actions or test cases.
- What are the potential damages flowing from the alleged wrong? Class actions are expensive to pursue. There needs to be large damages for class actions to make financial sense.
- Can a judgment be enforced? Does the wrongdoer have insurance or assets that can be collected against? Is the wrongdoer in a jurisdiction where it is difficult to enforce a judgment?
- Is there already a class action commenced in relation to the alleged wrongs? The Canadian class action database provides a listing of class actions commenced in Canada. Not all law firms comply with the requirement to post information about class actions in the database. Online searches may also help to determine whether there is an existing class action.
Understanding the perspectives of people who have been harmed is important and we do this by speaking with impacted people.
If we determine that the alleged wrong gives rise to a plausible cause of action, we seek to be retained by a representative plaintiff. The representative plaintiff is the person who brings the claim on behalf of the class. See below for more information about the role of the representative plaintiff.
Considerations for choosing a law firm
Having excellent counsel when taking a class action through the legal system is very important. Class actions are complex and can take several years to reach an outcome. It is important to choose counsel that has the experience, resources, and reputation required to reach a successful outcome.
There are various types of class actions and choosing counsel that have recognized knowledge and experience in a certain area is essential. For example, if you are a shareholder that has lost money because of the alleged wrongdoing of a public company, it makes sense to look for lawyers or a law firm that have successfully litigated securities class actions. Or, if you have been harmed by a pharmaceutical drug or medical device, you should look for a firm with a demonstrated history of successfully pursuing pharmaceutical litigation.
Choosing counsel that have the resources to support the case to settlement or a trial is an important consideration. Taking a class action from the research stage to a successful outcome requires the lawyers to invest significant time and resources. Typically, the lawyers are retained on a contingency fee basis, meaning that they fund the time and expenses, and are only paid in the event of success. Depending on the nature of the case, it can cost hundreds of thousands in expert fees alone to pursue the case to certification. The cost of a common issues trial is even higher. Some firms seek third-party funding to help fund these costs.
Finally, think about how well a lawyer or law firm has done litigating other class actions. How many cases have they resolved? Have they achieved reasonable outcomes?
Overall, the purpose of class actions is to provide access to justice for a large number of people and to encourage businesses to be more fair and ethical in their dealings. Choosing experienced counsel, who also understand the importance of these values, is key to a successful resolution.
What is the role/responsibilities of the representative plaintiff?
Section 5 of the Ontario Class Proceedings Act notes that a representative plaintiff must:
- fairly and adequately represent the interests of the class;
- produce a method of advancing the proceeding on behalf of the class; and
- not have a conflict of interest with other members of the class.
The class proceeding legislation in the other provinces contains similar language.
A representative plaintiff does not need to have any special legal knowledge or training. They simply need a basic knowledge of the matters at issue and be able to provide instructions to the lawyers, as needed.
The lawyers do the heavy lifting in pursuing the class action and will typically seek to minimize the burden on the representative plaintiff.
Are there any costs to starting a class action?
The representative plaintiff is not responsible for the costs of starting a class action. Class actions are usually handled on a contingency fee basis, meaning that the cost of taking the action to court is the responsibility of the law firm. Counsel will only be reimbursed for those costs, and paid legal fees, if a settlement is reached or there is a successful outcome at trial.
In some jurisdictions, such as Ontario, there is adverse costs. This mean that the losing party has to pay a portion of the winning party’s legal costs. Class Counsel customarily provide an indemnity against an adverse costs award, meaning that Class Counsel will pay any adverse costs in the place of the representative plaintiff. If Class Counsel is unwilling to provide an indemnity to a proposed representative plaintiff, the proposed representative plaintiff should seek independent legal advice before signing a retainer agreement.
Individual class members are also not responsible for paying lawyer fees or paying any costs if the class action is not successful.
I want to start a class action – what should I do?
Class actions are complicated legal proceedings against well-resourced defendants. The process can, at times, be overwhelming and confusing. If you believe you have been wronged, but have questions about where to begin, our dedicated class actions team is always available to discuss your concerns and determine if a class proceeding is the right course of action.