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Debates Amongst Class Members Are a Permissible Form of Communication


Written by on May 16th, 2013

Jason Squire

Partner, Deputy Leader, Class Actions Practice Group 

Rebecca Case

Associate 

Communications with class members pre-certification by anyone aside from class counsel is an oft disputed and contentious topic. In the past year, Ontario courts have ruled on the limits of communications between defendants and class members as well as between insurers of class members and their insureds. Most recently, in 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2013 ONCA 279, the Ontario Court of Appeal ruled that communications between class members directed towards persuading class members to opt-out were permissible.

At first instance, the motion judge held that the campaign to convince franchisees to opt-out of the class action organized by a group of class members known as the Concerned Pet Valu Franchisees (“CPVF”) had corrupted the opt-out process and could not be cured by sending out a new notice or re-doing the opt-out process. As a result, the opt-outs of those class members submitted on or after the CPVF’s campaign began were declared invalid and it was ordered that these class members would have a further chance to opt-out after the final disposition of the action on its merits. For a fuller summary of the below proceedings please read our blog post Orders Permitting Class Members to Opt-Out after Final Disposition: A Final or Interlocutory Remedy? 

The purpose of the opt-out process is to provide class members with the opportunity to make an informed and voluntary decision whether they wish to remain in the class action and involves important issues of access to justice. It is within the jurisdiction of the case management judge of a class action to make broad remedial orders to protect the integrity of the opt-out process.

In Pet Valu, the representative plaintiff, despite being aware of the CPVF campaign during the opt-out period, did not bring his motion to set aside the opt-outs until two months after the end of the opt-out period. A supporting affidavit was not filed for a further three months, and an amended notice was filed after a further four months had passed. Ultimately, the motion was not heard until approximately 10 months after the end of the opt-out period.

Importantly, the motion judge found that there was no evidence that the CPVF campaign was controlled by the defendants or that the defendant had exerted any form of pressure on class members to opt-out. There was therefore no evidentiary basis for the motion judge to find that the CPVF campaign had crossed the line into impropriety. Further, the Court of Appeal held that the motion judge erred in imposing obligations on class members to communicate in an objective manner.

In overturning the ruling, the Court of Appeal stated that a representative plaintiff should promptly seek intervention of the supervising judge once they become aware of tactics that may demand judicial scrutiny during the opt-out period. The opt-out process is one which must be protected for the benefit of the class and not for the benefit of the representative plaintiff or their counsel. Correspondingly, the defendants may not sit idly by without running the risk that a court will invalidate opt-outs.

The Court of Appeal also stated that the opt-out process is not one which is to be politicized and discussed how the opt-out process is not analogous to the labour context. The Court of Appeal held that the case management judge had evaluated the equities of the opt-out process from an incorrect belief that the class action was in peril.  Whether there is an increased number of opt-outs and a decreased number of class members is not a basis for decertification.

Class members have a right to make voluntary and informed decisions free from undue influence whether to opt-out. Within the opt-out process, class members are free to consider and debate the exercise of their options from a business perspective.

The content contained in these blogs is intended to provide information about the subject matter and is not intended as legal advice.  If you would like further information or advice on any of the subjects discussed in a blog post, please contact the author.