Gatekeeping - stops class action cold!

Litigation Update


On 16 November 2016, Madam Justice Dillon issued her decision in Harrison v. Afexa Life Sciences Inc., 2016 BCSC 2123, denying the certification of a class action against the makers of Cold-Fx under the Class Proceedings Act, R.S.B.C. 1996, c. 50 (“CPA”).

Dillon J. confirmed the court’s important gatekeeping role is to ensure that the powerful machinery of class proceedings legislation is only invoked to assist genuine plaintiffs with genuine claims. In so doing Her Ladyship carefully assessed the evidence filed on the certification application to determine whether the plaintiff had established “some basis in fact” that there is a genuine plaintiff who would “vigorously protect the interests of the class” and whether there are two or more individuals with a desire to have their common complaint determined in the proposed class proceeding.

The court found that the proposed representative plaintiff, Mr. Harrison, was not a genuine plaintiff and that the plaintiff had failed to present evidence of an identifiable interested class of two or more persons. In short, the court found no evidence that there was a genuine plaintiff or class of persons who sought to have a common complaint determined through class proceedings. 

Background: claim filed in 2012 after recruitment of representative plaintiff

By the time the certification hearing came before Madam Justice Dillon, it had already had a lengthy history. The original Notice of Civil Claim was filed in March of 2012, after Mr. Harrison “was recruited by his lawyer.” Following the initial Notice of Civil Claim, the claim was amended a total of six times. Several claims were struck out by the courts, including: breach of the Food and Drugs Act, R.S.C. 1985, c. F-27; restitutionary relief based on breaches of the Food and Drugs Act and the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2; breach of collateral contract and contractual duty of good faith/honest performance; unlawful interference with economic relations/unlawful means; and constructive trust.

Ultimately, proceedings before Mr. Justice Truscott established that the plaintiff’s claims brought in tort and under the Competition Act had satisfied the cause of action requirement under s. 4(1)(a) CPA. The 4(1)(a) analysis was therefore not revisited by Dillon J. in her final certification decision. Her Ladyship summarized the gist of the plaintiff’s claim as being that the defendants had made false representations on the labels of certain Cold-Fx products and that Mr. Harrison and other class members had bought these Cold-Fx products for short term relief on account of these representations.

The certification decision

Madam Justice Dillon’s certification decision dealt with the remaining four requirements under s. 4(1) CPA.

Most notable is Justice Dillon’s assessment of the requirement in s. 4(1)(b) CPA that the plaintiff establish that there is an identifiable class of two or more persons. With respect to this aspect of the CPA the plaintiff relied on affidavit evidence that was nearly identical in form to affidavit evidence proffered in Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc., 2014 BCCA 36, to meet the s. 4(1)(b) requirement.

In Harrison, the affiant, a lawyer with plaintiff’s counsel’s former law firm, deposed that there were four other persons who had informed her that they “were interested in and support” the class proceeding and that they had purchased Cold-Fx during the relevant time period. However, Justice Dillon noted:

[29] From evidence adduced by the defendants, it appears that two of the four persons identified by Harrison either work or have worked for plaintiff’s counsel’s former law firm and a third resides at the same address as one of the others. In the four years since the action was commenced, plaintiff’s counsel has advertised the class action on his website and intervened in online discussions to disparage the product and to encourage more participants to engage in the lawsuit. Plaintiff’s counsel has suggested, in online commentary and without evidential foundation, that the defendant has paid people to endorse Cold-Fx on social media.

Without distinguishing Wakelam, Dillon J. held that the plaintiff’s evidence was insufficient to meet the requirement for certification is s. 4(1)(b). Justice Dillon stated:

[56] The evidence that others had told counsel that they were interested in the class proceeding and that they had purchased Cold-Fx during the relevant time does not go so far as to establish that such persons have a complaint that they intend to pursue. The fact that such persons may have contacted counsel does not establish that there is a common complaint that these persons desire to be determined through the class action process.

Justice Dillon also held that the plaintiff had failed to show some basis in fact to establish a link between the claim and two or more bone fide claimants. Justice Dillon stated:

[58] The plaintiff has also failed to provide a means other than subjective examination to determine whether an individual purchaser falls within the class. The evidence shows that there are many reasons for a person to purchase this product. There does not appear to be an objective process to identify persons who purchased the product because of the representations.

[59] The plaintiff has failed to provide some basis in fact that any person purchased Cold-Fx based upon the alleged misrepresentations. Not a single person has self-identified as someone who relied upon the representations as alleged, and the plaintiff has not proposed a realistic methodology to objectively identify members of the proposed class. There is no evidence that anyone seeks to have a common complaint determined through the class action process.

While the plaintiff’s failure to establish the requirement in s. 4(1)(b) was sufficient to dispose of the certification application, Dillon J. went on to find that the plaintiff had failed to establish some basis in fact to support the requirements in ss. 4(1)(c) and (e): that the claims of the class members raise common issues, and that there is an appropriate representative plaintiff. She held that it was unnecessary to deal with the preferable procedure requirement under s. 4(1)(d) due to her conclusion that the requirements under ss. 4(1)(b) and (c) had not been met.

On the question of the representative plaintiff requirement in s. 4(1)(e), Dillon J. returned to her criticism of Mr. Harrison having been “recruited” and his lack of involvement in the litigation. Justice Dillon’s most significant criticism of Mr. Harrison, as representative plaintiff, was that “[h]e has no real interest in the outcome” (para 73). There was “no evidence that he had any idea about representations in the labelling or marketing of the product, or that he was ever concerned or felt harmed by them” (para 73). She noted that Mr. Harrison had not actively participated in the litigation and had not updated his affidavit since it was sworn in 2012, despite substantial changes to the Notice of Civil Claim. As a result, Dillon J. found the plaintiff was not a genuine plaintiff who would vigorously protect the interests of the class, and that he therefore did not meet the requirements set out in s. 4(1)(e) of the CPA.

Decision reinforces court’s gatekeeping role

Madam Justice Dillon’s review of the evidence to determine whether Mr. Harrison was a genuine plaintiff and her findings with respect to the plaintiff’s failure to meet even the low evidentiary burden to establish some basis in fact to support the requirement of an identifiable class of two or more persons shows a reticence on the court’s part to certify class actions that appear to be driven largely by plaintiff’s counsel. Justice Dillon cited Chartrand v. General Motors Corporation, 2008 BCSC 1781:

“[t]he CPA does not contemplate that causes of action, legitimate though they may be, will be identified, and class members recruited, for the ultimate financial gain of lawyers or organizers.

Justice Dillon’s decision emphasizes the court’s gatekeeping role to scrutinize closely the evidence filed in support of the certification requirements in s.4(b) to (d) CPA to ensure that the powerful machinery of class proceedings legislation is only invoked to assist genuine plaintiffs with genuine claims.