Class action lawsuits

Imagine this: you buy a new car and, shortly after, some electrical equipment fails from faulty wiring/poor design. It costs you $2,000.00 to fix it. You ask the car manufacturer to compensate you, but they refuse. You want to sue the manufacturer; but, it doesn’t make sense to hire a lawyer for a $2,000.00 claim (as legal costs would be more than $2,000.00). So, what do you do?

Well, you could consider starting a class action lawsuit.

A class action lawsuit is a lawsuit that groups people (plaintiffs) with a common claim against the same wrong-doer (defendant). Put another way, it groups several claims that would otherwise be separate.

Class actions aren’t particularly common, but they aren’t exceedingly rare, either.

Class actions often occur when several people have been harmed (physically and/or financially) by a manufactured good, such as a drug or a vehicle. Class actions are also common against governments, banks, and businesses, often for illegal service charges or misrepresentations.

The number of class actions often grows during economic downturns, particularly when it involves banking, financial services, pension, and/or employment.

Class actions are relatively new in Canada, so we take a lot of our cases and precedents from the United States.

Despite some public sentiment, these types of lawsuits benefit the public. To start, it is more cost effective (for the public) to have one court/judge deal with multiple like claims, rather than have multiple courts/judges deal with the same claim. Also, without class actions, a lot of people would be left without justice as legal costs would outweigh the amount of the claim (and, therefore, wouldn’t be pursued). Class actions also modify the behaviour of potential wrong-doers who might otherwise be tempted to ignore their public obligations (as lawsuits discourage bad behaviour).

There are advantages to the plaintiffs, too. For instance, there is safety in numbers: in a class action, a plaintiff is not alone in taking on a government or powerful company. As well, in a class action, a powerful defendant is more likely to play fair (and fairly discuss settlement).

Class actions are good for defendants, too. Defendants can avoid a ‘multiplicity’ of proceedings, meaning defendants don’t have to fight against multiple claims and can concentrate their efforts on a single claim. As well, defendants avoid inconsistent judgments if there is a single claim. Also, if there is settlement, all plaintiffs are bound to the agreement and the defendant does not have to negotiate individual claims.

Of course, despite the advantages, defendants generally resist class actions (and will spend a lot of money and time to fight against a class action from occurring). This isn’t surprising: in many cases, class actions end with the defendant paying A LOT of money.

I appreciate that I may not have convinced everyone that class actions are a good thing; some people may continue to think that class actions themselves (regardless of the claim) are frivolous. To those people: you are wrong.

Without class actions (and the security that comes with ‘not standing alone’), many people (and great, honourable claims) may never see justice.

In a speech recently delivered in Kamloops, The Right Honourable Chief Justice of Canada Beverley McLachlin, P.C. stated, “Our brains are hardwired for justice. To be required to accept that you can’t have justice is to give up a part of yourself as a human being.”

**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.