Looking Forward: Class Actions in 2021
Written by Tim Heneghan
The COVID-19 pandemic upended the class actions landscape in 2020, with over 30 COVID-19 related class actions launched in Canada since the pandemic took hold in March. While that number pales in comparison to the hundreds of COVID-related claims launched in the United States, it remains imperative for Canadian businesses and foreign businesses operating in Canada to be aware of potential areas of risk that may arise because of the global pandemic.
The main types of claims that have been started in Canada so far generally fall into one of four categories:
- Long-Term Care Home Negligence: Negligence claims have been launched against the owners and operators of long-term care homes which were the epicenters of the pandemic in the spring of 2020. The claims—brought by residents or their estates—broadly allege that the facilities failed to adequately address the threat of the virus in the pandemic's early days. Plaintiffs allege that insufficient protective equipment, staffing shortages, and inadequate safety protocols have allowed the virus to spread rapidly among residents, causing death in the worst cases. These claims have been started against long-term care homes in Alberta, Quebec, and Ontario. In some cases, multiple claims have been brought against the same set of defendants. Carriage fights—in which Class Counsel square off to determine who can best represent the class—will ensue for cases where the facts and defendants overlap.
- Breach of Contract/Inadequate Refunds: With travel and live events on hiatus for months, frustrated consumers turned to the courts after requests for cash refunds were met with outright denials or offers of redeemable credits. Airlines, ticket agencies, and sports teams, among others, are facing claims for their decisions to opt against granting full cash refunds. In some cases, the claims have prompted companies to reconsider their initial position. While many airlines—including Air Canada, Westjet, and Swoop—at first offered redeemable flight credits, some have relented and offered full cash refunds to demanding consumers. In Quebec, organizers of the Mont-Tremblant Iron Man triathlon face a claim after they refused to refund entry fees for thousands of competitors.
- Denial of Business Interruption Insurance: Government-ordered closures of all “non-essential” businesses prompted some to seek coverage from their insurers under “business interruption” policies. While a preponderance of individual actions have been started against insurers, so too have broader claims framed as class actions. Insurers are defending these actions, relying on, among other things, provisions in the policies requiring that the interruption be caused by “physical” damage to the business as well as exclusion clauses that specifically permit denial of coverage in relation to viruses and government-mandated shutdowns.
- Actions Against Government: The pace of claims against all levels of the Canadian government has been slow to date, despite a torrent of such claims in the United States (often purporting overreach related to public health directives). That said, inmates at some of Canada's penitentiaries have brought actions against the government alleging unsanitary living conditions and overcrowding, which heightened the risk of exposure to COVID-19.
As we move ahead in 2021, we see a continued risk of class action claims related to the COVID-19 pandemic arising. That said, new legislative measures may alter the potential scope of liability for certain claims related directly to the virus. For instance, Bill 218, the Supporting Ontario's Recovery Act, came into force in Ontario in November 2020. It provides broad liability protection from COVID-19 related incidents, going back to March 17, 2020. The new law states that a person (defined as including individuals, corporations, and even the government) will not be held liable if an act or omission, directly or indirectly, leads to another person being or potentially being exposed to COVID-19, so long as they have made a “good faith” effort to act in adherence to public health guidance, and have not acted in a grossly negligent manner. The law defines a “good faith effort” as being an honest effort, no matter if the effort is reasonable.
While this new law will offer broad protection against liability much of the time, it does not remove potential liability in claims brought forward by employees or workers who were exposed to COVID-19 in the workplace.
It will be of great interest to see how the Ontario courts interpret this “good faith effort” standard in determining liability in COVID-19 related claims. While COVID claims are sure to continue in 2021, we predict that the new legislative trends seen in Ontario, as well as in other provinces such as British Columbia where similar legislation has recently been enacted, will provide added security for businesses seeking to continue their operations in accordance with public health guidelines, without the fear of undue exposure to legal liability.