Written By Ranjan Agarwal and Adam Zur
The Ontario Superior Court recently released two separate carriage motion decisions (MacBrayne v LifeLabs Inc., 2020 ONSC 2674 and Del Giudice v Thompson, 2020 ONSC 2676), which adopt different approaches to deciding between overlapping class actions. Both decisions deal with class proceedings stemming from large-scale data breaches. In Canada, when there are overlapping class actions in a province or court, the court will decide which plaintiff and class counsel should have “carriage” of the action based on a broad range of criteria.
In December 2019, LifeLabs announced that hackers had breached their data systems, compromising personal information of about 15 million patients. At least 13 proposed class actions were immediately started: four in Ontario and nine in British Columbia. In Ontario, class counsel organized themselves into three consortiums.
In deciding the carriage motion, Justice Belobaba emphasized that courts must search for the factors that are determinative in deciphering which carriage proposal is in the best interests of the class. Here, it boiled down to two factors: overall approach and proposed fee arrangement. As to overall approach, Justice Belobaba preferred the filing of a single national class action, which he considered more sensible in comparison to filing two parallel class actions (one in Ontario for the eastern provinces and the other in British Columbia for the western provinces). That said, the motion was essentially decided based on each consortium’s proposed fee arrangement. Justice Belobaba awarded carriage to the proposed class counsel that had the most cost-effective (i.e., least expensive) fee arrangement for class members.
The decision suggests that in some cases, carriage motions may be decided by awarding carriage to the lowest bidder. Justice Belobaba noted that the experience and resources of the competing law firms was a relevant, but not determinative factor, as each law firm was experienced and competent. In that case, courts may rely on a reverse auction to decide carriage motions: who can provide their services at the lowest cost to the class members?
In July 2019, Capital One disclosed that its information technology systems had been hacked. The personal and confidential information of an estimated six million Canadian customers was compromised.
Justice Perell decided carriage between two different consortia based on case theory. Justice Perell awarded carriage to the proposed class counsel who had named as defendants Amazon (which owned the servers that stored Capital One's data) and GitHub (a website operator that published some of the personal information that had been hacked). Justice Perell acknowledged that although it is too early to tell whether Amazon and GitHub should be parties to the litigation, it is arguable that they are wrongdoers who should be held to account.
Despite being awarded carriage, Justice Perell scolded successful class counsel for delivering their motion materials 18 days late, in violation of his direction. Justice Perell said that he would consider awarding costs against class counsel personally for their failure to comply: “As noted above, although the Del Giudice Action has been granted carriage, I will consider, if requested, costs in whole or in part against counsel personally in the Del Giudice Action (not to be a charged or passed onto the Class Members) for the failure to comply with my case management direction.”
Justice Perell also criticized the parties’ materials noting, in part, that they were “conceited, pompously preachy, wanting in objectivity, and grossly overstated.”
Justice Perell, who is one of four designated class actions judges in Toronto, recommended that “putative Class Counsel retained external genuinely independent counsel to both: (a) professionally prepare the material for the motion; and (b) professionally argue the motion.”