Certification Refused Where Individual Issues Overwhelm Systemic Wrong

Whether an alleged wrong is a “systemic wrong” can decide whether the proposed class action is certified. In Canada, plaintiffs' counsel often describe alleged wrongs as "systemic wrongs" hoping to convince courts that there are common issues. The Court of Appeal for Ontario provided some guidance on the limits of systemic wrongs in

The Individual Issues Overwhelm The System In Dennis v. OLG

In Dennis, the plaintiff was a problem gambler (i.e., he "would become preoccupied with gambling" and "engage in excessive gambling"). He signed a self-exclusion form, in which OLG undertook to use its best efforts to refuse to let the plaintiff into its casinos. OLG took a picture of him and circulated the picture to its security officers, who were supposed to refuse to let the plaintiff in. Since OLG was created, more than 17,000 people have signed a self-exclusion form.

The plaintiff said that OLG's efforts were not "best efforts" and alleged negligence, occupiers' liability and breach of contract, seeking $3.5 billion. The plaintiff characterized the case as one of “systemic wrong,” focusing on OLG’s alleged wrongdoing rather than the individual issues of each class member’s vulnerability.

The Court of Appeal did not agree that the case was one of a systemic wrong. The Court explained that OLG's liability did not turn on the interpretation of the self-exclusion form or its security practices, but rather was "inextricably bound up with the vulnerability of the individual class members." In other words, simply signing the form did not expose all signers to the same risk because not all signers were problem gamblers, not all signers returned to casinos, not all signers who returned were let into the casinos, and not all signers could have been prevented from entering the casinos. Figuring out the shortcomings in OLG's security practices would not address the narrower issue of OLG's legal liability to each person who signed the form. The Court agreed that the class action should not be certified.

Why Is Dennis v. OLG Interesting?

First, the concept of a “systemic wrong” remains alive and well: the Court of Appeal confirms that systemic wrongs can and will be addressed through class actions, saying where "a systemic wrong causes harm to an undifferentiated class of individuals, it can be entirely proper to use a class proceeding." The Court explained that class actions can "resolve claims when all class members are exposed to the same risk on account of the defendant's conduct". Once that risk is established, then whether the individual class member was harmed (damages) and whether that harm was caused by the defendant's conduct (causation) can be determined individually.

However, the Court places some limits on how far the concept of "systemic wrong" can stretch before it fragments into individual claims. The systemic wrong has to expose the class to the same risk so that the defendant could theoretically be liable to anyone in the class. In other words, liability should “essentially turn on the unilateral actions of the defendant.”

This subtle parsing of “systemic wrong” may be easier to understand by comparing Dennis v. OLG with the overtime cases like Fresco v. CIBC, a case in which the plaintiff alleged that the defendant had systemic practices resulting in underpayment of overtime pay. In Fresco, the Court held that certain elements of the defendant’s liability could be determined on a class-wide basis and did “not depend on individual findings of fact.” In Dennis v. OLG, “it would be impossible to assess whether OLG was at fault” without considering each individual’s vulnerability.

Where Do We Stand?

Even comparing the two cases, however, whether the wrong is systemic or not seems to depend on your point of view. In Fresco, establishing certain elements of liability would significantly advance the case. In Dennis, even establishing certain elements of liability would not significantly advance the case. As the courts encounter more examples of facts that do not constitute a systemic wrong, we will have a better sense of when the wrong is truly systemic and when it is a loose collection of individual claims.

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Editors

Deborah Glendinning

Partner, Litigation

Sonia Bjorkquist

Partner, National Chair, Litigation

Éric Préfontaine

Partner, Litigation

Christopher Naudie

Partner, Litigation

Craig Lockwood

Partner, Litigation

Tristram Mallett

Partner, Litigation

Karin Sachar

Partner, Litigation