Court of Appeal upholds decision to put the brakes on the preferability of class actions

In upholding a decision of the Supreme Court of British Columbia denying certification, the British Columbia Court of Appeal in Vaugeois v. Budget Rent-A-Car of B.C. Ltd. recently confirmed that even where there are common issues, certification may not be appropriate where the resolution of those common issues would not meaningfully advance the resolution of the class members’ individual claims.

Background

The plaintiffs alleged that the defendants, Budget Rent-A-Car of B.C. Ltd. (“Budget”) and Inland Transportation Ltd., engaged in a “systematic scheme” in which consumers renting motor vehicles from Budget’s car rental locations in B.C. were improperly charged or over-charged for body and window glass repairs. The plaintiffs properly pleaded three causes of action: civil conspiracy, unjust enrichment and breach of the unconscionable act or practices or deceptive act or practice provisions of the British Columbia Business Practices and Consumer Protection Act.

The Court found that four out of the five requirements under section 4(1) of the Class Proceedings Act were met by the plaintiffs: cause of action, identifiable class, common issues and representative plaintiff. However, the Court was not satisfied that a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues.

Certification was ultimately denied because the defendants were successful in convincing the Court that the common issues did not predominate over issues affecting only individual members. In essence, even assuming that there was a systematic scheme to overcharge customers, it would still need to be determined, in each case, whether a particular repair was warranted, or whether the charge for it was proper. The Court held that the “fair and efficient resolution of the individual cases entails the defendants’ right to cross-examine each individual and provide the evidence of the particular Budget employees who engaged the individual”. As a result, “the individual questions of fact surrounding an individual’s rental of a Budget vehicle overwhelm the common issues.”

Judicial economy, access to justice & behavioural modification

In considering the factors of preferable procedure, the Supreme Court of British Columbia made the following observations:

1. The certification of class proceedings in the case at bar would delay the inevitable need for separate hearings for liability to be established. If certified, there would only be a mirage of judicial economy.
2. The aspect that distinguishes the case at bar from many certified class proceedings is that the reliability and credibility of each renter may be subject to challenge through cross-examination by the defendants.
3. An individual’s case will not depend on expert evidence or a large number of documents. The Provincial Court is particularly well-suited to handle small claims of this nature in a fair and efficient manner.

The Court of Appeal held that the certification judge could have concluded that a class proceeding “would merely be a prelude to many individual trials”. Further, the Court of Appeal observed the following:

unlike many proposed class actions, not only will success for the class fail to significantly advance the cause of any individual plaintiff […] but it can also be said that dismissal of the class action will not finally determine the claim of any class member. Even if the class fails to make out the existence of the ‘scheme’, consumers who have been wrongly billed for repairs will still have a claim. The fact the litigation will not finally determine claims, either way, must be weighed in assessing whether certification will serve the end of judicial economy.

As for behavioural modification, the Court of Appeal held that “the Court may fairly proceed on the assumption that the officers of the Legislature will use the tools at their disposal to protect consumers and effect behaviour modification as necessary”.

Practical implications for class actions

Plaintiffs will no doubt seek to limit the impact of this decision because it was decided under the British Columbia class proceedings legislation, which requires that common issues predominate over individual issues. Other provinces do not impose such a requirement and in those jurisdictions there is ample support for the proposition that common issues do not need to predominate over individual issues, so long as the resolution of the common issues would meaningfully advance the case. However, it is arguable that even under a less restrictive standard, this case is an illustration of individual issues overwhelming the common issues. Where it can be shown that the resolution of the common issues is of little or no consequence in the circumstances of each individual’s claim, and where there is sufficient evidence to demonstrate that the class proceeding would inevitably turn into multiple individual trials, respondents may be able to convince the court that a class proceeding is not the most fair and efficient means of resolving the common issues.