About a year ago, we wrote about the ability of plaintiffs to revise an unsuccessful certification motion on appeal. The Ontario Court of Appeal has now weighed in and confirmed that plaintiffs may do just that – as long as defendants are treated fairly.
To recap, the plaintiff in Keatley Surveying Ltd. v. Teranet Inc. lost its motion for certification of a copyright case at first instance. On appeal to the Divisional Court, the plaintiff substantially recast the case by redefining the class, revising and withdrawing proposed common issues, and dropping problematic pleas for injunctive relief. The Divisional Court allowed the appeal and certified the action, holding that although the motions judge properly dismissed the motion presented to her, the plaintiff’s new case on appeal met the certification test.
For more on the Divisional Court’s decision, see our post of May 15, 2014.
Ontario Court Of Appeal Decision
The Ontario Court of Appeal weighed in on the issue of whether an unsuccessful plaintiff can revise its case for certification on appeal. Largely agreeing with the Divisional Court, Sharpe J.A. held that plaintiffs could do so in appropriate circumstances, provided that defendants are treated fairly and not prejudiced by the plaintiff’s attempt to argue a different case on appeal. However, Sharpe J.A. was clear that there are “limits on the extent to which a party can recast the case it presented at first instance” and he endorsed the Divisional Court’s discouragement of the practice:
Nothing in these reasons should be taken as endorsing the practice of recasting certification motions on appeal. This practice clearly undermines the way class action certification motions should proceed through the courts. Using appellate courts to hear matters de novo both deprives the courts of the expertise of the judges who have been assigned to hear these cases at first instance and requires three judges to determine issues that could and should have been heard by one judge.
The Court of Appeal accepted that the plaintiff’s new proposal for class certification did not fundamentally change the nature of the case to the defendant’s prejudice. Sharpe J.A. accordingly upheld the Divisional Court’s decision to hear the plaintiff’s revised case and dismissed the appeal. In the net result, the plaintiff’s action will proceed as a class action – with a new class definition, revised common issues that the appeal courts consider workable, and no claim for injunctive relief.
It’s worth mentioning that the Ontario Court of Appeal may have more to say in the near future on the application of Keatley to other cases where the plaintiffs revamped their arguments on appeal. The Court of Appeal recently granted leave to appeal in Good v. Toronto Police Services Board, where the Divisional Court reluctantly permitted the plaintiff to present a “markedly different” case on appeal. Sharpe J.A. noted this in Keatley but left the discussion of Good for Good.
Strategic And Tactical Implications
The Court of Appeal’s decision leaves all of the same strategic and tactical considerations of the Divisional Court’s decision before it. Keatley opens the door to plaintiffs leveraging the motions judge’s reasons dismissing certification to devise a better case and ultimately achieve certification. Insofar as the Court of Appeal confirmed once again that fluidity and flexibility are hallmarks of the class action process, predictability will inevitably take a back seat.
But this does not mean defendants have to rewrite the playbook. Far from it. Defendants resist certification when a class action is not an appropriate procedural vehicle for some or all of a claim, and defences to certification are essential to streamline unwieldy or untenable claims. That too is in the interests of justice. Keatley in fact reinforces that fundamental problems with the plaintiff's case cannot be repaired on appeal, and revisions that seek to revamp the “conceptual core of the case” won’t be countenanced.
Should defendants then despair at the prospect of having to shoot at a moving target, even on appeal? Definitely not. While the decision at first might seem like a strange twist on judicial economy, both appeal courts sent blunt messages discouraging the practice of recasting the case on appeal. Plaintiffs who wait to devise a more thoughtful and streamlined version of their case on appeal do so at their peril. The result might have been different if a lack of evidence or a deficient record led to insurmountable prejudice to the defendant on appeal.
And if that’s not enough, Keatley again reinforces that plaintiffs are not immune from the costs sanction. The Court of Appeal held that prejudice to the defendant from a revised case on appeal may be addressed through an appropriate costs award (as the Divisional Court in fact did in its cost order).
Ultimately, if the end result is a more manageable approach to resolving a claim – something properly sent to a common issues trial – even the defendants can claim success.