The British Columbia Supreme Court recently denied certification of a proposed class action regarding the labelling and marketing of vitaminwater® products. The plaintiffs offered no realistic prospect of establishing their theory of loss on a class-wide basis. The decision represents an example of courts applying meaningful scrutiny to proposed class actions.
In Clark v. Energy Brands Inc., the plaintiff alleged that the labelling and marketing of vitaminwater® products in British Columbia misled consumers into paying premium prices. He applied for class certification, arguing that his “premium price theory” could be proven on a class-wide basis as a common issue. Justice Verhoeven disagreed and dismissed the application.
Justice Verhoeven denied certification in part because the plaintiff failed to present “some basis in fact” showing a realistic prospect of proving loss on a class-wide basis. The “premium price theory” was vague and not supported by any economic or marketing evidence in the record. The plaintiff failed to produce any expert evidence supporting his theory of class-wide damages. He did present evidence from himself and another potential class member, but none of that evidence offered a credible methodology for showing that consumers paid premium prices for the product.
The plaintiff urged the court to certify the action on the basis that the “premium price theory” might be established at trial with evidence obtained through the discovery process. However, Justice Verhoeven refused to defer to trial his consideration of whether the plaintiff’s “premium price theory” raised common issues. He held that “where the theory of damage and the pleadings to support it are both vague, and the plaintiff has adduced no evidence whatsoever to support the claims, it would not be appropriate to certify the [class] action for damages [...] on the basis that some evidence might be revealed on discovery that would in some manner support the claim.”
Second Related Class Action Not To Be Certified
Clark was the second action not to be certified as a class proceeding relating to the labelling and marketing of vitaminwater® products in Canada. In Wilkinson v. Coca-Cola Ltd., the Québec Superior Court refused to authorize a class action raising substantially similar allegations as in Clark. However, it denied certification for very different reasons. In particular, the Court found that the plaintiff’s allegations did not establish a prima facie case and that the proposed representative plaintiff was inadequate. For more on Wilkinson, see our September 16, 2014 post.
Meaning Of “Meaningful Screening Device”
Last year the Supreme Court of Canada called the certification test a “meaningful screening device.” Justice Verhoeven’s ruling in Clark demonstrates exactly what this means. Certification is the time to determine whether there is a realistic prospect of addressing the substantial ingredients of the class members’ claims on a class-wide basis. The proposed representative plaintiff must present sufficient facts to satisfy the applications judge that the conditions for certification have been met. Class actions should not be certified on the mere hope that evidence might be obtained through the discovery process to support the plaintiff’s theory. Meaningful scrutiny requires more.
The machinery of class proceedings demands evidence to be set in motion. The evidentiary standard is not onerous, but is more than merely symbolic. As Justice Verhoeven recognized, this means that certification issues such as commonality cannot be deferred to trial. Absent evidence in the certification record showing a realistic prospect that loss can be determined on a class-wide basis, the certification test is not met. These cases are properly screened out at certification.
For more on the evidentiary standard on certification, see our blog post of October 31, 2013.