No compensable loss, no class action: repair program defeats certification motion

Evidence of compensable loss is a fundamental prerequisite for a class action. An Ontario court recently applied that principle to deny certification in Maginnis and Magnaye v FCA Canada. The plaintiffs tried to certify an action alleging that they purchased vehicles containing emissions defeat devices, but the manufacturer was repairing the devices so that they would comply with emission control regulations. The repairs achieved an emissions-compliant vehicle and the plaintiffs did not have evidence of any other compensable loss. Therefore, the Court dismissed their certification motion.

Background: regulatory charges relating to defeat devices led to class actions

In January 2017, U.S. environmental agencies charged Fiat Chrysler Automobile (“FCA”) with installing defeat devices that made certain of its diesel vehicles appear to comply with environmental regulations when they did not. In January 2019, without admitting liability, FCA agreed to recall the impugned vehicles and repair the defeat devices. FCA launched a recall and repair program in both Canada and the U.S. in May 2019.

The plaintiffs each purchased “EcoDiesel” jeeps manufactured by FCA that the plaintiffs claimed had been outfitted with emissions defeat devices. They launched a class action shortly after FCA was charged in the U.S. and subsequently asked Justice Belobaba of the Ontario Superior Court of Justice to certify their class action against FCA and certain other defendants.

Court decision: certification refused because no evidence of compensable harm

There was no dispute that FCA’s repairs eliminated the defeat device and rendered FCA’s vehicles compliant with emissions regulations. In addition, the parties agreed that no class action should be certified without at least some evidence of compensable harm. Therefore, the motion turned on a threshold question: had the plaintiffs provided any evidence of compensable harm?

The plaintiffs argued they had provided the necessary evidence. In particular, they said they were harmed because they paid a premium price for the promise of “clean diesel” engines and because, they alleged, FCA’s repairs adversely affected their vehicle’s fuel economy and performance. According to Justice Belobaba, there was no evidence supporting either argument and so the plaintiffs failed to substantiate any compensable loss.

Justice Belobaba then turned to the legal basis for dismissing the motion. He noted that a certification motion where there is no evidence of compensable harm can be dismissed on three bases: a judge can rule that (i) there is no evidence of two or more people seeking access to justice under s. 5(1)(b) of the Class Proceedings Act, (ii) the plaintiff is not a suitable representative plaintiff as required under s. 5(1)(e) because they have sustained no loss and have no stake in the potential outcome, or (iii) the class action is not a preferable procedure as required under s. 5(1)(d). Justice Belobaba relied on the final basis because it cut to the core purpose of class actions. The preferability analysis considers the goals of access to justice, behaviour modification and judicial economy, and certifying a class action in the absence of compensable loss would not serve any of those goals.

Conclusion

Maginnis provides legal and practical takeaways for class action defendants. Legally, it reiterates that plaintiffs must provide evidence (and not just allegations) of compensable loss to successfully certify their action. Practically, it demonstrates how proactive steps by a defendant may stave off class actions and how, by solving customer complaints (where practical), defendants can resolve an injury that could otherwise support certification.

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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