Canadian Class Action Defence Blog

Too many men on the ice – court imposes cost consequences on “over-pleaded” class action

Sep 25, 2017 4 MIN READ
Craig Lockwood

Partner, Disputes, Toronto

Justice Perell’s costs decision in Berg v. Canadian Hockey League, 2017 ONSC 5382 is a stern warning that, in certification motions, plaintiffs who over-plead and parties who seek to prove the merits of their case may find themselves in the penalty box.

Holding both sides to blame for a certification motion that spiralled into a “litigation Chernobyl meltdown”, Justice Perell awarded costs of over $1.2 million to the plaintiff, but held that the payment of the majority of those costs would be postponed and only be payable if the plaintiffs were successful at the common issues trial.

Class action certified, but redundant claims rejected

The plaintiffs in Berg sought certification of a class action against amateur hockey clubs in Ontario and the United States on behalf of current and former players, alleging chiefly that the clubs failed to pay the players minimum wages and overtime pay in contravention of employment standards legislation. In that vein, the players also sought to certify claims for breach of contract, breach of duty of honesty, good faith and fair dealing, negligence, conspiracy, unjust enrichment, and waiver of tort.

As noted in our prior blog post, Justice Perell certified the claims for breach of employment law statutes and unjust enrichment against the Ontario clubs, but did not certify the claims based on the remaining causes of action or any of the claims against the American clubs. Justice Perell accepted the defendants’ submission that the majority of the causes of actions were redundant and added unnecessary and burdensome complexity to the claim that the class members were employees under contract or applicable employment standards legislation.

Costs decision – Court calls fouls on both sides

The plaintiffs sought $1,212,065.63 in costs for the certification motion, while the defendant American clubs sought $224,362.91.

Justice Perell was unequivocal that both the plaintiffs and the defendants were to blame for the enormously expensive certification motion:

[50] The problem for the court is that two wrongs do not make a right and both the Plaintiffs and the Defendants lost sight of the purposes of a certification motion. It is a fact that the Plaintiffs over-pleaded their case and provoked the Defendants, and it is a fact that the Defendants sought to prove the merits of their case on the certification motion and that both parties took the certification motion into territory that was outside the boundaries of a certification motion.

Justice Perell reduced the defendant American clubs costs to $200,000, to be set off against the costs award to the plaintiff. While he awarded all of the costs claimed by the plaintiffs, he ordered that payment of $712,065.63 be postponed and payable only if the plaintiffs were successful at the common issues trial (and subject to the discretion of the common issues judge) – resulting in a net recovery of only $300,000 to the plaintiffs at this stage. Justice Perell said: “the Plaintiffs should bear, at least temporarily, some responsibility for the mutation of a procedural motion”.

Post-game commentary

The certification and costs decisions in Berg emphasize judicial economy as an overarching objective of class actions.

While plaintiffs may be tempted to articulate as many causes of action as possible, this can result in redundant claims which add needless complexity and cost to the class proceeding. Justice Perell has previously expressed concerns about this phenomenon, most notably in Smith v. Sino-Forest Corporation, 2012 ONSC 24 and Magill v. Expedia Inc., 2013 ONSC 683.

By contrast, Justice Hall in Walter v. Western Hockey League, 2017 ABQB 382 (the parallel Alberta class proceeding to Berg) certified all of the plaintiffs’ claims, refusing to strike causes of action that were properly pleaded, even if they are redundant.

The Berg rulings are a welcome development for defendants faced with redundant or overlapping class claims. However, defendants should exercise caution when facing such “over-pleaded” claims. On the one hand, they have little choice but to mount a vigorous defence to every articulated claim. On the other hand, they must be careful not to delve into arguing the merits of the claim at the certification stage – or face the consequences of spiralling certification costs.