Overview
In the recent Ontario Superior Court of Justice decision, Coles v FCA Canada Inc., 2022 ONSC 5575 (Coles), the Honourable Justice Perell refused certification of a product liability class action because the defendant’s recall program was the preferable procedure to resolve the plaintiffs’ claims, and not the proposed class action. While the plaintiff’s burden on a certification motion is considered relatively low, Coles demonstrates that the preferable procedure aspect of the certification test can nevertheless be a battleground. This was highlighted in Coles where there was a recall program in place capable of resolving the class claims and where the class action was found to have “dawdled.”[1]
Mitigation is a key takeaway from Coles. Corporate defendants faced with, or at risk of, product liability class actions should consider what proactive steps they can take to remedy negligent design issues and compensate potential plaintiffs to mitigate the risk of class action certification.
Background
i. The class actions and recall campaigns
In Coles, the plaintiff brought an action for negligent design against FCA Canada Inc. (f/k/a Chrysler Canada Inc.) (Chrysler Canada). The proposed class was all lessors and owners of Chrysler Canada vehicles that had been subject to a Transport Canada recall of Takata airbags.
The class action arose from the global recall of airbags manufactured by Takata Corporation and TK Holdings (collectively, Takata), which had a risk of exploding when deployed during a motor vehicle accident. The risk increased in climates with high humidity and high temperatures.
Between 2013 and 2016, Chrysler Canada placed Takata’s airbags in its vehicles. On May 27, 2015, Chrysler Canada began recalling certain vehicles to replace Takata airbags. These recalls continued up to March 1, 2019, with Chrysler Canada recalling over one million Takata Airbags affecting 663,048 vehicles by January 11, 2019.
In light of supply chain issues, car manufacturers, including Chrysler Canada, had to prioritize recall campaigns with the greatest risk that the airbag defect would be triggered (i.e., high humidity and high-temperature regions). Notably, Chrysler Canada only utilized the Takata beta-airbags, which had a substantially lower risk of rupture than the alpha-airbags (1% versus 50%), which triggered the recalls worldwide.
ii. The Consortium’s class actions
Coles was brought by a consortium of class counsel (the Consortium) who represented plaintiffs in five other class actions against 12 car manufacturers across Canada. The six class actions were commenced separately by various counsel between 2014 and 2015, with the Consortium forming in April 2016. All of the class actions included allegations that the car manufacturers had concealed their knowledge of the defective airbags and had acted negligently.[2]
The statement of claim in Coles was originally issued on May 12, 2015, and was amended five times the following year. It was amended again (the sixth time) in May 2021. The plaintiff delivered his certification motion materials in August 2021, and the certification motion was heard in August 2022.
Justice Perell found that the Consortium’s strategy was to prosecute the class actions in a staggered manner, which was complicated by Takata’s bankruptcy proceedings in 2017.
Three of the Consortium’s class actions were settled and obtained court approval in 2018 and 2020. Honda was originally a defendant in the Coles action but settled with the plaintiff in December 2020.
The preferable procedure criterion
The preferable procedure analysis is always conducted through the lens of judicial economy, behaviour modification, and access to justice.[3] A class proceeding is the preferable procedure for the resolution of class-wide claims if it is a “fair, efficient, and manageable procedure that is preferable to any alternative method of resolving the claims.” To meet the preferable procedure criterion, the plaintiff must show some basis in fact that the proposed class action would:
a. Be a fair, efficient, and manageable method of advancing the claim;
b. Be preferable to any other reasonably available means of resolving the class members’ claims; and
c. Facilitate the three principal goals of class proceedings: judicial economy, behaviour modification and access to justice.
Justice Perell found that the Coles action was not a preferable procedure because the class action had “dawdled” and had “made no meaningful progress for its intended purpose of getting the dangerous airbags replaced before a class member dies or is dismembered.”[4]
Justice Perell further noted that the certification motion was argued in August 2022. If certified, a common issues trial would be heard in a further two to four years, given the complexity of the action and the availability of long trial dates. As a result, the proposed class action was not preferable to the existing recall program, which was already in effect and available to any putative class members who sought to replace the defective airbags with new and safe airbags.
While some of the delays in Coles were due to the Consortium’s settlement of three other related class actions against other car manufacturers, Justice Perell found that the delay in Coles was intolerable. He noted that settlement of the Coles action would have been a preferable procedure, but it is not a real alternative as settlement cannot be forced upon the parties.[5]
Further, Justice Perell found that class action was not a preferable procedure because of recent developments that narrowed the recovery of pure economic losses. As a result, the Consortium likely ‘overachieved’ in the three other settlements relative to what was recoverable if the Coles class action proceeded.[6]
Significance
For plaintiffs, Coles illustrates the importance of timely progression and/or timely resolution of class actions, particularly in product liability class actions where a product is alleged to be dangerous to the public. For corporate defendants, Coles illustrates the importance of risk mitigation and proactive steps, including recall programs that can be implemented broadly and efficiently.
Please reach out to Rabita Sharfuddin for more information or assistance in managing class action risk and considering alternative procedures in product liability class actions.
[1] Coles v FCA Canada Inc., 2022 ONSC 5575 (“Coles”) at para. 158.
[2] Coles at para. 90.
[3] Coles at para. 154citing AIC Limited v Fischer, 2013 SCC 69 at paras. 24-38.
[4] Coles at para. 158.
[5] Coles at para. 161.
[6] Coles at para. 167.
