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Is Canada becoming a haven for class-action lawsuits?

Class-action lawsuits, where aggrieved clients sue a company for financially misleading them, are ever-evolving beasts. Plaintiff lawyers might wish they practiced in Canada.

Class-action lawsuits, where aggrieved clients sue a company for financially misleading them, are ever-evolving beasts. A recent development in the U.S. has defense lawyers celebrating, while plaintiff lawyers might be wishing they practiced in Canada.

Last week, the Supreme Court ruled that companies can block disgruntled customers from joining together in a class-action lawsuit, under the Federal Arbitration Act. The decision was made in the case of AT&T Mobility vs. Concepcion, a couple that complained about a $30 charge involving their purchase of a cellphone, and wanted to join with others to form a class-action and sue.

In Canada, a precedent recently set in a class-action against Imax Corp. has made it easier to get permission to form a class-action, a bar Dimitri Lascaris, an Ontario plaintiff lawyer for the aforementioned case, says should rightfully be set very low. He explains under Ontario law, the losing party in Canada generally has to pay the other side’s legal costs, meaning the stakes are already very high for plaintiffs launching a case. “There’s so much risk if you erect a high barrier in front of plaintiffs to get the case started, there’s no way they will,” he says. “The Bay Street crowd complains how the bar is being set low, but I would say, there shouldn’t be any bar at all.”

Toronto-based class-action defense lawyer Joseph D’Angelo says he’s disappointed that in granting permission to move the Imax case forward, the judge set a low standard as to what the definition of “misrepresentation” is. This means the extent to which the plaintiffs have to prove they made a decision to invest in Imax, or any company, based on faulty numbers. He explains it like this: “If I’m selling you a car, and I tell you the car has 500 horsepower and after agreeing to buy it you find out it has 200 horsepower, the question is, did you rely on the fact you thought it was 500 or would you have bought it anyway? Normally, if there’s a simple case with just one investor, the defense lawyer can cross-examine that investor and find out, but when you talk about hundreds or thousands of people, you can see why it become logistically difficult to determine who read and who relied on a particular statement.”

So while the U.S., which was once the hub for class-action cases, is tightening up their rules on suing corporations, Canada has made things a little easier for those fed-up with their cellphone provider.