In Warner v. Smith & Nephew Inc. (Warner), a recent decision of the Court of Queen’s Bench of Alberta, Justice G.H. Poelman gave guidance on the class certification process and the extent to which the court will evaluate the merits of a class action at the class certification stage.
Class certification in Alberta is governed by the Class Proceedings Act (Act). In particular, section 5(1) of the Act states that the court must be satisfied as to each of the following requirements before a class action may be certified:
- The pleadings disclose a cause of action;
- There is an identifiable class of two or more persons;
- The claims of the prospective class members raise a common issue;
- A class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; and
- There is a person eligible to be appointed as a representative plaintiff.
In Warner, the plaintiff was implanted with a Birmingham Hip Resurfacing System manufactured by the defendant. The implantation surgery took place in 2005. Approximately three months after the procedure, a blood test revealed that the plaintiff had elevated metal ion levels. Subsequently, in 2012, the plaintiff elected to undergo revision surgery to remove the Birmingham system. She brought an action against the manufacturer for damages and applied for certification as a class proceeding, in which she would be the representative plaintiff.
The proposed class included all persons in Canada who have had the Birmingham system implanted. The plaintiff testified that she was informed by her counsel that counsel had been retained by nine plaintiffs who had experienced similar problems with the product. The plaintiff further testified that she had not spoken to any of these potential class members and had no knowledge of their identities, the nature of their complaints or why they retained counsel.
COURT OF QUEEN’S BENCH DECISION
Justice Poelman dismissed the application, holding that that the plaintiff had failed to satisfy the court that the requirements under section 5(1) of the Act had been fulfilled.
Cause of Action
The defendant argued that the statement of claim failed to plead adequate material facts to support a cause of action. The defendant argued that the statement of claim offered few particulars regarding what the defendant should have done differently in order to comply with its duty of care. Justice Poelman rejected this contention, relying on the Court of Appeal of Alberta’s decision in Hughes (Estate) v. Brady for the proposition that a mere lack of particulars does not signal the absence of a cause of action. Construed liberally, the overarching allegation in the statement of claim was that the Birmingham system should not have been on the market.
Justice Poelman found that the plaintiff had failed to establish an identifiable class. According to Justice Poelman, the plaintiff could not specifically identify any of the nine potential class members she learned of through her counsel nor could she provide any information regarding the nature of their complaints. Further, there was no evidence the other potential class members wished to commence legal proceedings. Justice Poelman noted that many potential plaintiffs retain counsel before deciding whether to commence an action. He went on to note the weakness of the plaintiff’s evidence on this issue—the evidence, having been passed from the nine potential class members to counsel to the plaintiff, constituted double hearsay. The plaintiff also identified three other groups of potential class members, each of whom had participated in a study on hip resurfacing procedures. Justice Poelman rejected these potential class members for the same reasons outlined above.
Justice Poelman pointed out a number of insufficiencies in the common issues proposed by the plaintiff. The plaintiff’s materials included issues not in dispute, such as whether a duty of care existed, and issues that are not common, such as the effects of the removal of metal shavings. Overall, the plaintiff provided little assistance in identifying which of the proposed issues should be heard. Justice Poelman suggested that such insufficiencies could be remedied on a subsequent appearance if the other requirements for certification were met. However, he declined to consider this possibility in light of the plaintiff’s failure to satisfy other criteria.
Justice Poelman’s discussion on this point focused on whether issues common to the prospective class members predominated over issues affecting only individuals. He found that the evidence adduced by the plaintiff did not fulfil this requirement. There were a multitude of individualized factors at play, such as the degree to which harm lines up with warnings in the product literature and the sensitivity of specific patients to metal ions. Despite the plaintiff’s broad allegation that the Birmingham system should not have been on the market, Justice Poelman stated that these individual variables remained important. For example, these individual variables may affect the amount of damages. Further, he found that the plaintiff’s primary allegation had very little prospect of success. The Birmingham system was federally licensed and regulated, recommended by numerous qualified surgeons, and had revision surgery rates comparable to total hip replacements. If the plaintiffs failed on their main allegation, which Justice Poelman concluded to be likely, only the individual factors would be left. He noted that this limited analysis of the merits was also important to the “overall screening function” performed by the courts when determining whether to certify a class proceeding.
Eligible Representative Plaintiff
Section 5(1) of the Act states that a representative plaintiff must fairly and adequately represent the interests of the class, and must produce a plan setting out a workable method for advancing the proceeding and notifying class members. As noted by Justice Poelman, these criteria have been fleshed out by case law emphasizing knowledge and control. A representative plaintiff must not be a “passive figurehead” and must direct the lawyer in the proceeding. Further, they must have a basic understanding of class actions and of their role in the proceeding. Justice Poelman found that the plaintiff did not meet these requirements. She knew very little about the proposed class members and took no steps to acquire further information. Based on her lack of initiative, Justice Poelman found that it was “unlikely that she will vigorously and capably prosecute the interests of these people of whom she knows nothing.” Further, her proposed plan was overly general and failed to address the particular challenges of the claim.
Warner exemplifies the increasing willingness of Alberta courts to consider the merits of a claim at the class certification stage. It is a general rule, codified in Section 6(2) of the Act, that a class certification order is not an evaluation of the merits. The Supreme Court of Canada (SCC) echoed this principle in the seminal 2001 case Hollick v. Toronto (City), stating that “the certification stage is decidedly not meant to be a test of the merits of the actions.” However, the SCC went on to state that some basis in fact must be shown for each of the certification requirements. In Windsor v. Canadian Pacific Railway Limited, the Court of Appeal of Alberta held that a certain threshold of evidence is required for certification, as some actions are “purely speculative, have no air of reality, or are doomed to fail.” Nevertheless, based on Justice Poelman’s decision, defendants in class action proceedings in Alberta should be aware that courts may engage in a limited evaluation of the merits of the proposed class action, and should prepare accordingly.
The authors acknowledge the contribution of Liam Kelley (Student-at-Law).