It has been the best of times for Canadian class action plaintiffs: an unprecedented level of attention from Canada’s top court has affirmed Canada’s relatively low evidentiary threshold at certification. These decisions also confirm that, with respect to the role of evidence at certification, Canada and the United States are on divergent paths.

Canada’s Relatively Low Evidentiary Threshold

In three consumer class action certification appeals known as the Indirect Purchaser Trilogy, discussed here and here, the Supreme Court of Canada affirmed that the evidentiary threshold to be met on a certification motion is the relatively low “some basis in fact”. In coming to this conclusion, the Court considered and rejected the American approach, as set out in Wal-Mart v. Dukes and In Re Hydrogen Peroxide Antitrust Litigation, which subjects proposed class actions to rigorous analysis and permits factual determinations to be made at the certification stage on a preponderance of the evidence.

More recently, in AIC Limited v. Fischer, discussed here and here, the Supreme Court clarified the “some basis in fact” standard. The Court reviewed the case law and remarked that the requirement to establish “some basis in fact” should not lead a more detailed assessment of contested facts going to the merits of the case. Therefore, at the certification stage, the evidentiary record need not be exhaustive and courts “cannot engage in any detailed weighing of the evidence but should confine itself to whether there is some basis in the evidence to support the certification requirements.”

Deepening Divide Between Canada And The U.S.

While Canada’s top court continues to circumscribe the role of evidence at the certification stage, the U.S. Supreme Court is moving in the opposite direction. In Halliburton Co. v. Erica P. John Fund, Inc., discussed here, the U.S. Supreme Court confirmed that plaintiffs in securities class actions could continue to rely on the “fraud-on-the-market” presumption. The presumption, which is activated when plaintiffs adduce indirect evidence of price impact, in effect eliminates the need for plaintiffs to demonstrate individualized reliance on an alleged misrepresentation. In turn, defendants are given an opportunity to rebut the presumption with evidence demonstrating that the alleged misrepresentation did not actually affect the stock price. Both the establishment and rebuttal of the “fraud-on-the-market” presumption occurs at the certification stage. In this way, antithetical to the Canadian approach, the U.S. Supreme Court in Halliburton has, in the context of securities class actions, embraced and expanded detailed evidentiary contests on the merits at certification.

Certification Still A Meaningful Screening Device In Canada

However, defendants in Canada should not expect that the relatively low “some basis in fact” standard will lead to the proliferation of class actions north of the border. Canadian courts have consistently maintained that certification remains a meaningful screening device.

The Supreme Court underscored this point by only authorizing the certification of two of the three actions in the Indirect Purchaser Trilogy (Pro-Sys Consultants Ltd. v. Microsoft Corporation and Infineon Technologies AG v. Option consommateurs). In the third action, Sun-Rype Products Ltd. v Archer Daniels Midland Company, the Court denied certification, having found that there was no basis in fact to support the existence of a class that could self-identify. In Sun-Rype, the putative class consisted of consumers who purchased products containing high-fructose corn syrup. However, the plaintiffs did not offer any evidence that such consumers could distinguish such products from those using liquid sugar, as high-fructose corn syrup and liquid sugar were used interchangeably in products. As a result, certification was refused.