In Keatley Surveying Inc. v. Teranet Inc., the Ontario Divisional Court permitted the plaintiff to significantly revise its unsuccessful certification motion during the appeal process, heard the matter de novo, and granted certification. Although Justice Sachs cautioned that the decision was not an “endorsement” of recasting certification motions on appeal, this decision is likely to have significant strategic and tactical implications for defendants facing certification motions.
The plaintiff alleged that the defendant’s electronic land registry database infringed copyright. The motions judge denied class certification on the basis that, other than satisfying the requirement that the pleadings disclosed a cause of action, the plaintiff failed to meet the certification requirements (a decision that Justice Sachs agreed was correct on the basis of the case argued before the motions judge).
However, as a result of the motions judge’s decision, the plaintiff significantly revised the certification motion during the appeal process in order to: (i) change the class definition; (ii) amend the common issues (including the withdrawal of previously proposed common issues); and (iii) eliminate the relief that created a conflict between class members. The defendant objected to the plaintiff’s recasting of the certification motion on the basis that it was abusive and prejudicial.
Recasting a Certification Motion on Appeal
At the outset, Justice Sachs noted that there were two lines of authority regarding a plaintiff’s ability to recast a certification motion during the appeal process. After reviewing the authorities, Justice Sachs decided to follow the Ontario Court of Appeal’s decision in Markson v. MBNA Canada Bank and concluded that a plaintiff may recast its certification motion on appeal in order to make the case more suitable for certification, provided that the defendant is not prejudiced.
Justice Sachs noted that there are two factors in the class actions context that overcome the general reluctance of courts to hear issues de novo on appeal. First, class actions are procedural vehicles that promote access to justice, judicial economy and behaviour modification. Therefore, a flexible approach that does not strictly hold a plaintiff to the initial formulation of their arguments is required. Second, changes to the class definition and common issues are not as substantial as they seem because the revisions simply change the manner in which the existence of those factors are presented to the court.
Strategic and Tactical Implications
In Keatley, the plaintiff significantly revised and recast its certification motion during the appeal process in response to the motions judge’s decision, which accepted the deficiencies identified by the full-blown attack launched by defendant’s counsel at the certification stage. The appellate court then concluded that the revisions resulted in the case being properly certified as a class action. In essence, the plaintiff was able to use the defendant’s success before the motions judge to “cooper up” its case and neutralize the defendant’s arguments on the appeal.
Although the appellate court did not generally endorse the practice of recasting certification motions on appeal, the decision confirms that plaintiffs will be permitted to do so. The availability of this option is a key factor that defendants will need to consider in determining whether and how to resist future certification motions since it appears that, much like demands for particulars and motions to strike, initial success for the defendant may eventually lead to a stronger certification motion for the plaintiff.