A recent decision of the Ontario Superior Court of Justice adds to the growing body of case law dealing with the issue of when a Court should intervene to restrict communication with class members after a class action has been certified. Defendants and third parties must not interfere with class members’ rights to participate in or abstain from the class action on an informed, voluntary basis, free from undue influence.
Durling v Sunrise Propane 2012 ONSC 6328 is a certified class action arising out of a series of explosions which occurred on August 10, 2008 at a propane facility in the City of Toronto. The plaintiff class members allege that they suffered property damage and/or personal injuries as a result of the explosion. Justice Horkins certified the class proceeding on July 23, 2012.
During the subsequent opt-out period, a lawyer representing an insurer which had paid monies to its insureds for losses sustained as a result of the explosions wrote to some class members informing them that it intended to unilaterally opt them out of the class action because it planned to advance subrogated claims instead. The letter informed the class members that under the terms of the insurance policy, the insurer had been assigned the right to pursue recovery, and it preferred to do so through its own action, rather than have the insureds participate in the class action.
The communication came to the attention of class counsel who brought a motion in front of Justice Horkins requesting an order restraining the insurer and its counsel from making any further communication with the class members until the opt-out period expired. Justice Horkins ultimately deemed the communication improper and, pursuant to s. 12 of the Class Proceedings Act (the “Act”), ordered that the insurer have no further contact with the class members during the opt-out period, unless it received the permission of the Court.
Justice Horkins commented on the rules regarding communications with class members. While the Act does not contain an absolute prohibition on communication by defendants or third-parties to class members during the opt-out phase, it does grant the Court broad supervisory powers over the conduct of class proceedings. This enables the Court to restrict communication if it is deemed that a party is interfering with class members’ right to make an informed decision to opt-out of the class. Justice Horkins explained that if a communication is found to have unduly influenced class members, then the Court should “make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination”.
This decision is a reminder that defendants and third parties should tread carefully when considering communication with class members after certification.