North American updates: Canada and the US

Canada – confirmation of higher threshold for certification of class actions

Robin Squires
BLG, Toronto, Ontario
RSquires@blg.com

In 2020, Ontario’s class actions legislation including certification criteria was amended to prescribe that a class proceeding can only be determined to be the ‘preferable procedure’ if at a minimum: (1) it is superior to all reasonably available means of determining entitlement to relief or addressing a defendant’s conduct; and (2) the questions of fact or law common to the class members predominate over any questions affecting only individual class members. 

Recent decisions have clarified this made the test harder for plaintiffs: in Banman v Ontario [2023] ONSC 6187, the court held that ‘the purpose of the amendment was to raise the threshold [and] heighten the barrier’ for satisfying the preferable procedure criterion. As a result, plaintiffs have increased filings in British Columbia and other provinces to avoid this higher threshold for class actions with a national scope.

Plaintiff law firms with offices in Quebec are most likely to choose Quebec as the filing location for national class actions, because the test for certification there is much lower than the rest of Canada. Defendants are not entitled to file any evidence or even examine the representative plaintiff without permission from the court. In addition, a representative plaintiff need establish only a mere ‘possibility’ of succeeding on the merits. At the certification stage, ‘the role of the judge is to screen out only those applications which are frivolous, clearly unfounded or untenable’.

US – increasing numbers of fraudulent claims in class action settlements

John G Crabtree
Crabtree & Auslander, Miami, Florida
jcrabtree@crabtreelaw.com

Recent developments in US class action settlements reveal a troubling trend: a surge in fraudulent claims facilitated by artificial intelligence (AI) and ‘click farms’. The Altria settlement over Juul products is a stark example, where administrators expected a manageable number of claims but were inundated with 14.4 million submissions, nearly five times the anticipated volume. With at least 80 per cent of claims likely fraudulent, sophisticated bots fabricated identities and manipulated data to overwhelm the claims process. Other settlements have faced similar challenges:

• Artsana (Chicco-brand Seats): received over 3.3 million claims for 875,000 seats, prompting a reversal of its settlement.
• Godiva Chocolatier: nearly 47 per cent of the 827,676 claims were fraudulent.
• Celsius Holdings: of 1.77 million claims, 49 per cent were fraudulent due to duplicates and suspicious digital payment accounts.

Fortunately, leading claims administrators, such as Angeion Group, are implementing advanced fraud-detection tools, including AI-powered systems and continuous monitoring, to identify fraudulent patterns early. By embracing proactive strategies and collaboration, law firms and businesses can protect the integrity of class actions and ensure fair compensation for legitimate claimants.