Two companies – George Weston and Loblaw – have agreed a $363m settlement, one of the largest antitrust deals in Canadian history. The payment in July settled their involvement in nationwide class action lawsuits that alleged the price of bread was fixed over a 14-year period. 

In a statement, Loblaw told Global Insight that it discovered the arrangement in 2015 and self-reported, ‘we sincerely apologize.’ Commenting on the settlement deal, Galen G Weston, Chairman of Loblaw and Chairman and Chief Executive Officer of George Weston said, ‘On behalf of the Weston group of companies, we are sorry for the price-fixing behaviour we discovered and self-reported in 2015. This behaviour should never have happened.’

A spokesperson for Metro told Global Insight that the company ‘was not a party to any “industry-wide” conspiracy to fix the price of bread, nor did it engage in conduct contrary to the Competition Act. Metro will continue to defend its position against the class actions.’ While the other defendants didn’t respond to Global Insight’s requests for comment, they have also publicly disputed the allegations and denied they were part of such an arrangement. 

Robert Johnston, Co-Chair of the IBA Class Actions Committee and a partner at Johnson Winter & Slattery in Sydney, says class action lawsuits such as this are becoming more common in a number of jurisdictions because ‘the mechanisms are getting better and the funders are getting better.’

He says there’s been an increase in mass torts and mass product liability claims in particular. The global nature of the products or services we consume significantly increases the number of possible class members in the event of a dispute, making the potential damages larger, in turn meaning class actions are more viable. ‘In one sense you’ve forever had wrongdoing by corporations,’ says Johnston, ‘but that has never been brought to account because it’s been too expensive to do so.’ 

Anne Merminod, Vice-Chair of the IBA Class Actions Committee and a partner at Torys in Montréal, says that where she practises, ‘class action law is a very easy way to achieve the goals of a proceeding. Instead of having a multitude of very small cases, class members can join together, making it easier to pursue shared objectives.’ 

A rise in class actions can increase the risk of frivolous or speculative claims, particularly in the US or in some Canadian provinces, where there are no adverse costs to act as a break. Kent Schmidt, a partner in Dorsey Whitney’s Southern California office, says in the US there’s been an increase in demand letters threatening a class action against a company unless it pays a certain sum to settle. Often the claim has enough substance to motivate the company to do so. However, settling only resolves that individual claim, meaning further action could be brought on the same issue if it isn’t addressed promptly by the business. 

Steven Rosenhek, Website Officer of the IBA Class Actions Committee and counsel at Fasken Martineau DuMoulin in Toronto, says in Canada the pendulum has begun to swing away from the plaintiffs and towards the defence side. There are more instances of the court denying certification, or the case going to trial on the merits and the defence winning. 

Merminod agrees. In Quebec where she practises, the threshold for certification is relatively low: a claimant doesn’t necessarily need evidence to back up their allegations. Because of this, defendants are becoming more confident in going forward to the merits stage because there may be little substance to the plaintiff’s claim. ‘We’ve seen many trials in class actions recently where defendants have prevailed,’ she says, ‘leading to rejection of the class action in the end after a trial on the merits.’

A more emboldened defence side could deter some of the more speculative cases from being brought if it seems probable that the merits of the case will be tested in court rather than the case being settled before it reaches that stage. 

Some organisations have begun to include class action waiver clauses in consumer contracts. Under these clauses, the consumer agrees not to participate in a class action and to have any dispute heard in arbitration, often in an obscure or inaccessible place. However, in the US, consumer lawyers are responding to these clauses by filing mass arbitrations, often using social media and artificial intelligence to collect claims. In some jurisdictions each individual arbitration comes with a large fee, which means that when a corporation finds itself defending thousands of individual arbitrations, those fees are sizeable. ‘Now you have massive leverage for the claimants,’ says Schmidt, who describes these mass arbitrations as ‘a very creative and unexpected shift.’

Johnston says consumer lawyers are using mass arbitrations as a ‘spoiling tactic’ to deter corporations from including class action waiver clauses in their contracts. He adds that some jurisdictions don’t even allow the clauses because they’re considered unconscionable. This could be because they create a power imbalance between the consumer and the business, or because they’re against public policy that may require certain types of corporate wrongdoing to be addressed in court. 

Mass arbitrations are a specific response to class action waiver clauses and their rise isn’t influenced by the same factors that have prompted a rise in class actions more broadly. ‘It’s a relatively small number that are focussed on mass arbitration,’ says Schmidt. Nevertheless, businesses are assessing their vulnerability to mass arbitration, and many are making the strategic decision to allow class actions rather than face mass arbitrations.  

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