In Tress v FCA US LLC, the Saskatchewan Court of Appeal reaffirmed the Court's gatekeeping role on certification, refusing leave to appeal the denial of certification where the plaintiff failed to provide any evidence of compensable harm or loss to the proposed class. Tress follows the growing line of cases flowing from the 2020 decision of the Supreme Court of Canada in Atlantic Lottery Corporation Inc. v Babstock, that emphasized that certification can be a tool to weed out hopeless claims. You can read our analysis of Babstock here, and our analysis of case law following Babstock here.
The trajectory of cases flowing from Babstock, most recently in Tress, emphasizes that certification is not a rubber stamp. Rather, the onus is on would-be representative plaintiffs to establish their claim ought to advance in the interests of access to justice. As succinctly put by the Court in Tress, "an intended class action should not be certified without threshold evidence of any compensable loss, and thus an absence of any realistic prospect of genuine remedy that could be achieved by the litigation."
Background
Tress concerned alleged misrepresentations of the emissions performance of vehicles through the use of Auxiliary Emission Control Devices or "defeat devices". Defeat devices are used to modify the functioning of a vehicle's emission control system, causing the vehicle to have a greater environmental impact. Prior to certification, the defendant provided a software update to ensure the vehicles met emissions standards and demonstrated to regulators that there were no detrimental consequences on fuel economy or vehicle performance.
Despite the regulatory approval, the plaintiff continued to seek certification, arguing that he would have never purchased the vehicle had he known of the defeat devices. The plaintiff alleged that he and other buyers were entitled to seek damages for: (a) loss of fuel efficiency and environmental friendliness; (b) loss of resale value; (c) reduced quality and reliability; (d) a price premium paid upon purchase; and (e) other inconveniences.
Certification Decision
At certification, the Chambers Judge found that the plaintiff had provided no evidence of compensable loss. Specifically, the judge referred to the analysis conducted by regulators after the software update showing the emissions issue resolved without affecting performance. Additionally, the judge stated that the plaintiff relied only on his own subjective evidence which is not "evidence of loss."
On the loss of resale value, the Chambers Judge found that it was only a concern of what may happen, not evidence of something that did happen. The plaintiff relied on an expert report as evidence of reduced quality and reliability. However, the expert relied on data before the software update was implemented. The Chambers Judge found that the opinion of the expert held no weight in determining whether the evidential threshold was met.
Further, the Chambers Judge found that the bill of sale was not evidence that the plaintiff or class members paid a premium, and that there was also no evidence provided that there were nominal damages suffered.
Given that there was no factual basis to support the allegation that the class members suffered a loss that would require compensation, the Chambers Judge held that the proposed class action was not the preferable procedure for resolving the litigation.
Decision in Tress
The plaintiff sought leave to appeal the denial of certification. The Court denied leave to appeal because the proposed grounds of appeal lacked sufficient merit.
Relying on case law from across Canada, the Court held that a class action will not be certified if the plaintiffs are unable to demonstrate a threshold requirement of compensable harm or loss. Throughout the case law, this conclusion has been based on the preferable procedure criterion, the adequate representative criterion, or the identifiable class criterion. But regardless of the analytical route, the result is the same: cases will not be certified where there is "an absence of any realistic prospect of genuine remedy that could be achieved by the litigation." Put another way, the plaintiff must establish some basis in fact for the allegation of compensable loss in order for their action to be certified.
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