“Too Big to Certify”

In Kett v. Mitsubishi Materials Corporation, 2020 BCSC 1879, Justice Branch dismissed a certification application because the case was “too big to certify”. The case confirms that there are limits to the scale of class actions—while plaintiffs may create the appearance of commonality through abstraction, certification will be inappropriate where individual analyses dominate.

The judgement is also notable for:

  • limiting the use of BC’s Business Practices and Consumer Protection Act (the “BPCPA”) against parties in a supply chain that provide components; not finished goods in the form received by consumers;
  • requiring plaintiffs’ counsel to disclose any relationship between the plaintiff and the firm; and
  • requiring plaintiffs to file more than a “standard form” litigation plan in complex cases.

Facts

The defendants sold a vast array of automobile parts to vehicle manufacturers and others in the automotive supply chain. With the possible exception of replacement parts, the parts sold by the defendants were all incorporated into vehicles then sold by others. The defendants did not deal directly with consumers.

The defendants delivered certain products to their customers that deviated from specifications. For example, the defendants did not perform all of the testing and inspections that they recorded. After their misconduct came to light, some of the defendants were charged with offences. None of their customers raised safety concerns.

The plaintiff alleged that the misconduct resulted in higher vehicle prices for consumers. He primarily relied on the statutory causes of action in the BPCPA but also advanced claims in unjust enrichment and the unlawful means tort.

The BPCPA does not allow consumers to target any component in a complex supply chain

The court concluded that the vast majority of the BPCPA claim was bound to fail because the defendants did not “supply” “goods” in a “consumer transaction” under the BPCPA. Rather the defendants supplied goods (automobile parts) to others who then supplied goods (vehicles) to consumers. The court emphasized that consumers were buying vehicles, not collections of parts—the BPCPA does not allow consumers to target any component in a complex supply chain when they buy a finished product. As an exception to this general conclusion, the court accepted that the plaintiff and other consumers may have a claim under the BPCPA for any replacement parts they purchased in the final form distributed by the defendants.

The court held that the diminished BPCPA claim and the claims in unjust enrichment and the unlawful means tort were not bound to fail.

Class action is not the preferable procedure: “a monster of complexity and cost”

The court nevertheless refused to certify the action because of its complexity—there was a significant risk that it would collapse under its own weight.

For example, the first proposed common issue asked whether the defendants “fraudulently alter[ed] quality control certifications”. The court held that the question was too broad to be common because there was no allegation of systematic wrongdoing across all defendants and products. Instead, each shipment of products would have to be reviewed individually. As the court explained (para. 139):

Would a class member with Part #545 from Shipment #9,456…want their counsel or their expert wasting time and money chasing down whether Part #123 from Shipment #3,225…also failed to meet testing standards?

The court concluded that most of the proposed common issues were not common for similar reasons. For example, any analysis of the alleged overcharge would have to be done on a shipment-by-shipment basis.

The court went on to conclude that a class action was not preferable—but rather “a monster of complexity and cost” (para. 193). For example, in considering causation it would have been necessary to assess what different purchasers (not class members) would have done had they known of the misconduct. Some might have accepted shipments anyway; others might have demanded discounts. And even more individuality existed at the class member level (para. 180):

One class member might have only one product from one defendant in their vehicle, while another could have multiple products made by multiple defendants. As such, even two class members who both obtained a vehicle containing Product #347 will not necessarily require the same analysis. For example, their overcharge analysis could differ if the second class member’s vehicle also contained defendants’ Product #5481.

Relationships between the plaintiff and the law firm must be disclosed

The court concluded that the plaintiff and counsel should have disclosed the relationship between them. The plaintiff was the brother-in-law of a former associate in the plaintiff’s counsel’s firm. The court noted the “positive obligation [that an affiant attest that all material facts to the certification application have been disclosed] is frequently, and unfortunately, observed in the breach by both sides on most certification applications” and the “failure does not reflect well on class counsel”.

Despite his comments, the court concluded that the plaintiff was an adequate representative because his brother-in-law resigned from the firm before he swore his affidavit in support of certification, thereby negating the conflict.

In complex cases, plaintiffs must produce more than a “standard form” litigation plan

Finally, the court rejected the plaintiff’s proposed litigation plan. The court acknowledged that similar litigation plans had been approved in previous cases, but concluded that a “standard form” plan was too simplistic for such a complex action. Citing Justice Winkler from the Ontario Superior Court of Justice, the court concluded:

In a proceeding of this size and complexity, a proper litigation plan should reflect a clear acknowledgment of the massive undertaking involved...and should satisfy the court as to how the resources available to the plaintiffs can be brought to bear to ensure that the litigation can be conducted in a way so as to protect the interests of class members.

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