In Williams v. Canon Canada Inc. released in November, Justice Strathy of the Ontario Superior Court of Justice refused to certify a putative class action on the basis that the plaintiffs had failed to establish even some "basis in fact" pertaining to the requirements for certification under section 5(1) of the Class Proceedings Act (the "CPA"). Justice Strathy concluded that the action was not appropriate for certification because there was no factual basis for the plaintiffs' assertion that the alleged defect in that product liability class action was common to all class members.
The plaintiffs moved to certify a class proceeding on behalf of a proposed class of owners of cameras manufactured by Canon Inc. and distributed in Canada by Canon Canada Inc. (the "defendants"). The plaintiffs alleged that 20 models in the "PowerShot" line of cameras sold by Canon between July 30, 2005 and the present (the "Cameras") contained a common "E18 Error" defect which allegedly caused the Cameras to shut down and remain inoperable.
The E18 Error message appears on a PowerShot Camera's LCD screen when the camera senses a problem with the movement of its lens barrel. When the camera's lens barrel extends or retracts, the camera's computer monitors whether the movement is completed within a specified time. If the lens barrel does not complete the movement within that time, the computer assumes that there is a problem, displays the E18 Error message on the LCD screen and shuts down the camera to avoid permanent damage to the lens mechanism. Thus, the display of the E18 Error message and the automatic shut-down of the camera is an intentionally designed safety feature of the cameras and is not necessarily an indication that the camera is malfunctioning.
The plaintiffs alleged that the E18 Error is a "design deficiency" that made the Cameras susceptible to unexpected manifestation of the E18 Error message. The plaintiffs pleaded that the E18 Error is caused by a defect in the design or manufacture of the Cameras that makes the Cameras unmerchantable and unfit for their intended use. In addition, to the motion for certification, the Court also heard a motion by the defendants to strike the plaintiffs' expert evidence.1
Motion to Strike Plaintiffs' Expert Evidence
The defendants argued that that the evidence of the plaintiffs' two experts, Mr. Atkins and Mr. Joffe, failed to satisfy the test established by the Supreme Court of Canada in R. v. Mohan for the admissibility of expert evidence. In particular, the defendant argued that the plaintiffs' experts were not properly qualified experts and their evidence was therefore inadmissible.
Mr. Joffe purported to be an expert in "web analytics" and "statistics" and was retained by the plaintiffs' counsel to determine whether the E18 Error was a statistically significant problem based on its internet presence and the level of web chatter surrounding the topic. The plaintiffs argued that the prevalence of the E18 Error on the internet established a basis in fact for the existence of a class of persons who would be interested in the resolution of the common issues. Justice Strathy noted that although Mr. Joffe did not define "web analytics," it appeared to involve the analysis of the occurrence of certain expressions on the internet, in this case expressions pertaining to the E18 Error, by conducting Google searches.
Applying the principles for the admissibility of expert evidence, Justice Strathy concluded that Mr. Joffe was not a qualified expert in respect of the matters on which he undertook to testify and as such, his evidence was inadmissible. Moreover, Mr. Joffe's evidence was inadmissible because his conclusion that the E18 Error was a statistically significant problem was irrelevant because it had not been establish that the display of the E18 Error reflected a defect in the Cameras. In so holding, Justice Strathy reasoned that the fact that Mr. Joffe works in the area of statistics and web analytics and thinks he is good at it did not mean he had the necessary expertise to testify as an expert. In particular, there was no indication that Mr. Joffe had published in the area of internet research. In addition, there was no evidence to establish that "web analytics" was an accepted area of expertise, or evidence to establish the reliability of this technique. His Honour found that Google searches were agglomerations of individual postings, the authenticity and reliability of which was unknown. Justice Strathy found that there was no way of testing the underlying truth of the postings, and Mr. Joffe had made no attempt to do so. In particular, Joffe failed to explain how his methodology screened out or differentiated malicious postings from genuine internet postings. Moreover, there was no evidence that one could extrapolate factual conclusions from the number of occurrences of a particular search phrase on Google.
In respect of his purported expertise in statistics, Justice Strathy found that Mr. Joffe showed no qualifications in statistics – specifically, no degrees, course, papers, professional affiliations or teaching. His Honour noted that statistics was not an area where on-the-job training or long experience could qualify as expertise.
Similarly, Justice Strathy concluded that Mr. Atkins, the plaintiffs' second expert, was a not a qualified expert in camera design to enable him to give an opinion about what specific design feature would have to be incorporated in the Cameras to prevent the occurrence of the E18 Error message and his opinion was therefore inadmissible. The plaintiffs sought to qualify Mr. Atkins as a "consumer product failure" expert. However, Justice Strathy held that, like Mr. Joffe, Mr. Atkins' expertise was self-conferred. Importantly, His Honour found that there was no independent evidence that Mr. Atkins was qualified to give an opinion on digital camera design or failure. Mr. Atkins had no experience in camera inspection, repair and design, and his experience with developing specifications for lawnmowers, bicycles and weed whackers did not qualify him to give an opinion about the failure of the optical unit of a camera.
Consideration of the Requirements for Certification
Having ruled on the admissibility of the plaintiffs' expert evidence, Justice Strathy turned to the requirements for certification under the CPA. Following a review of the defective product cases that have been considered for certification, His Honour noted that the cases demonstrate that on a certification motion, the plaintiff must demonstrate some basis in fact for the proposition that the product owned by the plaintiff shares a common defect with the products owned by all members of the class. Moreover, it must be shown that the defendant's liability to the class can be extrapolated from a finding in relation to the representative plaintiff. Ultimately, Justice Strathy concluded that the plaintiffs had failed to meet this burden in respect any of the elements of section 5(1) of the CPA and refused to certify the action.
Causes of Action
As to the first element of the test for certification, Justice Strathy held that the plaintiffs had not pleaded proper causes of action in contract, under the Consumer Protection Act, 2002, under the Competition Act, for unjust enrichment or for waiver of tort.
There was no cause of action for breach of contract because there was no pleading of any contract between Canon and the plaintiffs other than the standard warranty provided by Canon. However, the warranty was not a sale contract, but rather a contract to repair or replace defective cameras under certain conditions and accordingly, could not support a breach of contract claim. Moreover, Justice Strathy held that the plaintiffs had not pleaded facts that could establish a breach of warranty and there was no allegation that the warranty itself had been breached.
The plaintiffs' allegations under the Consumer Protection Act, 2002 were similarly untenable because the plaintiffs did not, and could not, plead that they purchased their cameras from Canon. At the outset, Justice Strathy noted the difficulty the plaintiffs had in overcoming his prior holding in Singer v. Schering-Plough Canada Inc. that the Consumer Protection Act, 2002 does not apply to claims by a consumer against a manufacturer. Justice Strathy held that the plaintiffs could not rely on section 52 of the Competition Act because they did not assert a cause of action under section 36 of that Act. Furthermore, the plaintiffs had not alleged any misrepresentations that were capable of sustaining a cause of action under section 52. The failure to disclose the alleged defect in the Cameras was not a "representation" for purposes of the statute.
Justice Strathy held that the plaintiffs did not have a claim for unjust enrichment because the plaintiffs were unable to assert a direct enrichment of Canon or the absence of a juristic reason for the enrichment. In particular, given that no money was paid by the plaintiffs directly to Canon, to the extent that Canon may have been enriched by the purchase of Cameras by the plaintiffs, the enrichment was indirect. Moreover, the existence of a valid contract between the plaintiffs and the retailers, and between the retailers and Canon, constitutes a valid juristic reason for any enrichment.
With regard to the plaintiffs' waiver of tort claim, it appeared that the claim was asserted as a remedy and not a cause of action. His Honour reasoned that if the claim was asserted as a remedy, the issue of entitlement to a disgorgement, if one existed, could be left to the common issues judge. However, to the extent the plaintiffs were asserting the claim as a cause of action it was untenable for lack of a predicate wrongdoing in light of His Honour's conclusions regarding the other causes of action asserted by the plaintiffs.
Justice Strathy held that the requirement of an identifiable class was not satisfied because there was no evidence to show any commonality between the complaints of the individual plaintiffs, owner of two of the PowerShot models at issue, and the owners of the other eighteen camera models. Justice Strathy expressed concern at the lack of evidence from the plaintiffs to show why the twenty camera models at issue were chosen (out of the 136 PowerShot models available) for inclusion in the class definition. Moreover, the evidence from the plaintiffs' experts failed to assist the Court with respect to this issue.
While the plaintiffs proposed numerous common issues, Justice Strathy agreed with the plaintiffs' counsel that the fundamental question regarding the common issues was whether the plaintiffs had established a basis in fact for the existence of a design defect, common to all the Cameras, that causes the E18 Error message to appear and that rendered the Cameras inoperable. If there was a basis in fact for this first common issue, some of the other issues would be appropriate for certification. If there was no basis in fact for this issue, the resolution of the remaining issues would not move the action forward. Justice Strathy noted that the obstacle to certification of the action was the absence of admissible evidence to show that the plaintiffs' claims gave rise to common issues of fact. The plaintiffs failed to produce admissible evidence that the display of the E18 Error message in their cameras was anything other than an indication that the cameras were doing exactly what they were programmed to do – namely, to shut down and warn the user that the lens could not extend in safety. His Honour reasoned that there was no admissible evidence that the plaintiffs' cameras shut down for any reason attributable to a defective design. In addition, there was no evidence that liability for the defect, if there was one, could be determined on a common basis. Justice Strathy concluded that the first common issue was incapable of certification and as such, the resolution of the remaining common issues, which hinged on it, would do nothing to advance the claims of the class. The plaintiffs' causes of action on which those common issues were based were also found to be untenable.
Preferable Procedure and Representative Plaintiff
In light of his findings that the fundamental common issue was inappropriate for certification, Justice Strathy concluded that the action did not meet the preferablity requirement. Moreover, His Honour concluded that it was unnecessary to conduct a thorough examination of the representative plaintiffs, given that the issue of representation was not the only matter precluding certification of the action.
The decision is an important reminder that, for the purposes of a certification hearing, expert evidence must still meet the requirements for admissibility established by the Supreme Court of Canada, failing which the court will exercise its "gatekeeper" role and bar the inadmissible evidence. Moreover, on a certification motion, the evidentiary burden requires the plaintiff to adduce admissible evidence to establish the certification requirements.
1. The Court also heard motions by the plaintiffs to amend the statement of claim and remove a representative plaintiff, as well as the plaintiffs' objection to the defendants' expert evidence.
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