The Court of Appeal for Ontario (Court) has confirmed the test for granting an extension to opt out of a class proceeding after the court-ordered deadline has elapsed. The Court has also confirmed that such deadline will rarely be extended where a judgment has been rendered or a settlement has been reached.
BACKGROUND
In
Johnson v. Ontario, the representative class members
commenced proposed class proceedings against the respondent Her
Majesty the Queen in Right of Ontario (Ontario) on behalf of all
persons who were incarcerated at the Elgin-Middlesex Detention
Centre (EMDC) between 2010 and 2017.
Having certified the action, on March 22, 2018, the court approved
a notice plan to inform class members of the proceedings and how to
opt out by completing and returning an opt-out form to class
counsel by June 20, 2018 (Notice Plan). The Notice Plan
contemplated for notice to be published in two local newspapers,
posted on class counsel's website, and sent by regular mail to
the last known address of each class member.
The appellant was an inmate at EMDC within the class period. He was
transferred to federal custody in August 2017, where he remained
until 2019. Class counsel mailed the notice to the appellant at his
last known address, where he resided with his father before he was
incarcerated. Although the appellant was in touch with his father
by telephone in the time surrounding the mailing of the notice, he
denied receiving or seeing any of the notices, or knowing about the
class proceeding at any time before the opt-out deadline.
On April 27, 2020, the appellant commenced an individual action
against Ontario and employees of EMDC, among other defendants. In
June 2020, he learned of the class action upon receiving a letter
from Ontario stating that his action overlapped with the class
action. Ontario asked that the appellant discontinue the individual
action against Ontario and its employees.
The appellant brought a motion in the Ontario Superior Court of
Justice for an extension of time to opt out of the class action.
The motion judge noted the appellant's concession that the
jurisdiction to extend the opt-out period is rarely exercised and
dismissed the appellant's request, effectively terminating the
individual action. The appellant appealed the decision.
COURT OF APPEAL DECISION
Justice Benjamin Zarnett, writing for a unanimous Court, allowed
the appeal, set aside the order of the motion judge and made an
order extending the time within which the appellant may opt out of
the class action. In so doing, the Court confirmed that the
"excusable neglect/no prejudice" test articulated by the
Ontario Superior Court in Young v. London Life Insurance
Co., [2002] O.J. No. 5971, is to be applied on a motion to
extend the time to opt out.
This test, derived from a case decided under the United States
Federal Rules of Civil Procedure, requires that such extensions be
granted only where:
- the delay in opting out is due to excusable neglect – in good faith and with a reasonable basis; and
- the court has considered whether any prejudice will accrue from permitting the late opt out to participating class members, the defendant, or the integrity of the process.
The Court reasoned that this test balances, on the one hand, the
importance of the right to opt out, which is fundamental to a class
member and to the integrity of the class proceedings scheme as a
whole, and, on the other, the importance of complying with a
court-ordered deadline.
The Court concluded that the excusable neglect prong of the test
was met because the appellant was incarcerated when the notice was
published, and the mailed notice was sent to an address at which he
was not physically present and which he did not return to during
the opt-out period. In addition, there was no assertion of any
delay in requesting an extension of time to opt out after the
appellant became aware of the class proceeding.
Importantly, the Court rejected the possibility that compliance
with an adequate notice plan is dispositive of the excusable
neglect issue, and further held that the appellant was not required
to prove under this prong of the test that he would have opted out
based on what he knew at the opt-out deadline. The Court held that
the appellant's evidence that he likely would not have opted
out by the deadline had he known of the class proceedings or that
he did not know of the existence of his cause of action until after
the expiry of the deadline were irrelevant.
With regard to the prejudice prong of the test, the Court reasoned
that there was no evidence of any judgment or settlement of the
class proceeding, or steps in that direction that might have been
taken in reliance on the appellant being a participating class
member or the number of opt outs. Class counsel did not oppose the
appeal, and Ontario did not point to any prejudice it would suffer.
On the other hand, the Court stated that had the appellant moved to
extend the time for opting out after judgment or settlement, his
request would most likely have been denied on the basis of
prejudice.
IMPLICATIONS
The deadline for opting out promotes certainty and predictability in the class proceeding. Going forward, this case raises the prospect of potential class members successfully extending the opt-out deadline at any time before judgment or before significant steps towards settlement have been taken. On the other hand, this decision affirms that courts will not lightly extend the opt-out period after a judgment or settlement of the class proceeding, and will not allow class members to rely on this more relaxed test to extend the opt-out period as part of a litigation strategy or as part of a wait-and-see approach.
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