The Ontario Divisional Court recently addressed the threshold required to establish a plausible methodology for measuring compensable loss on a class-wide basis. For the purpose of certification, plaintiffs are not required to quantify the actual loss suffered.
In MacKinnon v. Volkswagen Group Canada Inc., the Divisional Court overturned the decision of a motion judge to deny certification of a proposed class action brought against Volkswagen, Audi and a number of subsidiaries resulting from their use of an unlawful device designed to subvert emissions regulations. In 2021, the defendants had settled a class action which sought recovery for the drop in value of Volkswagen and Audi vehicles resulting from the public disclosure of the "defeat device" issue. The proposed class in this action consisted of claimants who were not included in the previous settlements. Specifically, the proposed class included Volkswagen and Audi owners and lessees who sold their diesel-engine vehicles prior to the revelation in September 2015 that the vehicles contained the unlawful defeat device.
The motion for certification was denied on the basis that there was no plausible methodology to calculate the damages claimed; namely, the premium paid for the clean diesel or low emission feature of the vehicle that was never received. The representative plaintiff's experts provided several proposed methodologies for measuring the loss. The motion judge took issue with the inability of the methodologies to isolate the monetary value of the clean diesel premium from other types of loss suffered by owners and lessees, such as reductions in the resale value of the vehicles. Absent a plausible methodology to measure the isolated value of the clean diesel premium, the motion judge dismissed the motion for certification.
On appeal, the Divisional Court held that the methodology proposed by the plaintiff's experts for measuring compensable loss on a class-wide basis was plausible, and therefore allowed the appeal.
The Court clarified the threshold in establishing plausible methodology: "The issue is merely whether the experts present a plausible – indeed, even a barely plausible – methodology; not whether it will ultimately work. It is by now well established that 'a certification motion is not the time for finely calibrated assessments of the expert opinions.'"
In light of this threshold, the Court held that the motion judge erred by requiring evidence that the methodology proposed by the plaintiff's expert could actually do what it purported to—provide a measure of loss. It found that there was a plausible methodology for measuring compensable loss on a class-wide basis. Accordingly, the appeal was allowed, and the matter was remitted to a new judge of the Superior Court of Justice to determine the balance of the certification issues. The issue addressed in this case is important for employers defending class proceedings because it serves as a reminder not to over-estimate the threshold (legal, factual and strategic) presented by the requirement for a "plausible" methodology to measure compensable loss.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
