I recently came across an interesting article entitled “Canada: Class Actions and the Insurance Industry” that I thought would be of particular interest to readers of this blog. Many U.S. insurers write homeowners and auto policies in Canada and may need to start paying closer attention to developments in Canadian class action law, which Canadian legal commentators indicate is more permissive for plaintiffs than U.S. federal law (here is an article discussing differences between Canadian and U.S. class action law). Reportedly there has been a significant increase in class action filings in Canada in recent years. I have not studied Canadian class action law in any detail but a few things jumped out at me:
- It appears that Canada primarily has what we call “issues classes” in the U.S. (where common issues are decided in a consolidated proceeding and then individual issues are resolved separately). The standard for certification though may be more generous to plaintiffs. On this, the recent American Law Institute Principles of the Law of Aggregate Litigation lay out some suggested guidelines for deciding whether and when to certify an issues class. Although obviously not binding on Canadian (or even U.S.) courts, they may have some persuasive value.
- The cases seem to proceed in a manner similar to in the U.S. – class certification is hotly contested, and most classes that are certified result in settlements, with trials of class actions rarely occurring. It appears that nationwide classes, however, are often pursued separately and simultaneously in multiple provinces because Canadian federal courts do not have jurisdiction over such cases.
- The issues that have been the focus of insurance class actions include some of the same issues that have been a focus in the U.S. – “vanishing premium” life insurance policies, the use of non-original equipment manufacturer parts in repairing damaged automobiles, and the use of “checkbook” accounts to pay policy proceeds under life policies. While so far it seems that issues identified as potential bases for class actions in the U.S. are migrating north of the border, given that Canada seems to have more plaintiff-friendly standards, we may see the reverse start to occur, with class action issues that are successful in Canada being brought into U.S. courts. Stay tuned.