Class Action Basics – Why do class actions exist?

It may have happened to you. You bought a product and later found out it was harmful. You purchased a car but later found out it was defective and therefore had less value on the market, cost more to maintain, or was not as fuel efficient as the manufacturer said it would be. You bought shares in a public company based on their information, only to find out later that the information you were given was incomplete or inaccurate. You worked at a place where you had to put in overtime hours but were never paid for those hours. You went to a college that promised one thing but delivered another. Your phone company overbilled you for no good reason.

Situations like these are regrettably common in our modern society. In all these cases, your loss may range from less serious to very serious. In monetary terms, you may lose a few dollars, a few hundred dollars, a few thousand dollars, and so on. The loss does not have to be large for one to feel the injustice. The first thing that comes to mind in these situations is: I want justice.

Unfortunately, that is often easier said than done. Our justice process is complex and costly. In many of these cases, hiring a legal professional to right a wrong could cost much more than the loss you suffered. Because the majority of people make their decisions on a cost/benefit basis, many of these wrongs go unpunished. So, very often one is left helpless.

A class action provides a solution to such situations.

If more than one person with a tiny claim have suffered a similar loss, it may be possible for them to pool their claims together in a way that the ultimate collective result becomes a large enough sum to justify investment in a lawsuit. The complaints might be for as little as a few cents each but still justify a lawsuit where the number of people affected is large enough. A class action is just that: a group lawsuit that deals with often small complaints of many.

As a result, class actions make justice more accessible. In other words, they increase people’s access to justice. With class actions, many people no longer have to suffer in silence because their potential claim is too small to justify a lawsuit. Access to justice is the most important reason for the existence of class actions.

Of course, even in cases where a few persons have suffered a similar large injury a class action may offer a more efficient and less costly method of advancing their claims with a single lawsuit. Regardless of whether the claims are small or large and whether the number of people affected is small or large, a class action may be a more efficient way to resolve claims than many individual lawsuits.

Finally, because class actions make justice more efficient and accessible, they can also change the behaviour of those who are in a position to commit a mass wrong. In other words, if large corporations and other entities know that harming a large number of people on a small scale can lead to liability, they tend to organize their affairs in a way to not harm people. Preventing unlawful behaviour is another goal of class actions.

Ontario law has permitted class actions for about 25 years. During these years, class actions have obtained justice for countless people including consumers, college students, Crown wards, patients, franchisees, shareholders, employees, investors, home owners, Aboriginal peoples, blind students, land owners, victims of abuse, hockey players. The list goes on.

Sotos LLP a recognized leader in class action litigation in Canada.