On a re-hearing of the certification motion in Mackinnon v. Volkswagen Group Canada Inc., et al., 2024 ONSC 4988, the Ontario Superior Court of Justice partially certified a class action lawsuit against Volkswagen and Audi alleging that certain diesel vehicles were fitted with unlawful defeat devices to manipulate emissions tests.
The case arises out of Volkswagen’s 2015 admission to American regulators that it equipped its diesel-powered vehicles with software designed to deceive emissions testing systems. The scandal triggered a cascade of litigation and corresponding settlements, including in Ontario; however, some owners and lessees were explicitly excluded from such settlements. This proposed class action sought to address the claims of those excluded, alleging that class members paid a premium for vehicles that did not deliver on their promised features.[1]
Initial Denial of Certification and Appeal
In 2021, the action proceeded to a certification motion before Belobaba J. who denied certification on the basis that there was insufficient evidence of compensable harm to the class or a viable methodology to calculate damages on a class-wide basis.[2] In his reasons, Belobaba J. found that although there was “no doubt” that owners and lessees of the impugned vehicles paid a premium for diesel engines, the plaintiffs had failed to provide isolated evidence of the premium paid specifically for the clean diesel feature.[3]
On appeal, the Divisional Court unanimously overturned the certification decision. In its decision, the Divisional Court specifically reviewed the motion judge’s analysis of the experts’ proposed methodologies for damages presented by expert evidence.[4] The Divisional Court then clarified that for the “some basis in fact” requirement at certification, a plaintiff need only establish whether there is a plausible methodology, not whether such a methodology would ultimately be successful.[5] In this case, the motion judge not only sought a methodology, but also requested additional evidence to demonstrate that the methodology would work—a step outside the scope of certification.[6] Having been satisfied that the alternative methodologies proposed by the experts demonstrated “some basis in fact,” the Divisional Court remitted the putative class action back to a different judge of the Superior Court for a re-hearing of the certification motion, excluding whether the proposed class suffered compensable harm and whether there was a plausible methodology for measuring damages on a class-wide basis.
Re-hearing of the Certification Motion
A key issue raised in the re-hearing of the certification motion heard by Akbarali J. was the scope of the court’s mandate in view of the Divisional Court’s remittance of the matter for a re-hearing “apart from the question of whether the proposed class suffered harm and the question of whether there is a plausible methodology for measuring damages on a class-wide basis.”[7]
The defendants argued that the nature of the re-hearing of the certification motion is such that the motion judge is not bound by any findings of fact or conclusions made by Belobaba J. in the initial motion hearing, nor the Divisional Court, and instead can consider the question of compensable harm afresh.[8] In making this argument, the defendants cited Price v. H. Lundbeck A/S, which involved a certification hearing which the Divisional Court sent back to be “heard afresh,” however, had done so while expressly declining to decide on whether the certification criteria were satisfied.[9]
In contrast, the plaintiffs argued that the Divisional Court determined the question of compensable harm and methodology of calculating loss for the purposes of certification, and the court was bound by those findings.[10]
In her decision rejecting the arguments of the defendants, Akbarali J. noted that the defendants previously sought leave to the Court of Appeal regarding the Divisional Court’s conclusions and were unsuccessful. Having regard to the defendants’ arguments in their leave application, Akbarali J. concluded that their appeal route had ended and she was “not inclined to be drawn into an appellate role reviewing the Divisional Court’s determination, and particularly not when the Court of Appeal has declined to exercise that role itself.”[11]
Key Takeaways
The Divisional Court at issue in this decision makes clear that that for the purposes of certification, it is sufficient for the moving party to demonstrate some basis in fact that some harm has been suffered by the proposed class, but that harm need not be quantified at this stage.[12] In other words, it was enough for the plaintiffs to advance a plausible methodology to meet the “some basis in fact” test, however there is no requirement at certification to demonstrate that these methodologies would be successful at trial. This thorough analysis of the certification criteria, the applicable evidentiary burden, and the facts of this case ultimately demonstrated to the judge rehearing certification that this issue had been thoroughly considered and decided.[13]
This case provides some clarity for counsel faced with motions remitted back for re-hearing to review the appellate court’s decision and determine whether it provides any explicit instructions to the new motion judge not to address certain substantive issues.
This case underscores the importance of carefully considering the arguments advanced at each stage of litigation and being mindful of their potential implications. In class actions, where multiple levels of court may review aspects of the case, positions taken early on can have far-reaching consequences. For example, an argument unsuccessfully made on a motion for leave to appeal a certification decision might affect how another judge approaches a re-hearing of that certification.
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