No Harm, No Foul: The Alberta Court of Appeal Dismisses a Novel Claim in Negligence at Certification

In Setoguchi v. Uber BV, 2023 ABCA 45, the Alberta Court of Appeal upheld a decision declining to certify a data breach class action against Uber. The Court found that the pleadings failed to disclose a cause of action in negligence because the plaintiff’s novel theory of loss was not compensable at law. The case confirms that courts can and will critically assess the pleadings and dismiss class actions that present unworkable novel claims at an early stage.

Background

In October 2016, external hackers stole the personal information – names, phone numbers, and email addresses – of 57 million Uber users and drivers globally. This information was collected by Uber and stored in a third-party cloud service. In response, the plaintiff brought a proposed class action against Uber for various claims, including negligence and breach of contract. There was no evidence that the information had been released to anyone other than the hackers in the four years since the breach, and there was no evidence that any class member had suffered any economic or psychological harm. Instead, the plaintiff focused on a novel legal theory of a “first loss.” The plaintiff argued that the “loss” of personal information to criminals who accessed and downloaded it constituted loss for the purposes of negligence.

In the court below, Associate Chief Justice Rooke declined to certify the class action on the basis that it did not satisfy the preferable procedure criterion of the certification test.[1] While there is normally no consideration of evidence at the s. 5(1)(a) stage, Associate Chief Justice Rooke was concerned with that standard given the lack of evidence of harm in this case. In commenting on his role as a gatekeeper at the certification stage, he suggested that it was unfortunate that the “some basis in fact” test – reserved for the other four criteria – is not available to deny cases under s. 5(1)(a). Despite these comments, he also appeared to accept that negligence was “fully and completely” pleaded.