No Compensable Harm, No Class Action

  • April 07, 2022
  • Ethan Schiff, Bennett Jones LLP

In Chow v Facebook, Inc, ("Chow"), the British Columbia Supreme Court joins several other courts in declining to certify class actions based on a lack of "compensable" harm. In Chow, the plaintiffs brought a claim based on breach of privacy associated with the defendant’s alleged misuse of user data for its benefit, and without the knowledge or consent of users. Justice Skolrood refused to certify the action, concluding that only one of the pleaded causes of action was viable, and that the plaintiffs had failed to provide some basis in fact for the proposed common issues.[1] The BC Court went on to note in the alternative that a class proceeding was not the preferable procedure because there was no evidence of "specific harm or loss" or "demonstrable harm".[2]

The Court's decision on the preferable procedure criterion was based largely on its consideration of its "gatekeeper function".[3] In this regard, the Court relied on the decision of Justice Perell in Berg v Canadian Hockey League, referencing proportionality in considering "how much procedure a litigant actually needs to obtain access to justice".[4] Justice Skolrood noted that "[c]lass proceedings are time consuming and complex. They involve the deployment of considerable judicial resources."[5] Despite the potential availability of nominal damages, the Court held that deployment of judicial resources where there was no evidence of compensable harm "would be the antitheses of judicial economy and would not provide meaningful access to justice".[6]

Chow follows several other cases in the data breach context in declining to certify class actions in the absence of compensable harm. In particular, Chow referenced the Alberta Court of Queen's Bench decision in Setoguchi v Uber B.V., denying certification of a proposed class action based on disclosure of personal information of users and drivers for the defendants' app.[7] On the question of relevance of compensable harm, Associate Chief Justice Rooke described the plaintiff's submission and his response as follows:

Setoguchi's thesis or theory seems to be that evidence of hackers having taken non-confidential information, without some evidence of actual compensable loss or harm, should nevertheless result in certification, on the basis of the presumption of merit to a cause of action that is properly pleaded. If that were to be a view that is maintained by the courts, it would lead to certification in almost any case, no matter the importance of it — the message would be that you do not need to search for evidence of harm or loss, but merely need hire a "good pleader" to cover all of the pleadings required to this end, regardless of the substance.