Court Decertifies “Phantom Class” Following Extensive Opt-Outs: Navartnarajah v. FSB Group Ltd.

  • 23 juin 2023
  • Adrian Pel & Ian Matthews

When substantially all the members of a certified class proceeding opt out, should the class proceeding be permitted to continue? This issue was recently considered by Justice Morgan in Navartnarajah v. FSB Group Ltd., 2023 ONSC 2574, where a rare decertification motion was granted over the opposition of the representative plaintiff.

The Certification Motion

In Navartnarajah, the plaintiff asserted that the defendant insurance brokerages had misclassified certain sales agents as independent contractor rather than employees.

A contested certification motion occurred in the summer of 2021. At that motion, the defendants argued that the vast majority of class members were likely to opt out because of the generally favourable financial terms they enjoyed from being treated as independent contractors rather than as employees.

Justice Morgan nevertheless certified the action as a class proceeding. In his certification decision, Justice Morgan expressly noted the defendants’ contentions that there would likely be a large number of opt-outs and that “the majority of class members may find that their financial interest was hijacked by the claim rather than advanced by the claim” (2021 ONSC 5418).