Carter v. LifeLabs et al, 2020 ONSC 7340

COURT FILE NO.: CV-20-636642-CP

DATE: 20201218

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ALITA MARIE CARTER

Plaintiff

– and –

LIFELABS INC., LIFELABS BC INC., LIFELABS LP, and EXCELLERIS TECHNOLOGIES INC.

Defendants

Proceeding under the Class Proceedings Act, 1992

BEFORE: Justice Edward P. Belobaba

COUNSEL: Dana M. Peebles and Christine Wadsworth for the Defendants / Moving Parties

Babak Vosooghi Zadeh for the Plaintiffs in the four Small Claims Court actions / Responding Parties

Bryan C. McPhadden for the Plaintiff in the proposed Carter class action

HEARD: December 4, 2020

Motion to Transfer and Stay Small Claims Court Claims

1The certification motion in this proposed breach of privacy class action against LifeLabs will be heard in December 2021. The LifeLabs defendants have also been sued in four Small Claims Court actions filed in Newmarket. The small claims allege the same breaches and make the same claims as the class action. Indeed, the plaintiffs in the Newmarket proceedings simply copied the class action claim verbatim for use in their Small Claims Court actions.

2LifeLabs brings this motion to transfer the four small claims to the Superior Court and stay them until the certification motion is decided.

3For the reasons set out below, the four small claims will not be transferred to this court. There is no need to do so. But they will be temporarily stayed until the certification motion in this court has been determined.

Background

4LifeLabs provides diagnostic and testing services to some 15 million customers, most of whom live in Ontario and British Columbia.

5In December 2017, LifeLabs announced that it had been the victim of a cyber-attack and computer system data breach. Class actions quickly materialized - four in Ontario and seven in British Columbia.

6Following a carriage motion, the Carter class action was selected to proceed in Ontario.¹ Counsel have agreed to a certification schedule leading to a hearing in December 2021. Meanwhile, four individuals who are included in the class definition have filed identical Small Claims Court actions in Newmarket.² As already noted, the four individuals simply copied and pasted the lengthy class action claim (including typos and inapt class procedure references) and filed this as their personal small claim.

7Counsel for LifeLabs advised Mr. Aryan, one of the Small Claims Court plaintiffs and is also the agent for the other plaintiffs, that LifeLabs intended to bring this motion to transfer and stay the small claims. Mr. Aryan was asked several times to hold the actions down until this motion could be heard and decided. Mr. Aryan refused to grant any indulgence and advised that he would note LifeLabs in default in each of the small claims the first day he could do so under the Rules of the Small Claims Court.

8Even after LifeLabs served a pro forma statement of defence to preserve its rights and the time allowed for filing the defences with the Small Claims Court had not expired, Mr. Aryan still tried (unsuccessfully) to note LifeLabs in default.

9I add this observation in passing. It was apparent to me from what was said by Mr. Aryan at a case conference and also by his lawyer at the hearing that their primary mission may be less about the vindication of personal damage claims than about the extraction of a quick settlement from a deep-pocketed defendant.

Analysis

• The actions will be stayed

10This court has jurisdiction under s. 13 of the Class Proceedings Act³ to “stay any proceeding related to the class proceeding before it, on such terms as it considers appropriate.” The Small Claims Court is a branch of the Superior Court of Justice. The reach of s. 13 therefore extends to the four small claims herein that are literally identical to the proposed class proceeding that is before me.

11I recognize that this court’s jurisdiction to stay these related claims can also be found in ss. 106 and 107(1)(e)(i) of the Courts of Justice Act⁴ and in Rule 6 of the Rules of Civil Procedure.⁵ However, I prefer to use s. 13 of the CPA because it links nicely with s. 9 that sets out the intended reach of the CPA over pending certifications and the timing of opt-outs.

12The small claim plaintiffs argue that even if they are included as class members in the class proceeding, their actions should nonetheless be allowed to continue because they can opt out of the class proceeding at any time including now. But this is not correct. Mr. Peebles, counsel for LifeLabs, properly emphasized s. 9 of the CPA that provides as follows:

9. Any member of a class involved in a class proceeding may opt out of the proceeding in the manner and within the time specified in the certification order.

13In other words, the clear legislative intention is that one cannot opt out of a class proceeding (and pursue, say, an individual claim) until certification has been decided.⁶ It is only at that point, assuming certification is granted, that class members can make a “fully informed” decision⁷ about the comparative advantages of remaining as a class member or opting out.

14In Singh v. RBC Insurance,⁸ this court used s. 13 of the CPA and s. 106 of the CJA to temporarily stay a related individual action while the certification of a proposed class action was pending. The court summarized the applicable law as follows:

A temporary stay of an individual action, while a class action is pending, will be appropriate where: (a) there is “substantial overlap of issues” in the two proceedings; (b) the two cases share the same factual background; (c) issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources; and (d) the temporary stay will not result in an injustice to the party resisting the stay; ⁹

15Here, the first three criteria are beyond dispute and nothing more need be said. The fourth – “that the temporary stay will not result in an injustice to the party resisting the stay” - is also easily satisfied. There is no injustice to the small claim plaintiffs if their actions are temporarily stayed. I say this for three reasons:

(i) LifeLabs agreed to pay the hacker’s ransom demand and appears to have recovered the hacked information. To date, none of the stolen personal or medical information has been posted or otherwise revealed.

(ii) LifeLabs has also agreed to provide one year of free “cyber-security protection services” that includes dark web monitoring and identity theft insurance. If the small claim plaintiffs take advantage of this free service, they will be fully protected until the certification motion.

(iii) There is no evidence of any compensable harm. Any alleged “distress and anxiety” short of psychiatric harm (no such evidence here) is not actionable.¹⁰

16In short, there is no injustice to the small claim plaintiffs if their actions are temporarily stayed. The four actions are therefore stayed pending the outcome of the certification motion.

• But not transferred

17There is no need at this time to transfer the four small claims to the Superior Court. In my view, it is more sensible and a much better use of both court’s administrative resources to wait and see what happens at certification.

18If this proposed class action is certified, the small claim plaintiffs may then opt out as per the terms of the certification order or they may decide to remain as class members. If they choose to opt out to pursue their small claims and it appears that the complexity of the litigation requires a transfer to this court, it is only then that a transfer motion becomes germane. If certification is denied, the small claim plaintiffs will have every right to pursue their (no longer stayed) actions in the Small Claims Court, subject of course to a possible transfer motion.

19Dealing with transfer today is unnecessary and premature.

Disposition

20The four Small Claims Court actions are not transferred to this court. But they are temporarily stayed pending the disposition of the certification motion.

21Success being divided, there will be no costs award.

Signed: Justice Edward P. Belobaba

Notwithstanding Rule 59.05, this Judgment [Order] is effective from the date it is made, and is enforceable without any need for entry and filing. In accordance with Rules 77.07(6) and 1.04, no formal Judgment [Order] need be entered and filed unless an appeal or a motion for leave to appeal is brought to an appellate court. Any party to this Judgment [Order] may nonetheless submit a formal Judgment [Order] for original signing, entry and filing when the Court returns to regular operations.

Footnotes

1. 1MacBrayne v. LifeLabs, 2020 ONSC 2674, leave to appeal denied 2020 ONSC 4268 (Div. Ct.).
2. 2The plaintiffs and action numbers in the four Newmarket small claims are: Aryan SC-20000005810000; Aryan SC-20000005820000; Hashemi SC-20000005880000; and Ghazael SC-20000005890000.
3. 3Class Proceedings Act, 1992, S.O. 1992, c. 6.
4. 4Courts of Justice Act, R.S.O. 1990, c. C.43.
5. 5Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
6. 6Of course, if certification fails, then no “opt out” is needed – one simply proceeds with their individual action.
7. 71250264 Ontario Inc. v. Pet Valu Canada Inc., 2013 ONCA 279, at paras. 2, 41-42 and 52.
8. 8Singh v. RBC Insurance Agency Ltd., 2020 ONSC 5368.
9. 9Ibid., at para. 131.
10. 10Mustapha v. Culligan of Canada Ltd., 2008 SCC 27.