Reasons for judgement were released this week by the BC Supreme Court certifying an a Class Proceeding Action (a class action lawsuit) against Lansbridge University.

The Plaintiff was a student at the University.  In May of 2007 the Ministry of Advanced Education shut down the school “because Lansbridge had breached the Degree Authorization Act, S.B.C. 2002, c. 24

The primary claim against the University was for breach of contract.  Specifically the Plaintiff claimed that class members contracted with the University “to provide a course of study leading to a bachelor’s degree in business” and that the University breached these contracts when it was shut down by the Ministry of Advanced Education.

When deciding if a potential Class Action should be certified in BC our Courts need to consider the factors set out in section 4(1) of the BC Class Proceedings Act, which states as follows:

4 (1)     The court must certify a proceeding as a class proceeding on an application under section 2 or 3 if all of the following requirements are met:

(a)        the pleadings disclose a cause of action;

(b)        there is an identifiable class of 2 or more persons;

(c)        the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members;

(d)        a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues;

(e)        there is a representative plaintiff who

(i)         would fairly and adequately represent the interests of the class,

(ii)        has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and

(iii)       does not have, on the common issues, an interest that is in conflict with the interests of other class members.

In certifying this class action, Mr. Justice Kelleher engaged in the following analysis:

(a) Do the pleadings disclose a cause of action?

[7] The primary cause of action advanced by the plaintiff is breach of contract. It is the plaintiff’s position that Lansbridge contracted with the potential class members, for consideration, to provide a course of study leading to a bachelor’s degree in business.  The defendant institution was ordered to cease operating by the Ministry of Advanced Education in May 2007, due to breaches of the Degree Authorization Act.  The defendant LUC did not fulfill its contract. The plaintiff also alleges that the defendant breached an implied duty to act in good faith.

[8] The plaintiff initially pled misrepresentation, arguing that the defendant misrepresented that it would grant recognized degrees to its students. However, this cause of action was abandoned in the course of oral submissions in this application.

[9] The plaintiff also advances a claim against the defendant Michael Lo, the former director and president of Lansbridge, in negligence. This claim is based on the plaintiff’s position that Mr. Lo had a duty of care to the students to take reasonable steps to ensure Lansbridge maintained compliance with the standards required under the Degree Authorization Act in order to remain in operation.

[10] The standard required of a plaintiff under s. 4(1)(a) is low.  The defendant must demonstrate that it is “plain and obvious” that the plaintiff cannot succeed: Hollick, at para. 25.

[11] The defendant argues that the plaintiff has failed to plead the material facts necessary to support the claim that the contract between the parties contained a term whereby the defendant agreed to provide a course of study leading to a bachelor’s degree in business administration. The defendant argues that there is a lack of particulars provided by the plaintiff regarding whether the alleged contract was written or oral, a combination of both, and when or how it was made. The plaintiff maintains that this term is implied, for example, in the student enrollment agreement.

[12] The defendant also submits that Canadian courts have yet to recognize as a general principle that contracts must be performed in good faith. With regard to the claim against Michael Lo, the defendant argues that it cannot succeed because it relies on a claim in pure economic loss in a category that has never been recognized as one where recovery of pure economic loss is available.

[13] Both claims may indeed be novel. But the fact that a claim is novel is not itself a bar to certification. Nor does it follow that it is plain and obvious that either claim is destined to fail.

[14] The circumstances are that the defendant contracted with the plaintiff to provide services as an educational institution, for which tuition was paid as consideration. When Lansbridge was shut down by the Ministry, it could no longer deliver these services to enrolled students. On this straightforward set of facts, it cannot be said that it is plain and obvious that the plaintiff’s claim for breach of contract, or the negligence claim against the president of the defendant corporation, cannot succeed.

[15] This stage of the inquiry does not involve a weighing of the evidence and the merits of the plaintiff’s claim.  These are matters for trial. The plaintiff has met the threshold requirement to disclose a cause of action in the pleadings.

(b) Is there an identifiable class of two or more persons?

[16] The plaintiff’s pleadings propose that the class be defined as “all persons enrolled at Lansbridge who suffered damages or loss upon Lansbridge closing down on or about May 1, 2007”. Presently, there are three class members confirmed in addition to the plaintiff.

[17] An identifiable class should be defined by reference to objective criteria, which should not be dependent on the merits of the action.  In Hollick, the Chief Justice put it this way at para 17:

The first question, therefore, is whether there is an identifiable class.  In my view, there is.  The appellant has defined the class by reference to objective criteria; a person is a member of the class if he or she owned or occupied property inside a specified area within a specified period of time.  Whether a given person is a member of the class can be determined without reference to the merits of the action.  While the appellant has not named every member of the class, it is clear that the class is bounded (that is, not unlimited).  There is, therefore, an identifiable class ….

[18] As the defendant argues, a class should not be defined, in part, on the basis of “persons who have suffered damages”: Chadha v. Bayer, Inc. (2001), 54 O.R. (3d) 520, 200 D.L.R. (4th) 309 at para. 97 (Sup. Ct. J.). During oral argument, the plaintiff acknowledged this deficiency in the pleadings, and revised the definition to omit the phrase “who suffered damages or loss”.

[19] The defendant also argues that the plaintiff’s proposed class cannot succeed because it is over-inclusive, as it may include students who do not have a claim against the defendant. These include: students who have transferred to another educational institution, or otherwise left the program; students who have already entered into settlements with the defendant and signed releases; or students  who have no interest in the action.

[20] The defendant relies on a series of cases from Ontario, particularly Mouhteros v. DeVry Canada Inc. (1998), 41 O.R. (3d) 63, 22 C.P.C. (4th) 198 (Ct. J. (Gen. Div.)).  In that case, certification was denied due to an over-inclusive proposed class. However, in Mouhteros the proposed class included all students attending the defendant’s campuses in two provinces over a six year period, for a total of over 17,000 potential class members (para. 16). In contrast, the plaintiff’s proposed class involves only those students enrolled at one campus, Lansbridge University in Vancouver, on a specific date. According to the plaintiff, this includes approximately 200 students.

[21] There may well be former Lansbridge students who have no interest in this litigation, but that is not a bar to certification. According to the Supreme Court of Canada, “the representative need not show that everyone in the class shares the same interest in the resolution of the asserted common issue”: Hollick, at para. 21.

[22] There may be students who have left the program.  If they were still enrolled at the time Lansbridge was closed, then they are properly included in the proposed class.

[23] The closure occurred at the end of the semester.  It appears that there were students who were graduating, or who had already arranged to transfer at the time the university closed.  In my view, these students would no longer be considered enrolled in May 2007, and would therefore not be party to the proposed class.

[24] It is self-evident that any students who wished to continue their studies when Lansbridge closed would have had to transfer to another institution. However, if properly enrolled at the time of the closure, regardless of what they did following the closure, a student will be properly considered part of the proposed class.

[25] Students who have already entered into settlements with the defendant and signed releases are presumably barred from participation in the action in any event.

[26] In my view, the plaintiff has succeeded in proposing a class, as revised during oral submissions, that can be identified by objective criteria. The definition is not over-inclusive.

[27] However, as submitted by the defendant in the course of oral argument, due to the potentially high number of international students included in the identifiable class, it is necessary to introduce a sub-class into the plaintiff’s proposed definition. Section 6(2) of the Class Proceedings Act requires a sub-class for non-residents with its own representative.

(c) Do the claims raise common issues?

[28] The plaintiff submits that all students enrolled at Lansbridge on May 1, 2007, were affected by the closure of the institution in the same way, as all were prevented from completing their programs of study at Lansbridge.

[29] According to s. 1 of the Class Proceedings Act, “common issues” means (a) common but not necessarily identical issues of fact, or (b) common but not necessarily identical issues of law that arise from common but not necessarily identical facts.

[30] The plaintiff presents the following issues for certification as common issues in his written submissions:

(a)      Did the defendant breach its contract and duty of good faith with the students in failing to provide a course of study leading to a degree being granted?

(b)      Has Lansbridge misrepresented that it would grant recognized degrees to students enrolled in a program of study at Lansbridge?

(c)      Has Lansbridge breached its obligations to the students to assist with transfer of course credits to other post-secondary institutions and to provide restitution or settlement for tuition paid by students?

(d)      What damages are appropriate?

(e)      Did Michael Lo breach his duty of care to the students in failing to take reasonable steps with or order the compliance with terms, conditions and statutory requirements needed for Lansbridge University to maintain its consent granted from the B.C. Ministry of Advanced Education to remain open as a university?

(f)       What damages are appropriate?

[31] In Harrington v. Dow Corning Corp., 2000 BCCA 605, 82 B.C.L.R. (3d) 1 at para. 24, the British Columbia Court of Appeal explained the application of s. 4(1)(c) as follows:

In the context of the Act, ‘common’ means that the resolution of the point in question must be applicable to all who are to be bound by it. I agree with the appellants that to be applicable to all parties, the answer to the question must, at least, be capable of extrapolation to each member of the class or subclass on whose behalf the trial of the common issue is certified for trial by a class proceeding.

[32] McLachlin C.J.C. in Hollick, at para. 18, cited her reasons in Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534:

…the underlying question is ‘whether allowing the suit to proceed as a representative one will avoid duplication of fact-finding or legal analysis’. Thus an issue will be common ‘only where its resolution is necessary to the resolution of each class member’s claim’ (para. 39). Further, an issue will not be ‘common’ in the requisite sense unless the issue is a ‘substantial . . . ingredient’ of each of the class members’ claims.

[33] The defendant argues that the plaintiff has failed to demonstrate the requisite commonality in reference to the issues listed above.  For example, in reference to issue (c), as well as the quantum of damages issues at (d) and (f), the defendant submits that an individual inquiry of each student involved would be required.

[34] I agree with the defendants with respect to quantum of damages.  Issues (d) and (f) are not common issues.

[35] Section 7(a) of the Class Proceedings Act provides:

Certain matters not bar to certification

7          The court must not refuse to certify a proceeding as a class proceeding merely because of one or more of the following:

(a)        the relief claimed includes a claim for damages that would require individual assessment after determination of the common issues….

[36] Thus, the fact that damages are claimed is not a bar to certification.  But damages must be treated as individual issues.

[37] As framed, issue (c) is problematic. It refers to two separate issues, the transfer of credits; and the refund of tuition.  The defendant argues that some students may have been able to successfully transfer credits from Lansbridge.  As such, resolution of this particular issue cannot be extrapolated to all potential class members, and cannot proceed for lack of commonality.

[38] Moreover, the defendant submits that there is no allegation in the pleadings that Lansbridge is obligated to assist students with the transfer of credits.  In fact, according to the amended statement of claim, this was a task assumed by the Ministry of Advanced Education.

[39] In the absence of any specific pleading, or evidence of any kind, that there was any obligation upon the defendant to assist the students in this regard, and in the face of the plaintiff’s own indication that it was not the task of the defendant but the Ministry, I agree with the defendant.  The pleadings do not permit  consideration of this issue for certification.

[40] In terms of the reference to the refund of tuition in issue (c), as the defendant notes, some students have obtained refunds through settlement agreements with the defendant and signed releases.  These students, as already noted, are thus barred from participation in the action in any event.  As for the remaining students properly included in the class, the tuition refund issue can be dealt with under the damages issue (d).

[41] The plaintiff’s misrepresentation claim, listed as issue (b), was abandoned during oral arguments.  This leaves (a) the breach of contract issue, and (e) the negligence claim against Michael Lo.  I agree with the plaintiff that these are common issues which arise from a common set of facts, with direct relevance and applicability to all members of the proposed identifiable class.  Addressing these issues as a class proceeding will, in my view, avoid duplication of fact-finding and legal analysis, as required under Hollick.

(d) Is a class proceeding the preferable procedure for the fair and efficient resolution of the common issues?

[42] Section 4(2) requires the court to consider all relevant matters, including the following, in determining whether a class proceeding is preferable:

(a)        whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members;

(b)        whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions;

(c)        whether the class proceeding would involve claims that are or have been the subject of any other proceedings;

(d)        whether other means of resolving the claims are less practical or less efficient;

(e)        whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means.

[43] The parties agree that, in addition to the factors listed at s. 4(2), there are three goals the court should consider when determining whether or not to certify an action as a class proceeding: judicial economy; access to justice; and behavior modification: Hollick at para. 27.

[44] Much of the defendant’s submission on this point focuses on misrepresentation.  Proof of such a tort doubtless requires attention to individual circumstances.  But, as outlined above, the plaintiff abandoned the allegation of misrepresentation in the course of submissions.

[45] In my view, there is no compelling evidence to suggest that any of the factors found at s. 4(2) are implicated to militate against certification in this case. As already discussed, there is sufficient commonality in the main issues. The interest of potential class members controlling their own individual actions has not been raised as a concern.  There is no evidence that any of the claims has been the subject of prior proceedings. There are at least four students already committed to participating in the class action.  Therefore, I am not persuaded by the defendant’s claim that a series of small claims proceedings would be more practical or efficient.

[46] As the plaintiff submits, certification in this case promotes judicial economy as it is more efficient then each potential class member conducting an action individually. As noted above, there are sufficient common issues that predominate in this case to warrant a class proceeding as the most expedient and efficient use of judicial resources.

[47] Access to justice is advanced in this case.  A class proceeding will enable a generally financially disadvantaged group, students who likely lack funds for individual litigation, to have their claims adjudicated. These students, as the plaintiff argues, will benefit from economies of scale in a class proceeding.

[48] With respect to behavior modification, it is noteworthy that Lansbridge is no longer in operation.  But the outcome of this litigation could influence the operations of other private education institutions.

[49] It is noteworthy as well that the claims are relatively straightforward.  I am unable to see this action as becoming “a monster of complexity and costs”: Tiemstra v. Insurance Corp. of British Columbia (1996), 22 B.C.L.R. (3d) 49, 49 C.P.C. (3d) 139 at para. 20 (S.C.).

[50] Overall, and having regard to the factors at s. 4(2) and the three goals noted above, I conclude that the class proceeding is the preferable procedure for resolution of the common issues.

(e) Does the proposed representative plaintiff meet the statutory criteria?

[51] The final step in the s. 4(1) analysis requires a finding that the representative plaintiff meets the following criteria:

(i)         would fairly and adequately represent the interests of the class,

(ii)        has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and

(iii)       does not have, on the common issues, an interest that is in conflict with the interests of other class members.

[52] There is no reason to conclude that the representative plaintiff would not represent the interests of the class. Indeed, he deposes that he was the class president during his time at Lansbridge.  As such, he is in a good position to represent the interests of the class.

[53] A plan for the proceeding has been drafted, and there is an email list permitting the representative plaintiff to contact the former students who are potential class members. There is nothing to suggest that the representative plaintiff has an interest in conflict with the interests of other class members.

[54] The defendant takes issue with part of the plan drafted by plaintiff’s counsel.  Section 10 of the plaintiff’s case plan proposes that individual issues be addressed by affidavit and that “standard proof of loss claims forms be developed and approved by the court”.  The defendants say that document disclosure and viva voce evidence is the fair method of proceeding.  I agree with the defendants.

[55] The Act requires a workable plan before the class can be certified.  The plaintiff’s proposed plan is amended by requiring the individual issues to be proved in the normal way.  With that amendment, the plaintiff’s case plan is workable.

[56] I am satisfied the statutory criteria have been met and that the proceeding should be certified as a class proceeding.  It is so ordered

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