An Update on COVID-19 Class Actions in Canada

Written By Gannon Beaulne and Rabita Sharfuddin

Nearly 2 years after the launch of more than 30 proposed class actions arising from the COVID-19 pandemic upended the Canadian class action landscape, pandemic-related class actions risk, and ongoing litigation appear to have entered a new phase.

After the initial explosion of claims in 2020, plaintiffs started fewer new COVID-19 class actions in 2021. Some potential liability was settled or legislated out of existence, other issues appear headed for a merits determination, and new battlegrounds may be emerging, such as those associated with the “Freedom Convoy” that made international headlines in early 2022 or other pandemic-related protests, including how those protests are funded and governmental responses.

Notable developments in 2021 give us insight into what we can expect for COVID-19 class actions in Canada over the rest of 2022.

Long-Term Care Home Negligence

Several class actions allege that the owners and operators of long-term care and retirement facilities (LTCs) failed to take appropriate health and safety measures to protect their residents from COVID-19.

In a 2021 carriage decision in Nisbet v Ontario, Justice Belobaba of the Ontario Superior Court of Justice referred to high-profile reports by the Ontario Auditor General and Ontario Long-Term Care COVID-19 Commission criticizing the government’s response and management of COVID-19 in LTCs. We expect that these types of public reports will be key to LTC litigation, in 2022 and beyond, particularly in settlement discussions, certification analyses and any merits determinations.

On the other hand, a number of provincial governments passed legislation limiting the potential liability of LTC owners and operators. For example, under the Supporting Ontario’s Recovery Act, 2020, plaintiffs need to show that those operating LTCs were grossly negligent to avoid statutory liability protection, a higher standard than applies to ordinary negligence claims. The courts have not yet considered the meaning of gross negligence under this new legislation, but the phrase has been defined in Supreme Court of Canada case law going back 80 years (see Cowper v Studer and McCullough v Murray) as a very marked departure from the required standard of care or a very great negligence.

While some LTC claims seem destined for trial (although none have been certified or set down for trial yet), the settlement of others is on the horizon. In a 2021 Québec decision in Schneider (Succession de Schneider) c Centre d’hébergement et de soins de longue durée Herron inc, the Superior Court approved a $5.5-million settlement for estates and surviving spouses and children of LTC residents who passed away.

Business Interruption Insurance Claims

Over the last two years, policyholders have started a spate of claims against insurers, including proposed class actions, seeking insurance coverage for alleged business interruption losses arising from the COVID-19 pandemic.

Insurers are defending these claims by relying on policy language that connects the existence of coverage for business interruption losses to physical loss of or damage to property, as well as on exclusion clauses related to viruses and government-mandated closures, among other defences.

While the coverage issues are expected to be hard-fought, COVID-19 business interruption decisions have been released in other jurisdictions, including the United States and England, generally favouring defendant insurers.

In Canada, insurers and insureds alike will be watching closely for the release of the first merits decision that directly engages with the policy interpretation question at the heart of these claims, which will likely occur within the next year or so.

Cancellation and Refund Actions

The airline industry has been hard-hit by the COVID-19 pandemic. Government shutdowns and closed borders have led to countless cancelled flights over the past two years. At first, many airlines refused to refund cancelled flights, instead offering consumers travel credits to be used in the future. After several class actions were started seeking refunds, many airlines shifted gears and implemented full-refund policies.

In 2021, in Lachaine c Air Transat AT inc, the Superior Court of Quebec allowed a class action to proceed against Sunwing Airlines and its tour operator, Sunwing Vacations, but dismissed the action against other airlines that had implemented refund programs. In October 2021, Sunwing also advised of its decision to implement a full-refund policy for affected customers. The Court then rescinded certification of the class action against Sunwing because there was no longer any basis for the plaintiff’s claims. Airlines willing to proactively “make their customers whole” may thus avoid potentially long and costly class action litigation, although the Sunwing decision is under appeal.

The Year Ahead

Although the pace of new COVID-19 class actions slowed in 2021, new claims may be filed in 2022 as more losses crystallize, limitation periods for pandemic-related claims approach and novel developments, such as “Freedom Convoy” or other protests and new government measures related to them, inevitably generate disputes.

Meanwhile, ongoing COVID-19 class actions, including those alleging LTC negligence, business interruption losses, and entitlement to refunds for cancelled flights, will continue to advance towards merits determinations. Businesses may also face claims related to COVID-19 outbreaks on their premises, as new and potentially more infectious variants of the coronavirus circulate.

In 2022, businesses with operations in Canada will continue to face COVID-19 class action risk. Despite pandemic fatigue, businesses should therefore stay vigilant when it comes to pandemic-related issues, and consider what steps may be available in their circumstances to manage their class action risk, including by proactively adopting and reviewing COVID-19 health and safety protocols and policies, among other steps.

Other Articles In This Series

• The Expansion and Contraction of Product Liability Causes of Action
• Diverging Approaches to the Certification of Class Actions
• Navigating Multijurisdictional Class Actions
• The Need to Prove Compensable Losses in Privacy Class Actions
• Ontario and British Columbia Lead a Sequencing Culture Shift