1 April 2017
Class Actions: How can take-up rates be improved?
A class action is a procedure by means of which a person or an organization can institute legal recourse against one or more defendants in their own name and on behalf of a class. Whenever a favourable judgment is reached on a class action request, or when the court approves an amicable settlement agreed upon by the parties, a claims process is set in motion to permit class members to apply for compensation.
Generally, only a fraction of those who are eligible actually claim compensation. This fact raises the question of the effectiveness of the class action suit as a means of ensuring compensation. The aim of our research was to determine how to improve the claim rate, or “take-up rate,” of class actions. Our results demonstrate that the factors affecting the take-up rate are manifold, as consequently, are the solutions.
Our literature search on the current legal frameworks in Canada, Australia, Brazil, the United States, and the European Union as well our as discussions with several experts allowed us to determine the criteria to be taken into account when analyzing data collected and to identify the best practices with regard to distribution protocols.
The focus groups we held in Montreal and Toronto showed us how Canadians perceive the factors that might affect their decision to file a claim when a distribution of funds to class members is announced.
Finally, we compiled a list of the class actions for which a distribution protocol has been developed over the past five years and for which an individual distribution took place in Canada. This task proved to be difficult, since there is no mandatory register in which this information is recorded. Moreover, many attorneys denied us access to data related to their take-up rates.
Our results demonstrate that there are many factors affecting the class action take-up rate. Among these are the notices to members, which should be clear and concise, the claims process, which ought to require fewer steps and supporting documents, and the judges’ use of their discretionary powers.
Our research shows that barriers still exist today when it comes the availability of class action data in Canada. As long as all the information, including that related to the take-up rate, continues not to be made public, it will be difficult to clearly establish the factors likely to affect the take-up rate. In addition to significantly reducing access to justice, such a process runs counter to the rationale behind collective action.