Class Actions: Top Ontario and Federal Cases in Q3 2025

Click the links below to access our class action summaries:

• Identifying a Public Correction for Statutory Secondary Market Misrepresentation
• Member Sports Teams’ Liability for League Abuses Left Open to Pursue
• When and How a Class Must Be Identifiable
• Sequencing: Pre-Certification Motion to Stay Individual Actions
• Advertising Statements Do Not Make Non-Direct Sellers Liable for Implied Warranty Claims Under the Sale of Goods Act?
• Evidence of Commonality in Misclassification Case Involving Temporary Worker
  

Identifying a Public Correction for Statutory Secondary Market Misrepresentation

A public correction establishes an endpoint for market distortion caused by a misrepresentation. It further defines the class of putative class members and plays a key role in the securities statutory formula for the calculation of damages. The test for identifying public corrections is whether the disclosures identify misleading or erroneous prior statements. A disclosure that does not expressly correct a prior statement, or is not followed by a statistically significant decline in the price of an issuer’s securities, may still constitute a public correction. The Ontario Court of Appeal in Terry Longair Professional Corporation v. Akumin Inc., 2025 ONCA 606, underscored that what is important for a public correction is the materiality of the misrepresentation and not the materiality of the correction.

On August 15, 2021, Akumin announced that it would be late in filing its second quarter financial statements, commenting that additional information and analysis was necessary relating to “potential additional credit losses with respect to prior years.” The next day, its common shares’ price fell by about 20 per cent. On October 12, 2021, Akumin announced that, upon further review, it had identified errors in the calculation of credit losses or writeoffs on accounts receivable for prior years and that it would be restating its annual financial statements for 2019 and 2020 as well as its Q1 2021 financial statements. It also announced that it had identified other errors in the capitalization of expenses that were expected to reduce the net book value of property plant and equipment by an amount yet to be quantified. In the two days that followed this announcement, there was a further decline in the stock price of Akumin’s common shares by about 12 per cent. It was on November 8, 2021, that Akumin advised that while the quantum of the adjustment to property plant and equipment was still being quantified, it was expected to result in a reduction to its net book value of approximately $19 million. A few days later, on November 15, 2021, Akumin announced that it had filed restated financial statements for the 2019 and 2020 years and released its Q1 2021 financial statements. There was no statistically significant decline in Akumin’s stock price following the announcements on November 8 and 15, 2021.

On appeal, among other grounds, Akumin submitted that the certification judge erred in finding that the August 15, 2021, announcement constituted a public correction as there was no connection to an alleged misrepresentation. It further submitted that the October 12, November 8 and November 15, 2021, announcements were incorrectly held to be public corrections even though they were not followed by a statistically significant decline in Akumin’s stock price.

Referencing its earlier decision in Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund v. Barrick Gold Corporation, 2021 ONCA 104, the Ontario Court of Appeal commented that the fact the alleged public correction did not expressly identify a prior misstatement is not conclusive on the issue of a whether a public correction arose. One must consider the announcement in context and surrounding circumstances. By doing so, a court may conclude that the announcement was capable of being understood as revealing to the market the existence of an untrue statement of a material fact. In this case, the appeal court agreed with the motion judge that the August 15, 2021, announcement alerted the market that Akumin’s previous financial reporting on credit losses could no longer be relied upon.

The court further rejected Akumin’s submission that the leave judge erred with respect to the October 12, November 8 and November 15, 2021, announcements. Whether a statement constitutes a public correction does not require that it be followed by a statistically significant decline in the stock price. While market reaction to an announcement can be probative on the question of whether a prior statement was material, there is no materiality analysis for a public correction. In all cases, the appellate court commented, the inquiry should be: “Did the alleged correction actually correct the alleged misrepresentation or not?” All four announcements identified misleading or incorrect statements in Akumin’s prior financial statements, thereby establishing that they were public corrections.

Akumin’s added argument, that an announcement can only constitute a public correction for purposes of statutory secondary market liability if the corrective statement relates to securities that trade in an “efficient market,” was also rejected by the court. This conclusion was based on the literal wording of the statute. The court did not engage in aspects of the statutory secondary market regime as premised on an efficient market for securities.

Last, and importantly, the court dismissed the argument that the motion judge erred by finding that a class proceeding was the preferable procedure for pursuing the common law negligent misrepresentation claim. It reasoned that the specific common issues certified by the motion judge for both the statutory and common law misrepresentation claims can be resolved without the need to undertake individualized assessments of each investor’s circumstances in terms of the common law requirement of a plaintiff establishing reliance and damages. Resolution of the certified issues for both the statutory and common law claims would avoid duplication of fact-finding or legal analysis, thereby facilitating judicial economy and access to justice.

Member Sports Teams’ Liability for League Abuses Left Open to Pursue

In Carcillo v. Ontario Major Junior Hockey League, 2025 ONCA 652, the Ontario Court of Appeal upheld the finding that this proposed class action involving abuse over half a century and scores of defendants was unmanageable. However, it disagreed with the motion judge’s striking out the appellants’ claim premised on unincorporated association liability. In doing so, the Court of Appeal noted that the creation of a corporation to administer some of an association’s affairs does not necessarily preclude finding the existence of an association. Moreover, members of association may be liable for their own actions in governing the leagues themselves or for those of appointed governors, as their agents. Given the factual nature of these issues, the certification judge should have found the claim for team liability for league-level wrongs to have pleaded a reasonable cause of action.

The appellants, three former junior hockey players, commenced a proposed class action against each of the four major junior hockey leagues, and all 60 teams that they represent, on behalf of thousands of players who, they allege, were subjected to systemic abuse over a 50-year span. The motion judge had denied certification, finding, among other things, that the proposed class action was unmanageable and lacked a litigation plan capable of addressing the scale and complexity of the case.

The Court of Appeal dismissed this ground of appeal, holding that the motion judge’s determination – that the proposed class action was unmanageable and therefore not the preferable procedure – was entitled to deference. In doing so, the court pointed out that its decision should not be understood as ruling out the possibility that other class actions – narrower in scope and targeting individual teams, single leagues or smaller groups of organizations – could be certified and managed effectively. It made a point of noting Canadian courts have previously certified systemic negligence class actions involving institutional abuse and the present case was of an unprecedented scale and complexity, far greater than that of other systemic negligence class actions previously recognized.

Despite dismissing the appeal, the appellate court reviewed the motion judge’s findings around systemic negligence as a plausible cause of action. The motion judge recognized that the appellants advanced viable systemic negligence claims against both the Canadian Hockey League (“CHL”) and the regional league corporations. However, the motion judge ruled that their claim that the individual teams bear legal responsibility for governance failures at the league level was bound to fail. The court ruled the motion judge erred, finding that he applied too rigorous a standard at the certification stage and overlooked plausible legal pathways through which team liability could be established under the appellants’ pleadings.

In terms of the latter point, the Court of Appeal noted that the appellants’ theory of collective liability rested on two core propositions: (1) that each league is an unincorporated association comprised of its member teams and its league corporation; and (2) that the member teams bear responsibility for systemic league-level misconduct because they – directly or through their appointed governors – are the governing authorities of the league.

In the first proposition, the respondents asserted that the existence of the league corporations precludes the existence of league-level unincorporated associations. The Court of Appeal observed that the creation of a corporation to administer some of an association’s affairs does not necessarily extinguish the association. Citing the Supreme Court of Canada’s decision in Lakeside Colony of Hutterian Brethren v. Hofer, [1992] 3 S.C.R. 165, an unincorporated association may continue to exist alongside a related corporation if the members intended it to remain distinct. In this case, the appellants had pleaded that each league’s corporation and its participating teams contractually bound themselves under their constitutions to pursue shared purposes and follow common rules. These facts, if true, could establish the essential elements of an unincorporated association. The appellants also point to specific constitutional provisions from each league, incorporated by reference into the pleadings, which make these allegations concrete rather than conclusory. The Court of Appeal added that, far from being implausible, the claim is consistent with how other professional sports leagues have been legally characterized: for example, the Canadian Football League, the National Football League and the National Hockey League have all been recognized as unincorporated associations.

As to the second proposition, the appellate court held the appellants’ theory, that the teams are liable for league-level failures because they govern the leagues directly or through appointed governors, was also legally tenable. While it is an established legal principle that members of an unincorporated association are not automatically liable for the wrongful acts of the association or of other members, they are liable for their own actions or for those of their agents.

In the present case, the appellants pleaded that the Ontario Hockey League Constitution equates governors with the teams themselves, meaning the teams could be personally liable for negligent decisions made in their governance role. They further alleged that each regional constitution designates league governors as agents of their appointing teams and that the CHL Constitution allows the regional leagues – themselves controlled by the teams – to appoint most of the CHL’s governors. If these allegations are found to be true at trial, the Court of Appeal commented that teams could indeed be vicariously liable for negligent league-level decisions made by their appointed governors. As such, the motion judge erred in striking out the claim and not allowing the factual-intensive questions – whether the leagues are unincorporated associations, whether governors acted as agents of the teams and whether their governance decisions give rise to personal or vicarious liability – to be determined at trial.

When and How a Class Must Be Identifiable

The ability of a class member to opt out of a class action is a fundamental and substantive right. To opt out requires persons be able to determine, prior to the expiry of the opt-out period, whether they are caught within the class definition. Where neither the definition itself nor information possessed by the defendant will enable a person to identify whether they are part of a class, the Federal Court of Appeal in Doan v. Clearview AI Inc., 2025 FCA 133, has left open a third option whereby persons can make identified queries to the defendant, described in the certification notice, to obtain information to allow them to identify whether they are a class member.

In Doan, the plaintiff had posted her photographs on the internet. The defendant operates a database of images, which uses web crawlers to search the internet for photographs. It stores and indexes images that contain a face and provides facial recognition and identification services to law enforcement and other clients. The plaintiff’s proposed class action alleges that the defendant’s actions infringe her and other persons’ copyright and violate moral rights.

The putative class was framed to include all natural persons who are either residents or citizens of Canada and are the authors of the photographs collected by the defendant (the “Collected Photographs”) or their assignees or licensees in the copyright. The certification judge refused to certify the action because of an absence of some basis in fact that the underlying action discloses an identifiable class. Specifically, the judge found that class members could not self-identify based on the class definition, and the defendant could not identify class members based on the metadata in its database. The plaintiff’s suggestion that putative class members submit a query or queries to the defendant to confirm their class membership, among other things, converted the class action scheme under the Federal Court Rules from an opt-out to an opt-in regime.

The Court of Appeal disagreed that a class definition that requires a class member to take steps to obtain information regarding their status amounts to an opt-in regime. The fact there will inevitably be class members who do not engage with the process does not result in an opt-in process. Persons who do not engage do so at their own risk, but a class member remains part of the class and could, if they wish, take steps to opt out.

The appellate court dismissed the plaintiff’s argument that the photographs she submitted demonstrate at least two class members and that geolocation metadata in the Collected Photographs establishes a class floor of approximately 1-million instances of copyright infringement. Both submissions missed that class members must have or be able to obtain sufficient information to make an informed decision as to whether to opt out of the proceeding – a fundamental, personal right of everyone.

The plaintiff advanced two query methods. First, the plaintiff raised that the defendant could and did identify persons upon receipt of a query from an individual requesting that their image be removed from the defendant’s database. Second, the plaintiff raised that the U.S. Digital Millenium Copyright Act (“DMCA”) permits copyright owners (including Canadians relative to a company subject to the legislation, such as the U.S.-based defendant) to upload their images, compare them to images in the defendant’s database and request that the defendant remove their images from its database. The defendant argued the first method only permits individuals to ask the defendant to remove images of themselves and not photographs they have taken and thereby does not assist in identifying copyright holders. As to the second method, the defendant simply raised that the DMCA takedown process could not be used to identify class members before the expiry of the opt-out period. The appellate court questioned why it was not available during the opt-out period and the defendant’s counsel conceded that if a class member could submit a query later in the proceeding to prove their status as a class member, they could, in theory, query the defendant to obtain sufficient information during the opt-out period.

The Federal Court of Appeal thereby held that the certification judge omitted to fully examine whether the evidence demonstrates some basis in fact of a workable method to identify class members for the end of the opt-out period and returned the matter back to her legal and factual arguments.

Sequencing: Pre-Certification Motion to Stay Individual Actions

Should plaintiffs’ counsel be able to move before certification to stay individual actions raising the enforceability of consumer loans that form the subject of the proposed class proceeding? Yes, according to Pavlioglu et al. v. FinanceIt Canada Inc., 2025 ONSC 4545.

The proposed class proceeding concerns loans associated with HVAC and home improvement purchases. The plaintiffs allege that the defendants misled consumers into signing agreements in breach of consumer protection legislation. There are also hundreds of individual proceedings, primarily in Small Claims Court, brought by the defendants against putative class members in default of their loan agreements and some proceedings by putative class members against the defendants to terminate the agreements (the “Related Proceedings”).

Class plaintiffs brought a motion to temporarily stay the Related Proceedings pending the final disposition of the class action, subject to opt-out rights. Plaintiffs’ counsel argued that, apart from avoiding a multiplicity of proceedings, a stay would protect putative class members from the prejudice of having to defend actions on their own against better resourced defendants. The defendants, on the other hand, argued that the motion should be scheduled before certification and that, if the plaintiffs want class-wide relief, they should move expeditiously to certify the class.

The nature of the motion did not fall within the scope of motions that are presumed to be argued before the hearing of the certification motion pursuant to section 4.1 of the Class Proceedings Act, 1992. It would not dispose of the putative class proceeding in whole or in part, or narrow the issues to be determined or the evidence to be adduced. Nonetheless, a court’s control over its own proceedings gives it the discretion to determine sequencing of motions. Before the introduction of section 4.1, a series of factors were identified by courts to assessing sequencing (see Cannon v. Funds for Canada Foundation, 2010 ONSC 146).

Justice Kalajdzic found that fairness and efficiency dictated that the interim motion be heard before certification. Her Honour noted that if a stay were granted, the possibility of inconsistent judgments would be reduced and promote efficiency in temporarily staying a large number of individual actions. Also, the defendants’ enforcement measures could effectively render the class proceeding moot. However, Her Honour noted the practical challenge of the plaintiffs’ motion, namely that the motion record would have to be served on litigants to the Related Proceedings. She further noted that she was not determining issues going to the merits of the motion raised by the defendants. The defendants raised that the representative plaintiffs themselves cannot meet the test for an injunction since they do not allege that they themselves will suffer any personal prejudice, and the plaintiffs cannot seek class-wide relief prior to certification.

Advertising Statements Do Not Make Non-Direct Sellers Liable for Implied Warranty Claims Under the Sale of Goods Act?

The Ontario Court of Appeal in Ottawa Community Housing Corporation v. Sloan Valve Company, 2025 ONCA 586, reaffirmed that the remedy of an implied warranty under Ontario’s Sale of Goods Act is restricted to claims against sellers who directly sell to purchasers and not manufactures who make statements in marketing materials intended for purchasers. It further agreed with the motion judge in striking a claim for loss of water as a claim for economic loss and not recoverable for a non-inherently dangerous product.

Ottawa Community Housing Corporation (“OCHC”) retrofitted residential unit toilets with a new flushing system manufactured by Sloan Valve Company (“Sloan”). Several years later, OCHC discovered the flushing system was leaking, giving rise to increased water usage and water costs. OCHC sued Sloan and the seller Wolseley Canada Inc. (“Wolseley”), seeking recovery for excess water costs because of the failure of the flushing system and repair costs. It raised several causes of action, including breach of implied warranties under the Sale of Goods Act, which applies to the “seller” of goods. The legislation defines a seller to mean “a person who sells or agrees to sell goods.”

OCHC argued the motion judge erred in striking out its implied warranty claim because a manufacturer can be deemed a seller for purposes of the Sale of Goods Act where the manufacturer had direct communication with the purchaser, as occurred in this instance. OCHC relied on the Ontario Court of Appeal’s prior decision in CIT Financial Ltd. v. Sellter Industries Inc., 2005 CanLII 8191 (“CIT”), in which an implied warranty claim was permitted to proceed where the manufacturer provided assurances that a product would “do the job.” OCHC pleaded that Sloan represented to the public and to OCHC that its flushing system was “a highly effective solution to reduce water consumption” and provided marketing materials to distributors knowing they would be relied upon by purchasers.

The Ontario Court of Appeal downplayed the force of its prior decision in CIT and described its later decision in Arora v. Whirlpool Canada LP, 2013 ONCA 657 (“Arora”) as “the controlling authority.” OCHC unsuccessfully sought to distinguish Arora because there were no pre-sale communications between the purchaser and Whirlpool. This was not important to the Court of Appeal. The appellate court raised that CIT was a very brief endorsement, only concluded that the claim advanced was not doomed to fail rather than deciding whether the claim would succeed and did not engage in a comprehensive interpretative analysis of the Sale of Goods Act in contrast to Arora. It stated, “[h]ad the court in CIT intended to set out a broad principle about the applicability of the SGA, one would have expected more comprehensive reasons, like in Arora.”

CIT and Arora were reconciled on the basis that CIT only left open the possibility that a claim could be brought against a manufacturer, and Arora represented a subsequent development in that law and was clear that an implied warranty claim under the Sale of Goods Act against a manufacturer will fail were the manufacturer did not directly sell the product and was not a party to the contract for the sale of goods. OCHC had not pleaded Sloan was a seller of the system, nor that Sloan was a party to a contract for the sale of goods. This was fatal, according to the Court of Appeal, to any implied warranty claim under the Sale of Goods Act, which applies where there is a “contract of sale of goods.” There must be privity of contract to raise claims based on the protections of the Sale of Goods Act.

The striking out of OCHC’s negligence claim was also affirmed by the Ontario Court of Appeal, commenting that the type of damages alleged can only be characterized as pure economic loss. The appellate court found unpersuasive OCHC’s characterization of its loss as a property loss of water. Apart from OCHC not pleading that the water that flows through its units is property, it pleaded its damages were for excess water “costs” arising from the failure of the system. Its claim was for increased water bills for a defective product that did not pose a safety risk to persons or other property. The Court of Appeal described allowing OCHC’s claim to be characterized as a loss of property would do an end run around established restrictive limits placed by established jurisprudence on recovery for pure economic loss.

Evidence of Commonality in Misclassification Case Involving Temporary Worker

Section 74.3 of Ontario’s Employment Standards Act, 2000 (“ESA”) provides that where a temporary help agency and person agree that the agency will assign or attempt to assign the person to perform work on a temporary basis for clients or potential clients of the agency, the temporary help agency is the person’s employer and the person is an employee of the temporary help agency. In Davidson v. T.E.S. Contracting Services Inc., 2025 ONSC 3537, the Ontario Divisional Court’s affirmation of the motion judge’s denial of certification underscores the highly factual and varying nature of misclassification actions and importance of the evidentiary record.

The respondent, T.E.S. Contracting Services Inc. (“T.E.S.”), provides recruitment, payroll and administrative services. T.E.S. had entered into a Master Professional Services Agreement with Texas Instruments Canada Inc. (“Texas Instruments”). Under this agreement, T.E.S. was to provide a basket of administrative services, depending on the temporary worker.

The appellant had applied for a term position with Texas Instruments involving providing information technology services lasting 11 months. She was contacted by Texas Instruments and, after being interviewed, was offered the position. Texas Instruments contacted T.E.S. and set out the terms for the appellant’s offer. The appellant, through a personal corporation she incorporated, entered into an agreement with T.E.S. and not Texas Instruments. The agreement she signed with T.E.S. described her personal corporation as the “Independent Contractor.”

The appellant later argued that T.E.S. misclassified her as independent contractor instead of as an employee. She claimed for benefits under the ESA, which she would be entitled to as an employee, and sought to be reimbursed for CPP and EI contributions that she asserted were owed to her because of the misclassification.

The appellant commenced a proposed class action on behalf of herself and all persons who worked under contract with T.E.S. and were misclassified as independent contractors. Her motion for certification was denied. The motion judge held that none of the proposed common issues could be determined in common and instead required individual determinations. In particular, the motion judge found that the appellant provided no evidence that all persons who signed an independent contractor agreement with T.E.S. were placed by T.E.S. with a client, as opposed to the client directly offering temporary work to the person.

The Ontario Divisional Court agreed with the motion judge that the proposed common issue as to whether putative class members were subject to a section 74.3 agreement could not be determined in common because of the breadth of services T.E.S. provided to Texas Instruments and a lack of evidence as to the commonality of putative class members’ particular circumstances. Specifically, use of terms such as “on assignment” in a cover letter to the appellant forwarding a booklet could not be considered a basis in fact that every putative class member was subject to a section 74.3 agreement. The same reasoning was applied to references to “placement and employment agency workers” in payroll instructions materials. The court noted this said nothing about T.E.S.’s role in a particular case. The evidence established that T.E.S. sometimes included placement services, but in other instances it did not. The appellant’s own circumstances called into question whether her own arrangements engaged section 74.3 as she applied directly to Texas Instruments, had been interviewed by Texas Instruments, was offered her job by Texas Instruments and had then been directed to T.E.S. by Texas Instruments.

The appellant’s efforts to further pursue, as common issues, whether putative class members were employees pursuant to the ESA’s definition of “employee” or at common law, citing systemic T.E.S. policies and practices, was equally found lacking in establishing an evidentiary basis for commonality. They failed to be helpful in determining whether a temporary worker was an independent contractor or employee either because the cited materials were provided to both employees and contractors or they contained provisions that were more consistent with an independent contractor status.

The Class Actions Group at Aird & Berlis LLP has broad class action defence experience in securities law, financial services, mining, oil and gas, consumer products, product liability, pharmaceutical, natural health products, telecommunications, condominiums, competition, copyright, privacy and insurance defence. For more information on how we can assist, please contact the authors or a member of our team.