Article

Developments in Class Action Law: Highlights From Q3 2026

October 30, 2026

By: Kate Findlay and Lipi Mishra

To listen to an audio recording of this article, click here.

In the third quarter of 2026, class action decisions from the courts in Ontario, British Columbia and the Federal Court demonstrated that courts continue to act as active gatekeepers of class proceedings, both when policing the threshold for certification and at the settlement stage of a proceeding.

Recent rulings highlight the following principles:

Federal Court Rejects Ticketmaster Drip Pricing Class Action

In Kuling v. Ticketmaster L.L.C., 2026 FC 1185, the Federal Court dismissed a motion to certify a proposed class action alleging that Ticketmaster’s online ticket pricing contravened the Competition Act’s drip pricing provisions. The decision considers the scope of the statutory prohibition against drip pricing and the importance of examining price representations in their entirety when assessing whether a reasonable cause of action exists.

The proposed representative plaintiff alleged that Ticketmaster misrepresented ticket prices by charging a mandatory order processing fee in addition to the advertised ticket price. She alleged that these price representations constituted prohibited drip pricing, whereby consumers are drawn in by one price, which is advertised, promoted or displayed upfront, with the added fees “hidden, concealed, shrouded or obfuscated” until they are revealed only subsequently in the purchasing process (or never revealed at all). The court denied certification on the basis that the pleadings did not disclose a reasonable cause of action.

In reaching its conclusion, the court distinguished prior appellate authority addressing drip pricing under the Competition Act. Unlike the fee arrangements considered in that earlier case, Ticketmaster’s order processing fee was disclosed alongside the ticket price from the outset, without requiring consumers to scroll down or undertake calculations to determine the amount payable. Considering the price representation as a whole, the court found that consumers could not reasonably understand the advertised ticket price to be attainable without paying the additional fee.

The court found that it was plain and obvious that the pleadings disclosed no reasonable cause of action under the impugned sections of the Competition Act, as, on their face, Ticketmaster’s price representation did not obscure or conceal the order processing fee. The court emphasized that even a generous reading of the pleadings could not characterize this situation as prohibited drip pricing and that it was not necessary to consider the remaining certification criteria, dismissing the certification motion without leave to amend the pleadings.

The decision underscores that the application of the Competition Act’s drip pricing provisions depends on how a price is represented to consumers as a whole. The disclosure, prominence and placement of mandatory fees may be critical in distinguishing prohibited drip pricing from permissible segmented pricing. The decision also reaffirms that the relatively low threshold for certification does not relieve plaintiffs of the obligation to plead the essential elements of a viable cause of action. Courts must perform a meaningful gatekeeping function and may refuse certification where the alleged conduct, even if the pleaded facts are accepted as true, does not fall within the statutory prohibition relied upon.

Consequence of Preferability to Class Action Certification

Recent decisions by the British Columbia and Ontario Courts of Appeal in Cleaver v. The Cadillac Fairview Corporation Limited, 2026 BCCA 353, and Gutierrez v. Watchtower Bible and Tract Society of Canada, 2026 ONCA 665, emphasize the importance of the preferability analysis to determination of certification. Appeals from the lower courts’ refusal to certify in both cases were dismissed, with both appeal courts considering the cause of action analysis in addition to preferability.

In Cleaver, the Court of Appeal confirmed that the material before the lower court provided no basis in fact for the proposition that facial images or biometric and personal information were recorded by the plaintiffs, a critical element to support the finding of some basis in fact for the causes of action pleaded by the plaintiffs, including intrusion upon seclusion, statutory actions for breach of privacy, negligence and various breaches of Quebec law.

In Gutierrez, the Court of Appeal affirmed the motion judge’s finding that the plaintiffs’ claim alleging negligence was novel and that it was plain and obvious the claims would not succeed as there was no nexus between the religious order and the Jehovah’s Witnesses’ elders who were alleged to have committed sexual abuse. The elders were not employed by the respondents, and the alleged conduct did not take place during activities organized by the respondents or on premises controlled by the respondents. Similarly, the Court of Appeal agreed with the lower court that there were no pleaded facts supporting a fiduciary relationship or a basis upon which the respondents could be held vicariously liable for conduct of the elders.

However, in both cases it was the respective Court of Appeal’s findings on preferability that cemented the dismissal of each appeal.

In Cleaver, the Court of Appeal held the appellants’ decision not to appeal the judge’s determination on preferability was significant as the certification test is conjunctive and the failure to appeal preferability precluded certification of the class proceeding.

In Gutierrez, the Court of Appeal rejected the appellants’ submission that the motion judge was required to explicitly address all five questions set out in AIC Limited v. Fischer, 2013 SCC 69, in the order and form presented in that decision and held that the certification judge’s decision as to whether a proposed class action is the preferable procedure attracts heightened deference, in particular where the motion judge is an experienced class jurist.

Cleaver and Gutierrez are both decisions which reflect the court’s gatekeeping role and the deference that will be given to preferability findings made by the lower court, in particular from an experienced class action judge.

Late Opt-Out From Class Action Denied Despite Class Members’ Lack of Notice

In Nardi v. Sorin Group Deutschland GmbH, 2026 ONSC 3891, the Ontario Superior Court of Justice dismissed a motion by a patient and his family members to extend the deadline to opt out of a class action concerning infections allegedly associated with contaminated cardiac surgery devices. The moving parties wished to pursue an individual action after the patient developed a serious infection, but the parties to the class action had already reached a settlement in principle. In coming to its decision, the court reaffirmed the applicability of the two-part test in Johnson v. Ontario, 2022 ONCA 725, which requires that a class member seeking to opt out after the court-ordered deadline must establish both: (1) excusable neglect; and (2) an absence of prejudice to the class, the defendants or the integrity of the class proceeding.

The court first held that the Johnson test applied even though the moving party’s symptoms did not arise until after the opt-out deadline. It found that the absence of discovered or significant damages did not make it impossible for a class member to decide whether to remain in or opt out of the class proceeding. The court emphasized that Johnson focuses on whether there was a reasonable basis for missing the deadline and whether a late opt-out would cause prejudice, not on the timing or extent of the claimant’s injuries.

The court then moved on to apply the test and accepted that the moving parties’ failure to opt out was excusable – they had no prior knowledge of the class action and had acted in good faith, satisfying the excusable-neglect branch of the test. However, the moving parties sought to opt out only after the defendants and class counsel had reached a settlement in principle involving a fixed payment in exchange for a class-wide release. The court held that permitting the late opt-out would prejudice the defendants, who would have to accept a narrower release, renegotiate the settlement or abandon it altogether. The fact that the settlement had not yet been finalized or approved by the court did not eliminate that prejudice.

This decision underscores that a lack of notice or the later emergence of significant injuries will not, on its own, justify extending an opt-out deadline. Courts must balance individual litigation autonomy against the need for certainty and finality in class proceedings, and prejudice may arise once a settlement in principle has been reached, even before formal approval. The court noted that an earlier request to opt out might have produced a different result, reinforcing the importance of acting promptly once a class member becomes aware of a proceeding and wishes to pursue an individual claim.

$98 Million in Damages Awarded in Mutual Fund Market-Timing Class Action

In Fischer v. IG Investment Management Ltd. et al., 2026 ONSC 4142, the Ontario Superior Court of Justice awarded approximately $98.4 million in damages plus pre-judgment interest in a securities class action arising from the defendant mutual fund companies’ negligent facilitation of frequent trading that enabled time-zone arbitrage. Following an earlier finding of liability, the court was required to determine how to quantify the losses suffered by long-term investors as a result of “time zone arbitrage” – a practice in which traders exploit differences between the closing times of international markets to profit from outdated mutual fund prices, diluting the value of units held by other investors. The defendants argued that investors had already been compensated through settlements with the Ontario Securities Commission (“OSC”) and that the plaintiffs’ proposed damages methodology overstated the losses.

The court preferred the plaintiffs’ proposed “Next Net Asset Value (NAV)” method to quantify damages, which measures the impact of market timing by comparing a fund’s net asset value at the end of the trading day with its value at the end of the following day. Although the court acknowledged that no methodology could quantify the losses with complete precision, it found this approach most closely targeted the dilution caused by time zone arbitrage. The court also held that the plaintiffs could establish the presence of market timing through objective trading characteristics and circumstantial evidence, without direct testimony from the traders about their subjective motivations. In calculating damages, the court applied discounts to account for uncertainty in the estimates, deducted amounts already paid through the OSC and other settlements and awarded aggregate damages plus pre-judgment interest from the commencement of the action.

The decision provides important guidance on quantifying aggregate damages in complex securities class actions where individual proof of loss would be impractical. It confirms that courts may rely on non-individualized evidence and select a reasonable damages methodology even where precise quantification is impossible, provided the approach sufficiently targets the harm and accounts for the risk of overcompensation. The court also emphasized that defendants’ failure to preserve relevant trading and holdings data can undermine their challenges to the reliability of the plaintiffs’ damages evidence.

Contingency Fees Remain Available in Megafund Litigation

In Fehr v. Sun Life Assurance Company of Canada, 2026 ONSC 5338, the plaintiffs sought court approval of a settlement valued at $213.4 million benefitting approximately 100,000 current and former universal life insurance policyholders sold by the predecessor insurance company to Sun Life. In the claim commenced in 2010, the plaintiffs alleged that Sun Life breached the terms of the policies by raising the Cost of Insurance rates and Administrative Fees on impermissible factors or by charging premiums above the maximum premium specified in certain policies. The settlement, achieved on the eve of a summary judgment motion, was structured to provide $142.5 million in cash benefits to compensate past and current policyholders and $71 million in future policy benefits. A 30% contingency fee to class counsel of $63.3 million, plus HST, $2.3 million in disbursement and an honorarium for the representative plaintiff, to be paid from the settlement value, were approved by the court applying the pre-2020 version of the Class Proceedings Act, 1992.

Fehr supports the proposition that contingency fees in the 30% range remain available in megafund cases, in particular where class counsel has proceeded without external funding or reliance upon the Class Proceedings Fund, which in this case represented a value of $21.3 million to the class. The court emphasized the factual and legal complexity of the underlying litigation, including novel issues of insurance law upon which the claim was based, together with the 2.2 multiplier on docketed time, in approving counsel’s fee.

The Class Actions Group at Aird & Berlis LLP offers a full range of services, including defending class actions, appellate advocacy, risk mitigation strategies, insurance coverage advice, representation at insolvency-related proceedings and settlement administration advice. Our team of lawyers brings decades of class action experience across a wide range of industries and subject matters. For more information, please contact Co-Leaders Kate Findlay or Steve Tenai.