Justice Belobaba recently refused to certify a class action arising from the “diesel-gate” auto emissions scandal. In 2015, regulatory authorities announced that certain manufacturers had been installing “defeat devices” in their diesel vehicles to cheat on emissions tests and violate clean air laws. Unlike other class proceedings related to the scandal, this proposed class consisted of owners and lessees of vehicles who sold or returned their vehicles before the scandal was revealed (pre-disclosure owners). At issue on the motion was whether or not the plaintiff’s expert could isolate and calculate the premium that was paid for the “clean diesel” or “low emissions” feature that was advertised but not provided to consumers.

The Threshold Issue

The certification motion turned on the threshold issue of whether there was any evidence of a compensable loss and if so, whether a plausible methodology has been provided that can measure such loss on a class-wide basis. In answering “no” to both questions, Justice Belobaba explained that absent evidence of economic loss and a related methodology for loss-related claims, the plaintiff is unable to satisfy the “some basis in fact” requirements as set out in ss. 5(1)(b) to (e) of the Class Proceedings Act, 1992.

The loss-related common issues proposed by the plaintiff mirrored a familiar template that was previously approved by the same Court when it certified “defeat device” class actions involving class members who held their vehicles after the emissions issue became public (post-disclosure owners). In the present case, Justice Belobaba accepted that pre-disclosure owners and lessees of the impugned vehicles paid a general diesel-engine premium and received diesel-engine-related benefits by the time they sold or returned their vehicles (such as improved fuel economy, increased torque and longer engine life).

The issue, however, was whether the plaintiff could establish any evidence that would isolate the value of the clean diesel or low emissions feature. In other words, could this particular feature that was promised but not provided be isolated and quantified in monetary terms for the purposes of the proposed class action? And, if it could be, was there a plausible methodology for measuring the loss on a class-wide basis?

In his reasons, Justice Belobaba referenced a recent Northern District of California decision relating to nearly identical proceedings. The District Court considered and dismissed a proposed action on behalf of pre-disclosure owners and lessees. Justice Belobaba agreed with and adopted the District Court’s approach and analysis, which turned on the plaintiff’s failure to isolate the alleged low emissions premium and provide some proof of damage as a “starting point”.

Justice Belobaba went so far as to grant an adjournment of the certification hearing (and offered a second adjournment, which was refused) in order to permit the plaintiff’s expert to file evidence that isolated the low emissions premium. However, the expert did not isolate or quantify a price premium for the clean diesel feature. Instead, he made assumptions about the value of the premium and employed a depreciation analysis without providing a methodology for class-wide measurement of loss. In dismissing the plaintiff’s certification motion, Justice Belobaba noted that in the absence of any evidence of a clean diesel premium, the analyses proffered by the plaintiff’s expert were “beside the point and irrelevant.”

Key Take Away

While the precise quantification of damages is not required at certification, a plaintiff’s failure to provide the Court with a ‘starting point’, grounded in facts, to support a methodology that can be used to measure loss on a class-wide basis may be fatal to a plaintiff’s certification motion.


David Gadsden represents global clients in complex commercial disputes. He is the Chair of Baker McKenzie's Canadian Class Actions Group and is known for his sound advice on commercial class actions, competition and antitrust matters, arbitration, fraud cases and product liability matters. Clients value David's pragmatic and determined approach to disputes and have described him as "absolutely terrific at bringing across the finish line the most complex and multidimensional issues". David has been recognized by Benchmark Litigation, Legal 500, Best Lawyers Canada, and Lexpert’s annual Guide to the Leading US/Canada Cross-border Litigation Lawyers. He has previously been recognized by Lexpert as a Rising Star. As Chair of Baker McKenzie's Canadian Class Actions Group, David draws on his extensive class action experience, having acted as counsel for defendants and plaintiffs in numerous national and global class action lawsuits involving allegations of anti-competitive conduct, professional service negligence, product liability and securities fraud. David's practice also comprises international and domestic business disputes of all manner, including competition and antitrust litigation, commercial arbitration, business tort and trade secrets claims and product liability matters. David also has deep experience in fraud and financial crime matters. He is trusted counsel on multijurisdictional fraud investigations, including related civil disputes and regulatory proceedings. David has appeared as counsel at all levels of court in Ontario and in international and domestic arbitrations. He has completed the Osgoode Intensive Trial Advocacy Program, as well as the Intensive Advocacy Training Program conducted by the National Institute of Trial Advocacy. David has also lectured in the Osgoode Hall Graduate (LL.M.) Programme.