Court Denies Certification of Proposed Class Action Against Hydro One

On November 28, 2017, the Ontario Superior Court dismissed a motion to certify a class action against Hydro One Networks Inc. (Hydro One) that sought damages of $100 million related to alleged overcharges resulting from the rollout of a new customer information system (CIS) starting in 2013. As set out in the Decision, this is not an appropriate case for a class action, in part because the determination of each class member’s claim would require individual trials.

The Decision leads off by stating that it is “known” that because of “a malfunctioning and a negligently implemented and administered CIS,” Hydro One undercharged or overcharged some of its 1.3 million customers. As noted, the launch of the new CIS was a “service provider and public relations disaster.” Some customers did not receive bills for extended periods of time and some customers received incorrect bills, including bills with large overcharge amounts. Hydro One asserts that it responded and resolved all billing issues, and that ultimately no customer was overcharged. The representative plaintiff in the lawsuit (a cottage owner who received a series of overbillings) disagrees.

In order for a case to be certified as a class action, a five-part test must be met. Among other things, the moving party must establish that there is a cause of action (a legally viable claim), an identifiable class of two or more affected persons, common issues raised by the class members and that a class action is preferable to individual lawsuits by class members.

The Court found that the representative plaintiff has advanced a cause of action (including claims of negligence, breach of contract and unjust enrichment) and that there is an identifiable class (Hydro One customers post-2013). However, the Court also found that the proposed common issues are not sufficient in that they will not avoid duplication of fact-finding or legal analysis of issues that are substantial components of each class member’s claim. For example, a determination of whether Hydro One was “systemically negligent” in the rollout of the CIS would not significantly advance each class member’s own claim, which will be based on that ratepayer’s individual circumstances. Based on its finding that there are no “productive common issues,” the Court found that a class action is not the preferable procedure for advancing the claims of class members. Even if the representative plaintiff was successful in establishing its overall claims (the common issues), there would be a host of remaining issues (largely around damages) to be established in individual damages trials.

Interestingly, after acknowledging that its Decision might deprive class members of a remedy (since the amount of any claims would not justify individual actions), the Court pointed to alternative administrative procedures that could be pursued through the Ontario Energy Board (OEB). Among other things, the Decision notes that:

The OEB’s complaint process has the potential to provide more effective substantive and procedural justice for the putative class members and the OEB process better fulfills the access to justice and behaviour modification objectives that underlie the Class Proceedings Act, 1992.

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The OEB has the jurisdiction to determine whether Hydro One Networks has overcharged a customer and, indeed, that jurisdiction apparently had an influence in the settlements already reached between customers and Hydro One Networks in the aftermath of the Cornerstone Project and the CIS problems.

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From the perspective of individual consumers, it should be recalled that the legislature directed that under the Ontario Energy Board Act, 1998, in carrying out its responsibilities, the OEB shall be guided by the objective to protect the interests of consumers with respect to prices and the adequacy reliability and quality of electricity service. Accepting that individual consumers cannot initiate OEB proceedings, it does not follow that the OEB will not respond in appropriate cases in accordance with its statutory mandate.

It may be that these observations will be relied upon by regulated utilities facing class action claims in the future. In the meantime, it remains to be seen whether the Decision will be appealed.