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Pirates Beware, Reverse Class Action Inches Closer To Trial

On 26 June 2023 the Federal Court released their most recent certification decision (Voltage Pictures, LLC v. Salna, 2023 FC 893 [Salna]) relating to reverse class actions attempting to hold copyright infringers liable for illegally downloading copyrighted content.

This decision is the latest in a case which began in 2016 and which has had aspects brought before the Federal Court of Appeal three times, and the Supreme Court of Canada once. For our previous discussion of this case see here.

In Salna, Voltage Pictures sought certification of the class action proceedings against internet account subscribers who allegedly uploaded and downloaded films produced by Voltage without authorization. The Federal Court rejected certification due to ‘deficiencies’ in Voltage Pictures’ litigation plan but left Voltage Pictures with the option to reapply for certification with a revised litigation plan. Specifically, the Federal Court rejected Voltage Pictures’ plan to use the notice and notice regime to communicate with the defendants and for failure to provide adequate provisions for the funding of Class Counsel. Rectifying both of these deficiencies is likely to increase the cost for Voltage Pictures of proceeding with the reverse class action.

While the failure to certify the class proceedings is a setback for Voltage Pictures, this decision did reject many of the arguments raised by the Representative Defendant and interveners against proceeding with a reverse class action. Notably, the Federal Court found that a reverse class action is presently the preferable procedure regardless of any potential differences in facts and defenses available to individual defendants. Further, the concern that defendants may opt-out thereby rendering the class size too small may be addressed if such a situation arises and decertification may be an option in such an event.

An additional aspect of this case which may be significant to entities in a similar situation as Voltage Pictures, is that over $50,000 in costs were awarded to the Representative Defendant in the certification motion. Ordinarily costs are not available in certification motions, however the Federal Court found that reverse class actions are in and of themselves an exceptional circumstance which warrants costs being awarded to the representative defendant to incentivise meaningful participation in the proceedings. This precedent may act as a disincentive for future reverse class actions as this raises the cost for plaintiffs who may find themselves footing the bill for defendants’ legal counsel.

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