Not Out Of The Woods Yet: When Regulatory Settlements Have Downstream Consequences For Class Action Certification

Mackenzie v. Chartwell Asset Management Inc ("Mackenzie")¹ is a recent decision in a continually evolving line of cases addressing the sufficiency of pleadings at the certification stage. It also illustrates one way in which prior regulatory proceedings can affect class action certification risk.

Two important lessons emerge from Mackenzie:

1. First, Mackenzie serves as a reminder that factual admissions in publicly-disclosed, regulatory settlements can have consequences for class action certification, potentially assisting plaintiffs to define their claims and also to meet the "some basis in fact" threshold for certification. This decision underscores the need for defendants to use careful language when drafting factual admissions, and to consider and mitigate potential class action risk proactively (e., at the drafting stage).