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Thursday
Nov122009

November 2009

THERE'S STILL TIME!

You can still register for Friday's November 20's Western Class Action Conference at:

http://www.cle.bc.ca/OnlineStore/productdetails.aspx?id=1826909

If you can't make it to Vancouver, you can also participate online.

I look forward to seeing you all there.

CLASS ACTIONS ON TRIAL

Kirk Baert et al are banging away at the Pearson v. Inco environmental class action trial. In unrelated news, profits at Welland, Ontario watering holes have spiked sharply.

Kotai v. Queen of the North (Ship), 2009 BCSC 1405: Resolution of common issues in ferry sinking class action. Several of the common issues were resolved as a result of an agreement on liability, and resolution of the property damage claims. The parties conducted a number of mini-trials to assist in the resolution of psychological injuries.

FEES

Fantl v. Transamerica Life Canada [2009] O.J. No. 4324 (S.C.): Justice Perrell approved a fee of $6.6 million plus disbursements and taxes, on claimed time of about $3.25 million

The Defendant had agreed to pay the fees fixed by the court or agreed by the parties. (It was said that this agreement was necessary in order to put class members on the same footing as policyholders outside the class who were receiving the same benefits without reduction for legal fees). The Plaintiff agreed not to seek to enforce any contingency fee arrangement previously agreed with the Plaintiff.

The court confirmed that the Defendant had standing because it was "affected", as a result of the agreement to pay fees directly (para.67).

The court rejected Class Counsel's argument that the earlier contingency fee agreement established the reasonable fee stating: "REO repeatedly makes a submission to the effect that since Mr. Fantl has agreed both in his retainer agreements and also by his approval to REO's motion to a 30% percentage contingency fee and since Transamerica has agreed to pay Mr. Fantl's legal fees, that is the end of the discussion, and the court must approve the 30% contingency fee. Once again, that submission is overcome by the court's obligation under s. 32 to determine what is a fair and reasonable counsel fee." (para.73)

The court noted the problem that class members no longer cared about the fee, and hence virtually anything was fair and reasonable from their perspective. However. "Fortunately, identifying the analytical problem, also suggests a means to solve it. The solution is to measure fairness and reasonableness from more perspectives. What the case at bar requires is to measure fairness and reasonableness of the counsel fee against what is fair and reasonable to all of the class, Class Counsel, the defendant, and the public interest. "

On the public interest, the court stated: "It is in the public interest and a good thing to encourage defendants to pay the fair and reasonable legal costs of the persons that they are alleged to have injured, and in the context of class proceedings, paying fair and reasonable legal costs includes paying a premium for the risk that Class Counsel accepted in bringing the matter forward and for assisting and not obstructing the fair resolution of the litigation.I also include the public interest because it is in the public's interest to encourage the economic use of not just judicial resources (which is a well known policy factor of the Class Proceedings Act, 1992) but to encourage the economic use of legal resources. Too much litigation already is a battle over legal fees, and in the case at bar, it would have been a waste of resources to obstruct a resolution of the Class Member's claims because Class Counsel would wish to push the matter to trial in order to obtain their share of the prize based on a contingency fee."

In assessing the base fee, the court removed the amounts expended to the carriage fight, taking the base fee down to $2.4 million: "This expenditure is part of what may justify the contingency fee or the multiplier of a base fee, but it is not reasonable to charge a client for what it costs the lawyer to safeguard a retainer from a competitor. These costs are a risk that the lawyer assumes when he or she takes on the retainer. Viewed in the context of the public's interest, it strikes me as a bad idea to encourage and intensify carriage fights by the prospect that the winner will not only get the file but be paid something by his or her client for getting the file."

The court found that a 2.75 multiplier was appropriate. The court declined to accept the defendant's argument that there should be a step down of the multiplier once settlement was in the offing stating: "[I]t is arguable that despite any lower risk, the settlement work was the more valuable contribution to all concerned, including the public interest and Transamerica itself. Moreover...the settlement path has its own set of risks, and indeed settlement negotiations may be a guise for a war of attrition that depletes the resources of Class Counsel. I am not suggesting that these circumstances existed in the case at bar, but I see no justification for applying differential multipliers, and although it think it low, a 2.5 multiplier applied to the adjusted base fee is within range of producing a fair and reasonable counsel fee."

The court also supported the fee on the basis that it was about 16% of the value of the settlement.

CALL TO SUPPORT CHARITY

Toronto class action Justice Maurice Cullity's secretary Amana Karim is retiring, and is now headed to India to work at a school for girls of leper parents. She is hoping to raise $3600 to support that effort.

You can donate online at:http://www.canadahelps.org/CharityProfilePage.aspx?CharityID=s79973 <http://www.canadahelps.org/CharityProfilePage.aspx?CharityID=s79973>

CARRIAGE

Sharma v. Timminco Limited, 2009 CanLII 58974 (ON S.C.): Court awarded carriage to Kim Orr over Siskinds in a securities case.

The court stated the test as follows: "The primary consideration on a class action carriage motion is arriving at a solution that is in the best interests of all class members, is fair to the defendants, and consistent with the policy objectives of the Class Proceedings Act, 1992... In determining who should be appointed as lawyer of record in a class action, the court may consider, among other things: (1) the nature and scope of the causes of action advanced; (2) the theories advanced by counsel as being supportive of the claims advanced; (3) the state of each class action, including preparation; (4) the number, size and extent of involvement of the proposed representative plaintiffs; (5) the relative priority of commencing the class action; (6) the resources and experience of counsel; and (7) the presence of any conflicts of interest."

The Court continued: "I foreshadow the discussion and analysis below to say that for the case at bar, I do not find particularly helpful factors numbered 3, 4, 5, 6, and 7. I also do not find helpful for the case at bar, a comparison between the retainer agreements and what I will later refer to as the "beauty pageant" factors of a carriage motion, where the rival law firms describe their current talents and past accomplishments. I regard the involvement of Milberg LLP as a sterile or neutral factor. This carriage motion turns on factors 1 and 2."

The court noted that both firms had commenced their investigations before they had a client, but did not comment adversely on that fact: "Next, given that both actions are very much the invention or discovery of the law firms, the number, size, and extent of involvement of the proposed representative plaintiffs (whom each firm enlisted after the idea of a class proceeding was developed) is not a meaningful factor."

On the two key factors the court stated: "The Siskind statement of claim starts the class period earlier and extends its longer. The Siskind theory seems to favour comprehensiveness over cohesiveness....There are challenges with the front end of the extension of the class period, but the challenges are perhaps more profound in the extension of the class period to include purchasers of shares after Timminco made public announcements to correct the alleged misrepresentations. This extension of class membership differentiates class members between those who purchased their shares without any corrective information and those who purchased shares after Timminco had made public announcements withdrawing its mis-statements and this, in turn, creates difficult factual issues about the efficacy of the corrective announcement or announcements, which may further divide the class, and about the legal interpretation of certain sections of Part XXIII.1 of the Ontario Securities Act. Notwithstanding Siskinds' arguments to the contrary, I do not see these extensions as being helpful to the case to be made for the class members who purchased shares before corrective announcements were made."

The court commented on the role of Milberg law firm in supporting Kim Orr: "It would be grounds for disqualification of an Ontario law firm seeking carriage of an Ontario class action proceeding if the Ontario firm entered into an arrangement where an American law firm, or any foreign law firm for that matter, assumed de jure or de facto the role of the lawyer of record for the representative plaintiff, unless the foreign law firm obtained permission to practice law in Ontario..I do not understand Milberg LLP's proposed involvement as usurping the role of Kim Orr....In my opinion, it would be grounds to disqualify an Ontario firm seeking carriage if it purported to partner with an American law firm so that the American firm had a proprietary interest in the Ontario law suit, because this would take the foreign firm's involvement into the territory of champerty and maintenance and impermissible fee splitting, but I do not understand this to be the case at bar....

The court held that payment for Milberg's services could be carved out of any future verdict or settlement. "There is nothing inherently wrong with...obtaining services from foreign law firms so long as there is no interference with or usurpation of the lawyer and client relationship,".

Further, the court stated: "Unkindly, Siskinds draws attention to a serious stain on the reputation of Milberg LLP," but "Milberg LLP does not bear the mark of Cain." The court noted that the two Milberg lawyers involved in the filing "were not parties to any wrongdoing and...thus no more needs to be said about this aspect of the matter."

Soderstrom v. Hoffman-La Roche Ltd., [2009] O.J. No. 4136 (Div. Ct.): Court granted motion to quash an appeal from a judgment preventing Perry Borden from continuing to pursue litigation in which carriage had already been decided against his firm.

CHICKEN AND EGGS

Durling v. Sunrise Propane Energy Group Inc., CV-08-363271-00CP (Ont.S.C.): In endorsements dated October 27, 2990 and November 5, 2009 respectively, Mr. Justice Cullity court found that:

1. One defendants' proposed summary judgment motion on evidence should not proceed in advance of certification;

2. The same defendant did not have standing on the facts to intervene of a proposed motion to discontinue against certain defendants.

The writer is counsel for one of the defendants in this matter.

SETTLEMENTS

Martin v. Roman Catholic Diocese of Antigonish, 2009 NSSC 331: Settlement of priest abuse class action approved. Writer was co-counsel for defendant.

Cilinger c. Centre hospitalier de Chicoutimi, 2009 QCCS 4445: A $5.4 million province-wide settlement was approved regarding wait times for breast cancer radiotherapy treatment in Quebec. The settlement grants compensation to patients diagnosed with breast cancer whom, between October 13, 1997 and March 26, 2009, after undergoing conservative surgery without chemotherapy, waited more than 12 weeks from the date of their referral in radio-oncology at the following Quebec hospitals. Court also approved a 20% contingency fee, which was just over a 1X multiplier.

Option Consommateurs c. Banque Royale du Canada, 2009 QCCS 4485: Settlement approved in relation to claim involving computer system crash.

Dupuis-Déri c. Montréal (Ville de), 2009 QCCS 4477: Illegal arrest class action was discontinued.

Goudreault c. Service garantie Québec inc., 2009 QCCS 4439: Notice of settlement approved.

BIFURCATION

Peter v. Medtronic, Inc., [2009] O.J. No. 4364 (S.C.): The defendants sought to defer the trial of the common issues relating to the quantification of the amount of the waiver of tort claim. The court agreed on the basis that "a disproportionate amount of the forensic energies of the parties and the court's resources would have to be expended " to resolve that issue. The court also found that the overall timeframe of the proceeding would not be unduly lengthened. The court also held: "I agree that the possibility of wasted expense in carrying out one's disclosure and production obligations is not sufficient to constitute prejudice, but I disagree that Medtronic's concerns about protecting its valuable confidential information are addressed. The deemed undertaking and an in-terim confidentially order offer no protection unless the trial is in camera, which is a rare occurrence and hard to imagine being ordered in a class action context."

On the concern about litigation by installments, the court stated: "In arriving at my opinion that Medtronic's request for divided discovery and a severance of issues at trial should be granted, I have not ignored the advice from former Chief Justice McMurtry in Garland v. Consumers' Gas Co., which advice was adopted by the Supreme Court of Canada that litigation by installments should be avoided. However, neither the Chief Justice nor the Supreme Court of Canada went so far as to preclude litigation by installments. Had they done so, then the result would have been to preclude summary judgment motions or motions under Rule 21 or rule 5.05, noted above, and many other rules from being brought in class proceedings."

 

CERTIFICATION

Robinson v. Medtronic, Inc., [2009] O.J. No. 4366 (S.C.): Application for certification of a defective lead class action granted in part and conditionally. The court (Perrell J.) found that the conspiracy claim was not adequately plead in relation to the special damage requirement, but leave was granted to correct that deficiency.

The court found that the Plaintiff could assert a claim on behalf of the Province of Alberta even though it was not technically a subrogated claim under that province's statute: "Provided that the Representative Plaintiff has his or her own cause of action, the Representative Plaintiff can assert a cause of action against a defendant on behalf of other class members that he or she does not assert personally, provided that the causes of action all share a common issue of law or of fact." (at para.80). A separate class was created for the health insurers to accommodate the fact that the claims were not all pure subrogation claims.

The court found that the Plaintiff could advance a family claim for persons outside the province even where the individual had not died: "The question of whether an individual member of the Family Law Class qualities for a claim pursuant to the Family Law Act and related provincial and territorial legislation is an individual issue to be determined after a common issues trial. The current pleading is adequate to advance the claims of the members of the Family Law Class." (at para.76).

On the inclusion of all implant recipients in the class, the court stated: "All of the proposed class members have defibrillators that are the subject matter of a product recall with respect to a life-saving medical device and in my view in the circumstances of this case, there is a basis in fact for the proposed class definitions. Whether or not Implant Class Members meet the threshold of Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114 is a matter for trial....The simple point is that all persons implanted with allegedly defective Leads ought to be bound by the outcome of the class action unless they exercise their right to opt-out." (at paras.139-142)

On common issues, the most controversial point was the commonality of the waiver of tort questions. The court accepted them stating: "...whatever the combination of wrongdoing (with the exception of the combination that yields no liability), the issue will be whether or not the victim of the wrongdoing can elect disgorgement instead of the remedy provided by the common-law or statute. If wrongdoing is proven, then the availability of disgorgement is a common issue of law for all the victims of the wrongdoing." (at para.160) The court did agree to bifurcate the waiver of tort issues until after the other common issues however.

Notably, the court declined to certify the punitive damages question stating: "...the entitlement to and the quantification of punitive damages may be a common issue in some cases. However, it is my opinion that the case at bar is not one of those cases because in the case at bar the entitlement and quantification of punitive damages requires a quantification of the compensatory damages and an appreciation of the extent of the harm caused by the defendant's misconduct, if proven...In order to rationally determine whether punitive damages should be awarded and to determine the quantum of them, the court needs to know the quantum of compensation that will be awarded." (at paras.167, 171). [ED'S NOTE: Perrell J is correct that Whiten does express the amount of compensatory damages as a consideration in whether punitives SHOULD be issued, rather than only being relevant to the AMOUNT that should be issued. However, queare whether what perhaps could and should be certified as a common issue is the element of the test for punitive damages as to whether there was "high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour" Justice Perrell's effort to distinguish the earlier cases that accepted punitive damage common issues was arguably strained, particularly the suggestion that Rumley was different because causation and damages remained to be determined after the common issues trial in Robinson. They were equally left to the individual issues stage in Rumley.]

The court commented on the need for greater commitment from Class Counsel to assist class members with individual hearings: "Class Members require, at least, the assurances that they will have the representation of Class Counsel and a willingness to provide services pursuant to a contingency fee agreement." (para.209) The Plaintiffs were given leave to amend the plan.

Gordon c. Société Radio-Canada, 2009 QCCS 4149: Proposed group libel type case denied certification. The court noted that proof of effect would depend on the reaction of each individual. The court also held that, in context, the words were not defamatory. Finally, the court held that the group was too diffuse to support the libel case.

Pagé v. Bell Mobility Inc., 2009 QCCS 377: Class action regarding charges for equipment upgrade where the amount was not disclosed or given in writing. The court commented on the Quebec cause of action test stating:

"As to the effect of proper evidence, it is important to mention that... The court must take the allegations of fact contained in the motion as proven. However, if these facts are contradicted during the presentation by the respondent through proper evidence permitted by the court and consented to by counsel for the petitioner, the court may assess its credibility... In sum, the conditions for bringing the action must be analyzed on the basis of the allegations contained in the motion, the exhibits appended to it, and the grounds of objection raised. In this context, however, it is not appropriate to carry out an in-depth assessment of the motion's chances of success."

The court also talked about the need to establish the existence of a group: "In this regard, the Court is required to engage in more than mere assumptions. The petitioner must adduce evidence of the existence of a group,14 for example, by public knowledge of the event in question. At the authorization stage, however, the Court may not require that the petitioner has conducted a thorough inquiry into the manner of providing the names of potential members. A reasonable inquiry must have been conducted, however, and an estimate of the number of persons involved must be supplied."

The court discussed the nature of the common issues requirement: "These terms are sufficiently broad to provide the definition of a group for the purposes of a class action, even if the actual situation of each member or of the member subgroups may point to some degree of diversity or individuality, notably in the circumstances surrounding the liability and the fault or in the quantum claimed by each of the members"

The court found that there was no evidence of a group with common issues, rather the evidence showed that this was an isolated case.

Brunelle c. Banque Toronto Dominion, 2009 QCCS 4605: Mortgage pre-payment class action certified.

Savoie v. Imperial Oil Ltd., 2008 QCCS 6634: Price increase class action certified. Plaintiff alleged that defendant acted in concert to prematurely raise their prices at the pump in order to pass on to consumers the entire amount of a duty that the Quebec government planned to charge them. The court found that the existence of an agreement was a proper common issue, as was the issue of exemplary damages. The court stated:

"At the trial on the merits, it will be up to the petitioner to prove that the lessening of competition was undue, a submission that must be considered in terms of the respondents' position in the market and the injurious nature of their behaviour.20 The Court is of the opinion that the facts alleged and the evidence initially adduced in support of the motion demonstrate the market power of the respondents, which is quite extensive, so that it is not unlikely to think that any agreement, if there is one, could be undue." (at para.44)

The court confirmed that it had also considered the rule of proportionality set out in art. 4.2 CCP.

COMMUNICATION WITH CLASS MEMBERS

405341 Ontario Ltd. v. Midas Canada Ltd. [2009] O.J. No. 4354 (S.C.): Justice Cullity agreed that franchisees have a statutory right to bring a class action under section 4 of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 and hence attempts by franchisors to interfere with or prohibit franchisees from exercising that right are unlawful and constitute an offence under the statute.

AMENDMENTS

Stevenson Estate v. Bank of Montreal, 2009 SKQB 371: Plaintiff sought to amend to add class allegations in a slip and fall case.The court considered the need for a prima facie case on such an application stating:

"...I draw my answer to the issue at hand - whether on the amendment application the plaintiffs must present a prima facie meritorious claim in relation to only the cause of action or also in relation to the prospect of the action being certified as a class action. I conclude that to require the plaintiffs to present a prima facie meritorious proof of entitlement to certification is not appropriate. Doing so would place a barrier in the way of an application for certification that was not intended by the legislature."

However, the court went on to consider the second issue of whether the amendment was "just and equitable". The court found that it was not stating:

"First, the amendment itself, even without certification, will lead to some delay and complication. The delay and complication, and the prospect of inequity, is not restricted to a period beginning with certification.... The plaintiffs want to make a new beginning, eight years after commencement of the action and seven years after that new beginning was available...Allowing the amendment to plead The Class Actions Act would unduly delay and complicate the trial, and it would be inequitable to the defendants."

Hence the application to amend to add class claims was rejected.

Cilinger c. Centre hospitalier de Chicoutimi, 2009 QCCS 4438: Request to amend class definition in cancer treatment class action. An end date was established for class membership.

2038724 Ontario Ltd. v. Quizno's Canada Restaurant Corp., [2009] O.J. No. 4376 (S.C.): Plaintiff class sought to amend claim in a certified class action that was under appeal. The defendants objected that certain amendments were designed to avoid the certification process. On procedure to amend in a class action, the court commented:

"Applying only the Rules of Civil Procedure, technically speaking, a plaintiff could proceed unilaterally to amend the statement of claim, because the defendant will not have delivered a statement of defence but, practically speaking, the defendant will be on the record and have delivered a plethora of pleading-like material in the run-up to the certification motion. Thus, the custom of seeking the defendant's consent or giving the defendant advance notice of the amendments makes sense. Following the unwritten ritual would have made even more sense in the case at bar where the emotional temperature of the litigation has been hot. It is unfortunate that the manner in which the Plaintiffs have made their amendments has added to the acrimony, but from the court's perspective it would not be productive to formalize all the customs and rituals of practice and procedure in class actions, which continue to develop and change...

[The] Quiznos Defendants submitted that proposed amendments to a statement of claim in a certified class action had to be treated differently from amendments in a normal action. He suggested that the leave of the court to amend should always be sought and that the court should scrutinize the proposed amendments having regard to their effect on the class proceedings. I agree with this sub-mission. Amendments to a pleading in a class action are significant not only to a party's claim or defence, which is their chief role, but they also may affect the certification criteria of class definition, common issues, and preferable procedure...

[A] key factor in determining whether to allow an amendment to a pleading in a class action are whether the amendment: (a) just contains a further allegation that does not fundamentally change the nature of the action or (b) fundamentally changes the nature of the action and would require reconsideration of all the matters considered on the first application."

The court struck the conspiracy claim with leave to amend for failure to plead special damages. The court allowed the amendment to plead the common law duty of good faith on the basis that it was not a fundamental change to the common issues.

COSTS

De Wolf v. Bell ExpressVu Inc., 2009 ONCA 765: Defendants sought costs on successful appeal striking the action. The case was funded by Class Proceedings Fund. The court found that no special factors applied, and awarded costs of $55,000 for the appeal and $125,000 of the action.

APPEALS

Richard v. British Columbia, [2009] S.C.C.A. No. 274: Leave denied from a decision foreclosing pre-Crown Proceedings Act claims. The writer is co-counsel for the Province in this matter.

Merck Frosst Canada Ltd and Merck & Co. Inc. v. Gerald Wuttunee et al , 2008 SCCA 512: Leave denied from Saskatchewan judgment refusing certification was dismissed.

Merck Frosst v. Mignacca, 2009 SCCA 261: Leave denied from Ontario judgment declining to stay the Saskatchewan proceedings was dismissed.

Hislop v. Canada (Attorney General), [2009] S.C.C.A. No. 264: Application for leave to appeal the Ontario judgment declining to allow class counsel to attach pension benefits in order to be paid was dismissed.

Lefrancois v. Guidant Corp., [2009] O.J. No. 4129 (Div.Ct.): Leave denied from refusal to narrow class definition to certain models.

Seidel v. Telus Communications Inc. (B.C.) [2009] S.C.C.A. No. 191: Leave granted in a decision finding that the defendant could rely on an arbitration clause to avoid class certification.

Sorbara v. Canada, [2009] S.C.C.A. No. 299: Leaved denied from decision finding that GST case could not proceed in Ontario superior court.

Lambert v. Guidant Corp., [2009] O.J. No. 4464 (Div Ct.): Leave denied from decision certifying products liability case. An interesting aside from the court: "In my opinion what was really driving this motion for leave was counsel's concern that courts dealing with certification applications have interpreted s. 5(1) of the CPA so as to make any meaningful opposition to certification virtually impossible. I am aware that amongst the members of the class action bar, counsel's view is not unique. If I am correct I observe that any perceived imperfections in the certification process must be resolved by the Legislature. The judges must work with the legislation that presently exists."

SETTLEMENT ADMINISTRATION ISSUES

Association d'aide aux victimes des prothèses de la hanche/Hip Implant Victim's Aid Association c. Centerpulse Orthopedics Inc. (Sulzer Orthopedics Inc.) (Zimmer Holdins Inc.), 2009 QCCS 4618: Court allowed the late claim of a class member because the defendant had failed to provide the late claimant's address for the purpose of giving notice.

EVIDENTIARY ISSUES

Pearson v. Inco Ltd. : As this class action moves through trial, there have been an number of evidentiary rulings:(October 20, 2009) 12023/01 (Ont.S.C.): Court allows late delivery of report from Todd Hillsee on communication issues regarding knowledge of high levels of nickel.(October 22, 2009) 12023/01 (Ont.S.C.): Introduction of updated calculations by expert witness on change in values prima facie allowed, but defendant given right to do discovery and to ask for admissibility to be reconsidered on the basis of the discovery evidence.(October 26, 2009) 12023/01 (Ont.S.C.): Court allows testimony by expert on base year that should be used for calculations.

Jeffery v. London Life Insurance Co. [2009] O.J. No. 4343 (S.C.): Canada sought to strike summons issued to certain gov't officials. Canada was not a party to the class action. The court struck 1 of the 3 summonses.

Brochu c. Loto-Québec, 2009 QCCS 4676: Court considered variety of admissibility issues in gambling addiction class action.

INTEREST CALCULATION

Toyota Canada inc. c. Association pour la protection des automobilistes inc., 2009 QCCA 2008: Court allowed appeal on proper determination of judgment interest.

TWEET!

Follow me on Twitter at

http://twitter.com/wbranch99 <http://twitter.com/wbranch99>

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