Written By: Katie Pfaff. Special thanks to Jonathan Foreman of Foreman & Company for lending his insights in the making of this blog.
You have made it. As a class member, you have followed a class action proceeding from its certification all the way to settlement approval, and now, thankfully, you are eligible for compensation under the settlement agreement. So how much time do you have to file your claim? How is it approved? What happens if you miss the deadline? To understand how much time you have, it’s important to first understand how claims distribution protocols are designed.
The length of a claims period is outlined in the distribution protocol, which is found in approved settlement agreements. Determining the claims procedure is complex and involves many moving parts. Factors for consideration include: how extensive the claims application form is; whether funds are to be administered claims-based (where class members are paid as their applications are approved), or pro rata (where class members all receive their share at one time after the period ends); and what must always be considered is the nature of the class action being settled.
Each of these factors help formulate how much time class members should have to complete the claims application form. For example, consider the differences in time and effort between the following two scenarios: 1) sending the serial number of a laptop with a faulty internal microchip in an online form and hitting submit; and 2) a survivor of institutional abuse having to recount and construct a narrative of the horrific events of their past for a third-party claims administrator who will adjudicate whether their story is “enough” to merit compensation under the settlement agreement. The latter claims procedure not only requires more time for class members to understand the trauma they have gone through, but class members may also be at risk for re-traumatization. Therefore, they should have more time to process their past, gather the relevant documentation, and write their narrative. Claims application periods in these types of class actions are known to extend anywhere from 12 months to two years, whereas product liability class action settlements have claims application periods that average 3-4 months.
Why Have Shorter Claims Periods?
Designing a claims period is often more of an exercise in human behaviour. The fact of the matter is this: we as people respond well to a call to action. A shorter claims period incentivizes class members to act and act quickly to ensure they submit their claim on time. Too long and class members forget to apply, and the settlement funds never make it into the hands of the people it was intended for.
This creates the tough balance that must be struck when designing claims and distribution protocols: prioritize the needs of class members, but also make the process logistically efficient for claims administrators. When approving distribution protocols, courts should scrutinize with a similar lens that they apply to settlement agreements on the whole. Distribution protocols must be fair, reasonable, and in the best interests of the class. What must not be forgotten is that they are ultimately a compromise, as found by Justice Perell in Eidoo v Infineon Technoloiges AG. While in principle class members’ needs should be prioritized, their interests are often compromised in favour of procedural and logistical efficiency in distribution protocols.
The Role of the Claims Administrator
After you have submitted your claim, it is being evaluated by a third party known as a claims administrator. A claims administrator’s role is to distribute the funds allotted in the settlement approval to eligible class members. A claims administrator is also responsible for determining whether a class member’s application is deficient and identifying what is barring them from receiving compensation. Often, claims distribution protocols have an appeal mechanism for class members if they are denied compensation. Some distribution protocols may even require the claims administrator to keep a reserve of funds set aside in the event that there are late claimants to assess their eligibility to receive compensation.
A shorter claims window allows for the claims administration to move efficiently to analyze class members’ claims, to communicate with class members whose applications have been approved or rejected, and then manage any appeals. A claims administrator will also favour a shorter claims application period to complete their job as efficiently as possible. A considerable motivation behind shorter claims application window lies in payment schedules. Some claim administrators are given a flat fee for their services and will want to have a shorter claims period to maximize their profits. Other claims administration payments aren’t paid until all applications are resolved. This incentivizes shorter application windows to allow the claims administrator to complete the distribution as quickly as possible to be paid as quickly as possible.
How can claims periods balance the needs of class members but also be efficient logistically for claims administration?
One way to ensure that there is flexibility to support class members is to build some discretion into the distribution protocol. An example of such a provision can be found in the approved settlement agreement in the Toronto G20 Summit Class Action. The Class Action Clinic was approached by a class member who was not aware of the deadline until after it had already passed. The Clinic studied the agreement with them to determine if they were eligible for any recourse and uncovered a section that states: “[t]he Parties reserve the right, subject to the Court’s approval, to agree to any reasonable extensions of time that might be necessary to carry out any of the provisions of this Settlement Agreement.” This clause benefits class members as it allows for flexibility for claimants to pursue a claim after the deadline while still remaining within the four corners of the approved settlement agreement. Such a clause provides a best-case scenario because class counsel, the defendant, and the claims administrator are prepared for late filings, and the parties can prepare a protocol or allocate funds reserved for late applicants so that eligible class members are able to receive the full benefits of the settlement. Unfortunately, such clauses are not worked into every distribution framework, and many times once the application deadline has passed, there are no grounds for class members to apply.
When done properly, distribution protocols can be written, proposed, and designed to benefit class members so they can actualize the benefits of class action settlements. Unfortunately, this is not universally true of all distribution protocols in Canada. Class members have to be diligent to mark important deadlines in any ongoing class actions they are part of. At the same time, the Class Action Clinic will continue to advocate for better procedures and to assist class members in their lawsuits.
Are you involved in a class action and are having difficulty navigating the claims procedure? Connect with the Class Action Clinic to see how we can assist you in filing your claim.