Author: michelinechevrier

By: Olivia Pomajba

The Class Action Clinic has selected the top five most notable class action decisions of 2021. These decisions set important precedents in class action practice, as the Court addressed the power dynamic between plaintiffs, defendants, and class action procedure itself.  

Class Actions & the Gig Economy: Heller v. Uber Technologies, 2021 ONSC 5518 

The Ontario Superior Court of Justice certified a class action against Uber on behalf of Uber’s drivers and couriers. In 2020, the Supreme Court of Canada heard arguments from both parties regarding the Court’s jurisdiction to adjudicate the dispute and ruled the arbitration clause was unconscionable because of the inequality between the parties and the barriers it imposed on drivers and couriers. 

Central to this class action is the question of whether the class members are employees or independent contractors “working for” the defendant in some capacity. The relationship between Uber and class members is governed by “Service Agreements” which allowed the use of Uber’s software applications to provide rider transportation and food delivery services. The class alleges that the Service Agreement is effectively an employment contract, and that Uber has contravened statutory employment protections for minimum pay and overtime. Uber claimed that drivers and couriers are not employees working for Uber but are independent contractors – as outlined in the Service Agreement. The Court was satisfied with the cause of action criterion for breach of contract and breach of Ontario’s Employment Standards Act.  

The class definition identifies putative class members simply as Uber app users (rather than determining whether they are “working for” Uber) and the Court requested that “extreme care” be taken with respect to notice of certification, citing the legal significance of the Arbitration and Class Action Waiver Clause and the legal consequences of exercising their right to opt-out.  

Communications by Defendant Pre-Certification: Del Giudice v. Thompson, 2021 ONSC 2206 

The plaintiff alleged that the personal confidential information of Canadian Capital One customers was compromised and filed an injunction to prevent the defendant from communicating with putative class members without Court approval. 

The Court ruled that it will address communication to the class to ensure the class action procedure is fair to all litigants. The Court does not have a duty to approve all communications between putative class members and the defendant before certification. A class proceeding, the Court said, is an adversarial process that requires an impartial even-handed judge that does not take sides. It is class counsel and not the Court that may have a fiduciary responsibility to the class. Before certification, a defendant is entitled to communicate with putative class members unless it is in a manner that would visit an injustice on the putative class members or would otherwise undermine the integrity of the proceedings. Members of a proposed class, the Court said, have an obligation to protect their own interests and seek their own advice. 

Class Actions are not a Lottery: MacDonald et al. v. BMO Trust et al., 2021 ONSC 3726 

This was a motion for judicial approval of the parties’ settlement agreement for an all-inclusive sum of $100 million, and approval of class counsel’s legal fees based on the 25% contingency fee retainer. Previously, on a motion for summary judgement on the certified common issues, the court found that BMO had a fiduciary obligation to registered account holders and that foreign exchange mark-ups were not disclosed to registered account holders as required under trust law over a ten-year period. 

Class counsel fees in a “mega settlement,” which the Court defined as in the $100 million range, must be considered on a case-by-case basis to determine a fair and reasonable fee. The “straight-line” application of the agreed-to contingency fee percentage works well for most class actions ($40 million range) but is not appropriate for mega settlements because it could result in undeserved windfalls which should be avoided. After all, the Court noted, class action litigation is not a lottery. 

Social Justice, No Costs Awards: Elder Advocates of Alberta Society v. Alberta Health Services, 2021 ABCA 67 

This was an appeal of the trial judge’s decision to order no costs against the unsuccessful plaintiffs after a long trial of a class action against Alberta Health Services. The action was launched on behalf of elderly and disabled Albertans whose paid accommodation was subject to an increase. The appellants contended that the trial judge erred in awarding no costs against the unsuccessful representative plaintiff. The respondent maintained that the claim was brought in the public interest and involved a novel point of law. 

Unlike Ontario and Quebec, there is no class action fund in Alberta to assist representative plaintiffs. While there is a presumption that the successful party is entitled to costs, the Court of Appeal held that exceptions can be made where there is a public interest component to the litigation. The Court viewed the class members as constituting a disadvantaged group as many were medically frail residents of long-term care facilities with little income. Further, the Court of Appeal found that the claim was meritorious, and a trial was required to determine a novel point of law. While individual class members had a financial interest in the action, the extent of that individual interest could not economically justify the action. 

Finally, the Court considered who would have been better able to bear the costs of the litigation. A costs award would not significantly change the defendants’ position, the Court concluded, but would inappropriately penalize the plaintiffs and may cause a chilling effect in future class actions. The trial judge is in the best position to assess what, if any, cost award is appropriate in the circumstances. 

Parallel Individual Actions vs. Certification of Class Action: Workman Optometry v. Aviva Insurance, 2021 ONSC 3843 

Two class actions and seventeen individual actions were launched following claims against insurance companies for business income loss from COVID-19 restrictions. The Workman class action targets 15 defendant insurers while the other parallel proceeding targets only Aviva. McCarthy Tetrault represented many small businesses in individual claims against the same defendants named in the Workman class action. Four defendant insurers brought a motion to stay the individual actions until the certification of the Workman class action was decided.  

The Ontario Superior Court denied the motion. The Court found that the Class Proceedings Act was designed to enhance access to justice, and that delaying access to opt-out rights for legitimate individual litigants would hinder access to justice. To determine if the individual actions should be stayed pending certification, the Court considered the substantial overlap of facts and issues between proceedings. Most importantly, the Court was not satisfied that the temporary stay would not result in an injustice to the party resisting the stay. The Court found that there was ample of evidence that the individual plaintiffs would be prejudiced if their actions were stayed pending certification. The defendant insurers did not clear the “no injustice or prejudice” hurdle. The requested stay would result in significant unfairness to the individual litigants who had chosen not to participate in the class action.  

Honourable Mention: 

Singh v. Glaxosmithkline, 2021 ABQB 316 

A representative plaintiff in a class proceeding has the right to change counsel, as they are a genuine plaintiff who chooses, retains, and instructs counsel. 

Looking Forward to 2022 

The Class Action Clinic looks forward to reviewing important decisions and their impacts on class members in 2022 and beyond. The Clinic’s blog features commentary on class actions in Canada. If you have a question about class actions and require assistance from the Class Actions Clinic, please do not hesitate to contact us. To keep up to date on class actions in the news, follow the @ClassActClinic on Twitter. 

By: Katie Pfaff and Jasminka Kalajdzic

In April 2020, former Clinic student caseworker Karly Lyons wrote a blog about a pivotal case for class action settlements – JW v Canada (AG), an appeal arising from the Indian Residential Schools Settlement Agreement (IRSSA). In a three-way split decision, the Supreme Court of Canada established limits on the scope of judicial intervention in class action settlement claims disputes. Four of the seven justices concluded that administrative law remedies are not available to class members because a settlement is a contract between private parties, notwithstanding a court order is required to give effect to the contract. The scope of a court’s supervisory jurisdiction is “limited and shaped by the terms of the agreement, once it is approved and determined to be fair and reasonable, and in the best interests of the class.” As a result, a court may intervene only where there are procedural gaps in the agreement or a failure to apply the terms of the agreement. A bad decision – even an unjust one – will stand so long as the adjudicator turned their mind to the relevant terms of the agreement.

Since JW was decided, a number of courts have confirmed that judicial recourse is extremely limited and that IRSSA and other class action settlement agreements were intended by their drafters to be a complete code.  Almost all of these decisions arise in the context of a denied claim, and an attempt by a claimant to overturn the adjudicator’s decision. The September 23, 2021 decision in McLean v Canada (AG) applies JW to a dispute about a purely administrative decision. The decision illustrates that applying JW narrowly can render the court’s supervisory authority virtually meaningless.

Background

The applicants, Ms. Waldron and Mr. Pooyak, were two class members in the Indian Day School Settlement (IDSSA), an agreement approved by Phelan J on August 19, 2019. The claims process opened January 13, 2020 and will close on July 13, 2022. Claims in this settlement are assessed on Levels from 1-5, with Level 1 claims determined by the Claims Administrator (Deloitte LLP) without any involvement by the Defendant, the Government of Canada. Successful Level 1 applications entitle the class member to a payment of $10,000, while Level 5 compensation for the most severe kinds of abuse is $200,000. Levels 2 to 5 are assessed by the Claims Administrator after Canada has had the opportunity to provide supplemental information regarding eligibility.  If the Claims Administrator determines that an application exceeds the criteria for the class member’s claimed Level, the payment is automatically processed at the higher Level. If the application does not meet the criteria for the level claimed, the class member may seek reconsideration, a process that culminates in a review by a third-party assessor. The right to seek reconsideration is limited to those circumstances where the third-party assessor adjusts the claim downward. Throughout the reconsideration process, a class member is entitled to submit additional documentation. Further documents may also be submitted if requested by the Claims Administrator.

Mr. Pooyak submitted his initial application at Level 2. According to Phelan J., Mr. Pooyak had difficulty disclosing the abuse he suffered, a phenomenon the judge agreed was a “common feature of abuse cases”. Mr. Pooyak submitted his application without the assistance of a lawyer and did not disclose the full details of his experience at Day School. In mid-July 2020, he retained a lawyer to assist him, and in November of that year, his lawyer submitted additional documents in support of a Level 5 claim. Although the Claims Administrator had been accepting applications revising the level designation up to June 15, 2020, they advised that no additional narratives were permitted after that date. Furthermore, even though his original claim had not yet been determined when he submitted his additional documents, the Administrator stated that Mr. Pooyak would only be assessed at his original election as a Level 2 claimant. His Level 2 claim was accepted in February 2021.

Ms. Waldron originally filed a Level 1 claim in mid-2020 without the assistance of a lawyer or any person with knowledge of the IDSSA. She subsequently hired a lawyer who filed another claim on her behalf, outlining abuses that entitled her to Levels 3 or 4 compensation.  Four weeks later, the Claims Administrator informed her that they would not accept the new claim Level selection: “While claimants are invited to send information to complete their claim, they are not entitled to change their Level selection.” Ms. Waldron’s claim was accepted at Level 1 several weeks later.

The Administrator allowed class members to submit additional narratives and revised claim Levels for the first five months of the claims process, until June 15, 2020, but then changed its policy on two weeks’ notice to the class. (The notice was not court-approved but was published on the IDSSA website and on Facebook.) Phelan J. found that the Administrator initially accepted revised claim forms to address problems it had processing claims due to the COVID-19 pandemic as work from home policies were made and employees adjusted to their new working environments. During this “grace period” class members were able to apply and/or make amendments to their claim form if the claim had not been fully adjudicated or payment had not been issued. Mr. Pooyak and Ms. Waldron submitted their updated claim forms after June 15, 2020 but before their original claims were adjudicated and payment was received.

At issue on the motion was whether only one claim form was permitted under IDSSA, as the Administrator and the parties (including Class Counsel) argued, or whether there was ambiguity or a gap in the agreement that permitted Court intervention.

The Decision

Justice Phelan concluded that granting the applicants’ motions would “alter the terms of the IDSSA” and that he was not permitted to do so. He stated that the “Claims Process is intended to be expeditious, cost-effective, user-friendly and culturally sensitive”. Permitting claim Level changes and additional documentation was a decision at the discretion of the Claims Administrator and not one for the Court. When the Claims Administrator chose to end the “grace period” they created, they were applying the ‘one claim form’ rule the parties had intended.

Justice Phelan held that the text and context of the agreement, in addition to the intent of the parties, supported the Claims Administrator’s interpretation. Although the agreement does not expressly prohibit claimants from changing their Level of harm or filing additional documentation, Phelan J. concluded that the use of the singular “application” was consistent with the single claim approach. In terms of context, he stated that IDSSA was designed “to avoid many of the problems associated with the IRSSA, including the IAP process and its progressive disclosure feature.” And in terms of intent, he found it “compelling” that both the defendant and Class Counsel opposed Mr. Pooyak’s and Ms. Waldron’s motions.

Discussion

Progressive disclosure has been discussed by Indigenous legal scholars as a critical component of trauma-informed lawyering. This process allows survivors of trauma to recount their stories over time to avoid re-traumatization. Legal counsel as well as governments and judges are called upon to be culturally competent and carry out their duties in a non-discriminatory manner.

Ms. Waldron and Mr. Pooyak argued that the administration of the claims process in a culturally competent manner requires an understanding of progressive disclosure.  Justice Phelan did not agree and made no reference to the evidence of Ms. Waldron, whose affidavit outlined the many efforts she had made to get assistance from Class Counsel to complete her form.[1] These efforts included driving 830 km to her Band Office for a session with Class Counsel that was cancelled on short notice, and making repeated unsuccessful attempts to reach someone at the phone number listed on the claim form. She filed her original claim out of confusion and frustration. Only after being referred to a lawyer who listened to her patiently over many meetings was she able to fully articulate what had happened to her. That full narrative was submitted in September 2020 but the Administrator refused to accept it. Ms. Waldron’s uncontradicted evidence was that she was “re-victimized” by the claims process. “It’s not that my story wasn’t believed, it was that no one even cared to hear it.”

Justice Phelan wrote that the intent of the claims process was to limit the effects of re-traumatization and that the Claims Administrator was to take the position that claims were completed honestly and in good faith. Nevertheless, he supported the Administrator’s position that it could refuse to accept claim Level changes and documentation for the sake of efficiency. The effect of the decision is that class members are unable to seek reconsideration or make submissions to the third-party assessor because the refusal to accept a revised claim form is not one of the enumerated grounds on which reconsideration can be sought. In other words, the refusal to even consider the updated claim shields the Administrator from internal review.

Justice Denied

This decision illustrates two kinds of injustice that can flow from an overly narrow interpretation of JW. First, courts will not intervene even when claims administrators appear to be prioritizing their own convenience and the efficiency of the administration process over the rights of class members to get the compensation to which they are entitled. It creates a dangerous precedent that ignores best practices in trauma-informed lawyering and places class members in vulnerable positions after the horrific experiences of their pasts. While the intent of the settlement was to limit re-traumatization, refusing to even read a class member’s full narrative inevitably leads to further trauma.

Second, the decision underscores the very limited rights class members have after a settlement has been approved. In almost all jurisdictions in Canada, class members have no right to appeal an approved settlement. Class members, therefore, are ‘stuck’ with a flawed settlement which they had no say in designing, just as class members are ‘stuck’ with a flawed claims decision, especially when Class Counsel opposes them. A class member whose revised claim will not even be considered, no matter the circumstances that gave rise to the original incomplete application, has no recourse if the court-approved ‘complete code’ gives no remedy.  

The decision by Phelan J. is under appeal. The Clinic will be watching closely to see if the Federal Court of Appeal provides some relief to class members in Ms. Waldron’s or Mr. Pooyak’s position. As courts have said repeatedly, the ultimate goal of class action procedure is access to justice, a discussion of which is noticeably absent in the McLean decision. This goal must be prioritized by all parties involved in a class action, including – perhaps especially – by claims administrators who often, as in this case, maintain responsibility for developing and implementing procedures for processing and making decisions on claims applications. Administrator-centric claims processes should be replaced by class member-centric ones if class actions are to fulfill their access to justice promise.

Class members who have not yet applied for compensation in the Indian Day Schools Settlement are invited to contact the Clinic for assistance. Clinic staff can be reached here. Please note that we will have reduced capacity during the month of December due to staff turnover and the holidays.

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[1] Affidavit of Jessie Waldron sworn February 3, 2021 (on file with Clinic).

By Oscar Ramirez

On June 17, 2021, Justice Belobaba released his decision approving the proposed settlement in MacDonald et al. v BMO Trust Company et al. In the decision, Justice Belobaba went over the proposed settlement, which included a term that the first $250,000 in cy-près distributions would be paid to the Class Action Clinic. On October 12, 2021, the Clinic was once more awarded cy-près funds in Romita v Intellipharmaceutics International Inc, a securities case before Justice Morgan. The Clinic will use the funds to further advance its aim of assisting class members. But what is cy-près, and why do some class action settlements give money to charities and other non-profits?

What is a Cy-Près Distribution and What is its Purpose?

In the class action context, a cy-près distribution refers to the disbursement of settlement funds or damage awards to an appropriate substitute for class members. Over the past twenty years, courts developed a general rule, which is now explicit in Ontario’s recently amended class action legislation, that cy-près distributions should not be approved where direct compensation to class members is practicable. When direct compensation of class members proves too expensive or impossible, courts generally prefer that unclaimed portions of funds and awards not revert back to the defendant. Cy-près distributions can be a useful tool in preventing the reversion of funds while presenting a benefit to class members.

Section 27.2 of the Class Proceedings Act, 1992 provides judges with direction as to when a cy-près distribution is appropriate. The section states that cy-près distributionscan be applied to either awarded amounts or settlement funds if the judge is satisfied that it is not practical or possible to compensate class members directly. Historically, cy-près distributions have been used in situations where each class member would receive minimal compensation and the cost to distribute the funds is greater than the compensation itself.

Section 27.2 also addresses who can be the recipient of a cy-près distribution. An appropriate substitute for class members could be a non-profit organization or charity that could reasonably be expected to benefit the class member, directly or indirectly. This part of the section reflects the roots of cy-près in trust law. Cy-près is a truncated form of the phrase “cy-près comme possible,” which means “as near as possible.” In trust law, cy-près applies to moments where carrying out a donor’s intention is impossible, impractical, or infeasible. As a result, the courts apply the concept of cy-près, carrying out the donor’s intent “as near as possible.”  Similarly, in the class action context, the cy-près recipient will use the funds to benefit class members “as near as possible” to the goals of the class action. According to the legislation, if there is no appropriate charity or non-profit organization to substitute class members, the cy-près distribution will be made to Legal Aid Ontario. In a previous blog, Clinic student Lauren Tzogas questioned the propriety of designating Legal Aid as the default recipient of cy-près awards.

What Does it Mean for Class Members When the Clinic Receives Cy-Près Funds?

The Class Action Clinic is a not-for-profit organization engaged in a variety of services, ranging from helping class members navigate the complexities of class actions to advancing legal research projects, providing legal education to the public, and advocacy. The Clinic aims to use the cy-près funds in all or some of the following four endeavours.

The Clinic is developing and maintaining a dedicated page on the Clinic website for settlement claim notices. Developing a central repository of notices creates a convenient location for class members to search for notices that might apply to them. Additionally, it can increase the ability of class counsel and claims administrators to reach class members that might not have been reached otherwise. For example, in consumer class actions, it is often not possible to provide direct notice. Having the repository would create further access to settlement information that is important to class members.

The cy-près funds will also be used to maintain the Class Action Database. The Law Commission of Ontario is currently in the final stages of constructing a database that will contain essential information about past and current class actions. The database will also provide valuable information to academics, lawyers, and the judiciary. It will contain information such as the nature of the legal claim, the lawyers on the class action, and the outcome. Once the database has been transferred to the Clinic, it will require continuous updating and maintenance. The cy-près funds will allow for students to be hired year-round to ensure the database is current and accurate.

The past two years of operation have revealed that the unmet needs of class members across Canada are acute and increasing. Stable funding is critical for the Clinic to continue assisting class members. A portion of the cy-près funds will be used to pay the salary of the staff lawyer and the wages of summer law student, to increase the Clinic’s capacity to assist an increasing number of clients.

The cy-près funds will also be used in consumer protection research and advocacy. Class actions quite often intersect with consumer law. With the exception of Quebec, other provinces in Canada have no robust consumer organization solely dedicated to legal information, research, and advocacy on consumer issues. The Clinic intends to use the cy-près funds to scale up operations and partner with other legal and academic institutions to fill the void. Joint research can be performed on many topics such as consumer privacy issues, environmental problems, and consumer contracts.

Conclusion

Cy-près distributions are a useful tool to provide benefits to class members they might not have received otherwise. Additionally, the ability to choose distribution schemes and an appropriate recipient of cy-près distributions can lead to tailored results. As the two recently approved awards to the Clinic illustrate, cy-près funding can be instrumental in creating resources and providing services that help class members in a variety of ways.

By: Micheline Chevrier

It can be many years before a class action lawsuit is resolved. If a settlement is reached and approved by the Court, the claims process is the final step to concluding the matter. It, too, can also take several months or a few years to complete. The kind and extent of evidence a class member needs to prove a claim will impact the complexity and timing of the claims process.

The Claims Administrator

A claims administrator is an impartial third-party that plays a significant role in the class action settlement process and who must also be Court-approved. The claims administrator disburses the settlement funds to eligible claimants in accordance with the claims protocol. Prior to the distribution of any funds, a notification process will take place to notify as many potential class members as possible. In the notice, the claims administrator is identified. Some of the most frequently used claims administrators in Canadian class actions are Collectiva, Deloitte, Epiq, MNP, and RicePoint.

The claims administrator must first verify that the claimant is indeed a class member who meets the definition of an eligible class member. To establish eligibility, a claimant must provide certain information and evidence.

What Types of Evidence is Required to Make a Claim?

The type of evidence required to make a claim depends on the nature of the case and claims protocol. A few examples:

Price-Fixing Claims

In price-fixing class actions, the claims application process is typically quite streamlined. For example, the online claim system for the Canadian Microsoft Software Class Action Settlement does not require proof of purchase unless an individual is claiming more than the specified amount. For smaller claims, an individual must click and formally attest to having purchased the Microsoft PC software listed during a specific period. For larger claims, the claimant must upload receipts, product identification number, product key number, license agreement, or other credible written evidence.

Privacy Breach Claims

Privacy breach class actions frequently involve data breaches and cyberattacks. In the Yahoo Data Breach Class Action, it is alleged that Yahoo experienced multiple data breaches between 2013 and 2016 resulting in the loss of account holders’ personal information. While the claims process has not yet begun in Canada, the long form notice provides insight as to what will be required to obtain compensation for the different types of claims available. The evidence includes documentation of out-of-pocket costs incurred due to the data breaches, proof of paid user services and/or proof of small business user services.

Product Liability Claims

Product liability class actions usually involve defective or dangerous consumer products, ranging from cars to pet food to medical devices. Most claims processes are relatively simple, unless the settlement involves compensation for personal injury. In DePuy BC ASR Revision Class Action Settlement, for example, some patients were harmed after having one of the two allegedly defective hip replacement systems implanted. To get a portion of the settlement fund, claimants had to provide the name of the hospital and surgeon who performed the surgeries, date and place of the procedure, product identification stickers, medical history, discharge summaries, and operative reports.

Historical Wrong Claims

In historical wrong class actions, the claims process tends to require greater details and documentation which carries the risk of potential re-traumatization for the claimant. Consider the Sixties Scoop Class Action Settlement which involved a claim against the Attorney General of Canada resulting from a government policy to ‘scoop up’ Indigenous children from their families and put them in foster care or adoption in non-Indigenous homes. It is alleged that these children lost their cultural identities and suffered gravely, both mentally and physically. In this case claimants had to provide proof of status under the Indian Act, adoption history or proof of wardship, and relevant dates. Some class members had to request disclosure of their child services file in order to prove their eligibility. Others had to first obtain Indian status (the Clinic assisted one such client). In addition, there was an optional section for the individual to share his or her story to assist the claims administrator in evaluating the claim if records could not be located.

Assistance with Making a Claim

Depending on the nature of the case and the claims process, some individuals will seek assistance in submitting their claim. It is not uncommon for class counsel to charge a fee for this service (in addition to the monies received for their work in reaching a settlement with the defendant(s)). Lawyers may ask class members to sign a standard form agreement, also known as an “individual contingency retainer agreement”, to represent them in the claims process. Typically, the fee is around 33% of what the individual claimant receives in compensation, again, subject to various factors.

In other class actions, such as the Sixties Scoop Class Action, the settlement provides that the class action lawyers will assist class members at no additional cost.

The Clinic provides claims assistance services free of charge to class members. If you or someone you know is seeking assistance in submitting a claim, we encourage you to reach out to us!

Conclusion

While not all class actions are alike, there are similarities in the types of evidence required to submit a claim, depending on the nature of the case. Class members should pay close attention to the type of evidence that will be required of them to submit a claim. This will ensure a seamless application once the claims process commences.

Please check back soon to find a growing list of class actions currently in the claims process listed on our website, including the following:

• BMW Settlement
• Canadian Microsoft Software Settlement
• CHSLD Herron Settlement
• City of Calgary Settlement
• CPRI Settlement
• DePuy ASR Settlement
• Federal Indian Day School Settlement
• 2011 MacBook Pro Laptop (15” or 17” screen) Quebec Settlement

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.

Distribution Protocols

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.

Conclusion

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.

By: Michael Burns

The fundamental principle of trauma informed lawyering is to be aware of the impact trauma can have upon a person. Trauma affects everyone differently and someone who has experienced trauma can react to it in a way that is unique to themselves. The legal system is often set up in a way which does not recognize trauma. Many conventional practices, procedures and policies can lead to re-traumatization. Trauma informed lawyering is focused on learning to better support those who have experienced trauma and to avoid causing re-traumatization.

Trauma Informed Lawyering: A Case Study

A recent class action serves as an opportunity to examine how a trauma informed approach is used in legal practice and how it can be improved upon in the future. Grann et al. v HMQ  (also called the Ontario Crown Ward case) involved allegations by former Crown Wards that the province breached its fiduciary duty and was negligent when it failed to make Crown Wards aware of their rights to seek compensation as a result of abuse suffered in foster care. Class Counsel and the Government of Ontario agreed to a settlement under which class members would get a maximum of $3000 (before legal fees). Justice Pierce presided over a hearing to determine if the proposed settlement was fair, reasonable and in the best interests of the class members. Over 100 class members attended the Zoom hearing, most of whom objected to the settlement as being inadequate. Justice Pierce ultimately rejected the settlement.

Typically to be an objector, a class member must write to class counsel to let them know they wish to object and class counsel then creates a list of approved class members with standing to speak at the hearing. The presiding judge decides who is allowed to speak and for how long, based on what is in the best interests of justice. While there was a small number of objectors who requested beforehand to address the court, on the day of the hearing a much larger number of people asked to speak. These class members either were unaware that they had the option to speak, were unaware of the process of being allowed to speak, or they had tried to contact class counsel but were not added to the objectors list.

The hearing was originally scheduled to take a day and a half. However, Justice Pierce made the decision that regardless of who had been put on the official speakers list, she would allow everyone who wanted to speak the opportunity to do so. Sixty class members ended up speaking, most of whom told the court about their horrific experiences of abuse and why the proposed settlement was inadequate. The hearing ultimately lasted three days.

The Good

Throughout the hearing, Justice Pierce exhibited several examples of trauma-informed practices. First, she allowed all class members the opportunity to speak and tell their stories. While this may not be seen as much, for some class members it was extremely important. Many felt that those who were charged with protecting their interests – from the government that had not protected them as children in care, to their own class counsel who were proposing what class members viewed as an unfair settlement – had never given them an opportunity to be heard. For some, it was vital that they be permitted to speak for themselves. Typically, objectors are given five minutes to speak, and the judge restricts them to the legal issues to be decided in the hearing. But Justice Pierce allowed class members to tell their story, not limiting them to legal arguments, nor the five-minute allotment. It was perhaps for this reason that many class members thanked Justice Pierce for listening to their stories; they said that no one else was listening.

Second, in addition to allowing class members to speak, Justice Pierce thanked the class members for telling their stories and she apologized for the trauma and abuse that they had experienced. For some class members, this was the first time anyone had apologized to them.

Finally, unlike in-person court hearings, where talking in the gallery would not be permitted, class members in the Zoom hearing were free to use a chat box to communicate with one another. Throughout the hearing there were constant messages being sent. These messages were usually in support of each other as they told their stories. Most class members did not know anyone else who experienced similar trauma and the chat box provided a way for class members to communicate with other people who had shared experiences. Many agreed to continue communicating after the hearing to continue their support of one another.

The Bad

While Justice Pierce allowed everyone an opportunity to speak and tell their story, this also created a burden. It was very emotionally difficult to hear what others experienced. No doubt it was also very difficult for class members to remember and disclose their trauma. One of the goals of trauma informed lawyering is to avoid re-traumatization.  Both class members who spoke and those who were present but stayed silent had to relive this trauma. Reactions varied.  Some were furious, some were distraught, some seemed hopeless, and some heartbroken. There were no formal supports for those who attended the hearing. Ideally, in a case where the focus was trauma and abuse that class members suffered, the court and counsel should prepare for and address the risk of re-traumatization. For example, creating Zoom breakout rooms where people can either have time alone or time to talk to a trauma specialist may make provide support for those who need it.

Conclusion

On the one hand, the hearing gave class members the option to tell their story and to finally be heard, in a setting where they were not alone, but where they were supported by people who had suffered like them. There is value in the experience of recounting one’s truth to an empathetic and patient judge who listens and offers apologies to survivors. On the other hand, the countless accounts of horrific abuse may have caused class members to re-suffer the trauma they experienced as a Crown Ward. A justice system that is trauma-informed should not leave it to class members to support each other or to rely on luck to get an empathetic judge. The justice system, and the lawyers, judges, and administrators who work as part of it, need to learn about and incorporate trauma-informed practices at all stages of litigation.

For more information on Trauma Informed Lawyering, please click here.

To read Justice Pierce’s decision, please click here.

                      

By: Emma Walsh

Introduction

Class actions can, and often do, serve as a procedural vehicle to aid comparably weaker parties in holding larger organizations accountable. Yet, at the outset of their relationship, larger organizations may require individuals to contractually waive their rights to participate in a class action. The British Columbia Court of Appeal recently rejected the validity of one of these clauses in Pearce v. 4 Pillars Consulting Group Inc., 2021 BCCA 198. The decision confirms that class action waiver clauses are not only unconscionable, but also contrary to public policy.

Class Action Waiver Clauses

Class action waiver clauses often emerge in contracts of adhesion, meaning the signing party has no say in the contractual terms. Most consumer contracts are considered contracts of adhesion. In this situation, the weaker party tends to sign the contract without familiarizing themselves with the terms. Large actors take advantage of this fact by including terms that unfairly disadvantage the individual.

Class action waiver clauses are an example of these types of terms. In essence, they state that an individual forfeits their right to be part of a class action for matters arising from the contract. Individual suits or mandatory arbitration become the only avenues for recourse, and very few individuals pursue either route.

The unequal bargaining power inherent in these clauses is a catalyst for consumer protection laws across Canada; these statutes in Quebec, Ontario, and Saskatchewan include provisions that prohibit the use of class action waiver clauses in consumer contracts. Unlike these provinces, however, British Columbia’s Consumer Protection Act is silent on the use of class action waiver clauses. 

What Happened in Pearce?

One of these clauses is at the heart of Pearce. The case emerged out of the business dealings of 4 Pillars Consulting, debt advisors who provided debt restructuring services to individuals on the brink of insolvency. Their customers brought a class action against them seeking damages for allegedly operating illegally and looking to recover the fees they had paid.

In response to the class action, however, 4 Pillars attempted to invoke the class action waiver clause that was standard in their business contracts. The clause read:

To the extent permitted under applicable law, you may only resolve disputes with us on an individual basis, and may not bring a claim as a plaintiff or class member in a class, consolidated, or representative action. Class arbitrations, class actions, general actions, and consolidation with other arbitrations are not allowed.

The lower court found the clause was invalid because it was unconscionable and because it violated public policy. 4 Pillars appealed to the BCCA, who ruled against them and affirmed the invalidity of the class action waiver clause.

Unconscionability

The BC Courts held that the class action waiver clause was unconscionable because there existed unequal bargaining power between the parties, and because the clause conferred an undue advantage on the stronger party such that it was an improvident bargain.

First, the Courts found there to be unequal bargaining power between 4 Pillars and the class members. The class members were all on the brink of bankruptcy when engaging its services, invoking the notion of necessity. Further, the class action waiver clause did not adequately explain its consequences so that a layperson would understand them.

The clause also represented an improvident bargain. The chambers judge had performed a cost-benefit analysis and determined a class action was the only economically viable route for class members to exercise their rights; the claims at issue were complex, and individual claimants would only be able to recover a mere $5,000. Thus, the clause was a direct barrier to access to justice.

Public policy

Though already invalid on the grounds of unconscionability, the Courts further stated that class action waiver clauses violate public policy. These clauses offend three of the major goals of class action proceedings, as identified by the Supreme Court of Canada in a landmark 2001 decision.

First, these waivers prevent class actions from preserving judicial resources. Forcing litigants to pursue individual actions, which could instead be consolidated, means multiple courts would be occupied with considering the same issues. Class actions “protect the rights of all Canadians by freeing up judicial resources to resolve other conflicts.”

Second, these waivers prevent individuals from cost-sharing, posing a barrier to access to justice. One of the main purposes of class actions is to make economically viable a lawsuit that would otherwise not be worth pursuing for an individual. Again, the chambers judge had opined that it would be economically irrational to pursue this claim as an individual.

Third, these waivers absolve large actors of responsibility for wrongdoing, contrary to the behavior modification goal of class actions. Large actors are, at least in theory, constrained from committing wrongdoing so long as the threat of a large class action lawsuit looms over their heads. Curbing one’s customers’ rights from participating in a class action defeats this purpose.

Just before the BC Court of Appeal rendered its decision, the Supreme Court of Canada rejected a mandatory arbitration clause in Uber Technologies. The BC Court of Appeal affirmed that Uber further solidified the correctness of their ruling.

Looking Forward

The decision in Pearce confirms what many have previously argued: class action waiver clauses run contrary to our conceptions of access to justice. In particular, the Court of Appeal’s public policy analysis demonstrates that these clauses frustrate the very functioning of class actions. In jurisdictions lacking the legislative protections of Quebec, Ontario, and Saskatchewan, this decision will serve as a strong signal.

By: Micheline Chevrier

Who is a “representative plaintiff”?

In a class action, the representative plaintiff is the individual who commences an action on behalf of a class of similarly situated individuals. Theoretically, the class may be as small as two individuals who would be represented by the representative plaintiff, but in reality, the class is usually made up of hundreds, thousands or tens of thousands of people. It is not uncommon for there to be more than one representative plaintiff.

Initial Steps

The first step is to sign a retainer agreement with the law firm that has decided to take on the class action (“class counsel”). The retainer agreement will set out the fees that counsel will seek at the end of the case. Often, the fees are calculated as a percentage of the anticipated recovery of the action (a contingency fee agreement). A judge will determine the appropriate fee after a settlement or trial. The fee in the retainer agreement is only one of many factors the judge will take into account.

The lawyers will draft and issue a Statement of Claim which lays out the facts that are alleged and the award being sought from the defendant(s). The proposed representative plaintiff’s name will appear on the lawsuit and materials, and it is their personal situation that will be described in this document as being representative of the claims of all the other proposed class members.

Certification and Court’s Determination of Suitability of the Representative Plaintiff

Once the claim has been issued, the first major procedural step in a class action is usually “certification”. This is a motion brought on the basis of affidavit evidence. Class counsel will seek an order from the Court that says that this case is appropriate to proceed as a class action. At this point, the representative plaintiff will have sworn an affidavit to support the motion. The lawyers generally take the lead in drafting those materials but should do so in close communication with the representative plaintiff.

A person does not become a representative plaintiff until the Court certifies and approves them as an appropriate representative of the class based on the requirements found in s. 5(1)(e) of the Class Proceedings Act (“CPA”). The representative plaintiff must fairly and adequately represent the interests of the class, have a plan for pursuing the action (class counsel takes the lead on this), and must not have a conflict of interest with any class members.

The Supreme Court of Canada in Western Canadian Shopping Centres Inc. v Dutton stated that the proposed representative need not be “typical” of the class, nor the “best” possible representative. The Court should be satisfied however, that the proposed representative will vigorously and capably prosecute the interests of the class. Generally, suitability of the representative plaintiff is not the largest hurdle to the certification of a class action. Nevertheless, there are situations where the Courts have determined the proposed representative plaintiff to be unsuitable. For instance, in Sondhi v Deloitte the Court directed that the proposed representative plaintiff be replaced. Justice Belobaba stated that the proposed class members are entitled at the very least to a representative plaintiff who can be counted on to take her job seriously, review key documents and demonstrate an appropriate level of interest in a class action that is being brought in her name. In Chartrand v General Motors Corporation, the proposed representative plaintiff’s lack of participation in the decisions relating to the litigation and poor understanding of the issues led to a finding of unsuitability and ultimately, certification was dismissed.

Responsibilities and Duties to Class Members

Class action litigation is unique in that class counsel takes the lead and takes their instructions from the representative plaintiff. The various obligations and responsibilities associated with being a representative plaintiff may include the following: instructing counsel; reviewing the Statement of Claim; taking part in oral and/or written discovery; taking part in cross-examinations; swearing affidavits; expressing opinions to class counsel; participating in settlement discussions; and communicating with class members and the media. Ultimately, the representative plaintiff must consider the interest of the class, not just their own.

Perhaps the greatest responsibility of the representative plaintiff arises if and when a settlement agreement is reached between the parties. At that point, class counsel will recommend a proposed settlement agreement as being fair, reasonable and in the best interests of the class. Thereafter, the representative plaintiff will have the opportunity to express their thoughts and determine whether to sign off on the settlement. Class action settlements must be approved by the Court. The representative plaintiff should be aware that there is a possibility that some class members will be unhappy with the settlement agreement and may formally object to it. The settlement must be in the best interests of the class members.

Costs and Financial Assistance for Representative Plaintiffs

If the case is unsuccessful at certification or trial, or at any step along the way, the representative plaintiff may be ordered to pay costs to the defendant, which can be in the hundreds of thousands of dollars. The other class members are not responsible for these costs. Usually, class counsel will agree in the retainer agreement to pay any such costs on behalf of the plaintiff. Alternatively, the Law Foundation of Ontario administers the Class Proceedings Fund (“CPF”) which is available to assist representative plaintiffs in financing disbursements used for the advancement of a class action. It also provides an indemnity against cost awards. In return for this indemnity and funding, the CPF receives a 10% fee of the net settlement fund available for distribution to the class. Merits, risk and the public interest are factors considered by the Class Proceedings Committee when lawyers apply on behalf of the representative plaintiff for funding from the CPF.

Additional Compensation for Representative Plaintiffs

In some instances, an application may be made to the Court at the time of settlement in order for the representative plaintiff to receive additional compensation (an honorarium) for their work in the class action. This too shall need to be approved by the Court. The payment of an honorarium is an exception rather than the rule. An honorarium is awarded only if the representative plaintiff “has gone well above and beyond the call of duty”, according to Park v Nongshim Co., Ltd. Honorariums range from $2,000 to $20,000, but are usually less than $10,000.

What To Do Before You Become a Representative Plaintiff

The role of representative plaintiff is an important and challenging one. You give up making decisions about your own legal dispute with the defendant because you are acting on behalf of many. For example, you will likely be required under the retainer agreement to stipulate that you will not settle your own individual claim even if the defendant offers to compensate you fully for your losses.

Here are some steps to take to ensure you have all the information you need before deciding to act as a representative plaintiff:

1. Get independent legal advice. Before signing the retainer agreement, ask to speak to another lawyer at a different firm. You can also get advice from the Class Action Clinic.
2. Discuss timelines and expectations with class counsel. It is important to know how long the case might take, and the possible outcomes in the case, in order to have reasonable expectations. Not all class actions settle, but very few go to trial.
3. Insist on getting a costs indemnity. Either class counsel, the CPF or a third-party funder should protect you against any costs orders.
4. Class actions often attract media attention. Be prepared to have your name and the details of your claim discussed openly by the lawyers, in court rulings, and by the media, especially in high-profile cases.

For more information regarding class actions and the rights and responsibilities of representative plaintiffs, please do not hesitate to contact the Class Action Clinic.