Objectors – The Reality of Objecting to Class Action Settlements

By Azra Alagic

In Canada, class members have four basic rights: the right to be provided notice once a class action is certified; the right to opt-out of a class action; the right to be provided with notice of settlement; and the right to officially object to a settlement they find is unfair or inappropriate.

A court determines whether a proposed settlement of a class action should be approved based upon whether it is fair, reasonable and in the best interests of the class. Among the criteria that the court may consider when evaluating a settlement is the number of objectors and nature of objections.

The settlement approval process begins with a notice being sent to class members containing information about the proposed settlement and how to object to its terms. Notice is generally delivered by way of direct mail, notices on websites, television commercials or newspapers. Class members can then provide written or oral objections to the court. Written objections are more typical. Objectors’ rights are limited as examined by Clinic Director Jasminka Kalajdzic: “They have the right to adduce evidence, but only as it relates to the issues raised in the objection. They have no right to oral or documentary discovery, but in principle may cross-examine deponents at the fairness hearing itself.”

Critics who oppose greater involvement by class members worry about making the process more onerous, time-consuming and costly with often little to no success. In addition, the presiding judge cannot impose better terms as a condition of approval. Justice Winkler in Gilbert v Canadian Imperial Bank of Commerce commented that “[o]bjections are a consideration in approving a settlement. The role of the court, however is not to alter or amend a settlement. The court’s exercise of discretion in determining whether to approve or reject a settlement is limited to approving or rejecting the settlement.”

In 2019, Theodore Eisenberg and Geoffrey Miller conducted the first systematic attempt at measuring the importance of objections to class actions in the United States. The right to object provides a “check on reasonableness” by providing a voice to the group directly affected by the settlement agreement. Eisenberg and Miller found that about 1% of class members object to class-wide settlements and that the rate of objections varies depending on the type of case. For example, civil rights and employment discrimination cases have higher objection rates as opposed to securities and antitrust cases in the United States.

Objectors face hurdles in the judicial process as there is often a lack of access to documentary evidence. As a result, there may not be enough information to make a comprehensive or persuasive argument, and objectors are unable to present an evidence-based challenge to proposed settlement agreements. In Canada, objectors do not have access to data to determine the frequency of objections and their success rate as not all settlement decisions in Canada are reported. Objections are rarely validated by the motion judge. Finally, objectors usually are not represented by counsel to assist them in court.

This summer, the Clinic has been examining reported settlement decisions with written and/or oral objections filed from 2000 to present. The study, not yet complete, has revealed that objections based on the monetary value of the claim have been overwhelmingly unsuccessful. Referring to Jones v Zimmer, commentators noted that “Justice Bowden found any objection that the overall settlement amount is insufficient to be unpersuasive because, in his view, a settlement is a compromise of claims.” Justice Bowden’s comments reflect how little weight objections can carry if only arising from a few class members. Objections to the quantum of the settlement are met with the argument that class members have the right to opt out, even though that right may not be available in those settlements that occur long after the opt-out deadline has passed.

Not surprisingly, there is a correlation between the absence of notice and a lack of objections. For example, there are few objections to honorarium applications, but also few notices with information for class members about the hearings where the honorarium applications would be considered. Notice provides the details of how to object, and without it, a class member would be unaware of this legal right.

Even where notices are ordered by a court, it is inevitable that they will not reach all class members. If notice is delivered by mail, current mailing addresses may not be available. If notice is by newspaper or online publication, not all class members will see it. Ultimately, perfect notice is not required under class proceedings legislation. Even the most expensive and thorough of notice campaigns, which included mailings, Aboriginal publications, mainstream newspapers and television, was still expected to reach only 91% of class members in the Residential Schools Class Action Settlement notice plan. In other cases, notices expected to reach about 80% of class were considered “robust” and approved.

Notices must also be understandable to class members. The Federal Judicial Center in the United States with assistance from Todd Hilsee, an expert on notice design, created a notice checklist and plain language guide. An American study found that, despite the requirement that notices “clearly and concisely state in plain, easily understood language”, 33% of non-securities notices and 40% of securities notices failed to clearly inform class members of their right to object to a settlement. Because of problems with imperfect reach and content of notice, the lack of objecting class members does not necessarily mean that the proposed settlement has the support of all class members.

If objecting to a proposed settlement is one of the few rights of class members, it ought to be a meaningful right. This includes effective notice of the settlement hearing, as well as access to documentary evidence and legal advice. As confirmed by Justice Lauwers in Rowlands v Durham Region Health, et al, “Objectors typically do not have an advocate for their positions and little financial incentive to pursue an objection through counsel.” If the nature and number of objectors are to be considered when approving settlement, class members should have the appropriate support at what is probably the most important stage of the litigation for them.

The Clinic is available to help class members understand a proposed settlement and to file an objection if appropriate. The Clinic also recently released a video on “The Basics of a Class Action in Canada” to assist class members in understanding their rights.

Latest Posts