The Settlement Claims Process: One More Hurdle on the Road to Justice

By Lovejot Bhullar

Once a settlement has been approved or a trial concluded, compensation to class members can generally be paid out in one of two ways. The first is a direct payment to class members by the defendant or added to a fund (such as a pension fund). The other, and arguably more prevalent, method of providing compensation to class members is by way of a claims process. Under this method, the defendant pays a lump sum into a fund for class members to access or agrees to pay class members whose claims are approved by a claims administrator or adjudicator.

The process for class members to access settlement money can be relatively simple (by providing proof of purchase in a product liability case, for example) or rather complicated. Some examples of a sophisticated but complicated claims process include the recent Residential Schools and Day Schools class action settlements. In these types of settlements, the compensation provided can vary greatly between class members, depending on their specific circumstances.

On the one hand, these types of claims processes provide a comprehensive method of accounting for the range of class members’ circumstances. On the other, a process that is onerous in its requirements for documentation and historical records, combined with little court oversight, can quickly create formidable barriers to justice – leaving the most vulnerable and underserved class members without compensation. Compounded with the fact that class members who did not opt out of a class action are bound by any settlement/decision, an effective and clear claims process may be the only way for class members to access justice.

McRea v Canada (an application for review of a claims administrator’s decision) serves as a recent example of a class action where the onerous and bureaucratic nature of a claims process resulted in vulnerable class members being denied compensation. This case concerned individuals who became ill during the course of their parental leave and were denied conversion of their parental benefits to sick benefits. The claimant spent the entirety of her maternity leave fighting stage 3 cancer and was instructed, by both her employer and the relevant government agencies, not to apply for sick benefits. Nonetheless, the Court denied her application for review since there was no documented instance of her applying for sick benefits, a requirement under the class definition. Though the Court’s decision in this case may be correct from a strict interpretation of the settlement agreement, it is difficult to argue that the access to justice function underlying class proceedings legislation was fulfilled.

A further problem arises when a difficult and bureaucratic claims process leads class members to seek legal assistance. Though courts around the country have recognized that class counsel have an ongoing obligation to provide some assistance to class members post-settlement, not all firms may have the resources to provide this assistance, further leaving class members in the dark.

Where courts agree to approve fee arrangements for non-class counsel providing legal assistance the obligations required of class counsel under the settlement agreement are further obfuscated and may increase the class’ difficulty in accessing compensation and reducing the overall fund (though courts are reluctant to pre-approve such arrangements).

Adjusting the claims process to pose less barriers while also providing compensation proportionate to their circumstances is unlikely to be a quick or easy procedure. For starters, there is a severe lack of extensive research into class action claims processes in Canada, and the resulting access to justice barriers. Many underlying issues mentioned in this post are based on either anecdotal cases or experiences relayed to us by clients of the Clinic. The problem is likely to be significantly worse than we already assume, as limited research in other comparable jurisdictions shows that failure to pursue claims is rampant even among more “sophisticated” class members. The lack of data in Canada can be tied back to inadequate tracking both on the part of judges (despite broad powers of oversight over settlement agreements) and class counsel (who presumably have the greatest access to this information).

To provide effective access to meaningful justice for class members, courts need to mandate reporting back at the conclusion of a claims distribution process. Such a step will increase accountability and transparency and provide judges with information about what works – and what does not – in a claims process. A proposed amendment to the Class Proceedings Act that would make such reports obligatory is, therefore, a step in the right direction.  Moreover, both defense and plaintiff’s counsel need to continuously improve and innovate when crafting widespread notice programs and accessible claims processes. Access to justice is not automatically promoted when a class action settles. For many class members, the settlement is only the beginning of the fight to achieve justice.

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