•  
  •  

Osgoode Home > Osgoode Digital Commons > Journals > OHLJ > Vol. 61 > Iss. 1 (2024)

 

Author ORCID Identifier

Suzanne Chiodo: 0000-0002-9837-3942

Document Type

Article

Abstract

Certain class action practices have always fit uncomfortably within the traditional model of civil litigation, not least the payment of honoraria (“additional payments”) to representative plaintiffs. This subject has received little attention in Canada and elsewhere. However, recent decisions in Ontario and the United States have put a spotlight on this practice. These decisions raise crucial questions about the purpose of such payments and the purposes of class actions generally. This article considers the doctrinal and theoretical basis for additional payments, and whether they should be permitted at all. It then proposes a structure for the awarding of additional payments, based on the representative plaintiff’s time and expenses together with a trauma-informed approach. This article brings conceptual clarity to an overlooked area of class actions and provides practical guidance to judges and lawyers on whether and when additional payments should be made.

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional Files
3805_Chiodo.epub (158 kB)
EPUB version (e-reader software required)

References

  1. Suzanne Chiodo, Assistant Professor, Osgoode Hall Law School. My thanks go to Kevin Chan for his research assistance. All errors are my own.
  2. See generally David Marcus, “The History of the Modern Class Action, Part I: Sturm Und Drang, 1953-1980” (2013) 90 Wash U L Rev 587 at 592-954.
  3. Class Proceedings Act, 1992, SO 1992, c 6, s 35 [CPA].
  4. See Western Canadian Shopping Centres Inc v Dutton, 2001 SCC 46 at para 29 [Dutton].
  5. See Doucet v The Royal Winnipeg Ballet, 2022 ONSC 976 [Doucet]; Redublo v CarePartners, 2022 ONSC 1398 [Redublo].
  6. See Doucet v The Royal Winnipeg Ballet, 2023 ONSC 2323 [Doucet Div Ct].
  7. Cheryl M Woodin & Gannon G Beaulne, “Requests for honoraria in class actions face rising scrutiny and resistance” (4 August 2021), online (blog): Westlaw Today [perma.cc/Z8JG-XQD9].
  8. CPA, supra note 3, s 2(1). All other provinces allow for the appointment of representative plaintiffs who are not class members, if doing so is “necessary” to avoid a “substantial injustice” to the class (See e.g., the British Columbia Class Proceedings Act, RSBC 1996, c 50, s 2(4) [BC CPA]).
  9. See e.g. BC CPA, supra note 8, s 4(1)(e).
  10. In Canada, only Ontario, Saskatchewan, Alberta, New Brunswick, Nova Scotia, and Québec have costs-shifting rules that apply to class actions. Québec’s costs are measured along the lines of the Small Claims Court tariff and are therefore negligible.
  11. Vince Morabito, “Additional Compensation to Representative Plaintiffs in Ontario: Conceptual, Empirical and Comparative Perspectives” (2014) 40 Queen’s LJ 341 at 350-351 [Morabito 2014].
  12. Ibid at 349.
  13. See Redublo, supra note 5 at paras 107, 111.
  14. For the reasons why people decide to become representative plaintiffs, see Stephen Meili, “Collective Justice or Personal Gain?: An Empirical Analysis of Consumer Class Action Lawyers and Named Plaintiffs” (2011) 44 Akron L Rev 67; Jane Caruana & Vince Morabito, “Turning the Spotlight on Class Representatives: Empirical Insights from Down Under” (2012) 30:2 Windsor YB Access Just 1, DOI: < https://doi.org/10.22329/wyaj.v30i2.4367>.
  15. Class members may occasionally be required to submit to discovery or give evidence at trial. See Doucet Div Ct, supra note 6.
  16. See Windisman v Toronto College Park Ltd, [1996] OJ No 2897 (Gen Div) at para 28 [Windisman]; William B Rubenstein et al, Newberg on Class Actions, 5th (Thomson Reuters, 2020) at s 17.3.
  17. This is usually requested at settlement, but such an award can also be made at judgment.
  18. Windisman, supra note 16 at para 27.
  19. This includes the United States. See The Committee on the Judiciary House of Representatives, 117th Cong, Federal Rules of Civil Procedure (HR Doc No 11) (US Government Publishing Office, 2023) at 32.
  20. Woodin, supra note 7.
  21. Doucet, supra note 5 at para 61, Perell J.
  22. Redublo, supra note 5 at para 112.
  23. That is, access to justice, judicial economy, and behaviour modification. See ibid; Dutton, supra note 4 at paras 27-29, citing Ontario Law Reform Commission, Report on Class Actions, Volume 1 (Ministry of the Attorney General, 1982) (Derek Mendes da Costa) at 118-22, 140-46 [OLRC Report].
  24. See e.g. Park v Nongshim Co, Ltd, 2019 ONSC 1997 [Park]; Cappelli v Nobilis Health Corp, 2019 ONSC 4521 [Cappelli]; Makris v Endo International PLC, 2020 ONSC 5709 [Makris]; Robinson v Medtronic, Inc, 2020 ONSC 1688 [Robinson II]; Aps v Flight Centre Travel Group, 2020 ONSC 6779 [Aps]; Casseres v Takeda Pharmaceutical Company, 2021 ONSC 2846 [Casseres].
  25. See Attar c Fonds d’aide aux actions collectives, 2020 QCCA 1121 at paras 15-20 [Attar], leave to appeal to SCC refused in 2021 CanLII 18042 (SCC).
  26. Code of Civil Procedure, CQLR c C-25.01, art 593 [CCP].
  27. See Parsons v Coast Capital Savings Credit Union, 2010 BCCA 311 at paras 23-25, 27 [Parsons].
  28. 975 F (3d) 1244 (11th Cir 2020) [Johnson].
  29. Trustees v Greenough, 105 US 527 (1882) [Greenough]; Central Railroad & Banking Co of Georgia v Pettus, 113 US 116 (1885) [Pettus].
  30. Greenough, supra note 29.
  31. Fikes Wholesale, Inc v HSBC Bank USA, NA, 62 F (4th) 704 (2nd Cir 2023) at 721, 723 [Fikes]. The court used the term “service awards.”
  32. Ibid at 35.
  33. On 17 April 2023, the Supreme Court denied the petitions for review of the 11th Circuit decision (no reasons were given). See Johnson v Dickenson, No. 22-389, 2023 WL 2959369 (U.S. Apr. 17, 2023)
  34. In re Apple Inc. Device Performance Litigation, 2022 WL 4492078 (9th Cir. 2022) [Apple].
  35. Shane Group Inc v Blue Cross Blue Shield of Michigan, 833 F. App’x. 430 (6th Cir. 2021) [Shane].
  36. See Law Commission of Ontario, Class Actions: Objectives, Experiences and Reforms (Toronto: Law Commission of Ontario, 2019) [LCO Report].
  37. See “Bill 161, Smarter and Stronger Justice Act, 2020,” Legislative Assembly of Ontario, Debates and Progress, 42-1.
  38. Class Proceedings Act, RSPEI 1988, c C-9.01. See “Bill 36, the Class Proceedings Act,” 1st reading, House of Commons Debates, 66-2 (19 October 2021) at 1961 (Hon Bloyce Thompson); 2nd reading, House of Commons Debates, 66-2 (22 October 2021) at 2132-2136 (Hon Darlene Compton), Committee of the Whole House, 66-2 (22 October 2021) at 2132-2136 (Blair Barbour, Hon Lynne Lund); 3rd reading and Royal Assent, House of Commons Debates, 66-2 (17 November 2021) at 2772-2773.
  39. Although presumably out-of-pocket expenses would be considered part of “the costs or expenses incurred by the representative in connection with the proceedings” and could be claimed from any undistributed damages. See Competition Act (UK), 1998, s 47C(6); The Competition Appeal Tribunal Rules (UK), SI 2015/1648, 93(4).
  40. See Austl, Commonwealth, Law Reform Commission, Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (Report No 134) (Australian Law Reform Commission, 2018); Austl, Commonwealth, Victorian Law Reform Commission, Access to Justice – Litigation Funding and Group Proceedings (Victorian Government Printer, 2018).
  41. Vince Morabito, “An Evidence-Based Approach to Class Action Reform in Australia: Common Fund Orders, Funding Fees and Reimbursement Payments” (Monash University, 2019) at 21, DOI: < https://doi.org/10.2139/ssrn.3326303>.
  42. Austl, Commonwealth, Te Aka Matua o te Ture Law Commission, Class Actions and Litigation Funding (Report No 147) (Auckland: Law Commission, 2021) [NZLC Report].
  43. Ibid at para 3.77.
  44. Ibid. See also Austl, Commonwealth, Te Aka Matua o te Ture Law Commission, Class Actions and Litigation Funding: Supplementary Issues Paper (Law Commission, 2021) at paras 3.21, 6.65-6.67.
  45. See e.g. Doucet Div Ct, supra note 6 at paras 114, 119; Parsons, supra note 27 at paras 20-22.
  46. In a recent hearing at the Divisional Court, the defendants took no part in the proceeding and amicus curiae assisted the court in providing full argument. See Doucet Div Ct, supra note 6.
  47. Morabito 2014, supra note 11 at 384. Morabito noted that the median total honoraria award in Ontario constituted, on average, 0.07% of class recovery. In British Columbia, he found that “total honorarium payments to all representative plaintiffs constituted, on average, 0.18% of the class recovery while the median total honoraria award constituted, on average, 0.14% of the class recovery.” See also Theodore Eisenberg & Geoffrey P Miller, “Incentive Awards to Class Action Plaintiffs: An Empirical Study” (2006) 53 UCLA L Rev 1303 at 1307-1308, DOI: < https://dx.doi.org/10.2139/ssrn.869308>. This study found that in 374 state and federal class actions in the United States, the total incentive award to all representative plaintiffs averaged 0.16% of total class recovery while the median total award averaged 0.02% of total class recovery.
  48. However, Morabito has noted that this lack of objection may also be because of the minimal detail about additional payments in notices to the class: Morabito 2014, supra note 11 at 381-382.
  49. Ibid; Marie Ong, “Fair Compensation or Unjustified Temptation to Compromise?: An Empirical Review of Requests for Honorarium Awards in Canadian Class Actions” (2022) 17:2 CCAR 1.
  50. Morabito’s empirical work on additional payments in Ontario is unsurpassed (ibid), although much has changed since his work was published. I am currently undertaking similar empirical work, which will be published in a separate paper.
  51. See Vince Morabito, “An Empirical and Comparative Study of Reimbursement Payments to Australia’s Class Representatives and Active Class Members” (2014) 33 CJQ 175 at 203 [Morabito Australia 2014]; Richard A Nagareda, “Restitution, Rent Extraction, and Class Representatives: Implications of Incentive Awards” (2006) 53 UCLA L Rev 1483 at 1488. I discuss this point in Part III.
  52. Other terms have included “compensation” (Windisman, supra note 16 at para 36), “stipend” (Glover v City of Toronto and HMQ, 2014 ONSC 305 at para 32), “incentive payments/awards” (Wiggins v Mattel, 2011 ONSC 2964 at para 31), and “performance honorarium” (Baroch v Canada Cartage, 2021 ONSC 7376 at para 23; MacDonald et al v BMO Trust Company et al, 2021 ONSC 3726 at para 56 [MacDonald]). These terms are generally interchangeable in the Ontarian case law and refer to a payment to the representative plaintiff for their service to the class. In the Ontario case law, “compensation” (courts sometimes refer to quantum meruit) can mean a general payment for service or reimbursement for time and expenses. See e.g. Windisman, supra note 16 at para 36.
  53. Rubenstein, supra note 16, s 17.2.
  54. Morabito 2014, supra note 11. Although the article’s title refers to “additional compensation,” the term “additional payments” is used throughout.
  55. Rubenstein, supra note 16, 17.4.
  56. Windisman, supra note 16 at para 27.
  57. Rubenstein, supra note 16, s 17.4.
  58. Supra note 5.
  59. Ibid at para 58.
  60. Ibid at para 61.
  61. Supra note 5 at para 114.
  62. See Parsons, supra note 27 at para 21.
  63. See the text accompanying note 23.
  64. See Redublo, supra note 5 at para 111.
  65. Ibid at para 112.
  66. See Marcus, supra note 2 at 4-11.
  67. See Doucet, supra note 5 at para 61.
  68. There are, however, numerous examples of such a departure, for example cy-près distributions, aggregate damages, and opt-out classes.
  69. Morabito 2014, supra note 11 at 354.
  70. Redublo, supra note 5 at para 111.
  71. Only one honorarium decision in Ontario mentions the term “incentive” in the positive sense: Redublo, supra note 6 at para 111.
  72. Doucet, supra note 6 at para 61. Nagareda, supra note 51 at 1488, has articulated the distinction between restitution and reward; Morabito 2014, supra note 11 at 353, notes that this dual purpose of “incentive awards” in the US has been one of the reasons for conflicting rulings on additional payments in that country.
  73. Warren K Winkler et al, The Law of Class Actions in Canada (Canada Law Book, 2014) at 153-54.
  74. Supra note 16 at para 28.
  75. 2006 CanLII 41291 (ONSC) at para 43 [Garland].
  76. See Cappelli, supra note 24 at para 39; Park, supra note 24 at para 86; Robinson II, supra note 24 at para 97; Sutherland v Boots Pharmaceutical PLC, [2002] OJ No 1361 at para 22 [Sutherland]. See also Welsh v Ontario, 2018 ONSC 3217 at paras 16-19. Perell J refused to award an honorarium where only 10 per cent of the student class members and none of the family class members would receive benefits (even indirectly) under the settlement agreement.
  77. 2012 ONSC 911 at para 43 [Robinson].
  78. Redublo, supra note 5 at para 114.
  79. Morabito 2014, supra note 11 at 366, 373-376.
  80. See Robinson, supra note 77 at para 43; Hodge v Neinstein, 2019 ONSC 439 at para 50 [Hodge]; Kaplan v PayPal CA Limited, 2021 ONSC 1981 at paras 95-102 [Kaplan]; Cannon v Funds for Canada Foundation, 2017 ONSC 2670 at paras 13-18 [Cannon]; Makris, supra note 24 at paras 37-46; Robinson II, supra note 24 at paras 99-100; Charette v Trinity Capital Corporation, 2019 ONSC 3153 at paras 89-97 [Charette]; Walmsley v 2016169 Ontario Inc, 2020 ONSC 1416 at paras 48-50 [Walmsley]; Cappelli, supra note 24 at paras 37-40; Park, supra note 24 at paras 87-92; Robertson v ProQuest Information and Learning LLC, 2011 ONSC 2629 at para 79.
  81. See Redublo, supra note 5 at para 114; Seed v Ontario, 2017 ONSC 3534 at paras 18-20 [Seed].
  82. See Kalra v Mercedes Benz, 2022 ONSC 941 at paras 34-40 [Kalra]; Aps, supra note 24 at paras 42-46; Goyal v Niagara College of Applied Arts and Technology, 2020 ONSC 739 at paras 41-43; McIntosh v Takata Corporation, 2020 ONSC 968 at paras 40-42; Rezmuves v Hohots, 2020 ONSC 5595 at paras 44-47 [Hohots].
  83. The Court of Appeal has implicitly confirmed the propriety of such payments. See Smith Estate v National Money Mart Company, 2011 ONCA 233 [Smith Estate]. The court confirmed that additional payments should be paid from the settlement fund and not from class counsel fees, as the latter “raises the spectre of fee-splitting” (ibid at para 135).
  84. See Doucet Div Ct, supra note 6 at paras 71-74.
  85. Ibid.
  86. See ibid at para 92. Those factors are: (i) the nature of the case, including whether the representative plaintiff brings forward a claim (such as for sexual abuse) in which they expose themselves to re-traumatization for the benefit of the class; (ii) the nature of the remedies available for the cause of action asserted, particularly cases where even complete success would lead to only a tiny monetary remedy for each class member or none at all; (iii) the steps taken by the representative plaintiff, who must do more than taking an active role and fulfilling the normal steps required in class proceedings, achieving a settlement. Exceptional circumstances include enduring significant additional personal or financial hardship in connection with the prosecution of the class proceeding; (iv) the rationale for the requested payment, which must not be added compensation for losses or damages that fall within the potential remedies available for the causes of action asserted in the claim itself or for the necessary steps to fulfill the responsibilities of a representative plaintiff; (v) the exposure to a real risk of an adverse costs award; and (vi) the quantum of the requested payment, which must be modest both in general terms and in relation to the remedies available to the class members in the settlement.
  87. Robinson, supra note 77 at para 43.
  88. See e.g. Lin v Airbnb, Inc., 2021 FC 1260 at paras 118-120 [Lin]; Tk’emlúps te Secwepemc First Nation v Canada, 2021 FC 1020 at para 46 [Tk’emlúps]; Toth v Canada, 2019 FC 125 at para 96 [Toth]; Merlo v Canada, 2017 FC 533 at para 73 [Merlo]; McCrea v Canada, 2019 FC 122 at paras 83-84 [McCrea]; McLean v Canada, 2019 FC 1077 at para 57.
  89. Sweetland v Glaxosmithkline Inc, 2019 NSSC 136 at para 44.
  90. Anderson v Canada (Attorney General), 2016 NLTD(G) 179 at paras 79-84 [Anderson].
  91. Although several have adopted the requirement in Parsons that honoraria be modest and proportionate to the benefits flowing to the class. See e.g. Parsons, supra note 27 at paras 19, 22; Lin, supra note 88 at para 121.
  92. See Attar, supra note 25. In multijurisdictional class proceedings in Canada, certain courts have declined to award honoraria to representative plaintiffs in other parts of the country on the basis that the Quebec representative plaintiffs are not eligible to receive honoraria and it would be unfair to treat them unequally. See e.g. Hello Baby Equipment Inc v Bank of Montreal, 2021 SKQB 316 at para 8; Coburn and Watson’s Metropolitan Home v Bank of Montreal, 2021 BCSC 2398 at para 33-34.
  93. See Attar, supra note 25 at para 10, citing Association for the Protection of Savers and Investors of Quebec (APEIQ) c Ontario Public Service Employees Union Pension Plan Trust Fund, 2008 QCCA 1132 [APEIQ].
  94. Attar, supra note 25 at paras 12-13, citing APEIQ, supra note 93 at para 19.
  95. See Attar, supra note 25 at paras 14-20.
  96. Rubenstein, supra note 16, ss 17.1, 17.7, 17.8.
  97. See Greenough and Pettus, supra note 29.
  98. See Johnson, supra note 28 at 1255.
  99. Ibid at 1258.
  100. Ibid at 1259.
  101. Ibid at 1260-61.
  102. Ibid at 1264, 1266, citing Holmes v Continental Can Co, 706 F (2d) 1144 (11th Cir 1983).
  103. Fikes, supra note 31 at 721, 723. The court used the term “service awards.”
  104. Supra note 35. Certain lower courts have also declined to follow Johnson. See e.g. Somogyi v Freedom Mortgage Corp, F Supp (3d) 337 (D NJ 2020).
  105. Apple, supra note 34 at 29.
  106. Ibid at 12-13.
  107. Elisabeth M Sperle, “Here Today, Possibly Gone Tomorrow: An Examination of Incentive Awards and Conflicts of Interest in Class Action Litigation” (2010) 23 Geo J Leg Ethics 873 at 875.
  108. Morabito Australia 2014, supra note 51 at 183.
  109. Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2), [2006] FCA 1388 (Austl, FCA) at para 76 [Darwalla No 2].
  110. See Doucet Div Ct, supra note 6 at para 92. The plaintiffs have not appealed to the Supreme Court of Canada.
  111. See ibid at para 61. His Honour has expressed these concerns in other cases. See Eidoo v Infineon Technologies AG, 2015 ONSC 2675 at para 20 [Eidoo].
  112. See Redublo, supra note 5 at para 112.
  113. See Jasminka Kalajdzic, Class Actions in Canada: The Promise and Reality of Access to Justice (UBC Press, 2018) at 97 [Kalajdzic, Class Actions in Canada].
  114. These issues have also been noted by the Australian judiciary. See Darwalla No 2, supra note 109 at para 75. In some US courts, judicial scrutiny of incentive awards has become so rigorous that there is a general presumption against making such awards at all. See Charles R Korsmo & Minor Myers, “Lead Plaintiff Incentives in Aggregate Litigation” (2019) 72 Vand L Rev 1923 at 1935.
  115. See Doucet, supra note 5 at para 61.
  116. See Redublo, supra note 5 at para 112.
  117. Korsmo & Myers, supra note 114 at 1934, 1974-1975.
  118. Tesluk v Boots Pharmaceutical PLC (2002), 113 ACWS (3d) 768 (ONSC) at para 22 [Tesluk]; Toronto Community Housing Corporation v Thyssenkrupp Elevator (Canada) Limited, 2012 ONSC 6626 at para 45 [TCHC]; Markson v MBNA Canada Bank, 2012 ONSC 5891 at para 59 [Markson].
  119. Rubenstein, supra note 16, s 17.3.
  120. See Doucet, supra note 5 at para 61.
  121. See Tesluk, supra note 118 at para 22.
  122. Ibid.
  123. CPA, supra note 3, ss 5(1)(e)(i) and (iii).
  124. See Tesluk, supra note 118 at para 21.
  125. See Sperle, supra note 107 at 878.
  126. 715 F.3d 1157 (9th Cir. 2013).
  127. Ibid at 1165; Rubenstein, supra note 16, ss 17.16, 17.17.
  128. 563 F (3d) 948 (9th Cir 2009) [Rodriguez].
  129. Ibid at 959.
  130. Ibid at 959-960; Rubenstein, supra note 16, s 17.15.
  131. See Parsons, supra note 27 at paras 20-22.
  132. See Doucet Div Ct, supra note 6 at para 91. The court also stated that the exceptionality requirement would mitigate conflict of interest concerns, although that requirement itself is fraught with difficulty, as discussed above.
  133. Ibid at para 24.
  134. Ibid at para 25.
  135. Ibid at para 19.
  136. Ibid at paras 19, 22; Aps, supra note 24 at paras 5, 42-46; Rubenstein, supra note 16, s 17.18; Sperle, supra note 107 at 878; Korsmo & Myers, supra note 114 at 1932-1933; Morabito Australia 2014, supra note 51 at 196; Nantiya Ruan, “Bringing Sense to Incentives: An Examination of Incentive Payments to Named Plaintiffs in Employment Discrimination Class Actions” (2006) 10 Employee Rts & Employment Pol’y J 395 at 418-420; Richard M Eittreim et al, “Ethical Issues in the Settlement of Complex Litigation” (2005) 41 Tort Trial & Ins Prac LJ 21 at 36-38; Jason Jarvis, “A New Approach to Plaintiff Incentive Fees in Class Action Lawsuits” (2020) 115 Northwest U L Rev 919 at 938-942.
  137. See Redublo, supra note 5 at paras 112, 120.
  138. CPA, supra note 3, ss 5(1)(e)(i) and (iii).
  139. See McCarthy v Canadian Red Cross Society, 2007 CanLII 21606 (ONSC) at para 19 [McCarthy]; Cappelli, supra note 24 at para 38; Park, supra note 24 at para 84; Bellaire v Daya, 2007 CanLII 53236 (ONSC) at para 71; Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at para 95 [Baker].
  140. Supra note 5 at para 112.
  141. Ibid at 87-89. Notices should also include details of the requested amounts. See Morabito 2014, supra note 11 at 377-382.
  142. They could be paid by class counsel, with court approval, and counsel could eventually be reimbursed from the funds available to the class at settlement or judgment.
  143. NZLC Report, supra note 42 at para 3.77.
  144. Parsons, supra note 27 at para 9.
  145. The exceptions are Justice Perell’s decision in Doucet and the Québec courts’ interpretation of article 593 of the CCP. See Doucet, supra note 5; CCP, supra note 26; Attar, supra note 25.
  146. See e.g. Bratton v Samsung Electronics Co Ltd, 2015 ONSC 7786.
  147. Morabito 2014, supra note 11 at 366-367.
  148. For the most recent Ontario decisions to rely on quantum meruit, see Redublo, supra note 6 at paras 103-104; Hohots, supra note 82 at para 9; Hodge, supra note 80 at para 48; Haikola v The Personal Insurance Company, 2019 ONSC 5982 at para 110. For the most recent in British Columbia, see Sherry v CIBC Mortgage Inc, 2022 BCSC 676 at para 46; Thomas v ByteDance Ltd, Tiktok Ltd, 2022 BCSC 297 at para 52; Chartrand v Google LLC, 2021 BCSC 7 at para 67; Cardoso v Canada Dry Mott’s Inc, 2020 BCSC 1569 at para 43 [Cardoso].
  149. Windisman, supra note 16 at para 28.
  150. Nagareda, supra note 51 at 1486; Eisenberg, supra note 47 at 1313, 1315-1316; Rubenstein, supra note 16, s.17.4; The American Law Institute, Principles of the Law of Aggregate Litigation, 21st ed (Thomson Reuters, 2022), s 1.05 [Principles of the Law of Aggregate Litigation]; David Betson & Jay Tidmarsh, “Optimal Class Size, Opt-Out Rights, and Indivisible Remedies” (2011) 79:2 Geo Wash L Rev 542 at 548.
  151. In the United States, additional payments have also been justified on the basis of the common fund doctrine, which operates on similar lines to quantum meruit – where “a litigant who recovers a common fund for the benefit of persons other than [themself] is entitled to recover some of the litigation expenses from the fund as a whole”: Hadix v Johnson, 322 F.3d 895 at 898 (6th Cir. 2003), cited in Morabito 2014, supra note 11 at 358; See also Apple, supra note 34 at 29.
  152. Parsons, supra note 27 at para 20.
  153. 2005 CanLII 16619 (ONSC) at para 63. See also Hodge, supra note 80 at para 51; Doucet, supra note 5 at para 61.
  154. Rubenstein, supra note 16, s 17.4.
  155. Matter of Continental Ill Sec Litigation, 962 F.2d 566 at 571 (7th Cir. 1992).
  156. GHL Fridman, “Quantum Meruit” (1999) 37 Alta L Rev 38 at 48 [emphasis added].
  157. CPA, supra note 3, s 5(1)(e)(i).
  158. In Canada, see Windisman, supra note 16 at para 28; in Australia, see Georgina Dimopoulos and Vince Morabito, “An Australian Perspective on the Judicial Review of Class Action Settlements” (2021) 29 NZULR 529 at 554, citing Smith v Commonwealth of Australia (No 2) (2020), FCA 837 at para 30 [Smith].
  159. Redublo, supra note 5 at para 111; Hodge, supra note 80 at para 53; Windisman, supra note 16 at para 23; Dow v 407 ETR Concession Company Limited, 2016 ONSC 7086 at para 25; Fraser v Falconbridge Ltd, [2002] OJ No 2383 at para 17.
  160. See Robinson II, supra note 24 at para 100; Peter v Medtronic, Inc, 2020 ONSC 1687 at para 74; Markson, supra note 118 at para 70.
  161. See Robinson, supra note 77 at paras 28, 43-44 (representative plaintiffs submitted evidence showing that they had each spent more than three hundred hours assisting counsel, but service held not to be exceptional); Sutherland, supra note 76 at paras 19-21 (four representative plaintiffs each spent on average 100 hours of time for which they claimed at two hundred dollars per hour; the court held the work was unnecessary and did not benefit the class because it began after settlement was structured); Cannon, supra note 80 at paras 13-18 (representative plaintiff spent more than 280 hours working on the case, but his opportunity costs, the financial risks to which he exposed himself, and his willingness to suffer notoriety, were equally important in decision to award fifty thousand dollars). An exception is TCHC, in which TCHC employees spent more than five hundred hours on the case, although the court also considered TCHC’s willingness to be exposed to an adverse costs award. See TCHC, supra note 118 at paras 46-51.
  162. TCHC, supra note 118 at para 50 ($15,000 honorarium for more than 500 hours).
  163. See Windisman, supra note 16 at paras 24-29 (honorarium request of $13,275 based on a rate of 125 dollars per hour reduced to $4,000 based on 40 dollars per hour); Garland, supra note 75 at paras 47-52 (honorarium request of $95,000 reduced to $25,000, but timesheets provided were found at para 49 to be “equivocal and insufficient”).
  164. See McCarthy, supra note 139 at paras 18, 20; Kalra, supra note 82 at para 36.
  165. CPA, supra note 3, s 5(1)(e)(i).
  166. See Morabito 2014, supra note 11 at 382-383. Morabito observes that: “In Australia, the average award per representative plaintiff was $36,751, while the median award per representative plaintiff was $15,071 … In Ontario, the average award per representative plaintiff was $6,419, while the median award per representative plaintiff was $3,500.”
  167. Darwalla No 2, supra note 109.
  168. Ibid at para 76.
  169. Morabito Australia 2014, supra note 51 at 183. Morabito notes that “time and efforts funds” have also been approved in several US class proceedings.
  170. Ibid at 192.
  171. Ibid.
  172. See Darwalla No 2, supra note 109 at para 74; Sutherland, supra note 76 at paras 19-22 (Ontario court refused to award additional payment because the work performed did not benefit the class).
  173. See Morabito Australia 2014, supra note 51 at 193-194, citing Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia, [2011] FCA 277 (Austl, FCA) at para 46; Clime Capital Ltd v Credit Corp Group Ltd, [2012] FCA 218 at para 36 (Austl, FCA). See also Garland, supra note 75, at para 49.
  174. Morabito Australia 2014, supra note 51 at 198-201.
  175. Ibid.
  176. Ibid at 199.
  177. Ibid at 200.
  178. 1176560 Ontario Ltd v Great Atlantic & Pacific Co of Canada Ltd, 2004 CarswellOnt 6549 at para 8.
  179. See Charette, supra note 80 at paras 57, 95-97 (each representative plaintiff devoted 200-300 hours to the case, and each was awarded $50,000).
  180. Ibid at paras 57, 95-97; Cannon, supra note 80 at paras 13-18. Each representative plaintiff was awarded $50,000 in both cases.
  181. An exception is Windisman, supra note 16 at para 29.
  182. Principles of the Law of Aggregate Litigation, supra note 150, s 1.05.
  183. Private Securities Litigation Reform Act, 15 USC § 78u (1995), ss 4(a)(2)(A) and 4(a)(4).
  184. Ibid, s 4(a)(4).
  185. Swack v Credit Suisse First Boston, LLC, 2006 WL 2987053 (D Mass 2006).
  186. Such treatment is not limited to cases involving traumatic events – retaliation is particularly prone to occur in employment class actions. See Ruan, supra note 136 at 397; Nagareda, supra note 51 at 1486. For Ontarian examples, see Aps, supra note 24 at paras 44-46; MacDonald, supra note 52 at paras 54-59; Eklund v Goodlife Fitness Centres Inc, 2018 ONSC 4146 at para 21; Phillip v Deloitte Management Services LLP et al, 2023 ONSC 1210 at paras 13-17.
  187. An internet “troll” attacks others in an inflammatory and mean-spirited way in order to elicit an emotional response. The representative plaintiffs in Doucet, supra note 6, were subject to this treatment. See Doucet v The Royal Winnipeg Ballet, 2023 ONSC 2323 (Factum, Appellant at para 39) (on file with author) [Doucet factum].
  188. See Doucet Div Ct, supra note 6 at paras 110-111; Redublo, supra note 5 at para 111. However, class members may be called to provide evidence. See Doucet, supra note 5 at para 57.
  189. Yeo v Ontario, 2021 ONSC 4534 at paras 42-43; Seed, supra note 81 at paras 18-20; Dolmage v HMQ, 2013 ONSC 6686 at paras 49-50 [Dolmage]; McKillop and Bechard v HMQ, 2014 ONSC 1282 at paras 41-43 [McKillop]; Brazeau v Attorney General (Canada), 2019 ONSC 4721 at paras 34-35; Johnston v The Sheila Morrison Schools, 2013 ONSC 1528 at para 43 [Johnston]; Tk’emlúps, supra note 88 at paras 30-31; Tk'emlúps te Secwépemc First Nation v Canada, 2023 FC 357 at paras 51-58; Merlo, supra note 88 at paras 69-70; TL v Alberta (Director of Child Welfare), 2015 ABQB 815 at para 35.
  190. See Redublo, supra note 5 at para 111; Seed, supra note 81 at para 20.
  191. Smith, supra note 158 at paras 103-106.
  192. Ibid at para 94.
  193. Morabito 2014, supra note 11 at 384-385. However, outside of Ontario, see Jane Doe (#7) v Newfoundland and Labrador, 2022 NLSC 133 at paras 129, 141, where the court only granted in part an honorarium request in a sexual abuse class action because “I do not have a detailed record of the actions taken by the Representative Plaintiffs” and it appeared their contribution was modest.
  194. Johnston, supra note 189 at para 43.
  195. McKillop, supra note 189 at para 42; Dolmage, supra note 189 at para 50; Condon v Canada, 2018 FC 522 at para 115 [Condon]; Toth, supra note 88 at para 95; Anderson, supra note 90 at para 82; McCrea, supra note 88 at para 82.
  196. See McCrea, supra note 88 at para 82; Toth, supra note 88 at para 95.
  197. Anderson, supra note 90 at para 79.
  198. Ibid at para 84.
  199. This characterization has not been limited to class actions involving traumatic events. See e.g. Condon, supra note 196. Condon was a data breach action involving (apart from some media publicity) no obvious trauma.
  200. Morabito 2014, supra note 11 at 365. See also Sheridan Chevrolet v Denso, 2021 ONSC 3648 at para 25; Casseres, supra note 24 at para 11; Sheridan Chevrolet v Valeo SA, 2021 ONSC 7375 at para 26; Forbes v Toyota Canada Inc, 2018 ONSC 5369 at para 33 [Forbes].
  201. 2007 CanLII 39608 (ONSC) at para 35. See also Mortillaro v Unicash Franchising Inc, 2011 ONSC 923 at para 27 [Mortillaro].
  202. Austin v Bell Canada, 2021 ONSC 5068 at para 25; Anderson, supra note 90 at para 84.
  203. MM v FCSLLG, 2021 ONSC 3310 at para 23.
  204. For a stark example, see Renk v Audi Canada et al, 2020 ONSC 7998 at paras 17-18. Belobaba J wrote: “Here there is nothing in the record that would justify the payment of a $5000 honorarium. However, class counsel was strongly of the view that Mr Renk’s contribution was indeed significant and should be recognized in some measure. I will yield to class counsel’s impassioned submission and approve an honorarium in the amount of $3000.”
  205. Jasminka Kalajdzic, “Self-Interest, Public Interest, and the Interests of the Absent Client: Legal ethics and Class Action Praxis” (2011) 49 OHLJ 1 at 8, 10, DOI: [Kalajdzic, “Self-Interest”]; Paul Perell, “Class Proceedings and Lawyers’ Conflicts of Interest” (2009) 35 Advoc Q 202 at 216.
  206. Kalajdzic, “Self-Interest,” supra note 205 at 11.
  207. See Redublo, supra note 5 at paras 107, 111, citing Snelgrove v Cathay Forest Products Corp, 2013 ONSC 7282 at para 24 and Morabito 2014, supra note 11 at 356-357; Catherine Piché, “‘The doors to justice are open, but how do I get in?’: Experiencing access to justice as a class action member” (2019) 8 IJR 277 at 289-290. For US commentary, see Principles of the Law of Aggregate Litigation, supra note 150 at s 1.05(c)(5); Ruan, supra note 136 at 412-143.
  208. Malcolm Mercer, “Access to Justice and Market Failure” (1 November 2016), online: Slaw [perma.cc/6AFG-RPG9].
  209. NZLC Report, supra note 42 at para 3.66.
  210. Vince Morabito has noted that many settlement approval notices in Ontario do not include the amount of additional payments to be sought, which is one reason why there are so few objections to such payments. See Morabito 2014, supra note 11 at 377-382.
  211. See Baker, supra note 139 at para 95. See also the text accompanying note 139.
  212. See Nagareda, supra note 51 at 1488.
  213. Kalajdzic, Class Actions in Canada, supra note 113 at 97.
  214. The only way monetary results for the class could determine the quantum of an additional payment is if the payment is calculated as a percentage of the monetary recovery, or on a sliding scale according to the amount of recovery. This brings with it its own hazards, as discussed elsewhere in this article.
  215. Nagareda, supra note 51 at 1488-1489.
  216. Eisenberg, supra note 47 at 1312.
  217. See Charette, supra note 80 at para 92; Windisman, supra note 16 at para 28; Bodnarchuk v Guestlogix Inc, 2020 ONSC 4789 at para 40; Walmsley, supra note 80 at para 49; Kaplan, supra note 80 at para 100; Kauf v Colt Resources, Inc, 2021 ONSC 2814 at para 60; Excalibur Special Opportunities LP v Schwartz Levitsky Feldman LLP, 2020 ONSC 2793 at para 49; Toth, supra note 88 at para 105. In the United States, see In re Synthroid Mktg Litig, 264 F3d 712, 722–23 (7th Cir 2001); Espenscheid v DirectSat USA, LLC, 688 F3d 872, 876 (7th Cir 2012).
  218. Ruan, supra note 136 at 412.
  219. Betson & Tidmarsh, supra note 150 at 547-548.
  220. Ibid.
  221. See Redublo, supra note 5 at para 111.
  222. Ibid. See also Jarvis, supra note 136 at 928.
  223. Korsmo & Myers, supra note 114 at 1926, 1944-1945.
  224. Morabito 2014, supra note 11 at 359; Redublo, supra note 5 at para 111; Korsmo & Myers, supra note 114 at 1931-1932; Eisenberg, supra note 47 at 1307.
  225. Meili, supra note 14 at 88-89.
  226. Caruana & Morabito, supra note 14 at 13-14.
  227. See Piché, supra note 207 at 296, 301-303. The other goals included making sure the truth “comes out” and securing compensation for others. However, the representative plaintiffs acknowledged that the role is burdensome, and that plaintiffs “should be financially compensated for their involvement.”
  228. Korsmo & Myers, supra note 114 at 1943; Charles Silver & Sam Dinkin, “Incentivizing Institutional Investors to Serve as Lead Plaintiffs in Securities Fraud Class Actions” (2008) 57 DePaul L Rev 471 at 478.
  229. Eisenberg, supra note 47 at 1305.
  230. However, this was one of the only justifications cited by the Divisional Court in Doucet Div Ct, supra note 6, at para 64. The others were the recognition of the additional trauma endured by the representative plaintiff in her service to the class (ibid at paras 58, 110, 114) and the fact that the plaintiff’s service has somehow been exceptional or “extraordinary” (ibid at para 71).
  231. See Dutton, supra note 4 at para 29; Attorney General’s Advisory Committee on Class Action Reform, Report of the Attorney General’s Advisory Committee on Class Action Reform (Ministry of the Attorney General, February 1990) at 17-18; OLRC Report, supra note 23 at 140-146.
  232. See OLRC Report, supra note 23 at 145; Matthew Good, “Access to Justice, Judicial Economy, and Behaviour Modification: Exploring the Goals of Canadian Class Actions” (2009) 47 Alta L Rev 185 at 222, DOI:< https://doi.org/10.29173/alr324>; Setoguchi v Uber BV, 2021 ABQB 18 at para 112.
  233. For exceptions, see the dissent in Sun-Rype Products Ltd v Archer Daniels Midland Company, 2013 SCC 58 at para 97; Craig Jones, Theory of Class Actions (Irwin Law, 2003).
  234. LCO Report, supra note 36 at 89-91.
  235. Even the most ardent proponents of the traditional goals of civil litigation accept that damages can have a behaviour modification effect. See generally, Ernest J Weinrib, “Deterrence and Corrective Justice” (2002) 50 UCLA L Rev 621.
  236. This is why Canadian courts have treated cy-près distributions with great caution. See generally Jasminka Kalajdzic, “The ‘Illusion of Compensation’: Cy Près Distributions in Canadian Class Actions” (2014) 92 Can Bar Rev 173 at 193.
  237. Rubenstein, supra note 16, s 17.3; Ruan, supra note 136 at 421-422.
  238. See Rodriguez, supra note 128 at 959; Sperle, supra note 107 at 880; Rubenstein, supra note 16, s 17.2.
  239. See Civil Rights Act of 1964, 42 USC tit 7 § 2000e et seq (1964); Ruan, supra note 136 at 421.
  240. Rubenstein, supra note 16, s 17.3.
  241. Ruan, supra note 136 at 420-421.
  242. Morabito Australia 2014, supra note 51 at 203.
  243. See the text accompanying note 76.
  244. See Doucet, supra note 5 at paras 57-61; Merlo, supra note 88; Mortillaro, supra note 201; Rosen v BMO Nesbitt Burns Inc, 2016 ONSC 4752; Montaque v Handa Travel Student Trip Ltd, 2020 ONSC 3821.
  245. See Redublo, supra note 5 at para 111.
  246. 2022 ONSC 3837 at paras 44, 81 [Suzic].
  247. See Redublo, supra note 5 at para 110.
  248. Justice Perell expressed concerns about departing from the compensatory objective of class proceedings in favour of behaviour modification alone. See Eidoo v Infineon Technologies AG, 2015 ONSC 5493 at para 26.
  249. Suzic, supra note 246 at paras 74-81.
  250. Ibid at paras 76-77.
  251. Ibid at para 79.
  252. Ibid at paras 78, 80.
  253. Ibid at para 35.
  254. For example, in Doucet Div Ct, the court held that the requested thirty-thousand Canadian dollar (CAD) payment was neither modest nor proportionate to the benefits received by the class, and it also presented potential conflict of interest concerns. However, the court simply considered that a significant number of honoraria awards in Ontario were in the $5,000 to &15,000 range and awarded an amount for the representative plaintiff towards the lower end of that range ($7,500). See Doucet Div Ct, supra note 6.
  255. Parsons, supra note 27 at para 25. The court found that the highest amount awarded in British Columbia to that point was $5,000.
  256. Ibid at para 26.
  257. Cardoso, supra note 148.
  258. See Doucet Div Ct, supra note 6 at para 119. The court “[bore] in mind all relevant factors” (including amicus’ review of the case law, which indicated a range of $5,000-$15,000 for representative plaintiffs), then reduced the representative plaintiff’s award from $30,000 to $7,500.
  259. 2015 ONSC 6896.
  260. Ibid at paras 4-6.
  261. Ibid at para 1.
  262. Ibid at para 22.
  263. Similarly, additional payments may be proportionate but not modest. See e.g. in Manuge c Canada, 2013 FC 341 (the representative plaintiff was awarded $50,000 as part of a settlement valued at more than $887 million).
  264. Rubenstein, supra note 16, s 17.18.
  265. Ruan, supra note 136 at 398, 419-420.
  266. Rubenstein, supra note 16, s 17.18.
  267. Ibid, s 17.16.
  268. Ibid. While the problem of excessive awards could be addressed by using a cap, this would then give rise to a conflict of interest. See Rodriguez, supra note 128.
  269. Doucet, supra note 5 at para 61.
  270. Ibid.
  271. Morabito 2014, supra note 11 at 369-372; See also Rubenstein, supra note 16, s 17.5. Rubenstein notes that additional payments could also be paid as disbursements, in which case they could be taken from the funds available to the class or paid separately by the defendant.
  272. Smith Estate, supra note 83 at para 135. However, see Korsmo & Myers, supra note 114 at 1927.
  273. Windisman, supra note 16 at para 36.
  274. See e.g. Bourque v Cineflix, 2021 ONSC 8464 at para 60.
  275. Rubenstein, supra note 16, s 17.5.
  276. See the text accompanying note 145.
  277. See Redublo, supra note 5 at para 145.
  278. CPA, supra note 3, s 27.1(5).
  279. For Ontario’s version of the test, see CPA, supra note 3, s 5(1)(e).
  280. See Darwalla No 2, supra note 109 at para 76.
  281. Doucet Div Ct, supra note 6 at para 56; Forbes, supra note 200 at para 31; Loewenthal v Sirius XM Holdings, Inc et al, 2021 ONSC 8220 at para 23; Hardwick v Blue Buffalo Company, Ltd et al, 2021 ONSC 5297 at para 19.
  282. Caruana & Morabito, supra note 14 at 10-11.
  283. Ibid at 11.
  284. Doucet, supra note 5 at para 61.
  285. See Redublo, supra note 5 at paras 111-112. Jarvis proposes a similar structure, but he suggests a multiplier for financial risk and only briefly touches on non-financial risk. Given that almost all representative plaintiffs in Canada are indemnified against adverse costs (in costs-shifting jurisdictions), and the need for a trauma-informed approach in class actions, the multiplier should apply to the non-financial risks experienced by the representative plaintiff. See Jarvis, supra note 136.
  286. MacDonald, supra note 52 at paras 56-57.
  287. Smith, supra note 158 at para 106.
  288. Although the prevailing approach in Canadian class action fee requests is to approve a contingent fee instead of a multiplier, the multiplier approach is still used as a cross-check in “mega-cases” that are settled for very high amounts. See MacDonald, supra note 52 at paras 29-31.
  289. Ibid at para 35; Baxter v Canada (Attorney General), 2006 CanLII 41673 (ONSC); Canadian Imperial Bank of Commerce v Deloitte, 2017 ONSC 5000 at para 12; The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v SNC-Lavalin Group Inc, 2018 ONSC 6447 at para 64.
  290. Doucet Div Ct, supra note 6 at para 61.
  291. Ibid at para 61.
  292. Smith Estate, supra note 83 at para 135.
  293. Parsons, supra note 27 at para 26.
  294. Dimopoulos, supra note 158 at 554.
  295. Rubenstein, supra note 16, s 17.5. Where a case does not create a common fund, defendants may agree to make the additional payment as part of a settlement, but the court has no jurisdiction to order them to do so.
  296. Doucet factum, supra note 187 at paras 27-41.
  297. Jarvis, supra note 136 at 943 (suggesting this is possible in the US context).

Download

Request a copy that is accessible using assistive technology (link opens in a new window)

Included in

Law Commons

Share

COinS