Law Times

Law Times • march 14, 2011 NEWS PAGE 3 Individuals have no right to settle class actions: court BY MICHAEL McKIERNAN Law Times I ndividual litigants lose their right to settle once a class action has been certifi ed, according to a recent deci- sion in the Ontario Superior Court of Justice. Justice Paul Perell found that only class representatives acting on the advice of class counsel have the right to accept settlement off ers and that they can reject them with- out notifying class members about their contents. "Class members do not have the right to individually accept settlement off ers. Giving them the right to do so destroys the representative nature of the proceed- ings," Perell wrote in his March 3 decision in Berry v. Pulley, a class action involving pilots from Air Canada and the former Air Ontario airline. "It follows from this con- clusion that if class members do not have the right to individually accept settlement off ers during the communal stages of the action, they need not be given notice and be tantalized by a settlement off er that they cannot accept and which is opposed by their representative." Th e right to settle will revive once the common issues trial is complete and mat- ters dealing with individual issues begin for specifi c class members, according to the decision. Kirk Baert, a class actions lawyer at Ko- skie Minsky LLP, says the decision makes sense because of the huge numbers in- volved in many class actions. "Th ose who aren't keen on being part of a group have complete freedom of action at the opt-out stage and they can object to a settlement, but you couldn't have a situation where you need the approval of 1,000 or 10,000 people to make off ers to settle or to accept them," he says. Th e Class Proceedings Act enshrines the special status of class representa- tives. At the same time, the representa- tive's duty to act in the best interests of the class as a whole tempers the lack of democracy, says Baert. "It's not like a regular lawsuit. If you want to have a regular lawsuit, you're free to have one at your own expense with your own risk. Th en you'll have 100-per- cent control over whether it's settled or litigated. If you consent to being part of a larger entity, you lose power, especially if the representative plaintiff is on the hook if the case goes south." In Berry, the plaintiff class includes 171 Air Ontario pilots. Th e case also involves a defendant class certifi ed by the court: 1,682 Air Canada pilots who quit their union in a dispute over the integration of their Air Ontario counterparts following the airline's purchase by the national car- rier in 1991. Th e Air Canada pilots were divided into subclasses based on their in- volvement in the dispute when the action was certifi ed in 2001. Th e plaintiff s allege conspiracy, breach of fi duciary duty, and negligent misrepre- sentation in the claim that hasn't been prov- en in court. Experts for the plaintiff s have estimated the damages suff ered at around $150 million or $80,000 to $100,000 per defendant class member. Perell made the ruling after counsel for the plaintiff class made an off er to settle with individual members of two subclasses as the common issues trial approached. It's WANTED A bencher determined to: Respond to all lawyers — wherever and whatever they practise Support new lawyers/raise the bar Reduce the need for self-reps in the court Candidate must be: Fair-minded Outspoken Practical and sensible A real producer Committed to the profession Vote BARB MURCHIE for Bencher. She'll GET IT DONE. For more, go to: http://electmurchie.wordpress.com Untitled-1 1 3/8/11 10:56:01 AM www.lawtimesnews.com Untitled-1 1 A Strong Voice for Reform Chris is a hard working and thoughtful Bencher. He has been a strong advocate for greater transparency and accountability in the governance of the Law Society and a consistent voice for reform. As a former Bencher, I know that Chris has the commitment, integrity, and resolve to serve our profession and work in the best interests of all lawyers in Ontario. Chris led climbs of Mt. Kilimanjaro in 2006 and 2010 that raised over $1 million for CODE's (Canadian Organization for Development through Education) children's literacy programs in Tanzania. A fine counsel, thoughtful and public-spirited, with a commitment to legal education. These qualities will continue to serve him well as a Bencher. RE-ELECT CHRISTOPHER D. BREDT BENCHER (TORONTO) still set to begin on March 14 and run for 10 weeks. In December, plaintiff counsel Rus- sell Raikes submitted an off er to settle the claim against the vast majority of rank-and-fi le members of the Air Can- ada union who publicly opposed the Air Ontario integration for $5,000. He also asked that the off er be circulated to members of the class. Th e representa- tive defendants rejected the off er. Steve Waller, who's acting for the defen- dants, says the ability to settle claims with individual class members could be par- ticularly damaging in the more typical case where a plaintiff class takes on a corporate defendant. "If a corporate defendant could make off ers and pick members off one by one until the class is half the size it was be- fore, it would virtually destroy the benefi t of having a class action," he says. Th e defendants in the case are seek- ing indemnifi cation from the Air Line Pilots Association in a third-party ac- tion. Brian Shell, who represents the association, says he was happy with the judgment. Without limiting in- dividual settlement off ers, he believes few counsel would be willing to take on class actions. "It's the unity of the class that's critical to making the whole system work. If you don't have that, you might as well have 5,000 individual actions," he says. C A N D I D A T E F O R B E N C H E R - C E N T R A L E A S T DAVID S. McROBERT I will work to update the name of the LSUC to the Law Society of Ontario (having advocated this since 1986). I will promote the highest standards of legal education including mentoring of new lawyers and paralegals. After 20 years of practice and teaching I have valuable insights into law reform, work-life balance, job- sharing opportunities for women and other key issues facing legal professionals. Join me and many others at a series of online Bencher Election town halls beginning on March 29th: See www.mylegalbriefcase.com/townhall DavidMcRobert_LT_Mar14_11.indd 1 3/9/11 11:43:36 AM 3/7/11 9:20:17 AM

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• Settlement Ruling
• Shared Assets
• Focus On Litigation