Law Times

April 6, 2009

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PAGE 8 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On CLASS ACTIONS ing to successful plaintiff s that a settlement is probably just around the corner. But now, an increasing number of defendants aren't rolling over at that point — instead they're pushing cases towards trial, Toronto lawyer Darcy Merkur tells Law Times. Th at means over the next two years, Certification not the Holy Grail anymore T Defendants increasingly pushing matters toward trial BY GRETCHEN DRUMMIE Law Times he certifi cation stage in class ac- tion lawsuits has traditionally been considered the Holy Grail, signal- lawyers who have taken on these challenges under the impression that these cases often settle at the certifi cation stage, "are going to realize that may no longer be the case, and they'll be put to the test in terms of working out these very expensive fi les and preparing them for trial," warns Merkur, a partner at Th omson Rogers, in the class action group. Typically, getting a class action certi- fi ed has been a signal to plaintiff s' counsel that you're almost all the way there. After all, suddenly, instead of representing one person who claims wrongdoing, the class plaintiff s' lawyer is representing hundreds or thousands of people who have the same generic claim, and in those cases the fi nancial risk to defendants can be astro- nomical. So, usually you'd see defendants settling post certifi cation saying the risk is in the multi-millions and they might as well try to resolve it, says Merkur. But now, "Defendants are deciding right at the time of issuance whether this is a case that they want to resolve or whether this is a case they want to fi ght, and the Darcy Merkur, left, and Alan Farrer, say an increasing number of defendants in class action lawsuits aren't rolling over at the certifi cation stage and instead are opting to push cases toward trial. cases they want to fi ght, they're not roll- ing over after the cases have been certifi ed which usually crystallizes the risk as being an enormous number. Instead, they know that the plaintiff s' lawyers will be hanging themselves out to dry potentially if they push the case on to trial." Of course that doesn't mean settlement post-certifi cation isn't still happening. But February 2008 lately law fi rms launching the class actions are taking on responsibility for pursuing them at enormous fi nancial risk and the de- fendants know that, so occasionally they use it to their advantage. "If a common issues trial is required it will be three, four months and the plaintiff s could go down, in which case there could be a costs order against the plaintiff s and there would be no recovery so it would be time wasted," says Merkur. "You saw what happened in the Kerr The 2009 Canadian Lawyer LEGAL FEES SURVEY $7.00 The Canadian Lawyer Legal Fees Survey is back and more convenient than ever. Fill out the short survey online at www.canadianlawyermag.com/surveys, and let us know what you are charging for various legal transactions and services in multiple practice areas. Our most requested survey takes just minutes to complete and will provide valuable information about what the nation's lawyers are charging for many common transactions and services, both nationally and regionally. Results will be published in the June issue of Canadian Lawyer. Survey closes on April 15 WIN! Two lucky participants will each win a swanky pair of legal-motif cufflinks provided by cuffwear.com v. Danier Leather Inc. case which went to the Supreme Court of Canada. It was ul- timately unsuccessful on the merits and the person who launched the claim, there was no recovery for the law fi rm, let's just say that," he says. In the last three or four years a lot of law fi rms who had "no experience in class actions have considered dabbling in it, become involved in it and right now that doesn't seem like such a bad decision," says Merkur. "But in the next few years it might turn out to have been a bad de- cision because the wave may be turning and . . . the risks to the plaintiff s' lawyers could bury the fi rm in certain cases." Merkur notes that class action is all contingency work. Unlike personal injury lawyers who toil on hundreds of fi les at the same time on a contingency basis, in class actions, "between communicating with the large class, [and] dealing with the court is- sues, you could be spending years or months working exclusively on a class action and you might have multiple lawyers doing that, especially on the big ones. You go down in the sense that if you don't get a liability fi nd- ing against the defendant that cost cannot be recovered, the fi rm will eat it." So how often does a class get certifi ed and then lose at trial? Do most settle as- suming they're going to win? Alan Farrer, Th omson Rogers manag- www.canadianlawyermag.com/surveys ing partner and also in the fi rm's class ac- tion group, says that's the situation now; the bar isn't very high on the threshold to get certifi ed. "Th e test is a procedural one and www.lawtimesnews.com most cases that are started as class actions will meet that threshold and will be capable of being certifi ed," he tells Law Times. But he says it's only the fi rst step be- cause while securing a procedural deter- mination that a class proceeding is a rea- sonable way in which to litigate a dispute, it is not a fi nding up to that point that there's a strong cause of action. "Th e next stage is the common is- sues trial which follows after certifi ca- tion in which the merits of the case are examined," Farrer tells Law Times. "Th at's where the greater risk is and that's where some defendants are now setting up the barricades to fi ght at that level as opposed to the certifi cation level." "What we're saying is that the defen- dants are realizing that on the current status of the law they are likely not going to win the certifi cation battle so they're redirecting their battle until after the certifi cation stage when that's customar- ily been the opposite: fi ght you to death at the certifi cation stage and if they lost that battle they would want to talk," says Merkur. "But now they're turning it around and saying they may challenge you at the certifi cation stage but they don't like their chances and they'll throw up the barriers afterwards. At that point it becomes very expensive to plaintiff s' counsel who's knee-deep at this point; they've already been through the certifi - cation stage, they're in communication with hundreds of people, they've circu- lated a notice plan which involves pub- lications in the newspaper sometimes at their expense or at joint expense and at that point the defendant can say, 'Well, I'm glad you're certifi ed, there was noth- ing we could do to stop you from suing us, but we don't think we did anything wrong here so we're not settling with you. We're not paying, let's go to trial.'" And this shifting of the landscape is going to bring fundamental changes to class action law, says Farrer. "Reasonable lawyers and prudent lawyers always looked at the merits of a claim and they're not fast to just jump on a bandwagon when they see some small harm that's publicized in a newspaper and they've decided that's a class action," he says. "Reasonable lawyers look at the case, consider it on its merits and make a reasoned decision about whether this is a case worth pursuing. "But what has happened is with the fl urry of press and other things surrounding some of these class actions and the initial situation in the early days of the class action proceeding in Ontario, where certifi cation seemed to determine whether a case would be settled or not, a lot of people have got into class actions and probably now are be- ginning to understand you do have to have a strong good case, a case that's worthy of pursuit and a case that you're prepared as litigation counsel to see through to the end and fi nance through to the end." He says there's a possibility that some of these class actions that might have been set- tled in a "knee-jerk reaction by defendants simply out of the notion that the case may get certifi ed and we may be liable, may be See Harder, page 9 April 6/13, 2009 • lAw Times

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