Law Times

Page 8 April 18, 2016 • lAw Times www.lawtimesnews.com FOCUS ON Class Actions Focus THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES NEW EDITION Perfectbound Published December each year On subscription $80 One time purchase $83 L88804-764 Multiple copy discounts available Plus applicable taxes and shipping & handling. (prices subject to change without notice) Visit carswell.com or call 1.800.387.5164 for a 30-day no-risk evaluation With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. Subscribers can depend on the credibility, accuracy and currency of this directory year after year. More detail and a wider scope of legal contact information for Ontario than any other source: • Over 27,000 lawyers listed • Over MBXȮSNTBOEDPSQPSBUFPGȮDFTMJTUFE • 'BYBOEUFMFQIPOFOVNCFSTFNBJMBEESFTTFTPGȮDFMPDBUJPOTBOEQPTUBMDPEFT Includes lists of: • Federal and provincial judges • Federal courts, including a section for federal government departments, boards and commissions • Ontario courts and services, including a section for provincial government ministries, boards and commissions • Small claims courts • The Institute of Law Clerks of Ontario • Miscellaneous services for lawyers ORDER YOUR COPY TODAY! Untitled-3 1 2016-04-13 10:10 AM Class action judges getting more vocal BY JIM MIDDLEMISS For Law Times I n class actions, judges are often thrust into the centre of the dispute, refereeing not only warring defence and plaintiff lawyers but also over- seeing unseemly fights among plaintiff counsel over who should carry a case. Factor in the added challenge of settlement hearings — where judges are called upon to deter- mine the fairness of an agree- ment — and it makes for a chal- lenging, and no doubt frustrat- ing, legal environment in which judges must operate, compared with traditional litigation. It's no surprise, then, that jus- tices in Ontario seem to be call- ing out class action lawyers more and more on their strategies. Alan D'Silva, a class action defence lawyer at Stikeman El- liott LLP in Toronto, notes, "We have very experienced class ac- tion judges. "If they suggest to plaintiff or defence counsel to amend something, or tweak something, or narrow something down, I think it carries a lot of weight. I think it's a good thing. Of course, judges have to be care- ful not to be weighing in on the merits," he says. D'Silva adds, "I think it's ap- propriate for judges to scrutinize a settlement to make sure that it is in the best interest of a class because that is what the statute requires. It ensures the case is being settled for an amount and quantum it should be settled for." It is often in their role of set- tlement scrutineer where judges are most vulnerable and becom- ing increasingly vocal. Michael Robb, a plaintiff law- yer at Siskinds LLP in London, Ont., says there's no adversarial process in a settlement hearing. "I understand the judge's di- lemma. They have an obligation to protect the best interest of the class," he says. One of the challenges lawyers face is justifying the settlement amount to the judge. Robb notes the amount is arrived at through a range of factors, everything from assessing the merits of the case — its weaknesses, strengths, and precedents — to assessing insurance policies, and engag- ing in tough negotiations with defence lawyers, discussions that are usually confidential. When called on to defend the settlement, Robb says it's "a fine line to walk in terms of what you can explain to court for a rationale for a settlement." It can be difficult to explain to a judge how a particular figure is obtained, he says. "You have to keep in mind that there is a risk of non- approval and you have client obligations of confidentiality and privilege," he says. "When a judge presses you for the rationale, if you really throw back the curtain, you expose important weaknesses in a case that might not have been appar- ent [to defence counsel]." If it doesn't settle, he says, "you go in with a significantly weaker hand." The subject came up recently before Justice Edward Beloba- ba in Leslie v. Agnico-Eagle Mines, a securities class action that settled for $17 million. Be- lobaba warned the bar to expect more scrutiny in settlements. "The judicial approval of class action settlements, especially se- curities settlements, leaves much to be desired. Judges should do more to ensure that a proposed settlement is in the best interest of a class," he wrote. He said the "core problem is that the only players at the settle- ment table — the defendant (or their counsel) and class counsel — have interests and incentives that can be aligned against the best interests of the class." He noted that under legisla- tion, it's his job to ensure that a settlement is fair and reasonable and in the best interests of the class. "But how does a judge do this? Judges are not in a position to second-guess the actual amount of the proposed settlement. Nor should they do so." The best they can do, he wrote, is look for "structural in- dicators that suggest collusion or conf lict of interest" and "satisfy themselves that the settlement amount falls within a zone of reasonableness." Robb, who was counsel on the case, filed an extensive sup- plementary factum to address concerns Belobaba had raised at the settlement hearing and set out a list of structural indi- cators the court should look for that could call into question a settlement, including: a release of claims without payment; "nebulous non-monetary com- pensation" to which substantial value is attached to boost fees; or a reversionary interest to the defendant in settlement funds, especially when a portion goes back to class counsel. He also filed an extensive chart showing a settlement range in securities class suits. Belobaba was satisfied with the amount and approved the settlement, but he asked whether it was time to appoint indepen- dent counsel paid for by both parties to provide a "much need- ed adversarial dimension to the settlement approval hearing." e best they can do, he wrote, is look for "structural in- dicators that suggest collusion or conflict of interest" and "satis- fy themselves that the settlement amount falls within a zone of reasonableness." It's not just set- tlement amounts facing greater scrutiny. Justice Paul Perell used a November settlement ruling in the Visa and Mastercard mer- chant fees case, Bancro-Snell v. Visa Canada Corporation, to pontificate upon the national class action conundrum. Although the ruling dealt with the settlement of a case certified in B.C., which covered Ontario, it was as much about Perell's criticisms of counsel's strategy for dealing with the ri- val class actions and the steps they should have taken to knock out those suits that caught the bar's attention as it was about the fact that he refused to approve a fee-sharing agreement involving Merchant Law Group. MLG had filed rival cases in Alberta and Saskatchewan more than 15 months aer the B.C. litigation, which was already moving toward certification. MLG agreed to stand down its actions in exchange for a cut of any settlement. Perell took issue with that and prohibited the class con- sortium from paying MLG, finding the fee agreement was "unenforceable and may possi- bly be an illegal agreement." He warned the bar that champerty and maintenance was still alive and well in Ontario and paying an "intermeddler" in a lawsuit was frowned upon." LT Michael Robb says a challenge lawyers face is justifying a settlement amount to the judge.

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