Law Times

Law Times • OcTOber 1, 2012 FOCUS ON Litigation Class action firm appeals order to pay $700K in costs Superior Court ruling focuses on indemnity agreement with plaintiffs A BY MICHAEL McKIERNAN Law Times cation motion is appealing the decision over its claim that its indemnity agreement with the representative plaintiff resulted in a boost to the amount award- ed. law firm on the hook for a $700,000 costs award aſter a failed class action certifi- Pharmaceuticals PLC, the drug company successfully fought off a certification motion brought by users of its antipsychotic drug Seroquel. Having dismissed the certification motion in May, Ontario Superior Court Jus- tice Carolyn Horkins followed up with an Aug. 14 decision on costs in which she said the cir- cumstances of the case "warrant a meaningful costs award. In Martin v. AstraZeneca tiffs' "seriously deficient, overly broad, unclear, and inconsistent" statement of claim unnecessarily lengthened the proceedings and said their U.S.-based regulatory expert was "ill-informed" on the Canadian regime. Horkins eventually settled The judge found the plain- " on $475,000 in fees plus more than $200,000 in disburse- ments and taxes. AstraZen- eca had asked for $1.2 million, while plaintiffs' counsel James Orr of the law firm Kim Orr argued that both sides should absorb their own costs. In argument, Orr claimed the plaintiffs were from a historically disadvantaged group, a fact that engaged a public interest con- sideration for the judge under s. 31 (1) of the Class Proceedings Act. But Horkins found the sec- tion didn't apply and that, even if it did, "then the role that this should play in considering costs is very minimal. of Seroquel for patients with sleep and anxiety problems widened the class to the ex- tent that not all would be members of a historically disadvantaged group. In ad- dition, she noted, the indem- nity agreement between the plaintiffs and the law firm insulated the plaintiffs from any cost award she made. "In my view, the indem- She said the off-label use " something that should have any bearing on the court' decision about what's a rea- s nity agreement eliminates the argument that a costs award against the plaintiffs will have a chilling effect that does not respect the goal of providing access to justice for the disadvantaged mem- bers of society, "Class counsel routinely as- sume the risk of costs whether the plaintiffs are disadvantaged members of society or not." The ruling was surprising, " wrote Horkins. says Orr. "It was very surprising that the court viewed the fact of a law firm' sis for a higher level of costs than would otherwise be awarded, tells Law Times. In a factum filed with the Di- s indemnity to be a ba- " he visional Court for an appeal of both the certification and the costs decision, Orr writes that Horkins' ruling marks the first time an Ontario court has ever awarded costs against a histori- cally disadvantaged group in an unsuccessful class action cer- tification motion and says the decision errs in its approach to indemnity. "In providing indemnity, coun- sel are agreeing to pay the costs awarded against the representative plaintiffs," the factum states. The ruling is a 'helpful reminder that there will be significant costs consequences when you get a broadly cast, vigorously pursued case,' says Eric Hoaken. to pay some higher amount. Prior to this decision, the law was clear "They are not volunteering entitlement, scale, and quan- tum of costs on a certification motion must be determined without reference to an indem- nity agreement. The view that awarding higher costs against plaintiffs' counsel will not nega- tively impact access to justice is plainly wrong. Courts have rec- ognized that the goal of access to justice would be illusory if it were deterred by the prospect of a crushing costs award borne by the representative plaintiff or counsel. that the issues of lights the fact that Horkins' award was much higher than the previous high-water mark for costs awarded to a defendant. In Fresco v. Canadian Imperial Bank of Commerce, the judge awarded $525,000, including fees, dis- bursements, and taxes. "Fresco involved 91 affidavits and at least 28 cross-examina- The firm's factum also high- " tions," Orr writes in his factum. "In contrast, the present case involved 10 affidavits and six cross-examinations. The mo- tion judge' " sonable amount for a party to pay in costs," she says. "If anything, the fact that costs to the defendants, and the quantum awarded, is an error in principle and is clearly wrong. Although the firm chose not s decision to award to reveal its costs on the certifi- cation motion, Horkins said in her decision that it was still pos- sible to gauge its expectations. "Counsel for the plaintiffs are public interest issues under s. 31 (1). The whole purpose of the legislation is to let entrepreneur- ial counsel assist people who wouldn't otherwise get access to get it, and if part of that process involves class counsel reassuring the plaintiff that they're not go- ing to be burdened with costs, then you're actually furthering that purpose. class counsel provided in- demnity is something that should be applauded as fur- thering access to justice for those people, but it shouldn't count as a disqualification when you're looking at the experienced class action lawyers who are well aware of the sig- nificant costs associated with a motion for certification in a case such as this one, referencing Lambert v. Guidant Corp. from 2009. "The plaintiffs were repre- " she said while sented by the same law firm (Kim Orr). Aſter a successful certification motion, the plain- tiffs requested partial indemnity costs of $1.26 million plus dis- bursements and taxes (they were ultimately awarded $650,000, plus disbursements and taxes)." demnity agreements should only come into play on settle- ment hearings when the court approves counsel fees. "Then it' According to Waddell, in- " court to look at because it goes to the risk that class counsel has assumed, been a merging of the two pro- cesses here, but they're quite dif- ferent analyses." Eric Hoaken, who co-chairs "My guess is there may have " she says. garet Waddell, a partner at Paliare Roland Rosenberg Rothstein LLP, believes Hor- kins got it wrong by consid- ering the agreement to in- demnify the representative plaintiff. "Indemnity is simply not Class actions lawyer Mar- PAGE 9 s an appropriate factor for the the Bennett Jones LLP class ac- tions practice group and fre- quently represents defendants in See Concerns, page 15 Heydary_LT_Oct1_12.indd 1 www.lawtimesnews.com 12-09-26 2:17 PM

• Cover