Canada’s class action plaintiff bar driving U. S.-style litigation in Canada

Canada’s class action plaintiff bar is becoming more sophisticated as it adopts U. S.-style litigation practices, people attending an AIG Canada product symposium were told.

Canadian plaintiff lawyers are increasingly seeking contingency fees in class action cases, Alan D’Silva, partner at Stikeman Elliott LLP, suggested.

“We’re seeing the courts approving multiples of four or five times the plaintiff lawyers’ fees,” he noted. “And with that, we’re seeing the development of a very sophisticated plaintiffs class action bar in Canada.”

In theory, the Class Proceedings Act is intended to offer consumer protection and modify the behaviour of organizations doing something wrong, D’Silva observed. But “what we’re seeing is — and this is not surprising, given the fees that lawyers can recover in these types of cases — some of these cases are in fact lawyer-driven and not consumer protection-or altruism-driven,” he said.

The most recent example of this phenomenon, D’Silva noted, is a case called Garland v. Consumers’ Gas Co. Initiated 10 years ago, the case addresses whether a late payment fee charged by the gas company is an illegal interest payment under the Criminal Code. It went up to the Supreme Court of Canada a couple of times,”D’Silva said. “Eventually the class action got certified and it got settled. And Consumers’ Gas [now Enbridge] settled the case for $24 million,”D’Silva said. The underlying assumption was that the $24 million would serve as indemnity for all of the people who had paid the late fee. “The problem was, when they started to implement the settlement, they couldn’t figure out who had overpaid and who hadn’t because they didn’t have the proper records,” D’Silva observed. “So $12.5 million of the settlement went to the lawyers who were active in the case, and the rest went to a charity fund.

“The story in that case is — without being critical of anyone — settlements are getting completely out of whack. Here’s a case where plaintiff lawyers say that this is a consumer protection case, they walk away with $12.5 million and the consumer gets nothing.” •