Other than fee sharing agreement, class counsel’s claim for payment of fees and disbursements was fair and reasonable

CLASS ACTIONS

Other than fee sharing agreement, class counsel’s claim for payment of fees and disbursements was fair and reasonable

Plaintiffs brought class actions in multiple provinces against defendants with respect to fees charged to merchants accepting payment from consumers via credit cards. To resolve carriage dispute, class counsel entered into fee-sharing agreement with law firm that brought carriage motions in two provinces. Plaintiffs’ class action was certified in British Columbia. Plaintiffs entered into settlement agreements with three of defendants. Plaintiffs brought motion for approval of settlements, of fee agreement with class counsel, and of class counsel’s fees and disbursements. Motion granted in part. Other than fee sharing agreement, class counsel’s claim for payment of fees and disbursements was fair and reasonable. Having regard to litigation risks and work by class counsel as well as good outcome of settlements, fee of $3,384,571.95 was appropriate. Award reduced class counsel fee by 10 per cent, on account of portion of counsel fee that would have been shared with law firm. Fee sharing agreement was unauthorized, unenforceable and possibly illegal agreement. Agreement required approval of court to be enforceable, pursuant to s. 32 of Class Proceedings Act as agreement about how fees paid by class members to class counsel were to be paid and shared. It was not fair, reasonable, or just to have class members pay law firm that was putative class counsel of stayed rival class action. Law firm did not make contribution to achievement of settlement agreement and should not share in recovery, especially as its late commencement of actions after success of similar actions in United States, suggested sole purpose of opportunism to share in fees. Fee sharing agreement might breach law against champerty or maintenance. While class counsel genuinely believed that it was necessary and in best interests to sign fee agreement, to avoid chaos and delay of carriage dispute, they were mistaken in disregarding merits of carriage arguments and failing to stand up for class members. Reduction was also warranted because class counsel did not need to commence overlapping national class actions in multiple provinces, ultimately obtaining orders from those courts that added nothing to work already done by court that certified national class action.
Bancroft-Snell v. Visa Canada Corp. (Nov. 23, 2015, Ont. S.C.J., Perell J., File No. CV-11-426591CP) 260 A.C.W.S. (3d) 223.