Class Action Lawsuits and the Representative Plaintiff’s Choice of Counsel

June 7, 2009

If the representative Plaintiff in a Class Action Lawsuit wishes to change counsel can this be done and if so what factors should a Court consider?

A recent case from the Ontario Court of Appeal (Fantl v. TransAmerica Life Canada) was released last month dealing with this issue.

While this blog deals with British Columbia Class Action Lawsuits this Ontario case is of general significance in this area of law and could well hold some persuasive reasoning if any similar applicaitons are raised in BC Courts.

In this case the representative Plaintiff retained a lawfirm (Roy Elliott Kim O’Connor) to advance his claim against TransAmerica.  During the Course of litigation the lawfirm disolved and some of the lawyers involved in the litigation went on to form a firm named Kim Orr while other lawyers went on to form a firm named Roy Elliott O’Connor.  The Plaintiff chose Roy Elliott O’Connor to represent him and the certificed class after disoluion.   The lawfirm Kim Orr brought a motion seeking an order requiring the representative Plaintiff (and the certified class) to retain their firm in this lawsuit.

This motion was dismissed and the claim was appealed to the Ontario Court of Appeal for their consideration.  In dismissing the Appeal the Court carefully considered the issues of choice of counsel by representsative Plaintiff’s and the circumstances when courts can intervence and require change of counsel.  The highlights of this discussion are reproduced below:

Issue 2: Test for reviewing a plaintiff’s choice of counsel

[48] The parties vigorously disputed the test to be applied when the court reviews a representative plaintiff’s choice of counsel. In his reasons, the motion judge correctly identified the issues and canvassed the relevant case law in deciding that question. In my view, he made no error in holding that the choice of counsel upon REKO’s dissolution was a matter for Mr. Fantl to deal with and that his decision did not warrant interference by the court.  Nonetheless, I would arrive at that result for different reasons and based on a different analysis than that of the motion judge.

[49] The appellant has argued that this court should evaluate Mr. Fantl’s choice of counsel by determining whether he was acting in the “best interests of the class” in so choosing. On the other hand, the respondent contends that the motion judge was correct in applying a test of adequacy to Mr. Fantl’s choice of counsel. In my view, both approaches miss the mark. Once the court’s jurisdiction is engaged, any review by the court of a decision as to choice of counsel must be directed to three factors:

(1) Has the plaintiff chosen competent counsel?

(2) Were there any improper considerations underlying the choice made by the plaintiff? and

(3) Is there prejudice to the class as a result of the choice?

[50] Unless this inquiry reveals something unsatisfactory to the court, it ought not to interfere with the choice of counsel made by the plaintiff. The court is not a substitute decision maker for the plaintiff in the litigation. Accordingly, any intervention based on its supervisory jurisdiction must be limited to situations where there is cogent evidence that steps taken may have an adverse impact on the absent class members.

[51] In formulating these criteria for review of the choice of counsel by the plaintiff, I am necessarily rejecting the argument of the appellant that the only test to be applied by the court is whether the choice is “in the best interests of the class”. It must be remembered that the broad and guiding “best interests” principle developed in recognition of the distinction that must be made between the interests of individual class members and the interests of the class as a whole when the court is considering certain issues: see Parsons v. Canadian Red Cross Society(1999), 40 C.P.C. (4th) 151 (Ont. S.C.), Ford v. F. Hoffman-LaRoche Ltd. , (2005), 74 O.R. (3d) 758 (S.C.), andOntario New Home Warranty Program v. Chevron Chemical Co. (1999), 46 O.R. (3d) 130 (S.C.). Here, the context is very different.

[52] Moreover, where the issue before the court is the plaintiff’s choice of counsel, insofar as the “interests of the class” must be considered, they are sufficiently addressed under the prejudice criterion. Where there is no prejudice, the choice of “competent counsel” who has not been selected for any improper purpose will also be in the interests of the class.

[53] By applying these criteria, the court avoids the “contest” approach proposed by the appellant, which pits two sets of competing lawyers against each other and undermines the role of the representative plaintiff in selecting counsel. Such an approach is neither necessary nor productive where, as here, competence is conceded and there is no evidence that the plaintiff has acted improperly or in a manner that prejudices the interests of the class.

[54] The appellant contends that the “contest” approach is appropriate in the present circumstances because the choice of counsel is analogous to a carriage motion. I disagree. A carriage motion is a motion to determine which of two or more overlapping, competing intended class actions should be allowed to proceed and which should be stayed. A carriage motion involves a competition which, of necessity, requires a comparison of the competing proceedings.  Unlike a carriage motion, there is no competition between proceedings here. It is for this reason that any analogy between a carriage motion and the present circumstances breaks down.

Application of the test to the instant case

[55] The instant proceeding involves the choice of counsel upon dissolution of the class counsel law firm.  The retainer agreement was entered into between Mr. Fantl and REKO, and not with Mr. Kim or any other individual lawyer. A team of lawyers at the predecessor firm dealt with the case.

[56] On dissolution, some of the team formed the appellant, some formed REO and one lawyer joined another firm. Lawyers in each of these factions had participated in the work on the file to varying degrees. The lawyer who did the most work on the file was the associate who left and went to an unrelated firm.

[57] The record indicates that, although Mr. Kim was the senior partner on the case, he did not take instructions from, or report to, Mr. Fantl, and that he only accompanied Mr. Fantl to cross-examinations. He attended one settlement meeting with the defendant at which defendant’s counsel offered to settle the claim, expand the class definition and communicate this development to class members.

[58] In the context of this file, and in the eyes of Mr. Fantl, there was more to the REKO firm than just Mr. Kim. Mr. Fantl was faced with three choices. He could go with the appellant, the REO firm or choose a different firm. He chose the REO firm.

[59] The appellant argues that the failure to retain KO was akin to a dismissal of counsel. I do not accept this characterization of the facts before this court. The appellant was not terminated by the plaintiff. Indeed, KO had no relationship with the plaintiff capable of termination. Rather, its complaint is that the plaintiff did not choose to retain its lawyers after REKO’s dissolution.

[60] Turning to the first factor of the test, competence of counsel of choice was conceded in the present case. I note the appellant’s submission that competence of counsel is not a useful benchmark since every lawyer in Ontario is competent and thus no motion challenging a plaintiff’s choice of counsel is likely to ever be successful. I disagree. Where competence is a live issue, the court should consider under this head:

(1) The nature of the lawsuit;

(2) The complexity of the litigation;

(3) The fact that it was a class proceeding;

(4) The experience of counsel as to subject matter and class actions;

(5) The resources of counsel;

(6) The stage of the proceedings at which the review occurs; and

(7) Any other considerations the court might deem to be appropriate.

[61] Moreover, when considering competence of counsel, the court must take into account the fact that, after certification, class counsel will be in a solicitor-client relationship with the class members, with all of the responsibilities that entails, extending until the implementation of a settlement or final disposition of any individual issues. In other words, given that the class may include a large number of people, this obligation may be significant and prolonged: see generally Cassano v. The Toronto-Dominion Bank , (2007), 87 O.R. (3d) 401 (C.A.), and Ward-Price v. Mariners Haven Inc. , (2004), 71 O.R. (3d) 664 (S.C.), at para. 7.

[62] These criteria serve to advance an object of the CPA, namely to obtain first class representation for class members.

[63] Turning to the second factor, there is no evidence of any improper purpose or motive on the part of the plaintiff in making his decision to retain REO. The appellant points to the plaintiff’s friendship with Mr. Roy, one of the partners of REO, as the driving factor in choice of counsel. While that was a consideration, it was not the only factor for the plaintiff’s choice of counsel. As noted by the motion judge and as indicated in the record, Mr. Fantl was attracted to REO because of the competence of counsel, which is not disputed, and its reputation in class action work.

[64] In any event, I would not accept that the fact of an acknowledged friendship between the plaintiff and his counsel of choice would constitute an improper purpose in and of itself. An improper purpose would be one where the plaintiff was seeking to gain a personal advantage, the hope of an advantage not shared by the class members or was motivated in some way that was inconsistent with the interests of the class.

[65] Turning to the third factor, to the extent that prejudice was argued by the appellant, this line of argument focused on the economic prejudice to the appellant rather than on any prejudice to the interests of the class.  The appellant emphasized what was characterized as the policy arguments in support of entrepreneurial lawyers, which were said to advance one of the goals of the CPA – access to justice. Effectively, the appellant’s argument is that it would be unfair for a plaintiff, upon dissolution of his or her counsel’s law firm, to choose any lawyer other than the lawyer who had previously acted as the lead counsel. In other words, in a class action, the lawyer’s time and effort on the file constitutes an equity investment by the lawyer in the case. It is argued that if representative plaintiffs are allowed to switch counsel at will, there will be less of an incentive for counsel to take on class actions and make an investment of time and effort that may be lost.

[66] There is no question that class proceedings are entrepreneurial in nature. However, the proposition advanced by the appellant would only be supportable if the creation of an entrepreneurial class action bar was a policy goal underpinning the CPA. This argument fails because as far as the CPA is concerned, the entrepreneurial lawyer is a means to an end, not an end in and of itself. Were it otherwise, one of the criticisms of the CPA, that it promulgates plaintiff-less litigation benefiting only the lawyers involved, would be well founded. Such is not the case.

[67] Sections 33(1) and (4) of the CPA, which provide for contingency fees and a multiplier effect on fees to reward risk and success, are intended to provide sufficient incentives for lawyers to take on class proceedings that would not otherwise be attractive. This is the entrepreneurial aspect of class proceedings legislation that enhances access to justice. The CPA does not, nor was it ever intended to, provide lawyers with a vested interest in the subject matter of the lawsuit entitling them to override the choices of the representative plaintiff in the litigation, including the choice of counsel.

[68] In any event, Mr. Kim’s investment of time and effort in the action while at REKO will be protected through the process of dissolving that firm.

[69] In conclusion, in light of the three factors set out above, namely, that competence of counsel is not in issue, there is no evidence of any improper purpose or considerations in choice of counsel, and no demonstrated prejudice to the class, there is no reason to interfere with the choice of counsel by Mr. Fantl.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s