It’s Time for Appellate Courts to Weigh In on Honoraria for Representative Plaintiffs in Class Actions

It’s Time for Appellate  Courts to Weigh In on Honoraria for Representative Plaintiffs in Class Actions

Honoraria have traditionally been available to representative plaintiffs in class actions in Ontario where the plaintiff has “gone well above and beyond the call of duty.”[1]

In Smith Estate v National Money Mart Company,[2] the Ontario Court of Appeal upheld the motion judge’s decision to grant a $3,000 honorarium because the representative plaintiff’s contributions to the class action “exceeded that which is normally expected of a representative plaintiff.”[3]

More recently, Regional Senior Justice MacLeod held that honoraria have become more common and “there is utility in encouraging the active involvement of representative plaintiffs in litigation of this type.”[4] However, recent case law has revived interest in not only the justifications for awarding honoraria and amounts awarded, but the appropriateness of the practice entirely.

Doucet v The Royal Winnipeg Ballet[5]

Stieber Berlach’s Elizabeth Bowker and Andrea LeDrew represented the Royal Winnipeg Ballet in  the above-noted class action, which recently settled.

Justice Perell approved all proposals at the settlement approval hearing, with one exception: the requested honoraria were not awarded. In fact, Justice Perell held that honoraria for representative plaintiffs should no longer be granted “as a matter of legal principal.”[6]

Part of the proposed settlement was for a $30,000 honorarium to Ms. Doucet, the representative plaintiff, and $10,000 honoraria each for four other class members, including three witnesses. These requests caused Justice Perell to reconsider the practice of awarding honoraria. He provided nine reasons for why the practice is “wrong:”[7]

– Awarding litigants on a quantum meruit basis for “active and necessary assistance” in a case is contrary to the policy of the administration of justice that represented litigants are not paid for providing legal services – lawyers are paid for providing legal services.

– Awarding represented litigants on a quantum meruit basis is contrary to the policy that self-represented litigants are not paid for providing legal services. Again, lawyers are paid for providing legal services, not litigants.

– Awarding litigants for, for example, being a witness on examinations for discovery or trial is contrary to the administration of justice “for obvious reasons.”

– Courts must rely on representative plaintiffs to give instructions to class counsel on matters such as settling the action. These decisions are a “major responsibility” and must not be influenced by a representative plaintiff receiving benefits not received by other class members.

– Awarding representative plaintiffs a portion of the funds awarded to class members creates a conflict of interest. Class members should have no reason to believe their representative is motivated by self-interest and personal gain while giving instructions to class counsel regarding settlement.

– There is no way of testing the genuineness and value of the contributions by representative plaintiffs or other class members. For example:

—  The affidavits supporting the requests have “become pro forma,”

—  There is no cross examination,

—  There is no one to “test” the praise of the representative plaintiff.

This lack of scrutiny can put class members in the position of not wanting to appear ungrateful and ungenerous. It can also lead to a revictimization of the representative plaintiff to be scrutinized and doubted by the court.

– The practice is “tawdry” and “dishonours more than honours the bravery and contribution of the Representative Plaintiff.” In the within case, Justice Perell compared the $2.25 million award to class counsel to the requested $30,000 for the representative plaintiff, both for contribution to prosecuting the action.

– The practice creates a “repugnant competition and grading” of the contributions of representative plaintiffs across other class actions

– Awarding honorariums in some cases and not others, or awarding honorariums of variable amounts, may be insulting to representative plaintiffs in other cases. Justice Perell compared the requested $30,000 requested in this institutional abuse action with the $10,000 awarded to the representative plaintiffs who brought access to justice to inmates in federal penitentiaries and had experienced solitary confinement. He concluded “Having to put a price tag to be paid by class members on heroism is repugnant.”

Conflicting Case Law

Less than two weeks after Justice Perell released his decision, Justice Belobaba delivered conflicting reasons in Kalra v Mercedes Benz[8] and, shortly thereafter, Justice J.T. Akbarali did the same in Redublo v CarePartners[9].

In Kalra, Justice Belobaba acknowledged Doucet, but opted not to “go that far.”[10] The plaintiffs alleged that the defendants’ vehicles, which were represented as “clean diesels,” were actually emitting high and illegal levels of nitrogen oxide pollution for most of the time they were being driven. The representative plaintiff in Kalra traded in his vehicle around two months after filing the proposed class proceeding, disentitling him to compensation from any settlement or judgment. Nevertheless, he continued as the representative plaintiff for the following five years out of a sense of duty. This, Justice Belobaba held, was “the kind of extraordinary effort that justifies a significant honorarium.”[11] Mr. Kalra was awarded $10,000 for his efforts.

In Redublo, Justice Akbarali discussed some additional arguments in favour of honoraria for representative plaintiff and then addressed Justice Perell’s decision in Doucet point-for-point. She sets out, inter alia, the following points:[12]

– The Ontario Court of Appeal’s decision in Smith Estate can be considered implicit approval of the practice of awarding honoraria.

– The British Columbia Court of Appeal has addressed whether honoraria put representative plaintiffs in conflicts of interest and nonetheless approved the practice, although cautioning against awards so large they create the “impression” of a conflict of interest.[13]

– Justice Sharpe (as he then was) expressed concerns in Windisman v Toronto College Park Ltd.[14] that not compensating a representative plaintiff for time and effort would enrich the class at the representative plaintiff’s expense.

– Arguments that not awarding honoraria is irreconcilable with “basic notions of fairness” and could result in no one with similar grievances coming forward to take on the role of representative plaintiff. Further, it is crucial to give representative plaintiffs incentives to act as a check and balance to class counsel, who have the greatest financial stake in the outcome of the litigation.

– Deciding whether and when to award honoraria must be viewed through the lens of the goals of the Class Proceedings Act, 1992,[15] which are access to justice, behaviour modification, and judicial economy. Justice Akbarali concluded that the goals of the CPA are met by awarding honoraria.

– Awarding an honorarium does not amount to paying for legal services or for participating in certain stages of an action.

– Close scrutiny of proposed settlements, counsel fees, and honoraria will address the issue of whether a representative plaintiff appears to be in a conflict of interest. The concerns regarding conflict of interest also justify preventing honoraria awards from being too large.

– Testing the genuineness and value of contributions can be handled in the same manner as the reasonableness of class counsel fees, or settlement broadly, using the tools of the court.

– Courts should reconsider the process by which evidence is tested to address re-traumatization of self-represented plaintiffs, not discard the practice of granting honoraria. Where necessary, a trauma-informed approach to judging can address these concerns.

– It is not tawdry to award honoraria. Courts should not decide how a representative plaintiff will feel about an honorarium. Further, honoraria is the only tool by which courts can recognize the contributions of representative plaintiffs: “We have no plaques to bestow, no trophies to hand out. All we have are awards of money.”

Justice Akbarali held that where a representative plaintiff or other involved class member “has provided competent service coupled with positive results to the class,” an honoraria is appropriate. The factors speaking to whether to award an honoraria include:[16]

– Did the representative plaintiffhave active involvement in the initiation of the litigation and retainer of counsel?

– Was the representative plaintiffexposed to a real risk of costs?

– Did the representative plaintiffsuffer significant personal hardship or inconvenience in connection with the litigation?

– Did the representative plaintiffsuffer direct financial losses or incur out-of-pocket costs that she would not have incurred as an individual litigant?

– Did the representative plaintifftake on a role that was extraordinarily onerous, or potentially traumatic, or that put her at risk of suffering additional harms?

– How much time did the representative plaintiffspend, and what activities did she undertake in advancing the litigation?

– How did the representative plaintiffcommunicate and interact with other class members?

– What was the extent of the representative plaintiff’s participation at various stages in the litigation, including discovery, settlement negotiations and trial?

– How does the settlement or judgment benefit the class?

– Is the proposed honorarium an amount that does not create an actual or perceived conflict with the class?

– Are there objectors to the proposed honorarium and if so, what are the nature of their objections?

Justice Akbarali concluded that the two representative plaintiffs had stepped forward and risked intrusion of their own privacy for the sake of helping class members access justice. She awarded each of them a $5,000 honorarium.

Looking Forward

The plaintiffs in Doucet have sought leave to appeal Justice Perell’s decision declining to grant honoraria before the Divisional Court. Now seems the perfect time for an appellate court to weigh in on this topic and provide parameters and guidance on how courts and counsel should approach the issue in the future.

[1] Baker Estate v Sony BMG Music (Canada) Inc., 2011 ONSC 7105.

[2] 2011 ONCA 233 [“Smith Estate”].

[3] Ibid at para. 133.

[4] Pabla v Caterpillar of Canada Corporation et al., 2022 ONSC 732.

[5] 2022 ONSC 976 [“Winnipeg Ballet”].

[6] Ibid at para. 58.

[7] Ibid at para. 61.

[8] 2022 ONSC 941 [“Kalra”].

[9] 2022 ONSCC 1398 [“Redublo”].

[10] Kalra, supra note 9 at footnote 19.

[11] Ibid at paras. 37-39.

[12] See Redublo, supra note 9 at paras.102 -111 for her general comments and para. 112 for her response to Justice Perell’s nine reasons.

[13] See Parsons v Coast Capital Savings Credit Union, 2010 BCCA 311.

[14] [1996] O.J. 2897 (Gen. Div).

[15] SO 1992, c 6 [“CPA”].

[16] Factors originally set out in Hodge v Neinstein, 2019 ONSC 439 at para. 50, plus a few more from Justice Akbarali, Redublo, supra note 9 at para. 114.

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