Court File and Parties
DIVISIONAL COURT FILE NO.: 125/14
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: LORNE WALDMAN, Plaintiff/Moving Party
- and -
THOMSON REUTERS CANADA LIMITED, Defendant/Responding Party
BEFORE: Swinton J.
COUNSEL: Jordan Goldblatt, for the Plaintiff/Moving Party
Andrew Bernstein and Sarah Whitmore, for the Defendant/Responding Party
HEARD at Toronto: in writing
ENDORSEMENT
Introduction
1The representative plaintiff in this class action proceeding seeks leave to appeal the order of Perell J. refusing to approve a settlement of the proceeding or class counsel fees.
2I would grant leave to appeal, as there is good reason to doubt the correctness of this order for a number of reasons, and the appeal raises issues of importance for the development of the law.
Analysis
3First, the motions judge appears to have added a new criterion for the approval of settlements to those normally considered and which are set out in his reasons at paras. 84 and 87. That criterion is institutional fairness, which he described as elevating the standard of approval (see para. 89). He gave this factor great weight, rather than considering in detail the factors set out in para. 87. Moreover, to the extent that institutional fairness is to protect against settlements obtained, as he says, through “misadventure, incompetence, lassitude or fatigue”, these factors do not appear to apply in the present case.
4Second, the motions judge gave great weight to the fact that class members were, in effect, giving up a “property right” because of the requirement that they give a non-exclusive licence to the defendant if they do not opt out of the settlement. This characterization of the licence appears to be in conflict with the decision of the Supreme Court in Roberston v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R. 363 at para. 56, where such a licence was described as a defence to a claim of infringement and not a transfer of a property right.
5Third, the motions judge appears to have focused on what he considered to be the proprietary nature of the licence and not taken into consideration the likelihood of the class members’ recovery or success in the litigation. For example, in assessing the settlement from the perspective of the class members, he failed to consider the “prohibitively high-risk” nature of the litigation, as he described the litigation at para. 92. He also failed to consider that the licence appears to have given nothing more to the defendant than what it could have achieved, if successful, through a defense of fair dealing in light of the Copyright Pentalogy of the Supreme Court of Canada.
6Fourth, the motions judge measured the proposed settlement against a hypothetical “fairer and more reasonable resolution” which he proposed - a discontinuance of the action - without considering the likelihood of the defendant agreeing to such an outcome while still paying to establish the cy-près fund.
7Fifth, the motions judge, in considering behaviour modification, appears not to have considered the strength of the defense and whether there was an obligation for the defendant to change its behaviour, especially given the Supreme Court’s copyright jurisprudence. In any event, there was evidence of changes in behavior – for example, with respect to the operation of Litigator.
8Sixth, the motions judge appears to have erred in saying that he had no authority to alter the class counsel fees, which formed part of the settlement. The Notice of Motion asked for approval in the amount sought or “such other amount as may be just.” Counsel also offered to reduce their fees by increasing the cy-près fund by $150,000.
9Given the arguable errors in the approval process, there is good reason to doubt the correctness of the decision.
10Moreover, this case raises an important issue with respect to the factors to be considered in the settlement of a class proceeding, especially the treatment of the institutional fairness factor, as well as issues of copyright law, that warrant the attention of an appellate court.
Disposition
11Therefore, the motion for leave to appeal is granted. Neither party seeks costs in their factum.
Swinton J.
Date: June 16, 2015