Waldman v. Thomson Reuters Canada Limited

[Indexed as: Waldman v. Thomson Reuters Canada Ltd.]

Ontario Reports

Ontario Superior Court of Justice,

Divisional Court,

Marrocco A.C.J.S.C., Morawetz R.S.J. and Conway J.

April 28, 2016

131 O.R. (3d) 367 | 2016 ONSC 2622

Case Summary

Civil procedure — Class proceedings — Settlement — Plaintiff bringing copyright infringement class action on behalf of lawyers who created documents which defendant obtained from public court files and made available to subscribers to online database service — Parties settling action after Supreme Court of Canada released decisions which significantly enhanced defendant's ability to rely on fair dealing defence — Settlement providing that class members would give defendant non-exclusive licence to use their work and that defendant would pay $350,000 into fund to finance public interest litigation and pay $825,000 for class counsel's costs — Motion judge refusing to approve settlement because it was more beneficial to class counsel than to class members and because it effectively expropriated class members' property rights — Appeal allowed and settlement approved — Motion judge erroneously characterizing non-exclusive licence as property right — Motion judge also erring in adding "institutional fairness" as new stand-alone factor for consideration when deciding whether to approve class action settlement — Action becoming prohibitively high-risk as result of Supreme Court of Canada decisions — Motion judge's decision unreasonable. [page368]

The plaintiff brought a class action on behalf of lawyers who created documents which the defendant obtained from public court files and made available to subscribers to its online database service. He alleged that the defendant, by reproducing the documents without the creators' authorization, infringed their copyright. The action was certified as a class proceeding. The parties entered into a settlement agreement after the Supreme Court of Canada released five decisions that significantly enhanced the defendant's ability to rely on the fair dealing defence. Among other things, the settlement agreement provided that the defendant would pay $350,000 to a fund that would be established to finance public interest litigation, that class members would grant the defendant a non-exclusive licence to use their existing and future works, and that the defendant would pay $825,000 for class counsel's costs. A motion for approval of the settlement agreement was dismissed. The motion judge found that the settlement agreement brought the administration of justice and class actions into disrepute because it was more beneficial to class counsel than to class members and because, in its practical effect, it expropriated class members' property rights in exchange for a charitable donation. The plaintiff appealed.

Held, the appeal should be allowed and the settlement agreement should be approved.

The motion judge erred in law in that he mischaracterized the non-exclusive licence as a property right rather than as providing a defence to claims of infringement. The motion judge also erred in introducing "institutional fairness" as a new stand-alone factor for consideration in deciding whether to approve a class action settlement. Finally, the motion judge found that, as a result of the five Supreme Court of Canada decisions, the case had become prohibitively high-risk litigation. In light of that finding, it was unreasonable for him to require the plaintiff to incur the time, expense and exposure in proceeding with a class action that had become no longer viable.

Cases referred to

Dabbs v. Sun Life Assurance Co. of Canada, [1998] O.J. No. 1598 (Gen. Div.); Dabbs v. Sun Life Assurance Co. of Canada (1998), 1998 7165 (ON CA), 41 O.R. (3d) 97, [1998] O.J. No. 3622, 165 D.L.R. (4th) 482, 113 O.A.C. 307, 7 C.C.L.I. (3d) 38, 27 C.P.C. (4th) 243, [1999] I.L