COURT FILE NO.: CV-14-502348-00CP DATE: 20180719 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Pietro Castrillo Plaintiff – and – Workplace Safety and Insurance Board Defendant

Counsel: Alan McConnell for the Plaintiff Caroline Zayid and Michael Rosenberg for the Defendant

Proceeding under the Class Proceedings Act, 1992

Heard: In writing

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] Pietro Castrillo brings a motion for an order granting him leave to discontinue what is a proposed class proceeding under the Class Proceedings Act, 1992 [1] against the Workplace Safety and Insurance Board (“WSIB”). He also seeks an order dismissing his action against WCIB on the basis that it has been settled for $90,000 to be paid to his lawyers, Fink & Bornstein P.C., on account of legal expenses.

B. Facts

[2] Mr. Castillo suffered a workplace injury that left him with a permanent impairment and loss of a range of motion of his shoulder. He made a claim to the WSIB. Medical testing in relation to his claim revealed pre-existing to severe osteoarthritis that had been asymptomatic before his injury.

[3] Based on its interpretation of Policy 18-05-05 (Effect of Pre-existing Impairment), the WCIB determined Mr. Castrillo’s Non-Economic Loss (“NEL”) benefit for a permanent impairment by multiplying the degree of the whole person impairment (expressed as a percentage) by a base value reduced by the degree of pre-existing impairment. In Mr. Castrillo’s case, the WCIB calculated his whole person impairment to be 6%, which it reduced to 3% owing to Mr. Castrillo’s pre-existing asymptomatic osteoarthritis.

[4] Mr. Castrillo appealed to the Appeals Resolution Officer. Mr. Castrillo argued that he did not have a pre-existing impairment but rather had a “pre-existing condition” and that the WSIB acted outside its authority be reducing his NEL benefit.

[5] The appeal was successful, and Mr. Castrillo bore his own legal expenses of $663.99.

[6] As a result of his experience, Mr. Castrillo sought to change the Board's interpretation of Policy 18-05-05 so that other injured workers would not bear the costs of reversing the Board's interpretation of its policy, and on April 16, 2014, Mr. Castrillo commenced this action under the Class Proceedings Act, 1992. He amended his Statement of Claim on October 7, 2014. He included claims for misfeasance in public office and for punitive damages.

[7] In April, 2015, pursuant to Rule 21.01, the WSIB brought a motion to strike Mr. Castrillo’s action for failure to plead a reasonable cause of action. On June 25, 2015, Justice Belobaba granted the motion, and the Statement of Claim was struck without leave to amend.

[8] On February 13, 2017, the Court of Appeal reversed Justice Belobaba's decision. The Court struck certain parts of the Amended Statement of Claim, concerning bad faith, but granted leave to amend. [2]

[9] Mr. Castrillo amended his pleading, and on August 10, 2017, he delivered a motion record for the certification of a class proceeding.

[10] On December 15, 2017, the WSIB issued a clarification of its Policy 18-05-05, as well as related policies that provided for the reduction of NEL benefits. The WSIB's clarification directed that the policies be interpreted in a manner that would have resulted in no reduction of Mr. Castrillo's NEL benefit. A copy of the clarification was posted on the WSIB website.

[11] On December 15, 2017, the WSIB also announced that it would commence a review of all cases from 2012 in which a worker's NEL benefit was reduced on account of a pre-existing condition. Where the application of the interpretation set out in the clarification would result in a higher NEL benefit, the WSIB would notify the worker and pay the difference.

[12] Thomas Teahen, President and Chief Executive Officer of WSIB, met with counsel for Mr. Castrillo to discuss ideas for policy reform. Mr. Castrillo's counsel presented several policy initiatives that are intended to ensure injured workers are fairly compensated for injuries sustained in the workplace.

[13] Mr. Castrillo has been advised by his lawyers, proposed Class Counsel, that his action would face significant challenges both at the certification stage and on the merits. Mr. Castrillo has also received independent legal advice confirming this view.

[14] In these circumstances, with the steps taken by the WSIB, Mr. Castrillo believes that the purpose of his proposed class action has largely been achieved and considering the risks of continued litigation, he no longer wishes to pursue his claim or a class action; he, therefore, seeks leave to discontinue the proposed class action.

[15] Mr. Castrillo has incurred significant legal expenses to date. In 2014, he applied to the Class Proceedings Fund for indemnification and funding to cover certain disbursements, but the Fund denied his application. The parties had agreed that they would bear their own costs on the WSIB's motion to strike the Statement of Claim and thus there was no recovery of costs notwithstanding his ultimate success. Excluding the costs of the motion to strike, Mr. Castrillo's legal fees for the commencement of the action and the preparation of a motion for certification of a class proceeding exceed $100,000, exclusive of taxes and disbursements.

[16] Despite the WSIB's view that Mr. Castrillo is not entitled to recover his legal costs, in recognition of Mr. Castrillo's role in raising the issue of NEL benefit reductions for further consideration, the WSIB has decided to pay $90,000 to partially offset his legal costs, subject to court approval.

C. Discussion

[17] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, or settlement of a class action. Section 29 states:

Discontinuance, abandonment and settlement

29. (1) A proceeding commenced under this Act and a proceeding certified as a class proceeding under this Act may be discontinued or abandoned only with the approval of the court, on such terms as the court considers appropriate.

Settlement without court approval not binding

(2) A settlement of a class proceeding is not binding unless approved by the court.

Effect of settlement

(3) A settlement of a class proceeding that is approved by the court binds all class members.

Notice: dismissal, discontinuance, abandonment or settlement

(4) In dismissing a proceeding for delay or in approving a discontinuance, abandonment or settlement, the court shall consider whether notice should be given under section 19 and whether any notice should include,

(a) an account of the conduct of the proceeding; (b) a statement of the result of the proceeding; and (c) a description of any plan for distributing settlement funds.

[18] Before giving approval of discontinuance - or as in the immediate case before approving what is in effect a discontinuance with prejudice to the proposed representative plaintiff but not the proposed class members - the court must be satisfied that the interests of the class will not be prejudiced. [3]

[19] A motion for discontinuance should be carefully scrutinized, and the court should consider, among other things: whether the proceeding was commenced for an improper purpose, whether if necessary there is a viable replacement party so that putative class members are not prejudiced, or whether the defendant will be prejudiced. [4]

[20] The policy rationales for requiring court approval for the discontinuance of a proposed class action include: (1) deterring plaintiffs and class counsel from abusing the class action procedure by bringing a meritless class proceeding (a so-called strike suit) to extract a payment as the price of discontinuing the class proceeding; and (2) providing an opportunity to ameliorate any adverse effect of the discontinuance on class members who might be prejudiced by the discontinuance.

[21] Under s. 29 of the Class Proceedings Act, 1992, in approving a discontinuance, the court is required to consider whether notice of the discontinuance should be given to the putative class members.

D. Conclusion

[22] For obvious reasons this is an appropriate case for a discontinuance. The purposes of the proposed class action have essentially been spent, and it is fair and appropriate that Mr. Castrillo be partially reimbursed for his legal expenses, which he incurred for the proposed class’s benefit. Accordingly, I make the following Order:

a. I grant leave to discontinue this action and the proposed class proceeding, with prejudice to his commencement of a new claim arising from the WSIB decision to reduce his NEL benefits; b. Notice of the discontinuance of this action and the proposed class proceeding shall be given in the form proposed by Mr. Castrillo and the notice shall be posted on the website of Fink & Bornstein P.C.; c. Fink & Bornstein P.C. shall make reasonable efforts to communicate notice of the discontinuance of this action to any prospective class members who have communicated directly in writing with Fink & Bornstein P.C. for the purpose of participating in the proceedings and who have provided Fink & Bornstein P.C. with contact particulars; d. The WSIB shall pay $90,000, inclusive of HST and disbursements, to Fink & Bornstein P.C. in respect of the legal costs incurred by Mr. Castrillo in prosecuting this action; and e. The suspension of any limitation period pursuant to s. 28(1) of the Class Proceedings Act, 1992 shall terminate 30 days after the date of the order.

Perell, J.

Released: July 19, 2018