ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 09-CV-371983CP
DATE: July 4, 2012

BETWEEN:

Henryk Krajewski, Norman Brandsma and Jeffrey Dunbrack

Plaintiffs

• and -

Tnow Entertainment Group, Inc., Ticketmaster Entertainment, Inc., Ticketmaster Canada Ltd. and Premium Inventory, Inc.

Defendants

Proceeding under the Class Proceedings Act, 1992

COUNSEL:

• Ward Branch, Jay Strosberg, and Luciana Brasil for the Plaintiffs

• Wendy Matheson and Stuart Svonkin for the Defendants

HEARING DATE: June 29, 2012

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION

[ 1 ] This is a consent motion by the plaintiffs in a proposed class action under the Class Proceedings Act, 1992 , S.O. 1992, c. 6 for certification of part of the action for settlement purposes and for approval of the settlement. Class counsel seeks approval of a contingency fee agreement and its counsel fee. (Similar motions are to follow in Alberta, Manitoba, and Québec.)

B. FACTUAL AND PROCEDURAL BACKGROUND

[ 2 ] The defendant Ticketmaster Entertainment Inc. (“Ticketmaster”) and Ticketmaster’s wholly-owned Canadian subsidiary, the defendant Ticketmaster Canada Ltd. (“Ticketmaster Canada”), sell primary market tickets for music, sporting, theatre and other events in Canada through their websites www.ticketmaster.com and www.ticketmaster.ca as well as by telephone and through a number of retail outlets.

[ 3 ] The defendants, TNOW Entertainment Group, Inc. (“TicketsNow”) and Premium Inventory, Inc. (“Premium Inventory”) are wholly-owned subsidiaries of Ticketmaster, which sold or assisted third parties, including professional ticket brokers and others, in reselling secondary market tickets for events in Ontario, Alberta, Manitoba and Québec through the website www.ticketsnow.com .

[3] On September 27, 2008, the proposed representative plaintiff, Henryk Krajewski, who lives in Toronto, Ontario, purchased two tickets through the TicketsNow website to see Smashing Pumpkins in Toronto, for a total purchase price of $533.65, including service charges and shipping costs. The original price of each ticket purchased by Mr. Krajewski was $66.50. Thus, Mr. Krajewski paid $403.65 to TicketsNow in secondary market charges.

[ 4 ] On February 9, 2009, Mr. Krajewski commenced a proposed class action against TicketsNow, Ticketmaster Canada, Ticketmaster, and Premium Inventory, Inc. On February 12, 2009, Norman Brandsma commenced a similar class action against Ticketmaster and Ticketmaster Canada.

[ 5 ] On March 26, 2009, Justice Cullity issued an order consolidating the actions commenced by Mr. Krajewski and by Mr. Brandsma, and adding Mr. Dunbrack as a plaintiff. A consolidated statement of claim was delivered.

[ 6 ] On March 30, 2010, the plaintiffs delivered an amended consolidated statement of claim.

[ 7 ] Messrs. Krajewski, Brandsma, and Dunbrack’s action concerns: (a) the primary market sale; and (b) the secondary market resale of tickets for music, sports, theatre and other events at prices that the plaintiffs allege contravene the provisions of the Ticket Speculation Act , R.S.O. 1990, c. 17.

[ 8 ] Similar actions concerning the secondary market resale of tickets have been commenced in Alberta, Manitoba, and Québec alleging contraventions of the the Alberta Amusements Act , RSA 2000, ch. A-40, the Amusements Act (Manitoba), CCSM c. A70 and the Québec Consumer Protection Act , LRQ c. P-40.1.

[ 9 ] While each of the actions is based on a different statute, the theory of the plaintiffs is the same; namely, the sale of primary and secondary market tickets to the plaintiffs and to the members of the proposed classes was contrary to the various statutes. The plaintiffs seek a number of remedies, including an injunction restraining the defendants and others from selling primary and secondary tickets at prices which contravene the statutes and damages based upon unjust enrichment and conspiracy.

[ 10 ] On June 6, 2010, the plaintiffs delivered their certification materials. The certification hearing was scheduled for April 4 to 6, 2011.

[ 11 ] In April 2011, the parties began settlement discussions in mediation sessions. Ronald Slaght Q.C., a highly experienced litigation counsel was the mediator. Present at the mediation were James H. MacMaster, Ward K. Branch and Jay Strosberg for the plaintiffs, as well as proposed representatives for each of the proposed primary market class and secondary market class. Present on behalf of the defendants were Richard Munisteri, Senior Vice President and Associate General Counsel for Ticketmaster, Tom Worrall, Chief Operating Officer of Ticketmaster Canada, and the defendants’ outside counsel Wendy Matheson and Stuart Svonkin.

[ 12 ] Following four days of mediation, the parties continued to have settlement discussions with the assistance of Mr. Slaght. Those discussions extended to November 2011, when the parties reached an agreement in principal with respect to the secondary market claims. Negotiations continued and concluded in January 2012.

[ 13 ] The plaintiffs in Ontario, Alberta, Manitoba, and Quebec entered into an agreement to settle the secondary market claims. This settlement is subject to the approval of the courts in Ontario, Alberta, Manitoba and Quebec. The Settlement Agreement does not dispose of the primary market claims brought in Ontario by Messrs. Brandsma and Dunbrack.

[ 14 ] The courts in Ontario, Alberta, Manitoba, and Québec respectively ordered that notice of the proposed settlement be given to the putative class members.

[ 15 ] The Pre-Approval Notice program included sending copies of the notice to each of the proposed Settlement Class Members by e-mail (using the most recent e-mail address they provided to TicketsNow in purchasing tickets) as well as to approximately 1,500 persons who contacted Class Counsel and identified themselves as being potential class members. Copies of the Pre-Approval Notice were sent to approximately 49,000 potential Settlement Class Members.

[ 16 ] Based on the number of persons who were sent copies of the Pre-Approval Notice, it is estimated that there will be approximately 49,000 Settlement Class Members. On average, each proposed Settlement Class Member purchased approximately three tickets;

[ 17 ] The deadline for objections from Ontario Settlement Class Members was June 22, 2012. There were no notices of objection.

[ 18 ] The funding agencies, the Ontario Class Proceedings Fund (the “Fund”) and the Fonds d’aide aux recours collectifs (the “Fonds”) do not object to the proposed settlement.

[ 19 ] Class Counsel, who are very experienced class action counsel, recommend approval of the settlement. It is Class Counsel's opinion that the settlement represents a fair and reasonable compromise of the secondary market claims advanced in the actions.

[ 20 ] The major terms of the proposed settlement are as follows:

• each Settlement Class Member will receive a refund of $36 per ticket, less certain deductions for legal fees and repayment of funding levies, if applicable

• there are no monetary caps

• payments are to be made to all Settlement Class Members within 4 months of the Effective Date of Settlement

• the Defendants agree to make changes to the TicketsNow Website and to the Ticketmaster websites that address concerns with respect to the functionality of these websites. In particular, the Defendants will eliminate any and all hyperlinks between the “No Tickets Found” page on the Ticketmaster Website and the TicketsNow Website

• in Ontario and in Manitoba, where there are ticket resale restrictions, the Defendants have agreed that:

o sellers will not be permitted to list or sell tickets for events in those provinces unless the tickets are listed and sold in a manner that complies with the applicable legislation; and

o if tickets are listed for events in Manitoba or Ontario, a warning will advise purchasers of the limits imposed by the legislation on the ticket price, and will advise buyers to verify whether their tickets comply with the restrictions. If the buyer verifies that the tickets were sold contrary to the legislation limits, TicketsNow will give the buyer an option to reverse the transaction within a defined period of time

• the Defendants agree to pay for the costs of the mediation, administration of the settlement, and for the majority of the notice costs;

• the Defendants agree to pay the sum of $850,000 on account of costs in the Ontario, Alberta, Manitoba and Québec actions

• Class Counsel will be notified in respect of Settlement Class Members who do not cash their cheques. Class Counsel will then attempt to locate those persons, who will have an additional period in which to cash their cheques, or request replacement cheques

• to the extent that there are any uncashed amounts at the conclusion of the ultimate cashing deadline, the Defendants agree to pay up to $500,000 as a cy-pres payment to a charity to be designated at that time.

[ 21 ] Assuming that all of the Settlement Class Members cash their refund cheques, the projected recovery is $5,034,528.

[ 22 ] Class Counsel’s analysis is that the potential recovery for the proposed settlement class would require the defendants to disgorge between 2.40 and 2.96 times their profits.

[ 23 ] The following chart summarizes the pertinent information concerning the projected financial benefits of the proposed settlement and the amounts claimed for Class Counsel’s fees, disbursements and applicable taxes:

Number of persons comprising the settlement class in Ontario, Manitoba, Quebec and Alberta

46,700

Total number of tickets sold by TicketsNow to settlement class members

139,848

Projected total value of refunds, being proposed refund per Ticket ($36) x total number of tickets sold to Settlement Class Members (139,848)

$5,034,528

Projected fee of Class Counsel, being projected total value of refunds ($5,034,528) x 25 percent

$1,258,632

Value of Class Counsel’s docketed time to date, excluding preparation and attendance at approval hearings in four jurisdictions

$1,140,387

Amount Class Counsel will ask the Ontario Court to initially approve on account of costs/fees

$850,000

Theoretical premium assuming 100 percent take up

$118,245

Theoretical multiplier assuming 100 percent take up

1.1

Class Counsel’s disbursements, including taxes

$119,777.82

C. CERTIFICATION FOR SETTLEMENT PURPOSES

[ 24 ] Pursuant to s. 5(1) of the Class Proceedings Act , 1992, the court shall certify a proceeding as a class proceeding if: (a) the pleadings disclose a cause of action; (b) there is an identifiable class; (c) the claims or defences of the class members raise common issues of fact or law; (d) a class proceeding would be the preferable procedure; and (e) there is a representative plaintiff or defendant who would adequately represent the interests of the class without conflict of interest and there is a workable litigation plan.

[ 25 ] Where certification is sought for the purposes of settlement, all the criteria for certification must still be met: Baxter v. Canada (Attorney General) (2006), 83 O.R. (3d) 481 (S.C.J.) at para. 22. However, compliance with the certification criteria is not as strictly required because of the different circumstances associated with settlements: Bellaire v. Daya , [2007] O.J. No. 4819 (S.C.J.) at para. 16 ; National Trust Co. v. Smallhorn , [2007] O.J. No. 3825 (S.C.J.) at para. 8 ; Nutech Brands Inc. v. Air Canada , [2008] O.J. No. 1065 (S.C.J.) at para. 9 .

[ 26 ] Having reviewed the Statement of Claim, I am satisfied that the pleadings disclose a cause of action and, therefore, the first criterion for certification is satisfied.

[ 27 ] The plaintiffs propose the following class definition: “All Settlement Class Members who purchased Ontario Tickets” where “Settlement Class Members” and “Ontario Tickets” are defined in the Secondary Claim Settlement Agreement so that membership in the proposed Ontario Settlement Class can be determined solely by reference to the date of purchase of the tickets (between February 9, 2007 and the effective date of the Settlement) and the location of the event in Ontario.

[ 28 ] I am satisfied that this class definition satisfies the second criterion for certification.

[ 29 ] Mr. Krajewski proposes the following common issue, which in my opinion satisfies the third criterion for certification:

Did the Defendants or any of them breach or conspire to breach section 2 (a) of the Ontario Ticket Speculation Act by selling or otherwise disposing of Ontario Tickets?

[ 30 ] The determination of whether or not the defendants breached or conspired to breach section 2 (a) of the Ontario Ticket Speculation Act is central to the claim of each proposed class member, and can be made without reference to the individual class members.

[ 31 ] Turning to the preferable procedure criterion, where there is a cause of action, an identifiable class, common issues, and a settlement, there is a strong basis for concluding that a class proceeding is the preferable procedure because certification would serve the primary purposes of the Class Proceedings Act, 1992 ; namely, access to justice, behavioural modification, and judicial economy.

[ 32 ] Certification provides the settling parties the powerful and flexible mechanisms of the Act to implement their settlement. Several cases have recognized that where certification is sought for the purposes of implementing a settlement, there is a strong argument that the preferable procedure criterion has been satisfied. See: Coleman v. Bayer Inc. , [2004] O.J. No. 1974 (S.C.J.) at para. 80 ; Paramount Pictures (Canada) Inc. v. Dillon , [2006] O.J. No. 2368 (S.C.J) at para. 36 .

[ 33 ] I am satisfied that the preferable procedure criterion is satisfied in the case at bar.

[ 34 ] I am also satisfied that the Mr. Krajewsk will fairly and adequately represent the interests of the class members. I am, therefore, satisfied that the fifth criterion for certification as a class action has been satisfied.

[ 35 ] With all the criteria satisfied, I approve the certification of this action as a class proceeding under the Class Proceedings Act, 1992 .

D. SETTLEMENT APPROVAL

[ 36 ] Under s. 29 (2) of the Class Proceedings Act, 1992 , a settlement of a class proceeding must be approved by the court to be binding on the parties.

[ 37 ] To approve a settlement of a class proceeding, the court must find that in all the circumstances the settlement is fair, reasonable, and in the best interests of those affected by it: Dabbs v. Sun Life Assurance , [1998] O.J. No. 1598 (Gen. Div.) at para. 9 ; Parsons v. Canadian Red Cross Society , [1999] O.J. No. 3572 (S.C.J.) at paras. 68-73 .

[ 38 ] In determining whether to approve a settlement, the court, without making findings of facts on the merits of the litigation, examines the fairness and reasonableness of the proposed settlement and whether it is in the best interests of the class as a whole having regard to the claims and defences in the litigation and any objections raised to the settlement: Baxter v. Canada (Attorney General) (2006), 83 O.R. (3d) 481 (S.C.J.) at para. 10 .

[ 39 ] When considering the approval of negotiated settlements, the court may consider, among other things: (a) likelihood of recovery or likelihood of success; (b) amount and nature of discovery, evidence or investigation; (c) settlement terms and conditions; (d) recommendation and experience of counsel; (e) future expenses and likely duration of litigation and risk; (f) recommendation of neutral parties, (g) if any; number of objectors and nature of objections; (h) the presence of good faith, arms- length bargaining and the absence of collusion; (i) the degree and nature of communications by counsel and the representative parties with class members during the litigation; and (j) information conveying to the court, the dynamics of and the positions taken by the parties during the negotiation: Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 14855 (ON SC) , 40 O.R. (3d) 429 (Gen. Div.) at pp. 440-44, aff'd (1998), 1998 7165 (ON CA) , 41 O.R. (3d) 97 (C.A.), leave to appeal to S.C.C., [1998] S.C.C.A. No. 372; Parsons v. The Canadian Red Cross Society , [1999] O.J. No. 3572 (S.C.J.) at paras. 71-72 ; Frohlinger v. Nortel Networks Corp. , 2007 696 (ON SC) , [2007] O.J. No. 148 (S.C.J.) at para. 8 ; Kelman v. Goodyear Tire and Rubber Co. , 2005 803 (ON SC) , [2005] O.J. No. 175 (S.C.J.) at paras. 12-13 ; Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. (2005), 2005 8751 (ON SC) , 74 O.R. (3d) 758 (S.C.J.) at para. 117 ; Sutherland v. Boots Pharmaceutical plc , [2002] O.J. No. 1361 (S.C.J.) at para. 10 .

[ 40 ] A reasonable and fair settlement is inherently a compromise and a reasonable and fair settlement will not be and need not be perfect from the perspective of the aspirations of the parties. That some class members are disappointed or unsatisfied will not disqualify a settlement because the measure of a reasonable and fair settlement is not unanimity or perfection. See: Baxter v. Canada (Attorney General) , 2006 41673 (ON SC) , [2006] O.J. No. 4968 (S.C.J.) at para. 21 ; Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 14855 (ON SC) , 40 O.R. (3d) 429 (Gen. Div.) at p. 440, aff'd (1998), 1998 7165 (ON CA) , 41 O.R. (3d) 97 (C.A.), leave to appeal to S.C.C., [1998] S.C.C.A. No. 372.

[ 41 ] I am satisfied that the settlement proposed to settle the secondary market claims is fair, reasonable, and in the best interests of those affected by it. Accordingly, I approve the settlement.

E. FEE APPROVAL

[ 42 ] Mr. Krajewski signed a contingency fee agreement. He (and each of the plaintiffs in the companion actions) agreed to a fee of 25% of the settlement amount, plus disbursements and applicable taxes. He also agreed that regardless of whether success was achieved in the Ontario Action, Class Counsel would be paid all costs recovered in the action, which as noted above is $850,000.

[ 43 ] Subject to a limitation on their ability to collect fees in relation to uncashed refund cheques, class counsel from Ontario, Alberta, Manitoba and Québec, collectively request a fee of 25 percent of the amounts recovered by the Settlement Class Members, plus taxes, plus reimbursement of disbursements and taxes. Class Counsel seek an immediate payment of $850,000, plus 25 percent of each cheque that is cashed by a Settlement Class Member. This will not exceed 25 percent of the recovery of the Settlement Class Members.

[ 44 ] Before preparing for the consent certification and settlement approval hearing, Class Counsel docketed time valued at $1,140,387. Assuming that all of the Settlement Class Members cash their refund cheques, the projected fee would provide a multiplier of 1.1.

[ 45 ] Mr. Krajewski supports the fee request, and there are no objections to the amount sought.

[ 46 ] The fairness and reasonableness of the fee awarded in respect of class proceedings is to be determined in light of the risk undertaken by the lawyers in conducting the litigation and the degree of success or results achieved: Maxwell v. MLG Ventures Ltd. (1996), 30 O.R. (3d) 304 (Gen. Div.); Windisman v. Toronto College Park Ltd. , [1996] O.J. No. 2897 (Gen. Div.) ; Serwaczek v. Medical Engineering Corp. , [1996] O.J. No. 3038 (Gen. Div.) ; Parsons v. Canadian Red Cross Society (2000), 2000 22386 (ON SC) , 49 O.R. (3d) 281 (S.C.J.).

[ 47 ] Where the fee arrangements are a part of the settlement, the court must decide whether the fee arrangements are fair and reasonable, and this means that counsel are entitled to a fair fee, which may include a premium for the risk undertaken and the result achieved, but the fees must not bring about a settlement that is in the interests of the lawyers, but not in the best interests of the Class Members as a whole: Sparvier v. Canada (Attorney General) , 2006 SKQB 533 () , [2006] S.J. No. 752 (Q.B.) at para. 43 , aff’d 2007 SKCA 37 () , [2007] S.J. No. 145 (C.A.).

[ 48 ] Fair and reasonable compensation must be sufficient to provide a real economic incentive to lawyers to take on a class proceeding and to do it well: Gagne v. Silcorp Ltd . (1998), 1998 1584 (ON CA) , 41 O.R. (3d) 417 (C.A.); Parsons v. Canadian Red Cross Society (2000), 2000 22386 (ON SC) , 49 O.R. (3d) 281 (S.C.J.); Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. , [2005] O.J. No. 1117 (S.C.J.) at paras. 59-61 .

[ 49 ] Factors relevant in assessing the reasonableness of the fees of Class Counsel include: (a) the factual and legal complexities of the matters dealt with; (b) the risk undertaken, including the risk that the matter might not be certified; (c) the degree of responsibility assumed by Class Counsel; (d) the monetary value of the matters in issue; (e) the importance of the matter to the class; (f) the degree of skill and competence demonstrated by Class Counsel; (g) the results achieved; (h) the ability of the class to pay; (i) the expectations of the class as to the amount of the fees; (j) the opportunity cost to Class Counsel in the expenditure of time in pursuit of the litigation and settlement: Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. , [2005] O.J. No. 1117 (S.C.J.) at para. 67 ; Endean v. Canadian Red Cross Society , 2000 BCSC 971 () , [2000] B.C.J. No. 1254 (S.C.); Wamboldt v. Northstar Aerospace (Canada) [2009] O.J. No. 2583 (S.C.J.) at para. 33 .

[ 50 ] In my opinion, considering the facts described above and the factors relevant to assessing the reasonableness of Class Counsel’s fee request, I am satisfied that Class Counsel’s fee request should be approved and I do so in accordance with the Class Proceedings Act, 1992 .

F. CONCLUSION

[ 51 ] For the above reasons, I certify this action, approve the settlement, and approve the fee of Class Counsel in accordance with the Class Proceedings Act, 1992 .

[ 52 ] Order accordingly.

Perell, J.

Released: July 4, 2012

COURT FILE NO.: 09-CV-371983CP

DATE: July 4, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Henryk Krajewski, Mr. Brandsma and Jeffrey Dunbrack

Plaintiffs

‑ and ‑

Tnow Entertainment Group, Inc., Ticketmaster Entertainment, Inc., Ticketmaster Canada Ltd. and Premium Inventory, Inc.

Defendants

REASONS FOR DECISION

Perell, J.

Released: July 4, 2012.