COURT FILE NO.: 4367/11 CP
DATE: 2012/12/06
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARVIN SHEREBRIN and MICHAEL KRAUSE
Plaintiffs
– and –
BUILDING PRODUCTS OF CANADA CORP.
Defendant
Jon Foreman & Genevieve Meisenheimer, for the Plaintiffs
Charles Wright & Linda Visser, for the Defendant
HEARD: October 12, 2012
Leitch J.
RE: APPROVAL OF SETTLEMENT
[1] The Plaintiffs brought a motion seeking approval of a Settlement Agreement entered into between the Plaintiffs and the Defendant on January 19, 2012. This settlement was a North American-wide settlement involving Plaintiffs’ counsel in Ontario, Quebec and in the United States, along with the Defendant’s counsel.
[2] The action was certified for settlement purposes on March 28, 2012 and a form of notice advising of the settlement approval hearing was also approved on that date.
[3] The settlement has been approved in Quebec and a settlement approval hearing is scheduled in the United States for December 12, 2012.
[4] For the reasons that follow, I found the proposed settlement was a fair and reasonable resolution of this action and in the best interest of Class Members. As a result, the order presented by counsel was previously signed.
The Terms of the Settlement Agreement
[5] This action related to alleged deficiencies in the B.P. Organic Shingles warranty offered by the Defendant and in the administration of that program. The settlement, as Class Counsel has outlined, enhances and augments the current warranty; ensures adherence to all warranty terms; and, ensures the appropriate administration of warranty complaints.
[6] The augmentations to the warranty program are outlined in para. 18 of the affidavit filed in support of settlement approval. They include what is described as a 5% rule (if 5% or more of a roof slope is damaged, eligible claimants will be entitled to settlement benefits based on the total number of squares on the slope); compensation will be based on the prorated amount of the current or actual costs of labour and materials at the time a claim is made, rather than the original cost of labour and materials; the minimum non-proration period (during which a claimant will be eligible for 100% of the original cost of labour and materials) has been increased to five years; eligible claimants are now entitled to choose a cash settlement option; and, claims denied in whole or part after June 9, 2009 are eligible for re-evaluation.
[7] Another important enhancement to the warranty, as described in the motions materials, is the fact that there is now a right of appeal in relation to a warranty decision which provides a reasonable and cost effective procedure for the resolution of warranty disputes. These disputes will be referred to an independent roofing inspector appointed by the agreement of the Plaintiffs and the Defendant. Disputes of an administrative nature will be reviewed by an independent adjudicator (ADR Chambers). The Defendant has assumed responsibility for the fees incurred in relation to the inspector and adjudicator, unless there has been any fraudulent conduct by a claimant. In such circumstances, the Defendant may impose a charge of up to $250.00.
[8] In addition, a partial or complete rejection of a claim requires the Defendant to provide reasons for such rejection and an explanation of a claimant’s right to seek a review of the decision.
[9] As Class Counsel emphasized, there is no monetary limit on the claims that may be made pursuant to the settlement and no expiration date on the settlement benefits.
[10] The Settlement Agreement provides that its terms and provisions were operative as of February, 2012. As a result, Class Counsel has had experience in relation to the administration of the new warranty program. At the settlement approval hearing, Class Counsel expressed confidence in the process and the conduct of the Defendant.
[11] In addition, the Settlement Agreement requires the Defendant to provide Class Counsel with a report outlining the resolution of claims and a description of settlement benefits provided to each claimant on an annual basis. Further, Class Counsel has the right to annually audit the processing and disposition of claims by the Defendant. Class Counsel also has the right to examine all books and records maintained by the Defendant relating to the processing of claims and correspondence with the claimants.
Notice of the Settlement Approval Hearing
[12] As Class Counsel described, the Defendant undertook a comprehensive notice program at its expense in accordance with the earlier approval of the Court.
[13] The affidavits filed in support of this motion outline the extensive number of “visitors” to the settlement website; the fact that over 1000 Class Members have contacted Class Counsel by email or telephone; and, that the Defendant’s call centre has received a high volume of traffic.
Assessment of the Settlement
[14] Courts have endorsed a number of factors for consideration in assessing a settlement as outlined in the Plaintiffs’ factum. (See Nunes v. Air Transat A.T. Inc., [2005] O.J. No. 2527; Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., 2005 8751 (ON SC), [2005] O.J. No. 1118 (S.C.J.); Dabbs v. Sun Life, Assurance Company of Canada, [1998] O.J. No. 1598 at 13 (Gen. Div); and Parsons v. The Canadian Red Cross Society, [1999] O.J. No. 3572 at paras. 71, 72 (S.C.J.).
[15] This settlement was the result of arm’s length negotiation, which is a factor favouring approval of the settlement.
[16] The settlement was achieved very early in the action and prior to formal discovery, however, Class Counsel described the investigations that they undertook and the significant contact they had with Class Members, together with informal discovery and early disclosures made by the Defendant. As a result, Class Counsel consider themselves well informed and fully recommend approval of this settlement as do each of the representative Plaintiffs.
[17] As Class Counsel indicated, while the Plaintiffs had a good and arguable case and they believed in their case, there were risks relating to causation issues in particular. Class Counsel channelled their efforts into resolution resulting in the successful execution of the North America-wide settlement.
[18] The advantage of early resolution and the avoidance of the risks of litigation and inherent delay, together with the recommendation of Class Counsel experienced in consumer protection and product liability cases, are all factors favouring approval of the settlement. I agree with Class Counsel that the fact that the Settlement Agreement has been effective for a number of months allows Class Counsel to express their opinion with confidence and their opinion should be given considerable weight.
[19] The fact that there has been no objection to the settlement after notice was given of the settlement approval hearing, is also a factor favouring approval of the settlement.
[20] There have been 55 opt-outs from the settlement, which represents an extremely small percentage of the huge number of Class Members. This is also a factor favouring approval of the settlement, particularly when those who opted out had ongoing litigation with the Defendant.
[21] The terms of the settlement and the claims process are straight forward.
[22] The court will retain jurisdiction over the settlement because of the provisions of s. 6.16 of the Settlement Agreement, requiring that all disputes, claims and controversy be resolved by this court.
[23] Based on the foregoing, as previously outlined, the draft order presented by counsel, was approved and signed.
Justice L. C. Leitch
Released: December 6, 2012
COURT FILE NO.: 4367/11 CP
DATE: 2012/12/06
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARVIN SHEREBRIN and MICHAEL KRAUSE
Plaintiffs
– and –
BUILDING PRODUCTS OF CANADA CORP.
Defendant
REASONS FOR JUDGMENT
Leitch J.
Released: December 6, 2012