COURT FILE NO.: 4172/08
DATE: 20130107
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DOROTHY ELLIOT as Estate Trustee of the Last Will and Testament of John MacDougall Elliot, deceased, DOROTHY ELLIOTT, GORDON RICHARDSON, GORDON RICHARDSON as Estate Trustee of the Last Will and Testament of Mae Myrtle Hall, deceased, ALICE KOTUBA as Estate Trustee of the Last Will and Testament of Charles Gibbs, deceased, ALICE KOTUBA and PATRICIA O’SULLIVAN
Harvey T. Strosberg, Q.C.,
Sharon Strosberg, and
Stanley M. Tick, for the Plaintiffs
Plaintiffs
- and -
JOSEPH BRANT MEMORIAL HOSPITAL
Barry Glaspell, for the Defendant
Defendant
HEARD: December 10, 2012
APPROVAL OF CLASS ACTION SETTLEMENT
Baltman J.
Introduction
[1] In this class action the plaintiffs alleged that the defendant was negligent in its operation of Brant Hospital, and thereby caused numerous persons to be infected with C. difficile during the period of May 1, 2006 to December 31, 2007. During this period approximately 223 patients were diagnosed with C difficile, of which 91 died.
[2] On October 4, 2011, I certified the action, on consent, following submissions from the parties. On February 17, 2012, the opt out period expired. In total, five class members opted out. None of them has commenced a separate action against the Hospital.
[3] The plaintiffs moved for an order under s. 29 of the Class Proceedings Act approving the settlement of the class action. They also moved for an order approving Class Counsels’ fee agreement. Pursuant to my direction Class Counsel notified the Class of the approval hearing, to be held before me on December 10, 2012.
[4] On December 10th I conducted the approval hearing. The motion was supported by the Hospital and was unopposed by the office of the Children’s Lawyer and the Office of the Public Guardian and Trustee. Several of the representative plaintiffs and their family members attended, along with other interested parties. At my request, a representative of the proposed administrator – Paolo DeRosa, Senior Vice President of Marsh Canada - also attended. Although there were initially five objections filed, by the time of the approval hearing all of those had been withdrawn, save one. The one remaining objector did not attend the approval hearing, despite proper notice. The details of his objection are set out below.
[5] After reviewing the evidence and hearing the submissions of counsel, I ruled that for written reasons to follow, the proposed settlement was approved. I also approved Class Counsel’s fee plan, which is detailed below. These are my reasons.
[6] At various points in these reasons some of the submissions made by Class Counsel in their factum have been adopted and repeated, in whole or in part.
Factual Background
[7] This action concerns an outbreak of C. difficile at the Hospital. During the Class Period, approximately 223 patients at the Hospital were diagnosed with C. difficile, of which 91 patients died.
[8] C. difficile is a bacterium which causes illness ranging from mild to severe diarrhea, nausea, vomiting, dehydration, severe pain, fever, colitis and in some cases, death. The disease is spread by the fecal-oral route in the body. Individuals can become infected if they touch items or surfaces that are contaminated with fecal traces and then touch their mouth or nose.
[9] C. difficile exists in the public domain as well as in hospital settings, although it tends to spread more readily and rapidly in the latter. This action concerns only those individuals who contracted C. difficile in the hospital during the Class period. Many of those affected were elderly and already compromised by numerous other ailments at the relevant time.
[10] The details of the settlement are set out below. By way of overview, the settlement provides for a total payment by the Hospital of 9 million dollars, to be allocated among three categories of patients according to the duration and severity of their symptoms. The settlement is divided as follows:
| PAYABLE TO: | AMOUNTS: |
|---|---|
| Categories 1, 2 and 3 | $6,074,700 |
| OHIP | 714,000 |
| Secondary Harm Fund | 714,000 |
| Administrator/Arbitrator | 375,000 |
| Class Counsel Fees, Disbursements and Taxes thereon | 1,122,300 |
| TOTAL | $9,000,000 |
[11] In addition to the fees set out above, Class Counsel seek 15% of the amounts available for distribution to the Class Members in Categories 1, 2 and 3 and Secondary Harm, resulting in total fees of $1,936,322.
Law relating to Approval of a Settlement
[12] Under s. 29 of the CPA the court must approve a class action settlement. 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, taking into account the claims and defences in the litigation and any objections to the settlement: Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 (S.C.) at paras. 68-73; Dabbs v. Sun Life Assurance, [1998] O.J. No. 1598 (Gen.Div. at para. 9, aff’d (1998) 1998 7165 (ON CA), 41 O.R. (3d) 97 (C.A.); Baxter v. Canada (Attorney General) (2006), 2006 41673 (ON SC), 83 O.R. (3d) 481 (S.C.) at para. 10.
[13] A settlement does not have to be perfect or treat everybody equally. Nor is it necessary for the settlement to meet the demands of each class member. It need only fall within a zone of reasonableness: Parsons, para. 70; Dabbs, para. 11; Frohlinger v. Nortel Networks Corp., 2007 696 (ON SC), [2007] O.J. No. 148 (S.C.) at para. 8.
[14] The parties proposing the settlement bear the onus of satisfying the court that it ought to be approved. In determining whether to approve a settlement, the court may take into account factors such as:
a) the likelihood of recovery or success;
b) the amount and nature of discovery, evidence or investigation;
c) the proposed settlement terms and conditions;
d) the future expense and likely duration of litigation;
e) the recommendation of neutral parties, if any;
f) the number of objectors and nature of objections;
g) the presence of good faith, arms length bargaining and the absence of collusion;
h) the degree and nature of communications by counsel and the representative plaintiffs with class members during the litigation;
i) the recommendation and experience of counsel.
[15] The factors listed above are “guidelines rather than rigid criteria.” In any particular case, some criteria may not be satisfied or some may be given more weight than others: see Ford v. F. Hoffman-LaRoche Ltd. (2005), 2005 8751 (ON SC), 74 O.R. (3d) 758 (S.C.) at para. 117; Frohlinger, para. 8; Parsons, para. 73.
[16] There is a strong initial presumption of fairness when a settlement is negotiated arms-length. Moreover, the court may give considerable weight to the recommendations of experienced counsel who have been involved in the litigation and are in a better position than the court or the class members to weigh the factors that bear on the reasonableness of a particular settlement: Vitapharm Canada Ltd. v. F. Hoffman-LaRoche Ltd. (2005), 2005 8751 (ON SC), 74 O.R. (3d) 758 (S.C.), paras., 113-114 and 142; CSL Equity Investments Ltd. v. Valois, [2007] O.J. No. 3932 (S.C.) at para. 5; Kranjcec v. Ontario, [2006] O.J. No. 3671 at para. 11.
[17] Before approving a settlement, the court must be assured that the class members will receive the promised benefits in a timely and efficient manner; moreover, the administrators of the settlement will be subject to the court’s supervision and must be autonomous, independent, and neutral: Baxter, paras. 31-39.
Factors relevant to this Settlement Approval
a. Likelihood of Recovery or Success
[18] The affidavit evidence reveals that absent a court approved settlement, the action involved substantial risks. These included:
The prejudice arising from protracted litigation: many of the class members are elderly and vulnerable, and a substantial number have already died; a long wait for trial (and any possible appeal) will deprive Class Members of any meaningful relief;
a liability dispute involving a battle of experts and focused on the difficult question of whether the Hospital had sufficient infection control policies in place at the relevant time;
a causation issue requiring each class member to prove not only that they contracted C. difficile at the Hospital during the relevant time, but that this infection caused the losses claimed.
b. Amount and Nature of Discovery, Evidence or Investigation
[19] The parties were able to reach a proposed settlement at a relatively early stage in the proceeding and without the need for formal discovery. However, I am satisfied that Class Counsel did everything reasonably possible to properly evaluate the claims, including retaining an expert in infectious diseases and reviewing thousands of pages of medical documentation for the 89 Class Members who contacted them directly.
c. Proposed Settlement Terms and Conditions
[20] The settlement provides for the Hospital to pay $9,000,000 with no right of reversion, to be allocated as follows:
| PAYABLE TO: | AMOUNTS: |
|---|---|
| Categories 1, 2 and 3 | $6,074,700 |
| OHIP | 714,000 |
| Secondary Harm Fund | 714,000 |
| Administrator/Arbitrator | 375,000 |
| Class Counsel Fees, Disbursements and Taxes thereon | 1,122,300 |
| TOTAL | $9,000,000 |
[21] The Categories of compensation follow:
| CATEGORY | DURATION OF SYMPTOMS | CLASS MEMBER RECEIVES: | FAMILY CLASS MEMBERS SHARE: |
|---|---|---|---|
| 1 | Up to 30 days | $3,000 | $1,000 |
| 2 | 31 days to 90 days | $10,000 | $2,000 |
| 3 | 90 days or more, or is on Mortality List, or suffered from Sequelae | $15,000 | $21,000 |
[22] A Class Member in Category 3 can apply to receive additional funds of $20,000 from the Secondary Harm fund upon delivering an affidavit and medical records to the Administrator which establish, on the balance of probabilities, that the Class Member was treated for certain conditions after contracting C. difficile.
[23] If there are insufficient funds for the amounts awarded to each Class Member, then recovery shall be reduced on a pro rata basis. In the event there are funds left over after every Class Member has been paid, the excess will be shared pro rata. Under no circumstances will there be any reversion of funds to the Hospital.
[24] In my view, these settlement amounts are within the range considered reasonable for individuals infected with C. difficile or other comparable maladies. By way of comparison, in 2012, a $1 million class action settlement, with the right of reversion, was approved in the Quebec Superior Court regarding the C.difficile outbreak at a hospital which infected 76 people. The Class Members received the following compensation:
(a) for individuals infected during the time period covered by the inquest:
(i) general damages: $10,000 minimum per Class Member, including 16 death claims;
(ii) an additional $12,500 per Class Member per surgery (up to a maximum of 3 surgeries) relating to C. difficile;
(iii) FLA claims for Class Members who died: $7,500 per spouse and $5,000 per child; and
(iv) $0 for FLA claimants of Class Members who did not die;
(b) for individuals infected during the time period which was not covered by the inquest:
(i) general damages: $5,000 per Class Member;
(ii) an additional $4,000 per Class Member per surgery relating to C. difficile; and
(iii) $0 for all FLA claimants.
[25] See also:
Cupido v. Sargeant (1989) CarswellOnt 1616 (HCJ) at paras. 71 and 72. $20,000 general damages for C.difficile infection (duration: 12 months), $1,000 for FLA claimant;
McNeil v. Airport Hotel (Halifax) Ltd., [1980] NSJ No. 498 (NSSC) at para. 28. $3,000 general damages for salmonella infection;
In the Matter of an Arbitration pursuant to the Walkerton Compensation Plan (Reva Devins) at paras. 17 and 22.
$4,000 general damages (diarrhea, vomiting and cramps from E. coli water contamination, beyond the 30 days called for by the Walkerton Compensation Plan).
Tourlos v. Tiffany Gate Foods, [2008 3677 (Ont. Sup. Ct.)] at para. 15. The following grid applied:
1 to 3 days of symptoms: $1,000 general damages, $250 to family members
4 to 9 days of symptoms: $2,000 general damages, $500 to family members
10 to 15 days of symptoms: $4,000 general damages, $750 to family members
16 to 22 days of symptoms: $6,000 general damages, $1,200 to family members
Illness in excess of 22 days: $8,000 general damages, $1,500 to family members
d. Future Expense and Likely Duration of Litigation
[26] The courts have recognized that the practical value of an expedited recovery is an important factor for consideration. Aside from the legal and evidentiary risks, a settlement avoids the prospect of a case such as this one being litigated over many more years, including any potential appeals.
e. Recommendation of a Neutral Party
[27] The parties attended a two day mediation which was presided over by an experienced adjudicator, but were not able to resolve these proceedings during that process.
f. Number of Objectors and Nature of Objections
[28] As previously noted, although five objections were delivered, all but one have since been withdrawn.
[29] The sole outstanding objection is that of Mr. Larry Abbott, whose mother died during her stay at the Hospital. Mr. Abbott did not attend the approval hearing. On behalf of the Abbott family, Mr. Abbott wrote a letter to Class Counsel expressing his dismay with the proposed settlement on the basis that in his view, the sums proposed are inadequate. Mr. Abbott relayed the anguish his family experienced over the loss of his mother and his dissatisfaction with the treatment provided by the hospital and its staff. He believes the monetary value of the settlement does not properly reflect his family’s loss.
[30] In response, Class Counsel telephoned and wrote to the Abbott family, explaining the rationale for the settlement and how it allowed recovery irrespective of whether it could be established that Mrs. Abbott’s death was in fact the result of the C. difficile she contracted. This is relevant in her case because she had a complex medical history, and at the time of her hospitalization was already suffering from stage 3 cancer, which was likely terminal. Moreover, the actual cause of her death was congestive heart failure, not C. difficile, but because she contracted the disease the family is entitled to the death benefit as part of the class action.
[31] No amount of money can replace a human life. I recognize too that whatever other ailments Mrs. Abbott suffered from, the contraction of C. difficile added even more stress and misery to her final days. However, the proposed settlement provides some financial compensation to the family without them having to prove negligence on the part of the Hospital or that any alleged negligence caused Mrs. Abbott’s death. The amount of the settlement, while undoubtedly less than the value anyone attributes to a loved one, reflects the uncertainties associated with the cause of death as well as the risk in attempting to establish liability. That is the essence of any settlement and the unique advantage of a class action settlement.
[32] While I am sympathetic to the Abbott family, the fact remains that if they did not wish to be bound by the class action because they believe their circumstances were different from class members, they could have opted out. By remaining in the class they must appreciate that the settlement does not have to be perfect or completely address each member’s unique circumstances; rather the court, without making findings of facts on the merits of the litigation, determines whether the proposed settlement is fair and reasonable and whether it is in the best interests of the class as a whole.
[33] For those reasons I conclude that the Abbott family’s objection does not provide a reason to refuse the proposed settlement.
g. Presence of Arms Length Bargaining and Dynamics of the Negotiations
[34] The parties negotiated for approximately two years before reaching an agreement. The negotiations were at arm’s length and adversarial, and conducted by seasoned and capable advocates on both sides.
h. Degree and Nature of Communications with Class Members
[35] Throughout the proceeding Class Counsel were in regular contact, either in person or by telephone, with 89 Class Members (or their families). In October 2012 Class counsel posted notice of the proposed settlement of this action on the website maintained by them for this action, and published it in the Burlington Post newspaper. The notice of the proposed settlement was also sent directly to Class Members by regular mail, and by email, if an email address was provided.
[36] In addition, Class Counsel also posted the Settlement Agreement on the website, so that Class members were able to review the draft Judgment and Distribution Plan, if they so desired.
[37] Finally, according to their affidavits, all of the representative plaintiffs were regularly briefed and were involved in any major decisions in the action. They instructed Class Counsel to sign the Settlement Agreement and recommend approval of the settlement.
i. Recommendation of Experienced Counsel
[38] Class Counsel have opined that the proposed settlement is fair, reasonable and in the best interests of the Class Members. The Class Counsel serving this file have extensive experience in class action litigation. In particular, Mr. Tick was counsel in the Walkerton Class action and the Daya Class action; Mr. Strosberg was lead counsel in the Hepatitis C class action and continues to be recognized as one of the foremost class action lawyers in Canada. They have disclosed to the court their tactics and rationale and I am satisfied that they have exercised sound judgment in analyzing this case. Their recommendation therefore deserves substantial regard when assessing the proposed settlement.
Administrator and Arbitrator
[39] The proposed Administrator is Marsh Risk Consulting, who has previously administered numerous class proceedings. Mr. Paolo De Rosa, a senior vice president with Marsh, addressed the court at the approval hearing and supplied a written proposal. Based on those submissions I am satisfied that the proposed system of administration is thorough, efficient and user-friendly.
[40] The proposed Arbitrator is Ms. Reva Devins. She is a highly qualified adjudicator and has previously performed this task in numerous class proceedings, including large personal injury settlements. I have no hesitation in approving her involvement.
Behaviour Modification
[41] One of the goals of class actions is behaviour modification, or the generation of “a sharper sense of obligation to the public by those whose actions affect large numbers of people”: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67 at para. 15; Ontario Attorney General’s Advisory Committee on Class Action Reform, Report (Toronto: The Committee, 1990) at 16-18 and 20; Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, [2000] S.C.J. No. 63 at paras. 27-29. Class actions thus deter repeated breaches because defendants recognize they will continue to be held accountable to the public.
[42] In this case the CEO of the Hospital, Mr. Eric Vandewall, informed the court through his counsel of numerous changes made in the facility in order to protect against further outbreaks. These include:
The introduction of molecular testing for more rapid detection of C. difficile;
Regular monitoring of antibiotic usage and hygiene practices;
The hiring of a fulltime infection disease specialist, who chairs an infection control committee;
Prompt placement of patients in isolation upon first symptoms of diarrhea;
Limiting transfers or movements of patients who are in isolation;
Regular cleaning of isolation rooms and equipment used on patients;
Regular reporting to prevention and control services;
Ongoing promotion of proper hand hygiene;
Auditing of hand hygiene and reporting practices in all departments.
[43] These steps, assuming they are being properly implemented, indicate the Hospital has taken a more aggressive approach to patient safety and disease control, thereby advancing the goal of behavior modification.
Fee Approval
[44] I turn to the matter of the approval of Class Counsel’s fee.
[45] As a general rule, Class Counsel’s fees are to be fixed and approved on the basis of whether they are “fair and reasonable” in all of the circumstances. That assessment typically includes the following factors:
the factual and legal complexities of the matters dealt with;
the risks undertaken, including the risk that the matter might not be certified;
the degree of responsibility assumed and the skill and competence demonstrated by class counsel;
the monetary value of the matters in issue;
the results achieved;
the importance of the matter to the class members and to the public;
the ability of the class to pay;
the expectations of the class as to the amount of the fees; and
the opportunity costs to class counsel in the expenditure of time in pursuit of the litigation and settlement.
[46] See Vitapharm, para. 67; Parsons, paras. 16-17; Wilson v. Servier Canada Inc., 2005 7128 (ON SC), [2005] O.J. No. 1039 (S.C.) at para. 74.
[47] This was a risky and complicated case which alleged negligence in a hospital setting. The action was vigorously defended by able defence counsel. Both liability and causation were in issue and conflicting medical expert opinions were exchanged. Class Counsel retained and obtained opinions from a medical expert, successfully certified the action as a class proceeding, and engaged in adversarial negotiations over a two year period.
[48] Had the case not come to a settlement, there was a real risk of protracted, expensive litigation that would inevitably take a toll on many families that had already suffered a loss. Moreover, success on a class wide basis was important because given the amounts in issue, it would not have been economical for the persons or families affected to pursue individual actions.
[49] The plaintiffs entered into a retainer agreement that contemplated the payment of 25% of the recovery, plus applicable taxes and disbursements. The proposed fees – at 21.5% ($1,936,322) - are less than that amount. The Ontario Court of Appeal has recognized that lawyer’s fees of 20% to 30% are common and reasonable in personal injury actions. As the proposed fees fall well within that range, are supported by all the representative plaintiffs, and fairly reflect the factors listed above, I conclude that the fee should be approved, with one caveat: although the initial amount of $1,122,300 is payable now, the balance shall not be paid out until the final distribution of the funds has been approved by the court.
Conclusion
[50] For the reasons set out above, I approved the proposed settlement, and have issued a judgment reflecting its terms.
Baltman J.
Released: January 7, 2013
COURT FILE NO.: 4172/08
DATE: 20130107
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DOROTHY ELLIOT as Estate Trustee of the Last Will and Testament of John MacDougall Elliot, deceased, DOROTHY ELLIOTT, GORDON RICHARDSON, GORDON RICHARDSON as Estate Trustee of the Last Will and Testament of Mae Myrtle Hall, deceased, ALICE KOTUBA as Estate Trustee of the Last Will and Testament of Charles Gibbs, deceased, ALICE KOTUBA and PATRICIA O’SULLIVAN
- and -
JOSEPH BRANT MEMORIAL HOSPITAL
APPROVAL OF CLASS ACTION SETTLEMENT
Baltman J.
Released: January 7, 2013