ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 11-CV-425487CP
DATE: June , 2013
BETWEEN:
NATASHA MAKSIMOVIC
Plaintiff
– and –
SONY OF CANADA LTD, SONY CORPORATION OF AMERICA, SONY CORPORATION also known as SONY KABUSHIKI KAISHA, SONY COMPUTER ENTERTAINMENT AMERICA LLC, SONY NETWORK ENTERTAINMENT INTERNATIONAL LLC, and SONY ONLINE ENTERTAINMENT LLC
Defendants
Bryan C. McPhadden and Idan Erez for the Plaintiff
Dana M. Peebles for the Defendants
Proceeding under the Class Proceedings Act, 1992
HEARD: June 10, 2013.
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION
[1] This is a certified class action. See Maksimovic v. Sony of Canada Ltd. 2013 ONSC 1241. The Plaintiff, Natasha Maksimovic now moves for approval of a settlement and for approval of Class Counsel’s fees, all pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6. For the reasons that follow, I grant the relief requested.
B. FACTUAL AND PROCEDURAL BACKGROUND BACKGROUND
[2] The Defendants are: (a) Sony Corporation, a Japanese corporation; (b) Sony of Canada Ltd., which is a Canadian corporation; (c) Sony Corporation of America, which is an American corporation; (d) Sony Computer Entertainment America LLC, an American limited liability company; (e) Sony Network Entertainment International LLC, an American limited liability company; and (f) Sony Only Entertainment LLC, an American limited liability company.
[3] The Defendants manufacture and sell gaming devices and E-book readers, and they offer users of the devices online networks known as the Play Station Network, (“PSN”), the Sony Entertainment Service, (“SOE”), and Qriocity. These online networks allow consumers to play games online and to purchase games, music, videos, and e-books.
[4] In April 2011, there were approximately 3.5 million Canadian PSN and Qriocity accounts and approximately 959,000 Canadian SOE accounts. (Because users can hold multiple accounts, the number of Canadians with accounts is somewhat lower than the number of accounts.)
[5] One of the account holders was the Plaintiff Natasha Maksimovic, who lives in Mississauga, Ontario. She had registered with the PSN and with the Qriocity services and had provided personal information to the Defendants.
[6] In April 2011, third parties launched a cyber-attack to gain access to the accountholder information of consumers of the PSN, Qriocity, and SOE services.
[7] In response to the attacks, the Defendants temporarily shut down their networks. Following the attacks, in May of 2011, the Defendants offered a “Welcome Back” package to accountholders. The Welcome Back package included an offer of free content and free or discounted subscriptions to the online services.
[8] Following the resumption of services, four proposed class actions were commenced in Canada, two in Ontario and two in Québec. In those actions, the plaintiffs alleged that the unauthorized intrusions upon the networks deprived the putative class members with access to the networks and were breach of their privacy rights. The plaintiffs alleged that the defendants were in breach of contract.
[9] The Canadian actions, which includes the action now before the court, are being jointly prosecuted by a consortium of plaintiffs’ lawyers composed of McPhadden Samac Tuovi LLP and Merchant Law Group in Ontario, and Lauzon Bélanger Lespérance LLP and Lex Group Inc. in Québec.
[10] A number of proceedings related to the unauthorized attack on the defendants’ networks were also commenced in the United States. These proceedings have been centralized by the Judicial Panel of Multi-District Litigation in the Federal District Court for the District of San Diego.
[11] In the summer of 2012, there were negotiations in an effort to resolve the class actions in both the United States and Canada. These negotiations between plaintiffs’ counsel in the United States and the Sony Entities’ counsel in the U.S., however, proved unsuccessful.
[12] With the failure of the negotiations in the United States, Class Counsel in Canada entered into discussions with the Sony Entities’ Canadian counsel about the possibility of settling the Canadian actions independently of the U.S. proceedings.
[13] There were extensive negotiations in Canada, and the parties did negotiate a Settlement Agreement. The major terms of the settlement are as follows:
• Class Members who had a credit balance in their PSN or SOE account at the time of the Intrusions but have not used any of their accounts shall receive cash payments for credit balances.
• The Sony Entities will make available online game and service benefits to class members geared principally to the type of account (PSN, Qriocity, and/or SOE) held by the class member at the time of the Intrusions.
• The settlement benefits are available through a simple process. To become entitled to benefits, Class Members need only to complete a claim form.
• The Sony Entities will reimburse any Class Members who can demonstrate that they suffered Actual Identity Theft, as defined in the Settlement Agreement.
- Class Members that prove Identity Theft can submit claims for reimbursement of out-of-pocket payments (not otherwise reimbursed) for expenses that are incurred as a direct result of the Actual Identity Theft, up to a maximum of $2,500.00 per claim.
• The Sony Entities are to pay for the costs associated with providing notice of the Settlement Agreement and the settlement approval hearing, all administration costs, as well as an agreed amount for plaintiffs’ lawyers’ fees and expenses.
[14] Class Counsel requests approval of a fee of $265,000 inclusive of fees, disbursements, and applicable taxes. This claim is less than the value of the docketed time for the matter, which exceeds $300,000.
[15] The Settlement Agreement was premised on the understanding that there has in fact been no improper use of users’ personal information resulting in identity theft. In this regard, there is no evidence that any Class Members’ credit card payment information was accessed.
[16] Under the Settlement Agreement, the level and type of compensation takes into consideration the benefits the Sony Entities provided pursuant to their Welcome Back program. The Settlement Agreement reflects the state of the law, including possible damage awards, for breach of privacy/intrusion upon seclusion and loss/denial of service claims.
[17] By court order dated February 26, 2013, Rust Consulting Inc. was appointed as Claims Administrator for the administration of Opt Outs, coordination of the Notice Plan, administration of objections and related tasks.
[18] Notice of certification and of the motion for settlement approval was distributed to 3.5 million accountholder email addresses. This high degree of reach was possible because the Sony Entities had an extensive database of Class Members’ accountholder email addresses, which were used to disseminate the Court-approved notice, with a very low rate (15%) of undeliverable emails returned.
[19] The Administrator reports that it received 28 opt out forms. There were no objections. As the tip-over figure of 1,500 opt-outs provided for in the Settlement Agreement has not been reached, the Defendants are not free to terminate the settlement
[20] The consortium of law firms that are Class Counsel recommend the settlement as fair, reasonable, and in the best interests of the Class Members.
C. SETTLEMENT APPROVAL
[21] Section 29(2) of the Class Proceedings Act, 1992 provides that a settlement of a class proceeding is not binding unless approved by the court. 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 the class: Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 (S.C.J.) at para 57; Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 (S.C.J.), at para. 43.
[22] In determining whether a settlement is reasonable and in the best interests of the class, the following factors may be considered: (a) the likelihood of recovery or likelihood of success; (b) the amount and nature of discovery, evidence or investigation; (c) the proposed settlement terms and conditions; (d) the recommendation and experience of counsel; (e) the future expense and likely duration of litigation; (f) the number of objectors and nature of objections; (g) the presence of good faith, arm’s-length bargaining and the absence of collusion; (h) the information conveying to the court the dynamics of, and the positions taken by, the parties during the negotiations; and, (i) the nature of communications by counsel and the representative plaintiff with class members during the litigation. See: Fantl v. Transamerica Life Canada, supra at para 59; Corless v. KPMG LLP, [2008] O.J. No. 3092 (S.C.J.), at para. 38; Farkas v. Sunnybrook and Women’s Health Sciences Centre, supra, at para. 45.
[23] In my opinion, having regard to the various criteria set out above, the outcome of this class action is fair, reasonable, and in the best interests of the Class Members
D. FEE APPROVAL
[24] Turning to the matter of Class Counsel’s fee request, 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 lawyer in conducting the litigation and the degree of success or result achieved: Parsons v. Canadian Red Cross Society, 2000 22386 (ON SC), [2000] O.J. No. 2374 (S.C.J.), at para 13; Smith v. National Money Mart, 2010 ONSC 1334, [2010] O.J. No. 873 (S.C.J.), at paras 19-20; Fischer v. I.G. Investment Management Ltd., [2010] O.J. No. 5649 (S.C.J.), at para 25.
[25] 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: Smith v. National Money Mart, supra, at paras. 19-20; Fischer v. I.G. Investment Management Ltd., supra, at para 28.
[26] Having regard to these various factors, Class Counsel’s fee request is fair and reasonable and I approve it.
E. CONCLUSION
[27] For the above reasons, this motion should be granted.
Perell, J.
Released: June *, 2013
COURT FILE NO.: 11-CV-425487CP
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NATASHA MAKSIMOVIC
Plaintiff
‑ and ‑
SONY OF CANADA LTD, SONY CORPORATION OF AMERICA, SONY CORPORATION also known as SONY KABUSHIKI KAISHA, SONY COMPUTER ENTERTAINMENT AMERICA LLC, SONY NETWORK ENTERTAINMENT INTERNATIONAL LLC, and SONY ONLINE ENTERTAINMENT LLC
Defendants
REASONS FOR DECISION
Perell, J.
Released: June *, 2013.