ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-11-433052CP
COURT FILE NO.: CV-11-458468CP
DATE: February 6, 2013
BETWEEN:
WILLIAM MORGAN
Plaintiff
– and –
SARA LEE OF CANADA NS ULC, SARA LEE CORPORATION OF CANADA LTD., and SARA LEE CORPORATION, SARA LEE FOODSERVICE LTD. SERVICE ALIMENTAIRE SARA LEE LTÉE, TANA CANADA INC. and HANESBRANDS CANADA NS ULC
Defendants
Geoffrey D.E. Adair, Q.C. for the Plaintiff
J.A. Prestage for the Defendants
AND BETWEEN:
MICHAEL SCIME
Plaintiff
– and –
SARA LEE OF CANADA NS ULC, SARA LEE CORPORATION OF CANADA LTD., SARA LEE CORPORATION/SARA LEE FOODSERVICE LTD. SERVICE ALIMENTAIRE SARA LEE LTÉE, TANA CANADA INC. and HANESBRAND CANADA NS ULC
Defendants
Ian W.M. Angus for the Plaintiff
J.A. Prestage for the Defendants
HEARD: February 4, 2013
Proceedings under the Class Proceedings Act
PERELL, J.
REASONS FOR DECISION
I. INTRODUCTION
[1] Before the court are motions for, among other things: (a) the approval of a settlement in two actions under the Class Proceedings Act, 1992, S.O. 1992, c. C.6; (b) the approval of several fee agreements; and (c) the approval of Class Counsels’ fees in the two class actions.
II. FACTUAL BACKGROUND TO THE APPROVAL OF THE SETTLEMENTS
[2] Briefly, the factual background to these motions begins in March 2011, when Christopher Prichard, the son of a pensioner with a pension plan from the Defendants, approached Adair Morse LLP to investigate whether there was a claim against the Defendants with respect its administration of its employee pension plans.
[3] Eventually two class actions were commenced by Adair Morse LLP. The Representative Plaintiff in one of the actions, Morgan v. Sara Lee of Canada NS ULC, is William Morgan, who is 79 years old. Mr. Morgan worked for Fuller Brush for more than 30 years. He was a member of a pension plan known as Fuller Brush Company Revised Retirement Plan No. 1.
[4] The Representative Plaintiff in the other class action, Scime v. Sara Lee of Canada NS ULC, is Michael Scime. He was a member of the Defendants’ Pension Plan No. 2. Up until relatively recently, Mr. Scime’s lawyer of record was Adair Morse, LLP. Around the time of the settlement of the two actions, there was a falling out between Mr. Scime and Mr. Adair, and Mr. Scime retained Ian W.M. Angus to act for him.
[5] That said, back in April 2011, Mr. Morgan retained Adair Morse LLP to act on his behalf to pursue payment of 100% of the surplus of Plan No. 1. Other former members of Plan 1 also retained Adair Morse LLP, as did several former members, including Mr. Scime, of the Fuller Brush Pension Plan known as Fuller Brush Company Revised Retirement Plan No. 2.
[6] Mr. Morgan has been very extensively involved with Mr. Geoffrey Adair of Adair Morse LLP and his associate Alexa Sulzenko in the carriage of the class actions. Mr. Morgan deposed that he had in excess of 100 occasions to discuss the litigation with Adair Morse LLP and had numerous meetings with the Class Members.
[7] With Mr. Adair’s firm acting as lawyer of record, class actions were brought to recover 100% of the surplus in the two pension plans. The disputes were between the employer and sponsor of the plans and 19 members of Plan 1 and 18 members of Plan 2. Mr. Morgan’s action was commenced on August 17, 2011. Mr. Scime’s action was commenced on July 10, 2012, shortly before a mediation to settle both actions.
[8] On July 24, 2012, the parties to both actions attended a judicial mediation presided over by Justice Colin Campbell. Mr. Angus attended with a watching brief.
[9] Before the mediation, the Defendants had made three settlement proposals. All were rejected.
[10] Approximately twenty former members of Plan 1 and Plan 2 attended the mediation. As noted, Mr. Angus attended the mediation, but the negotiating was essentially between Mr. Adair and Mr. Prestage, the lawyer acting for the Defendants. The mediation session, which lasted the full day, was productive, and the parties arrived at a settlement in principle.
[11] Adair Morse LLP was lawyer of record of both class actions until August 16, 2012, at which time Mr. Scime delivered a notice of change of lawyer appointing Ian. W. Angus as his lawyer.
[12] In July and August 2012 and into December, the parties attended to drafting a formal agreement, which was eventually signed and is dated December 7, 2012.
[13] Under the Settlement Agreement, all of the surplus in both pension plans, estimated to be $3,490,000 will be paid to the plan beneficiaries. In addition, $350,000 will be paid in respect of all other claims including costs.
[14] Of this last sum, during the negotiations $180,000 was attributable to legal fees for the class action. However, in my opinion, all of the $350,000 can be used to pay legal fees before encroaching on the surplus to be paid to the Class Members.
[15] A settlement agreement having been reached, the parties moved forward to certify the actions for settlement purposes.
[16] On December 18, 2012, I certified Morgan v. Sara Lee of Canada NS ULC for settlement purposes. On December 20, 2012, I certified Scime v. Sara Lee of Canada NS ULC, 2012 ONSC 7305 for settlement purposes. See: (1) Morgan v. Sara Lee of Canada NS ULC, 2012 ONSC 7203; and (2) Scime v. Sara Lee of Canada, NS ULC 2012 ONSC 7305.
[17] Several Class Members who wish to participate in the settlement mistakenly opted out of the actions. Therefore, I cancel the opt outs of Donna J. Davis, Margaret Wilkinson, and Darla Jean Bostad.
[18] Mary Prichard opted out of the class action.
[19] Five other class members opted out of the class action.
[20] The parties in the two actions now move for approval of the settlement reached with the Defendants of both actions. The lawyers move for approval of their respective fee agreements and for approval of their claims for legal fees from the settlement of the two actions.
[21] Some more details of the factual circumstances and the details of the settlement agreement for the two actions are set out in my Reasons for Decision, cited above, certifying the actions for settlement purposes. For present purposes, I will simply incorporate those reasons by reference to them and add some additional facts.
[22] The Representative Plaintiffs recommend the settlement as do Class Counsel.
[23] There were no objectors to the settlement.
[24] There were, however, objections by Mrs. Prichard to the services provided by Mr. Adair, particularly about whether the matter of the audit was adequately pursued. A problem with addressing Mrs. Pritchard’s objections is that she has opted out of the class action.
III. FACTUAL BACKGROUND – CLAIM TO LEGAL FEES
[25] As may be gathered, Morgan and Scime are virtually identical class actions. As already noted above, until recently, both actions were being prosecuted by Adair Morse LLP as lawyer of record.
[26] Just after the mediation, Michael Scime, the Plaintiff in the Scime action changed his lawyer of record, and the class in that action is now represented by Ian W.M. Angus.
[27] There is a dispute between Adair Morse LLP and Mr. Angus about his contribution to the resolution of Scime v. Sara Lee of Canada NS ULC and about the apportionment of legal fees for the two actions.
[28] Adair Morse LLP challenges the contribution made by Mr. Angus. For his part, Mr. Angus says that Mr. Adair did not do enough to follow up on the Class Members’ right to an audit and reservation of rights that was a part of the Settlement Agreement. Mr. Adair’s response to this charge is that under the Settlement Agreement, the right to pursue an audit was an individual matter not a Class Member matter.
[29] With respect to the lawyers’ claim for approval of their legal fees, I add the following facts.
[30] In May 2011, thirty-two pensioners signed a contingent retainer agreement with Adair Morse LLP. The fees if the contingency was satisfied was 20% of any amount recovered over 50% of the surplus plus unrecovered disbursements and all applicable taxes.
[31] At the mediation in the presence of Justice Campbell, Mr. Adair stated that given that the settlement included a payment of costs, his fee would be reduced to an amount equal to the total of those costs (i.e. $180,000) plus 5% of the total surplus plus all disbursements and applicable taxes.
[32] On January 28, 2013, just before the fairness hearing, Mr. Morgan signed a retainer agreement that complies with the requirements of the Class Proceedings Act and that is consistent with Mr. Adair’s fee commitment made at the mediation session.
[33] Adair Morse LLP intends to deliver an account to Plan 1 Class Members in an amount equal to 5% of the Plan 1 surplus plus that proportion of $180,000 attributable to the Plan 1 action. It believes that a multiplier against the base fee of 1.5 of the base fee will achieve this purpose.
[34] The Adair Morse LLP dockets indicate that up until notice the change of solicitors in the Scime action, it has a claim for legal fees of $179,041.83 broken down as follows: $145,709.50 for fees; $18,942.24 HST on fees; $12,786.20 for disbursements; and $1,603.89 for HST on disbursements.
[35] The Adair Morse LLP dockets indicate that up until the motion for settlement approval, it has a claim for legal fees of $364,877.33 broken down as follows: $306,948.75 ($204,632.50 for base fees times a multiplier of 1.5); $39,903.33 HST on fees; $16,421.36 for disbursements; and $2,059.95 for HST on disbursements.
[36] Based on the ratio of Plan 2 to Plan 1 surplus (18.8%), Adair Morse LLP proposes to render an account to Mr. Scime of $46,624.56. This proposed account would include 50% of the disbursements and a $7,500 premium for risk.
[37] Turning to Mr. Angus’ claim for legal fees, Mr. Scime signed a retainer agreement with Mr. Angus. Mr. Angus is claiming from the settlement funds a legal fee of $109,593.05, broken down as $85,500 ($57,000 for base counsel fee times a multiplier of 1.5), plus $10,735 for disbursements, and $12,608.05.55 for HST. Mr. Angus’ hourly rate is $500 per hour, and he says that he has spent 115 hours of time working on the file.
[38] At the fairness hearing, Mr. Adair and Mr. Angus acknowledged that if the court approved the settlement and approved their claims for legal fees, there were be no further claims for legal fees should it subsequently be determined that the surplus in the pension plans was greater than the currently estimated $3,490,000.
[39] The Defendants, Representative Plaintiffs, and Class Counsel in the respective class actions recommend approval of the settlement. The respective Representative Plaintiffs recommend the approval of the legal fees for their respective Class Counsel.
IV. DISCUSSION – SETTLEMENT APPROVAL
[40] 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.
[41] 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, arms-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.
[42] 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.
[43] Indeed, in this case, the settlement achieved is very good.
V. DISCUSSION – COUNSEL FEES
[44] 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.
[45] 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.
[46] In all the circumstances of this case, I award Adair Morse LLP $340,000, all inclusive. I approve the retainer agreement with Mr. Morgan.
[47] As noted above, Mr. Angus claims an all inclusive fee of $109,593.05. This fee includes a multiplier of 1.5 of the base fee. In the circumstances of this case, there is no basis for any multiplier. From a risk perspective, Mr. Angus’s retainer did not begin until after the settlement had been achieved. Although Mr. Angus was unofficially involved and present at the mediation session, practically speaking, he was retained by Mr. Scime for a second opinion.
[48] In all the circumstances of this case, I award Mr. Angus a fee of $75,000 all inclusive of counsel fee and disbursements and applicable taxes. I approve his agreement with Mr. Scime.
[49] I see no purpose in Mr. Adair actually rendering an account to Mr. Scime.
[50] The aggregate legal accounts that have been approved by the Court total $415,000, all inclusive. Of that sum, $350,000 of the expense portion of the settlement is available for legal fees, disbursements, and applicable taxes, and this money should be used for those purposes, leaving a balance of $65,000. Of that sum, 18.8%, i.e., $12,220 should be paid from the settlement proceeds for Plan 2; and 81.2%, i.e., $52,780 should be paid from the settlement proceeds for Plan 1.
[51] In my opinion, the result is fair and reasonable for all of the Class Members and also Class Counsel.
[52] Orders accordingly.
Perell, J.
Released: February 6, 2013
COURT FILE NO.: CV-11-433052CP
COURT FILE NO.: CV-11-458468CP
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WILLIAM MORGAN
Plaintiff
‑ and ‑
SARA LEE OF CANADA NS ULC, SARA LEE CORPORATION OF CANADA LTD., and SARA LEE CORPORATION, SARA LEE FOODSERVICE LTD. SERVICE ALIMENTAIRE SARA LEE LTÉE, TANA CANADA INC. and HANESBRANDS CANADA NS ULC
Defendants
AND BETWEEN:
MICHAEL SCIME
Plaintiff
‑ and ‑
SARA LEE OF CANADA NS ULC, SARA LEE CORPORATION OF CANADA LTD., SARA LEE CORPORATION/SARA LEE FOODSERVICE LTD. SERVICE ALIMENTAIRE SARA LEE LTÉE, TANA CANADA INC. and HANESBRAND CANADA NS ULC
Defendants
REASONS FOR DECISION
Perell, J.