SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 05-CV-299031
DATE: 20140213

RE: GERALD CLAYTON GLOVER, LINDA GLOVER, CACHITA WHYTE by her Estate Representative CLARENCE WHYTE, CLARENCE WHYTE, SONIA RADA, Estate Trustee without a Will of the Estate of ANNA RADA, SONIA RADA, ADELINE DAVIDSON by her Estate Representative, THOMAS DAVIDSON and THOMAS DAVIDSON, Plaintiffs

AND:

CITY OF TORONTO and HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, Defendants

BEFORE: Conway J.

COUNSEL:
Joel Rochon and Remissa Hirji, for the Plaintiffs

Robert Traves, Cheryl M. Woodin and Leslie Mendelson, for the Defendant, City of Toronto

Lise Favreau, for the Defendant, Her Majesty the Queen in Right of Ontario

HEARD: December 12, 2013, January 16, 2014 and February 12, 2014

Proceeding under the Class Proceedings Act, 1992

REASONS FOR DECISION (Settlement and Class Counsel Fee Approval) (Removal of Representative Plaintiff)

Conway J.

[1] The plaintiffs move for an order (i) approving a settlement pursuant to s. 29(2) of the Class Proceedings Act, 1992, S.O. 1992, c.6 (the “Act”); and (ii) approving class counsel fees. In addition, class counsel moves to have Mr. Clarence Whyte removed as a representative plaintiff.

[2] At the conclusion of the hearing, I approved the settlement and class counsel fees. I also removed Mr. Whyte as a representative plaintiff. I extended the date for opting-out of the class action to March 31, 2014. These are my reasons for doing so.

Background and the Settlement

[3] This class action relates to the outbreak of Legionnaires’ Disease at the Seven Oaks Nursing Home for the Aged (“Seven Oaks”), a long-term care facility owned and operated by the City of Toronto. Between September 1, 2005 and October 13, 2005, approximately 135 people in and around Seven Oaks contracted Legionnaires’ Disease, including 70 residents, 21 visitors and 39 staff members. There were 23 reported deaths.

[4] The cause of the outbreak was determined to be Legionella pneumophilia, which was found in the cooling tower located on the roof at Seven Oaks. Legionella pneumophilia causes Legionnaires Disease (a bacterial pneumonia) and Pontiac Fever (a milder, non-pneumonia infection).

[5] Two actions were brought by class counsel in 2005 and 2007 and were later consolidated. After a heavily contested certification hearing, Justice Lax certified the action as a class proceeding in April 2009. The “Class” is defined as:

those persons (excluding employees of the City of Toronto and her Majesty the Queen in Right of Ontario) who lived, worked or visited at Seven Oaks Home for the Aged, 7 Neilsen Road, Toronto, Ontario or within a radius of three kilometres, between September 1, 2005 and October 13, 2005, and who contracted Legionnaires’ Disease or Pontiac Fever.

[6] Leave to appeal was denied in February 2010. The parties proceeded to mediation in the fall of 2010, which was unsuccessful. They continued to negotiate on their own and arrived at a tentative settlement in January 2011. They finalized the terms of the settlement over the next 12 to 18 months. Minutes of settlement were signed by all three representative plaintiffs and the defendants on August 21, 2013.

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

• Legionnaires’ Disease Claims: The defendants will create a settlement fund of $1.2 million (the “Settlement Fund”) to satisfy claims for general damages. The amount of each claim is to be determined according to the five levels of “Compensation Categories”. Eligible class members will receive base payments of up to $30,000 (depending on the number of days from onset of illness to discharge from hospital, with the highest category for illness resulting in death) and up to $20,000 for family class members.

Special damages (including out-of-pocket expenses and lost wages) are payable to class members and their families in Compensation Categories 3, 4 and 5. These special damages will come out of the residue in the Settlement Fund after Compensation Category payments are made. If the residue is insufficient to cover all special damages, the defendants will pay the excess.

Class members in Compensation Categories 4 and 5 can apply to have their claims assessed at a reference. Any excess damages assessed by the referee are payable firstly out of the residue of the Settlement Fund (after payment of Compensation Category claims and special damages) and otherwise by the defendants.

• Pontiac Fever Claims: The defendants will pay $500 for each eligible Pontiac Fever claim, up to a maximum of $12,500 for all Pontiac Fever claims.

• Residue: If there is a residue in the Settlement Fund, up to 15% of the value of that fund will be redistributed to eligible class members who received at least $10. Any further residue will be distributed cy-près in equal amounts to The Baycrest Centre Foundation and Toronto Intergenerational Partnerships in Community.

• Class Counsel Fees: The defendants will pay (in addition to the Settlement Fund) $356,500 for class counsel’s fees, plus taxes and plus disbursements relating to administration of the notice and settlement program. Class counsel is further entitled to receive 10% of any payment to a class member;

• Government Claims: the defendants will pay $250,000 to settle the claims of the Ministry of Health and Long-Term Care and the Ontario Health Insurance Plan relating to past and future medical care for class members; and

• Administrator/Referee: the defendants will pay the fees of the administrator and the referee.

[8] The City of Toronto has prepared a “Qualifying List” of individuals it acknowledges are class members, together with contact information for such members and/or their next of kin. The Qualifying List classifies each class member into one of the Compensation Categories but a class member can challenge this classification when making a claim.[^1]

[9] The fairness hearing commenced on December 12, 2013. Although Mr. Whyte had signed the minutes of settlement in August 2013, he attended the hearing and objected to the settlement. He provided a confidential letter to the court (a copy of which was given immediately to counsel) outlining his concerns. Class counsel requested an adjournment to meet with Mr. Whyte. They met on two occasions but were unable to resolve matters. Counsel asked him to put his objections in an affidavit. Mr. Whyte did not wish to do so but gave counsel a note to provide to the court.

[10] When the hearing resumed on January 16, 2014, Mr. Whyte attended and continued to object. Class counsel submitted that a conflict had arisen and that Mr. Whyte could not continue as a representative plaintiff. Mr. Whyte did not wish to step down. Class counsel sought an adjournment to bring a motion to have Mr. Whyte removed as a representative plaintiff. The hearing continued on February 12, 2014. Mr. Whyte attended the hearing. He handed the court materials in which he states, among other things, that he continues to act in the best interests of the class and wishes to remain a representative plaintiff. He asks that the opt-out deadline be extended until a decision is made with respect to his status.

[11] Despite this history and its motion to remove, class counsel concedes that what is critical at this juncture is for the court to consider the substance of Mr. Whyte’s objections to the settlement. I agree. My focus at this point is on whether the settlement is fair, reasonable and in the best interests of the class as a whole, taking into account all relevant factors, including the objections Mr. Whyte has raised.

Settlement Approval

[12] 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 Co. of Canada, (1998) 1998 14855 (ON SC), 40 O.R. (3d) 429 (Gen. Div.), at p. 440-44, aff’d (1998), 1998 7165 (ON CA), 41 O.R. (3d) 97 (C.A.). The factors to be considered in approving a settlement are well-established: see Dabbs, at paras. 30-46; Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 (S.C.J.), at paras. 71-72; Bilodeau v. Maple Leaf Foods Inc., 2009 10392 (On. S.C.J.), at paras. 45-46.

[13] In determining whether to approve a settlement, courts may consider, among other factors:

• The likelihood of recovery or success;

• the amount and nature of discovery, evidence or investigation;

• the terms of the settlement;

• the recommendation and experience of class counsel;

• future expenses and likely duration of litigation and its attendant risks;

• the recommendations of neutral parties;

• the number of objections or objectors, if any;

• the presence of good faith, arms-length bargaining and the absence of collusion;

• the degree and nature of communications by counsel and the representative parties with class members during the litigation; and

• information conveying to the court the dynamics of and positions taken by parties during the negotiations.[^2]

[14] I have considered those factors. The Settlement Fund is an immediate monetary pool available to satisfy the class members’ general and special damages. The Compensation Categories and recovery amounts provide a measure of certainty to class members, while leaving it open for them to challenge their categorization or seek a higher level of damages through a reference. The reference process is a streamlined and accessible one.

[15] There is no limit on special damages or on general damages assessed at a reference, as the defendants will pay those amounts in full.

[16] The settlement reflects the litigation risks faced by the plaintiffs with respect to standard of care and causation, as well as future delays if the case proceeds to discoveries, trial and individual damage assessments. This litigation has been ongoing for eight years. Many class members are elderly or now deceased.

[17] While the case has not reached the discovery stage, class counsel had access to a significant amount of information, including evidence from its own expert on Legionnaires’ Disease and the province’s Report of the Expert Panel on the Legionnaires’ Disease Outbreak.

[18] The development of the Qualifying List has assisted in identifying and locating class members. Notice and claim forms were sent out in October 2013.[^3] While the opt-out deadline in the notice is February 28, 2014, there have been no opt-outs to date.

[19] Class counsel expects that the amount of the Settlement Fund will cover virtually all of the known claims of class members and that any pro rating arising from a shortfall will be modest.

[20] I am satisfied that if the Settlement Fund is not exhausted, the cy-près payments will go to organizations that provide support and care to seniors, and are in keeping with the interests of the class members in this litigation.

[21] Class counsel recommends the settlement, as do two of the representative plaintiffs, Ms. Rada and Dr. Davidson.[^4] The settlement is the product of an arm's length, adversarial, extended negotiation process. The parties were represented by experienced counsel throughout that process.

[22] There have been two objections. One class member sent a written objection in which he was critical of the health authorities’ inspection of Seven Oaks and the loss of his blood samples and alleges a coverup. He does not raise any objections to the merits of the settlement itself.

[23] The other objection comes from Mr. Whyte. He has expressed numerous reasons for objecting to the settlement. They have evolved over time.[^5] However, his primary concerns appear to be:

• the grid structure should not be based on the length of hospitalization but on how long a person was sick and took to recover. This appears to be significant to Mr. Whyte because (according to the hospital records that he submitted to the court) he did not wish to stay in hospital, in isolation, and signed himself out the same day;

• he is dissatisfied with his and his mother’s categorization in the grid. This impacts the level of compensation they will receive and whether they can apply for a reference. Mr. Whyte specifically states that he was misdiagnosed and should be in a Legionnaire’s Disease category, not the Pontiac Fever one; and

• all of the residue, not just 15%, should go to class members and not to charities.

[24] It appears that Mr. Whyte is largely focused on his individual circumstances and the compensation that he and his late mother will receive under the settlement. These individual circumstances are not issues to be considered at this hearing: see Directright Cartage Ltd. v. London Life Insurance Co., 2001 CarswellOnt 3658 (S.C.J.), at para 25.

[25] However, I have considered carefully all of his objections in determining whether the settlement is fair and reasonable to the class as a whole. With respect to the issue of improper categorization, the settlement has procedures for any claimant to challenge his categorization by providing supporting medical documentation. Further, the opt-out period has not expired and any claimant who is dissatisfied with his compensation under the settlement can opt-out and pursue his claims individually.

[26] With respect to the grid structure itself, class counsel explains that basing the grid on hospital stay is reasonable in this case given the fact that the vast majority of class members are or were elderly at the time and would likely not have been discharged if they had any serious continuing symptoms. In addition, determining grid classification based on duration of symptoms would raise administrative manageability concerns and issues of proof. I accept this explanation as reasonable.

[27] With respect to the 15/85% allocation of residue (if any), as between class members and the charities in question, I accept class counsel’s explanation that this avoids a disproportionate payment to individual claimants in the unlikely event that the take-up rate is low. As mentioned, the cy-près distribution goes to organizations aligned with the interests of the class members.

[28] A settlement is a compromise that reflects the risk, delay and expense of continuing with the litigation: see Stewart v. General Motors of Canada Ltd., 2008 CarswellOnt 6590 (S.C.J.), at para. 23. In my view, this settlement is a compromise that falls within the zone of reasonable resolutions. I consider it to be fair, reasonable and in the best interests of the class and I approve the settlement.

Legal Fees and Stipend to Representative Plaintiffs

[29] The settlement provides that the defendants will pay class counsel legal fees of $356,500 plus applicable taxes and disbursements for notice and administration. In addition, class counsel is entitled to receive 10% of each payment made to a class and family member. Class counsel already received $143,500 in costs from the defendants following the certification motion. Class counsel submits that the total fee sought will not cover the amount of time it has expended on this file.[^6]

[30] Ms. Rada and Dr. Davidson have sworn affidavits supporting this fee, stating that it is within the parameters of their retainer agreements with class counsel.[^7]

[31] I have considered the relevant factors outlined in Smith Estate v. National Money Mart Co. (2011), 2011 ONCA 233, 106 O.R. (3d) 37, at paragraph 80 (C.A.) – in particular, the complexity of the issues in this litigation; the risk undertaken by counsel; the successful results achieved for the class as a whole; and the expectations of the class as to the amount of the fees. I am satisfied that the fees claimed are reasonable and I approve them.

[32] Finally, I approve the $5000 stipend payable to the representative plaintiffs as a quantum meruit payment for their time spent in advancing this proceeding for the class over the last eight years.[^8] The plaintiffs’ time, as set out in the record before me, includes participating in over a week of cross-examinations for the certification motion, attending numerous mediation and settlement sessions, meeting with counsel, swearing affidavits, reviewing documents, and providing particulars of their (and their deceased mothers’) experiences at Seven Oaks. I further note that the stipend is to be paid on top of the Settlement Fund and will not reduce the compensation payable to class members from the fund.

Going Forward

[33] It is apparent to me that Mr. Whyte cannot remain a representative plaintiff during the administration of this settlement. His relationship with class counsel has deteriorated to the point where it is unlikely that class counsel will be able to seek or take instructions him should issues arise in the course of administering the settlement.[^9] I therefore order, pursuant to s. 12 of the Act, that Mr. Whyte be removed as a representative plaintiff during the administration phase. Ms. Rada and Dr. Davidson will continue to remain as representative plaintiffs during this phase.

[34] I also extend the opt-out deadline from February 28, 2014 to March 31, 2014. This will give Mr. Whyte and any other class members an opportunity to consider whether they wish to remain in this class proceeding or to pursue their claims individually.

[35] Order accordingly. The parties may send me the formal order for signature.

[36] If the parties require assistance during the course of administering the settlement, I may be spoken to.

Conway J.

Date: February 13, 2014

[^1]: The City of Toronto prepared this list from the records of Seven Oaks, the Ministry of Health and Long Term Care, and Toronto Public Health. Notice of this hearing and claim forms were mailed to every person on the Qualifying List.

[^2]: Sayers v. Shaw Cablesystems Ltd., 2011 ONSC 962, at para. 28.

[^3]: The notice referred both to certification and the settlement hearing. At the request of the defendants, notice of certification was not given to class members after the Divisional Court denied leave to appeal. The court-approved notice explained that the action had been certified in 2009 and that class members have until February 28, 2014 to opt-out of the action.

[^4]: According to the affidavit of Ms. Hirji, a lawyer with class counsel, both Dr. Davidson and Ms. Rada are aware of Mr. Whyte’s objections and continue to support the settlement.

[^5]: Mr. Whyte has objected, among other things, to the fact that the $5000 honorarium was not guaranteed (although he subsequently advised the court that he does not care about receiving that honorarium); that all counsel are trying to silence him; that he was not aware of the December 12th hearing until the previous day; that the Minister of Health has changed his status and denied him access to a hospital following the Legionnaire’s tests conducted in 2005; that he had only recently been made aware of parts of the settlement; that he was disappointed with his legal representation and counsel’s actions should be investigated; that he has been unable to speak directly to the other two representative plaintiffs about the settlement; that another class member’s claim had been improperly categorized; that 8 of the class members’ information on the list needs to be updated; and that class counsel let this matter languish for 3 years from 2005 to 2008.

[^6]: Class counsel states that its unbilled time is $686,187, exclusive of taxes, and that it will expend another $40-60,000 to complete the settlement. The total fee it is seeking represents a multiplier of .9 on unbilled fees to date and .8 when the additional time is taken into account. Counsel also notes that it has been carrying over $50,000 in disbursements on this action to date.

[^7]: The retainer agreements provide that fees will be 25% of the amount recovered or a 3 times multiplier, whichever is higher. The fee sought ($356,500 plus 10% of $1.2 million if there is full takeup) is 26% of the total value of the settlement (and, if the $143,500 in previous costs are factored in the number is 34%). Either calculation is well within the range contemplated in the retainer agreements.

[^8]: Similar modest payments for time spent by representative plaintiffs have been approved recently in Goodridge v. Pfizer Canada Inc., 2013 ONSC 2686, at paras. 46, 47 and Johnston v. Sheila Morrison Schools, 2013 ONSC 1528, at paras. 42, 43. All counsel acknowledge that Mr. Whyte is entitled to receive this quantum meruit payment as a representative plaintiff (despite his objections to the settlement) given his past contribution to the litigation over the years.

[^9]: A good summary of the legal principles that apply on conflicts between a representative plaintiff and class counsel may be found in Richard v. HMTQ, 2007 BCSC 1107, at para. 42.