Court File and Parties

COURT FILE NO.: CV-15-523068-CP DATE: 20160511 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Donna O’Brien, Adam Pierce, Elizabeth Burden and Bruce Burden, Plaintiffs AND: Bard Canada Inc., C.R. Bard Inc., and Bard Medical Division, Defendants

BEFORE: Justice Edward P. Belobaba

COUNSEL: Michael Peerless and Matthew Baer for the Plaintiffs Michael Eizenga and Ashley Paterson for the Defendants

HEARD: May 2, 2016

Proceeding under the Class Proceedings Act, 1992

Approval of Settlement and Legal Fees

[1] The plaintiffs ask that the court certify the proposed class action for settlement purposes and then approve the settlement and the legal fees.

[2] Unlike the plaintiffs’ initial and much larger class action which was not certified because it involved some 19 different categories of pelvic mesh products, [^1] the class action herein is limited to just two categories: the defendant’s Avaulta product that is used to treat pelvic organ prolapse (“POP”) and the defendant’s Align or Ajust product used to treat stress urinary incontinence (“SUI”).

[3] The settlement provides $400,000 for the benefit of the Avaulta Class, $1,550,000 for the benefit of the Align and Ajust Class, $300,000 in a “special circumstances fund” for the benefit of both classes, and $225,000 for notice and claims administration - for a non-reversionary total of $2,475,000.

[4] Class counsel advises that there are currently 22 potential claimants.

[5] Every class member’s claim will be awarded points by class counsel (because they have the best understanding of each claim) based on the severity of the harm or injury sustained. The claims administrator will use the points to determine the appropriate compensation payment. Appeals from the decision of the administrator were initially to come to this court.

[6] At the hearing on May 2, 2016 I voiced two concerns about the settlement as proposed: first, that any appeals from the decision of the administrator not involve the court; and second, that class counsel should provide more information as to why the $2.475 million settlement amount falls within a zone of reasonableness.

[7] Both concerns were promptly addressed. Within days, class counsel advised that the parties had amended the settlement agreement to provide that a “special appeals master” (an experienced class action lawyer) would review and decide any claims appeals. Class counsel also provided a supplementary affidavit with the additional information that I required.

Certification for settlement purposes

[8] The first order to business is to certify the proposed class action for settlement purposes. I have no difficulty doing so. Each of the five requirements set out in s. 5(1) of the Class Proceedings Act [^2] is satisfied. The pleadings disclose a cause of action in negligence. There is an identifiable class defined, in essence, as all persons resident in Canada (excluding Quebec) who were implanted with an Avaulta, Align and/or Ajust product, and includes family law claims and the subrogated claims of the provincial health insurers.

[9] There is some basis in fact for the existence and commonality of the proposed common issue – whether the defendants breached a duty of care owed to the classes by marketing and distributing the above-noted products in Canada. The certification of this common issue will avoid duplication in fact-finding and legal analysis and will definitely advance the litigation. A class action will be a fair, efficient and manageable method of advancing the claim and the named plaintiffs have a workable litigation plan in place and together will fairly and adequately represent the interests of the class.

[10] The proposed class action, limited to the Avaulta, Align and Ajust products, is certified for settlement purposes.

Settlement approval

[11] As already noted, I was not persuaded by the material that was initially filed by class counsel. The affidavit and factum, although in many respects routine, was little more than non-specific “boiler-plate.” [^3] The primary concern of a class action judge in approving a settlement is to be satisfied that the settlement amount falls within a range or zone of reasonableness. [^4] I frankly needed more information on this important point.

[12] In a supplementary affidavit filed just a few days after the hearing, class counsel addressed my concern and explained why $2.475 million is within a zone of reasonableness. What follows is my summary of the additional evidence:

• Class counsels’ knowledge level about the risks (and rewards) of further litigation in this case is relatively high given that they have just fought and lost a larger certification motion with the same basic liability and damages issues. In other words, this is not an “early stage” settlement and class counsel’s assessment should be taken more seriously;
• About 328 Avaulta models and 4,059 Align/Ajust models were sold in Canada, although some may not be implanted and may still be in inventory. The risk of serious side effects for the SUI products is between 1 and 2% and for the POP products between 2.5 and 10%. Applying the higher percentage in each case results in about 33 POP claimants and 81 SUI claimants, with an overall total of 114 potential claimants.
• Class counsel, however, is currently aware of only 22 claimants and notes that the number of claims actually made typically ends up being two to three times the number of known cases at the time of resolution. Here this means, at most, 66 claimants.
• Had the matter gone to trial, the recovery would have been in the range of $50,000 to $150,000 per claimant. Discounting this by 50 per cent to reflect the risks of litigation, the compensation payment is therefore in the range of $25,000 to $75,000 per claimant. Given that 22 to 66 claims are expected, and given the settlement amount, the average recovery will exceed $30,000 and individual claims will range from a few thousand to around $100,000. [^5]

[13] This is exactly the kind of information that a court requires. It is simply not enough for class counsel (whose interests are not aligned with those of the class) to file a factum that says nothing more than “We know what we’re doing … trust us.” It is my hope that in approving class action settlements in the future, judges will urge class counsel to skip the wind-up (i.e. all the non-specific “boiler-plate”) and just throw the pitch (and explain why the settlement amount is within a zone of reasonableness.)

[14] In this case, with the additional information provided by class counsel as summarized above, I am satisfied that the $2.475 million settlement amount is indeed within a zone of reasonableness. I am satisfied that the agreement is fair and reasonable and in the best interests of the class. The settlement is approved.

Legal fees approval

[15] Under the retainer agreements entered into with the four representative plaintiffs, class counsel is entitled to a 30 per cent contingency plus disbursements and taxes. This is exactly what class counsel is requesting: legal fees of $742,500 plus disbursements and taxes.

[16] As I noted in Cannon, [^6] contingency fee arrangements of up to one-third recovery that are fully understood and accepted by the representative plaintiffs should be presumptively valid and enforceable. In my view, this is the most principled approach to class counsel compensation and one that best assures the future viability of the class action as a significant vehicle for access to justice. Class counsels’ legal fees are therefore approved as requested.

[17] Orders to go as per the draft Orders signed by me today.

Belobaba J. Date: May 11, 2016

Footnotes

[^1]: O’Brien v. Bard Canada Inc., 2015 ONSC 2470. [^2]: Class Proceedings Act, 1992, S.O. 1992, c. 6. [^3]: See my comments in Leslie v. Agnico-Eagle Mines, 2016 ONSC 532. [^4]: Sheridan Chevrolet Cadillac Ltd. v. Furukawa Electric Co., 2016 ONSC 729, at para. 12. [^5]: I would add this calculation: assume an average compensation payment of $50,000 (the mid-point between $25,000 and $75,000) and assume 44 claimants (the mid-point between 22 and 66) the settlement should be around $2.2 million. Therefore, the actual settlement of $2.475 million falls easily within a zone of reasonableness. [^6]: Cannon v. Funds for Canada Foundation, 2013 ONSC 7686.