Court File and Parties

Court File No.: CV-O8-363847-CP Date: 2016-05-31 Ontario Superior Court of Justice

Between:

Katrina Ramdath, Zsolt Kovessy and Ashish Singh, Plaintiffs

• and - The George Brown College of Applied Arts and Technology, Defendant

Counsel: Won J. Kim, Aris Gyamfi and Glenn Brandys, for the Plaintiffs Robert Bell and Jonathan Chen, for the Defendant

Heard: May 30, 2016

Proceeding under the Class Proceedings Act, 1992 Subject: Settlement and legal fees approval

Justice Belobaba:

[1] After eight years of precedent-setting trials and hard-fought appeals, this class action has settled. The class members will be fairly, indeed generously, compensated. I am satisfied that the proposed settlement is fair and reasonable and very much in the best interests of the class. The settlement amount, the requested honoraria for the three representative plaintiffs and class counsel’s legal fees are all approved.

[2] This is that rare class action that actually went to trial and in doing so generated new law in consumer protection and aggregate damages. The class counsel team worked tirelessly and deserve special commendation for their legal acumen, their unrelenting commitment to the best interests of the class members and for the superior results that were achieved.

Brief background

[3] The class action stems from misrepresentations made by George Brown College (“GBC”) in the 2007-08 and 2008-09 course calendars about the benefits of the International Business Management Program. GBC falsely stated that by completing the eight-month Program, students would obtain three industry designations [^1] in addition to the GBC graduate certificate. The Program attracted students from around the world. The students soon discovered that GBC had no agreements in place with any of the industry associations and no such additional designations would be awarded.

[4] Three of the students commenced an action in 2008. The action was certified as a class proceeding in 2010. [^2] The class was defined to include the 119 students (two-thirds of whom were foreign students) that had enrolled in the three affected “cohorts” - the first cohort (September, 2007 to April, 2008), the second cohort (January, 2008 to August, 2008), and the third cohort (September, 2008 to April, 2009). Eleven students have opted out of the action, leaving 108 class members.

[5] I conducted the common issues trial in 2012. At the conclusion of the common issues trial, I found that GBC had engaged in an unfair practice under the Consumer Protection Act [^3] and that the students had prevailed on the negligent misrepresentation claim. [^4] These findings were upheld on appeal. [^5] When the matter returned before me for the damages trial, class counsel advised they would be proceeding solely on the basis of the consumer protection claim. I conducted the damages trial in early 2014 and concluded that damages could be assessed in the aggregate for two of the four categories – “direct expenses” and “residual value” – but not for “foregone income” or “delayed entry” and only for the first two cohorts, but not the third. [^6] In a follow-up decision I concluded that the residual value of the GBC diploma standing alone was about 15 per cent. [^7] On appeal, the Court of Appeal affirmed the aggregate damages and residual value analysis but reversed my exclusion of the third cohort. The Court referred the assessment of damages relating to the third cohort back to me. [^8]

[6] The defendant’s insurer meanwhile decided to seek leave to appeal from the Supreme Court of Canada. It was at that point that the parties settled.

Settlement approval

[7] The defendant (through its insurer) has agreed to pay $2.725 million to the 108 class members in the three affected cohorts. The claims process is designed to be fast and easy. Simply by submitting a one-page claim form, with no need for supporting documentation, the class members will be reimbursed for all of the direct costs of entering into the Program [^9] , and up to 40 per cent of the income that they lost taking the Program. The domestic students who graduated from the Program will be entitled to a maximum of $16,427 and the international students a maximum of $22,484.

[8] The overall settlement falls within a zone of reasonable because:

(i) At the time of settlement, class counsel’s knowledge base about the ongoing risks and rewards was at its highest possible point. In other words, this was not an early stage settlement where the court is understandably “suspicious.” [^10] Here the settlement was negotiated and achieved after the completion of discovery, two trials and numerous appeals. Class counsel’s recommendations were thus less likely to be tainted with self-interest and more likely to be in the best interests of the class.

(ii) The amount that is allocated for “direct costs” includes three categories of expenses that were not awarded by the court in the aggregate damages decision, namely public transportation costs, increased living expenses, and visa/immigration fees. [^11] That is, the direct costs component in the settlement is much higher than in the amount decided by this court.

(iii) The provision allowing claimants to recover up to 40 per cent in the “foregone income” category is very generous given that less than 10 per cent of the class was able to produce any documentation on this point. And now they will be receiving reimbursement of up to 40 per cent of “foregone income” on their word alone.

(iv) The fact that no monies are being allocated under the third category, “delayed entry into the workforce,” is really of no consequence. In the damages decision, I effectively foreclosed this additional source of compensation because I was not persuaded on the evidence before me that a “delayed entry” of eight months at age 25 “cannot be mitigated over a lifetime in the workforce”. [^12] Pursing this claim in a further individual damages trial would be expensive and challenging, to say the least.

[9] In sum, I agree with class counsel that when one considers the increased value of the “direct costs” component and the risk that class members may not able to prove any of their indirect damages at individual damage assessments, the settlement herein is very much in the class members’ best interest.

Approval of honoria

[10] Class counsel is requesting a $10,000 honorarium for each of the three representative plaintiffs, to be paid out of the settlement fund. [^13] I have no difficulty with this request. The record shows that Katrina Ramdath, Zsolt Kovessy and Ashish Singh went far beyond what is normally required of a representative plaintiff in advancing a class action. In addition to their usual duties as representative plaintiffs they endured three extensive examinations when most representative plaintiffs are only subjected to one (i.e. cross-examination on their affidavit in support of certification); they remained in contact with class members, via email, telephone and in-person meetings throughout the litigation to provide updates and answer questions; they assisted class counsel in publicizing the notice of the settlement approval hearing and locating class members whose contact information was out of date so that they could receive notice of the proposed settlement and have an opportunity to participate; and they have handled a large number of media inquiries.

[11] I also note that Mr. Singh attended the settlement approval hearing, expressed his gratitude to class counsel and spoke eloquently about his experience in this litigation and the reasonableness of the overall settlement.

[12] The requested payment of a $10,000 honorarium to each of the three class representatives is approved.

Approval of class counsel’s legal fees

[13] Class counsel asks for the payment of legal fees on the basis of the 30 per cent contingency that is set out in the retainer agreement. The amount being sought, $773,412 plus disbursements and taxes, is a small portion of the actual time that was docketed by class counsel over the eight years of protracted litigation. [^14]

[14] The legal fees request is more than reasonable and easily approved.

Disposition

[15] The settlement, the payment of honoraria to the three class representatives and the payment of class counsel’s legal fees are all approved.

[16] Order to go as per the draft Order that I signed at the conclusion of the hearing.

[17] I thank counsel on both sides again for their assistance and for the quality of their written and oral advocacy during the motions and trials in a matter that I was pleased to hear and even more pleased to see concluded.

Belobaba J. Released: May 31, 2016

Footnotes

[^1]: Specifically, a CITP (Certified International Trade Professional); a CCS (Certified Customs Specialist); and a CIFF (Certified International Freight Forwarder). [^2]: Ramdath v. George Brown College of Applied Arts and Technology, 2010 ONSC 2019. [^3]: Consumer Protection Act, 2002, S.O. 2002, c. 30, Schedule A. [^4]: Ramdath v. George Brown College of Applied Arts and Technology, 2012 ONSC 6173. [^5]: Ramdath v. George Brown College of Applied Arts and Technology, 2013 ONCA 468. [^6]: Ramdath v. George Brown College of Applied Arts and Technology, 2014 ONSC 3066. [^7]: Ramdath v. George Brown College of Applied Arts and Technology, 2014 ONSC 4215. [^8]: Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921. [^9]: Less the 15% residual value of the college diploma as determined at the damages trial, supra, note 7. [^10]: See the discussion in Clegg v. HMQ Ontario, 2016 ONSC 2662, at paras. 26-31. [^11]: Supra, note 6. [^12]: Supra, note 6, at para. 66. [^13]: When honoraria are paid to representative plaintiffs, they should be paid out of the settlement fund and not out of class counsel’s legal fees award: see generally Morabito, “Additional Compensation to Representative Plaintiffs in Ontario: Conceptual, Empirical and Comparative Perspectives,” (2014) Queen’s L.J. 341. [^14]: That is why I concluded in Cannon v. Funds for Canada Foundation, 2013 ONSC 7686 that contingency fee agreements of up to one-third should generally be accorded presumptive validity and enforced by the court. Over a period of years, plaintiff-side class action firms will win cases and lose cases. Or, like here, they will win the case but end up taking a large loss on the legal fees award. The “risk” that contingency lawyers face cannot be assessed case-by-case or one-off, but must be measured across a great many files. A “large” contingency recovery in one case will offset the loss or losses in other cases. That is why the “multiplier” approach that purports to assess risk by considering only the case that is currently before the court is fundamentally flawed, indeed unprincipled.