COURT FILE NO.: CV-15-537029-CP DATE: 20160727 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Matthew Robert Quenneville, Luciano Tauro, Michael Joseph Pare, Therese H. Gadoury, Amy Fitzgerald, Renee James, Al-Noor Wissanji, Jack Mastromattei and Jay MacDonald, Plaintiffs / Moving Parties
AND:
Volkswagen Group Canada Inc., Volkswagen Aktiengesellschaft, Volkswagen Group of America Inc., Audi Canada Inc., Audi Aktiengesellschaft, Audi of America Inc. and VW Credit Canada Inc., / Defendants
AND:
Joshua Merchant, Anthony Tibbs and Merchant Law Group LLP, Responding Parties
BEFORE: Justice Edward P. Belobaba
COUNSEL: David F. O’Connor and J. Adam Dewar for Plaintiffs / Moving Parties Brian Moher for Joshua Merchant and Anthony Tibbs / Responding Parties Robert Bell for the Volkswagen and Audi Defendants No one appearing for Merchant Law Group LLP / Responding Party
HEARD: July 13, 2016
Contempt of court motion
[1] The plaintiffs in this proposed class action bring a contempt of court motion against the Merchant Law Group LLP (“MLG”) and two of its lawyers, Joshua Merchant and Anthony Tibbs, for allegedly breaching an Order of this court.
[2] On December 4, 2015 I granted carriage of the Volkswagen class action in Ontario to a consortium of eight law firms. I stayed the Ontario action brought by MLG and I ordered that “no other similar class action shall be issued or be continued without leave of this Court.”
[3] Having granted carriage of the Ontario class action to the eight-firm consortium, I assumed that MLG would understand that they could not “scoop” Ontario residents for any class actions that they were planning outside Ontario. Unfortunately, MLG did exactly that. In an email blast in January, 2016 to about 9500 recipients, including 3500 in Ontario, MLG invited the recipients to retain MLG for either a individual-joinder action or a class proceeding. Attached to the emails was a retainer agreement that was signed and returned by some 150 Ontario residents.
[4] The plaintiffs brought an immediate motion to address the issues raised by the January email blast. The motion was argued on February 3, 2016. The defendant Anthony Tibbs attended on behalf of MLG. I suggested to Mr. Tibbs that the MLG email blast may well be misleading and in breach of the December 4, 2015 Carriage Order. MLG to its credit agreed to “de-escalate” the situation and consented to an order requiring MLG to immediately send out a clarifying email, not execute any of the 150 retainer agreements received from Ontario residents and file an affidavit confirming that this had been done.
[5] In a hand-written Endorsement dated February 3, 2016 I set out these three points and promised that written reasons explaining why the January emails were in breach of the Carriage Order would be released “next week.” On February 12, 2015 I released those reasons. [1] I noted that the January emails, in essence, urged the recipients to join an MLG class action. I found that they were “misleading” and in breach of the Carriage Order because MLG “was trying to scoop Ontario residents” for “what could well become an MLG class action.” [2] I advised the parties that if there were any further breaches of the Carriage Order, “the appropriate remedy was a motion for contempt of court that could be brought before me on 24 hours’ notice.” [3] I concluded that MLG’s breach of the Carriage Order was “deserving of censure and condemnation” and I awarded costs to the plaintiffs on a substantial indemnity basis. [4]
[6] Counsel for the plaintiffs have now discovered to their dismay that MLG continued to email Ontario residents despite what was said in the February 12, 2016 Endorsement. They point to emails sent by Joshua Merchant on February 8, by Anthony Tibbs on February 15 and 16, and by two other MLG lawyers on February 16 and 19. The plaintiffs move that the defendants Merchant, Tibbs and MLG be found in contempt of court.
[7] The gist of the plaintiffs’ complaint is that contrary to the order of this court, MLG has continued to recruit Ontario residents for an MLG class action.
Applicable law
[8] It is well settled in Canadian common law that what is required to establish civil contempt is proof beyond a reasonable doubt of an intentional act or omission that is in breach of a clear court order of which the alleged contemnor has notice. [5] The court order must state clearly and unequivocally what should and should not be done [6] and the party allegedly in breach must have intentionally done the act that the order prohibits. [7]
Analysis
[9] For the reasons set out below, the motion for contempt of court must be dismissed.
[10] The impugned February emails to Ontario residents were careless, unprofessional and arguably in breach of the December 4 Carriage Order as clarified by the February 12 Endorsement, but I am unable to find that contempt of court has been established beyond a reasonable doubt.
[11] The core complaint against each of the defendants is that contrary to the December 4 Carriage Order (as clarified by the February 12 Endorsement) they tried to scoop Ontario residents for an MLG class action. The plaintiffs point primarily to the fact that the agreement attached to the impugned emails retained MLG “to represent [the Ontario resident] in individual proceedings by joinder or in class proceedings …” As I indicated to counsel, trying to scoop even Ontario residents for a joinder action was not in breach of any clear and unequivocal order of this court. The breach was in trying to scoop Ontario residents for an MLG class action.
[12] I will now consider the conduct of each of the defendants.
(1) Joshua Merchant’s February 8 email
[13] Joshua Merchant’s responding email of February 8 to Ontario resident Roy invited Mr. Roy to join the MLG individual/joinder action. The attached retainer agreement, however, was not restricted to the joinder action but also referred to “class proceedings.” Nonetheless, I am unable to find contempt of court beyond a reasonable doubt for two reasons:
(i) The first requirement for a contempt of court finding is a clear and unequivocal court order. Here, it was only in the February 12 Endorsement that this court made clear that trying to scoop Ontario residents for an MLG class action was a breach of the December 4 Carriage Order. Mr. Merchant’s February 8 email preceded the February 12 clarification. Thus, it cannot be said that on February 8 he breached a clear and unequivocal court order;
(ii) While it is true that the retainer agreement that was forwarded to Mr. Roy refers to “class proceedings” the body of Mr. Merchant’s email speaks only about joining “the individual action.” Given this very specific language in the covering email, I am not persuaded beyond a reasonable doubt that Mr. Merchant intended to scoop Ontario residents for an MLG class action.
[14] The contempt of court motion against Joshua Merchant is dismissed.
(2) Anthony Tibbs’ February 15 emails
[15] Anthony Tibbs responded to email inquiries from Ontario residents Berry, Roy and Deans. With each emailed response he attached the retainer agreement that explicitly referred to both “individual proceedings by joinder” and “class proceedings.” The latter reference (at least for Ontario residents) is in breach of the Carriage Order. But here again, although I ascribe extreme carelessness to Mr. Tibbs, who was in court on February 3 and must have understood the court’s concerns, I am unable to find him guilty of contempt beyond a reasonable doubt. I say this for two reasons:
(i) Mr. Tibbs’ covering email letter in each of his three responses spoke mainly about the Ontario resident retaining MLG in a “joinder action”;
(ii) It is true that the last paragraph of the two-page email mentions being part of “a class action depending on how matters develop.” However, Mr. Tibbs explains in the email that MLG is pursuing class actions in Alberta and Saskatchewan, and other lawyers [i.e. the consortium] are pursuing similar actions in Ontario and elsewhere. He then says this to the email recipient:
We do not yet know which class proceeding will be approved by the court or whether or not you … will be part of the class that a court ultimately certifies. We will know more over the coming months and will keep you informed of any major developments in the litigation.
[16] While technically true, what Mr. Tibbs said was disingenuous. Mr. Tibbs is an experienced class action lawyer. He understands provincial certification requirements. He must know that the chance that the Ontario action against Volkswagen will not be certified is remote. Indeed, there is every likelihood that the Ontario action will be certified for settlement purposes. Tibbs’ emails are, at the very least, misleading.
[17] Nonetheless, given what is said in the covering email, I cannot find beyond a reasonable doubt that Mr. Tibbs was deliberately and wilfully trying to scoop Ontario residents for an MLG class action. Undoubtedly, he was trying to scoop Ontario residents for a joinder action but not for a class action, at least not beyond a reasonable doubt.
[18] The contempt of court motion against Mr. Tibbs is dismissed.
(3) The three other MLG emails
[19] Here again, the complaint about the February 16 and 19 emails that were sent to Ontario residents by MLG lawyer Iqbal Brar responding to Boehm and Berry and by someone named “Jonathan” responding to Boehm, was that they both attached a retainer agreement that referenced “class proceedings.” However, as was the case with Mr. Merchant, in their responding emails Mr. Brar and Jonathan spoke only about “individual” or “joinder” actions and said nothing about class actions.
[20] This being so, I am unable to find beyond a reasonable doubt that Mr. Brar or Jonathan were wilfully and deliberately trying to scoop Ontario residents for an MLG class action.
[21] The contempt of court motion against MLG is dismissed.
Disposition
[22] Because I cannot find contempt of court beyond a reasonable doubt, the motion must be dismissed.
[23] However, this disposition should not be misunderstood as an endorsement of the defendants’ behaviour. About 126 Ontario residents received MLG retainer agreements that explicitly mentioned “class proceedings.” This was contrary to the Carriage Order as clarified by the February 12 Endorsement. Mr. Tibbs was in court on February 3. He must have heard and understood what was said. Suffice it to say, he should have known better.
[24] In my February 12 Endorsement I concluded that the defendants’ January email blast was deserving of censure and condemnation and I awarded costs on a substantial indemnity basis. The same comments can be made about the February emails impugned herein.
[25] Here, however, the defendants prevailed on the motion for contempt of court and strictly speaking could be entitled to costs. However, in my view, given what was done in the face of the Carriage Order and the February 12 Endorsement, this is not a case for costs – at least not for the defendants. The court’s displeasure could be expressed by simply denying costs to the defendants. But, in my opinion, this would be insufficient.
[26] I note that costs can be awarded against a successful party “in a proper case” (Rule 57.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194) and in disposing of a contempt motion the court can make any order “as is just” (Rule 60.11(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194).
[27] I find it just and proper on the facts of this case that this court express its displeasure with the defendants’ conduct by making a costs award payable to the plaintiffs. Exercising my discretion under Rules 57.01(2) and 60.11(5), I order that the defendants pay $5000 in costs to the plaintiffs forthwith. [8]
[28] Finally, so that there can be no misunderstanding on the part of MLG, I order and direct that any further emails or other methods of contact with Ontario residents from anyone at MLG inviting Ontario residents to consider or sign a retainer that in any way suggests that MLG can represent them in a Volkswagen -related class action is a breach of this court order.
[29] Order to go accordingly.
Belobaba J. Date: July 27, 2016
[1] Quenneville v. Volkswagen, 2016 ONSC 959. [2] Ibid., at paras. 1, 5 and 7. [3] Ibid. at para. 9. [4] Ibid., at para. 16. [5] Carey v Laiken, 2015 SCC 17 at para. 38. [6] Ceridian Canada Ltd. v. Azeezodeen [2014] O.J. No. 3102 (S.C.J.) at paras. 31-34; aff’d 2014 ONCA 656. [7] Carey, supra, note 5, at para. 35. [8] Given the parties’ costs submissions for the February 3 hearing and given my estimate that the costs incurred herein were at least the same if not more, I would have expected cost requests in the range of $25,000. The award of $5000 herein is enough to convey the court’s displeasure without being disproportionate or punitive.