CITATION: Alexander v. Ontario, 2016 ONSC 7059
COURT FILE NO.: CV-13-477703
DATE: 20161114
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DARLENE ALEXANDER
Plaintiff
– and –
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO
Defendant
James K. McDonald for the Plaintiff
Judie Im and Sarah Valair for the Defendant
Proceeding under the Class Proceedings Act, 1992
HEARD: November 14, 2016
PERELL, J.
REASONS FOR DECISION
1. Introduction
[1] In this action under the Class Proceedings Act, 1992, S.O. 1992, c. 6, the Representative Plaintiff, Darlene Alexander, moves for an order amending the Class definition, for approval of a settlement, and for approval of Class Counsel’s fees.
2. Factual Background
[2] In Ontario, before 1997, homecare and co-ordination placement services were predominantly provided by municipalities or private providers. In 1996 and 1997, the Defendant, the Government of Ontario, incorporated 43 Community Care Access Centres (“CCACs”) and the services were transferred to the CCACs, along with responsibility for the employment of the employees carrying out the services. The CCACs were funded by the Ministry of Health and Long-Term Care.
[3] At the time of the transfers, many of the employees were unionized. The trade unions included, among others, the Canadian Union of Public Employees (“CUPE”), the Ontario Nurses Association (“ONA”), and the Ontario Public Service Employees Union (“OPSEU”).
[4] Before the transfers, some employees were members of the Victorian Order of Nurses (“VON”) Pension Plan, but most employees were enrolled in the Ontario Municipal Employees Retirement System (“OMERS”) Pension Plan.
[5] Under the then applicable terms of the Ontario Municipal Employees Retirement System Act, 2006, S.O. 2006, c. 2, only municipal (not provincial) employees were entitled to participate in the OMERS Pension Plan. As a result, the employees who were being transferred to the CCACs had to be enrolled in a pension plan other than OMERS.
[6] Ultimately, the affected employees who had been members of OMERS Pension Plan and the VON Pension Plan became members of what is now known as the Healthcare of Ontario Pension Plan (“HOOPP”). However, at the time, it was recognized that a possible consequence of having service in two pension plans was that the total value of an individual’s pension benefits upon retirement would be less than if the individual had service in a single plan.
[7] Darlene Alexander, the Plaintiff in this action, alleges that the Government made a binding commitment that there would be “no loss” to the Class Members’ pensions as a result of the transfer.
[8] Initially, the employees, through their unions, attempted to negotiate compensation for what they perceived to be the Government’s breach of the no loss commitment. In March of 2002, the Ministry indicated that it was no longer prepared to continue any negotiations with respect to what the unions were asserting was the no-loss commitment.
[9] In 2002, employees and former employees of the CCACs represented by OPSEU commenced a class proceeding, McSheffrey v. HMQ (02-CV-236588CP).
[10] A second action was later commenced by employees and former employees of the CCACs represented by the ONA, LeClair v. HMQ (06-CV-324475PD3).
[11] The similar claims in the case at bar, however, were not asserted for a decade, and this action began by notice under the Proceedings Against the Crown Act delivered on November 26, 2012. A Statement of Claim was issued on April 5, 2013. The Class was defined as follows:
(a) employees and former employees of municipalities or service providers associated with municipalities (hereinafter referred to as "municipal providers") whose employment was transferred from the municipal providers to newly-established Community Care Access Centres (“CCACs”) and who were members of CUPE at the time of the transfer and who did not subsequently become members of the Ontario Nurses Association (“ONA”) or the Ontario Public Service Employees Union (“OPSEU”) and for greater certainty, those who became enrolled in the Healthcare of Ontario Pension Plan, formerly known as the Hospitals of Ontario Pension Plan, (“HOOP”) and were previously enrolled in the Ontario Municipal Employees Retirement System (“Former Plan”); and
(b) employees of the municipal providers whose employment was transferred from the municipal providers to CCACs who subsequently became members of CUPE and who were not members of CUPE, ONA, or OPSEU at the time of the transfer.
[12] In the immediate action, the Government brought a motion for summary judgment, in which it asserted that Ms. Alexander’s claim was too late and was statute-barred.
[13] After two days of argument on September 16 and 17, 2014, Justice Conway decided that she could not determine the relevant date for the purposes of calculating the limitation period without first making a finding as to the particulars of the “no-loss” promise. It was agreed that these matters had to be determined at trial.
[14] On consent, the proceeding was certified as a class proceeding. The cause of action certified was “breach of contractual undertaking” - one of the causes of action certified in the McSheffrey and LeClair actions.
[15] Meanwhile, the LeClair and McSheffrey claims settled, and those settlements were approved by Justice Horkins in a decision dated December 3, 2012. See McSheffrey v. Ontario, 2012 ONSC 6803.
[16] The LeClair and McSheffrey settlement provided $6,500,000 to the members of those classes to be distributed equally between all members, with no reversion of any funds to the defendant, plus $1 million to be paid by the defendant towards the administrative and the plaintiffs’ legal fees. There was a claims process administered by NPT RicePoint, with a right of appeal to a referee. Based on the estimated class size at that time (2,500), the benefits per class member were estimated to be approximately $2,700.
[17] In her reasons approving the settlement, Justice Horkins noted that the claim faced considerable risk both with respect to liability and with respect to proof of damages.
[18] In July, 2015, the parties in the immediate case first entertained the possibility of some form of settlement. The Government was prepared to consider a settlement that would have paid to each Class Member their ‘actual’ loss. The Government, however, at that time was not prepared to consider a fixed payment for each Class Member because it believed that it had over-paid in respect of the McSheffrey and LeClair settlements. The settlement discussions stalled.
[19] The parties completed discoveries in 2015 and attended a pre-trial conference in December 2015. At the pre-trial conference before Justice Glustein, the parties again discussed settlement. The basis being considered for the possible settlement was that the Government would pay a fixed amount of money to the Class Members who did not share in the settlement of the LeClair and McSheffrey actions. The Government took the position that the amount to the Class should be less than the ‘notional’ $2,700 paid to LeClair and McSheffrey class members, because the Government in contesting the claims in those actions did not have the same limitations period defence that it had in this action.
[20] Counsel engaged in a further telephone discussion concerning the possible settlement on December 14, 2015. Class Counsel proposed a payment to Class Members equivalent to the intended payment to the class members in the McSheffrey and LeClair actions as reflected in Justice Horkins’ decision, plus a contribution by the Government to the costs incurred by the Class Members in prosecuting the claim. The Government’s counterproposal was to pay a fixed amount based on the expected class size that would translate into a significantly lesser individual payment to each Class Member than what was paid to the class members in the LeClair and McSheffrey actions, plus a contribution to the Class Members’ legal fees, together with a reversion of the fixed amount to the Government if the take-up rate was less than 100% and the fixed amount was not paid in full.
[21] In response, Class Counsel suggested that money proposed by the Government for legal fees be added to the total amount available for all Class Members, and that legal fees only be paid if the take-up rate was less than 100%, pursuant to a tiered arrangement by which some amount of the reversion would revert to the Government, then a fixed amount, if any, would be paid to reimburse some of the Plaintiff’s legal fees, then any remaining amount would revert back to the Government.
[22] On December 24, 2015, settlement discussions terminated.
[23] A trial date was set for the week of January 11, 2016. At trial, Ms. Alexander`s argument would have been that her claim for breach of a ‘contractual undertaking’ was analogous to a claim in promissory estoppel. Applied to the facts of the case, Ms. Alexander’s position was that the Government had made a contractual undertaking by way of a commitment to her union, CUPE, which was her bargaining agent in respect of the terms and conditions of her employment, including her pension plan, following the establishment of the CCACs. The contractual undertaking was breached when the Government refused to make any provisions so that Class Members would receive equivalent pension benefits to what they would have received if they had been members of OMERS throughout their relevant working life. She further planned to argue that the breach occurred on the date of each Class Member’s retirement, and on the date of every pension payment received after retirement which did not place the Class Member into the promised ‘no loss’ position.
[24] The parties continued to prepare for trial. However, on January 6, 2016, counsel for the parties spoke by telephone and over the course of that day and the following day, the parties reached a settlement in principle. The trial was adjourned to allow the parties to finalize the settlement. Ultimately, following further negotiations, the parties signed the Minutes of Settlement on March 8, 2016.
[25] A Settlement Approval Hearing was scheduled to proceed on June 24, 2016, but was adjourned sine die to allow for further discussions between the parties, resulting from an issue which arose regarding the entitlement to participate in the settlement of CUPE members who had been enrolled in the VON Pension Plan before the transfer.
[26] Following correspondence between counsel for the parties, an agreement was reached whereby the Court would be asked to amend the Class definition and the CUPE members who had been members of the VON Pension Plan at the time of the transfer would be included in the settlement, and the other terms of the settlement would be unchanged.
[27] The parties, on consent, seek to amend the Class definition as follows:
(a) employees and former employees of municipalities or service providers associated with municipalities (hereinafter referred to as "municipal providers") whose employment was transferred from the municipal providers to newly-established Community Care Access Centres ("CCACs") and who were members of CUPE at the time of the transfer and who did not subsequently become members of the Ontario Nurses Association ("ONA") or the Ontario Public Service Employees Union ("OPSEU") and for greater certainty, those who became enrolled in the Healthcare of Ontario Pension Plan, formerly known as the Hospitals of Ontario Pension Plan, ("HOOP") and were previously enrolled in the Ontario Municipal Employees Retirement System or the VON Canada Pension Plan ("Former Plans"); and
(b) employees of the municipal providers whose employment was transferred from the municipal providers to CCACs who subsequently became members of CUPE and who were not members of CUPE, ONA, or OPSEU at the time of the transfer.
[28] There are approximately 365 Class Members.
3. The Proposed Settlement
[29] Under the terms of the proposed settlement, the Government will pay $752,500 into a fund to be held by the Administrator (RicePoint) in an interest-bearing account. The amount of $752,500 represents a $2,500 payment for an estimated 301 Class Members.
[30] From this fund, the Administrator will pay $2,500 to each Class Member with a valid claim (“Valid Class Members”). If the number of Valid Class Members exceeds 301, the Government will nonetheless pay $2,500 for each such additional Class Member.
[31] If there are amounts left over from the amount of $752,500 after the distribution of the settlement benefits to the Valid Class Members (i.e., if the number of Valid Class Members is less than 301), the remaining funds will be distributed as follows: (a) reversion of the first $75,000 or any part thereof, to the Government; (b) and then, reversion of the next $75,000 or any part thereof, to Class Counsel as compensation for legal fees and disbursements, to a maximum of $75,000; (c) then, reversion of any remaining balance to the Government; (d) any interest accrued on the funds will be returned to the Government.
[32] The Administrator will set up a toll free telephone number as well as a website containing information about the action and the claims process. The deadline to submit a claim as well as the necessary forms will be available on the website. Class Members will have 90 days from the date the settlement approval Order is issued and entered to file their claims with the Administrator.
[33] As part of the claims process, the Class Member must certify that he/she: (a) worked as an employee for a municipality or other employer providing homecare services and/or placement coordination services; (b) was then transferred to a CCAC between 1996-1998 and continued their employment without interruption; (c) was a member of CUPE at the time of the transfer to a CCAC and remained a member of CUPE, or were a member of another union at the time of transfer but later became a member of CUPE; (d) was a member of the VON Pension Plan or OMERS Pension Plan prior to the transfer; (e) was not a member of the Healthcare of Ontario Pension Plan, formerly HOOPP, prior to the transfer and became a member of HOOPP after the transfer; (f) did not receive settlement funds from other class actions that were commenced by Sue McSheffrey on behalf of OPSEU members and Diane LeClair on behalf of ONA members; and (g) did not opt out of this class action.
[34] An individual whose name does not appear on the Class List prepared by CUPE may nevertheless make a claim but will be required to provide additional documentation demonstrating their membership in the Class and eligibility to receive a payment, including proof of enrollment in the pension plans, proof of employment with a CCAC, proof of employment with a predecessor employer, proof of CUPE membership, and a statement that the Class Member did not receive settlement benefits under the LeClair and McSheffrey actions.
[35] The Administrator will calculate the number of Valid Claims within 150 days of the publication of the Notice of Settlement. The Administrator will provide the Valid Class Members with cheques sent by regular mail to the addresses on their claim forms. The cheques will be provided within 60 days of the Administrator having calculated the number of Valid Claims (the deadline may be extended by up to 45 days in the event the number of Valid Claims exceeds 301).
[36] If the Administrator does not allow the Class Member’s claim, the Class Member may appeal that determination to a referee, who will determine the appeal in writing. Mr. Kumail Karimjee (“Karimjee”) has agreed to act as the referee.
[37] Class Counsel’s opinion is that the Class Members’ claims faces considerable risks. The cause of action of breach of contractual undertaking is novel and, therefore, likelihood of success is uncertain. The evidence as to the nature of the promise allegedly made by the Government is contested. The limitation period defence presents a serious risk. In addition, damages would require proof on an individual basis based on expert evidence, and because of the nature of the claim, the calculation of an individual Class Member’s damages might not be possible until after that Class Member’s retirement.
[38] Class Counsel recommended the settlement based on consideration of all of these factors. Class Counsel considered the quantum of settlement benefits per Class Member to be reasonable having regard to the amount which had been the basis of the McSheffrey and LeClair settlement.
[39] Class Counsel believes that the settlement reflects a fair and appropriate balancing of the litigation risk and delay associated with the litigation (including any appeals), and, therefore, recommends the settlement. Class Counsel has extensive experience, including acting for plaintiffs in other employment and benefits class actions.
[40] There have been two objections to the settlement on the basis that the negotiated amount of $2,500 was less than the Class Members estimated their damages to be. One Class Member estimated her “damages” were approximately $26,000. The other Class Member estimated her “damages” to be $48,163.39.
4. The Motion to Amend the Definition of the Class
[41] The parties have agreed to amend the definition of the Class to include CUPE members who were members of the VON Pension Plan at the time of the transfer. Notice has been given to CUPE members who may become Class Members if the amendment is granted.
[42] There will be no prejudice suffered by any Class Members who are included in the current definition of the Class if the amendment is granted. The terms of the settlement are only amended to include the New Class Members, but do not deprive any existing members of the Class of any of the benefits of the settlement. The amount of the settlement to be received by each Class Member is not affected.
[43] If the order granting the amendment includes a term which gives each New Class Member ninety (90) days to opt out of the action and the settlement, the New Class Members will have had the same opportunity to opt out as the current Class Members.
[44] I grant the motion to amend the definition of the Class.
5. Settlement Approval
[45] 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; Kidd v. Canada Life Assurance Company, 2013 ONSC 1868.
[46] 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 the litigation; (f) the number of objectors and nature of objections; (g) the presence of good faith, arm’s-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; Kidd v. Canada Life Assurance Company, supra.
[47] In determining whether to approve a settlement, the court, without making findings of fact on the merits of the litigation, examines the fairness and reasonableness of the proposed settlement and whether it is in the best interests of the class as a whole having regard to the claims and defences in the litigation and any objections raised to the settlement: Baxter v. Canada (Attorney General) (2006), 2006 CanLII 41673 (ON SC), 83 O.R. (3d) 481 (S.C.J.) at para. 10. An objective and rational assessment of the pros and cons of the settlement is required: Al-Harazi v. Quizno’s Canada Restaurant Corp. (2007), 49 C.P.C. (6th) 191 (Ont. S.C.J.) at para. 23.
[48] The case law establishes that a settlement must fall within a zone of reasonableness. Reasonableness allows for a range of possible resolutions and is an objective standard that allows for variation depending upon the subject-matter of the litigation and the nature of the damages for which the settlement is to provide compensation: Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 (S.C.J.) at para. 70; Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 CanLII 14855 (ON SC), 40 O.R. (3d) 429 (Gen. Div.). A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally: Fraser v. Falconbridge Ltd., [2002] O.J. No. 2383 (S.C.J.) at para. 13; McCarthy v. Canadian Red Cross Society (2007), 158 ACWS (3d) 12 (Ont. S.C.J.) at para. 17.
[49] A similar settlement amount was approved by Justice Horkins in the LeClair and McSheffrey actions. In her reasons approving those settlements, Justice Horkins noted that those claims faced considerable risk both with respect to liability and with respect to proof of damages.
[50] In the case at bar, the amount negotiated per Class Member ($2,500) is comparable to the intended amount negotiated per class member in the McSheffrey and LeClair actions, as reflected in the decision of Justice Horkins approving the settlement of those actions ($2,700). Ms. Alexander faced additional risks compared to those faced by the plaintiffs in the McSheffrey and LeClair actions as a result of the limitations defence.
[51] The amount negotiated per Class Member in the within action was the maximum Ms. Alexander was able to achieve after vigorous and arm’s length negotiations by experienced counsel. Taking into account the significant litigation risks of this claim and the other relevant factors, the settlement is fair, reasonable and in the best interests of the Class.
[52] I approve the settlement.
6. Approval of Legal Fees
[53] 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 CanLII 22386 (ON SC), [2000] O.J. No. 2374 (S.C.J.) at para. 13; Smith v. National Money Mart, 2010 ONSC 1334 at paras. 19-20, varied 2011 ONCA 233; Fischer v. I.G. Investment Management Ltd., [2010] O.J. No. 5649 (S.C.J.) at para. 25.
[54] 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; and (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; Fischer v. I.G. Investment Management Ltd., supra, at para. 28.
[55] The Plaintiff also seeks an order approving the legal fees and disbursements in this matter in the maximum amount of $75,000, to be paid only if certain conditions as set out in the Minutes of Settlement are satisfied.
[56] As part of the settlement, the Government has agreed to reimburse a maximum of $75,000 towards Class Counsel’s legal fees and disbursements under certain conditions. The actual amount of Class Counsel’s legal fees and disbursements in this matter is at least $331,113.79. The maximum amount of $75,000 is, therefore, far less than Class Counsel’s actual fees and disbursements, and is modest having regard to the complexity of the litigation and the fact that the claim was pursued to nearly the point of trial.
[57] The maximum amount of $75,000 in this action is less than what was approved by Justice Horkins in the comparable LeClair and McSheffrey actions ($175,000 and $575,000, respectively).
[58] It is expected that there will be a high take-up rate, and it is, therefore, quite possible that no fees and disbursements will be paid to Class Counsel as a result.
[59] The fee approval in this matter is supported by the Representative Plaintiff and by CUPE (which has paid Class Counsel’s legal fees and disbursements in connection with this matter and which provided an indemnity to Ms. Alexander).
[60] In my opinion, having regard to the various factors used to determine whether to approve the fees of Class Counsel, the fee request in the immediate case should be approved.
7. Conclusion
[61] For the above reasons, I approve the settlement set out in the Minutes of Settlement executed on March 8, 2016, and I approve the payment of legal fees and disbursements pursuant to the arrangement set out in the Minutes of Settlement, to the maximum amount of $75,000.
Perell, J.
Released: November 14, 2016
CITATION: Alexander v. Ontario, 2016 ONSC 7059
COURT FILE NO.: CV-13-477703
DATE: 20161114
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DARLENE ALEXANDER
Plaintiff
– and –
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO
Defendant
REASONS FOR DECISION
PERELL J.
Released: November 14, 2016