Court File and Parties

CITATION: Dine v. Biomet, 2016 ONSC 857 COURT FILE NO.: CV-13-490112-CP DATE: 20160209

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Steven Dalton Dine, Plaintiff / Moving Party AND: Biomet Inc., Biomet Orthopedics LLC, Biomet Manufacturing Corp., Biomet U.S. Reconstruction LLC and Biomet Canada Inc., Defendants / Responding Parties

BEFORE: Justice Edward P. Belobaba

COUNSEL: Jonathan Ptak, Doug Lennox and Garth Myers for the Plaintiff Kent Thomson, Derek Ricci, Kristin Jeffery and Michael Finley for the Defendants

HEARD: September 29 and 30 and October 2, 2015

Proceeding under the Class Proceedings Act, 1992

costs award – CERTIFICATION

[1] In a decision released on December 18, 2015 I certified a class action involving metal-on-metal hip implants designed, manufactured and distributed by the Biomet defendants.[^1] The successful plaintiff now asks for costs on a partial indemnity basis - $356,894 in fees and $178,161 in disbursements for a total, with taxes, of $584,288.

[2] The defendants say this costs request is grossly excessive and remind the court that in Crisante v DePuy[^2] a similar hip implant certification motion, the costs award was $175,000. Here, say the defendants, a fair and reasonable costs award should be no more than $150,000.

[3] My approach to costs awards on certification motions was set out in five decisions that were released in 2013.[^3] I said this:

In an effort to further the ‘access to justice’ objective and make my own decision-making process more transparent and predictable, I will adopt the following procedure in deciding costs awards in conventional certification motions …

➢ I will generally be content with costs outlines certified by counsel. I will not require either side to submit actual dockets. If they wish to do so, that is up to them.

➢ I will (briefly) review the certified costs outlines to ensure that the hourly rates being charged by counsel fall within the range set out by the Rules Committee in its Information to the Profession.

➢ I will also review the costs outline for any obvious excesses in fees or disbursements.[^4] Apart from any obvious excesses, I will accept the costs outline as is. I will not drill down into any of the detail.

➢ If the unsuccessful party wants to argue unreasonableness (beyond hourly-rate compliance or obvious excesses) it should submit its own certified costs outline showing what it actually spent (on a partial indemnity scale) on the certification motion. If a parallel costs outline is not submitted by the unsuccessful party (and none is required) I will probably conclude that the amount being requested by the successful party is not unreasonable.

➢ I will consider historical costs awards in similar cases.

➢ As I conclude my costs review, I will stand back and reassess the amount that is before me (after the reductions or removals of any excesses.) I will again review the factors set out in Rule 57.01(1), the admonitions of the Court of Appeal, and the historical costs awards data as set out above, and come to a final amount that, in my view, is fair and reasonable to both sides, always remembering that the fundamental objective of the Class Proceedings Act is access to justice.

[4] I will now apply this approach to the costs submissions herein.

(i) Review of hourly rates to ensure compliance with the Rules Committee “Grid”

[5] The well-known Grid is based on the lawyer’s year of call and recommends that hourly rates (on a partial indemnity basis) be calculated as follows: less than ten years, maximum of $225; ten to twenty years, maximum of $300; over twenty years, maximum of $350. It is important to note that the maximum amounts are ceilings not floors. Thus, a one-year call should probably be allocated no more than $140 per hour, and a twelve-year call about $240. The senior lawyer with more than 20-years’ experience should only be awarded $350 if the legal work she performed actually required this level of experience.

[6] The hourly rates charged by the plaintiff’s nine-person legal team in their costs submission do not comply with the Grid. The $350 hourly rate charged for the four senior lawyers, Messers. Klein, Newland and Stevenson and Ms. Vergis is acceptable. However, I have adjusted the hourly rates for the others as follows: Mr. Lennox, a seventeen-year call, $275; Mr. Ptak, a thirteen-year call, $250; Mr. McConville, a seven-year call, $200; Mr. Myers, a three-year call, $160; and Ms. Joanisse, a one-year call, $140.

[7] I know that many lawyers and even some judges believe that the Grid is “out of date” because hourly rates for senior lawyers, at least in downtown Toronto, are now routinely in the $600 to $1200 range. But in my view these increasing (and frankly problematic) hourly rates only magnify the core problem of monopoly-pricing and reaffirm the overall reasonableness of the rates that are set out in the Grid.[^5]

[8] Having re-calculated the hourly rates for the plaintiff’s nine-lawyer team, I find that the legal fees total must be reduced from $356,894 to $279,104.

(ii) Any obvious excesses in fees or disbursements

[9] There is one area of obvious and unjustifiable excess and I foreshadowed this concern in the opening paragraphs of my certification decision. I said this:

Class counsel generally understands that only a minimal amount of evidence is needed to satisfy the [certification] requirements. Defence counsel generally does not and presents far too much merit-based evidence that has no place at certification and is better left for trial.

That’s what happened here. Much of the defendants’ written and oral submissions were mired in the minutiae of evidentiary analysis. This level of detail is neither required nor appropriate on a certification motion. The defendants may well prevail at trial or on a summary judgment motion when the merits of this action will be fully adjudicated but at this point the plaintiff has satisfied the modest requirements for certification.

[10] In their costs submissions, class counsel acknowledged this very point and noted that the defendants’ had mounted a “full-scale attack and focus on the merits of the action, which is misplaced at the certification motion.” But then, instead of staying within the narrow and relatively modest parameters of what is needed for certification, class counsel (who should and do know better) decided to engage with the defendants on the merits and ended up wasting an enormous amount of time and money responding to issues and evidence that had nothing to do with certification. Class counsel recognized in their costs submission that their decision to litigate the merits “resulted in an inordinate expenditure of time.” Indeed, they concede that this merits battle was the cause “by far” of “the most expenditure of time” on the part of class counsel.

[11] This leads to an obvious question: if the defendants’ misunderstood the certification requirements and marshalled a full-scale attack on the merits, why was class counsel “inexorably” (their word) driven to waste time and money following the defendants down this rabbit-hole of completely unnecessary litigation? In my view, this detour into MeritsLand was an obvious and expensive excess. By the plaintiff’s own admission, an “inordinate” amount of time was spent on legal work that was completely outside the scope of the certification motion.

[12] If the defendants had prevailed on certification, they would have recovered nothing in the way of costs for their unnecessary foray into the merits. The same principle should apply to limit the costs that can be recovered by the successful plaintiff. In my view, the legal fees component should be reduced by at least 50 percent to properly reflect the admitted waste of time and money. The adjusted amount for legal fees is therefore $139,552.

[13] The largest and most controversial disbursement is the $135,760 that was paid to Dr. Graves for his expert reports and related cross-examinations. It has often been said that the best way for a plaintiff to provide some evidence of a class-wide (common) product defect is with an expert report. Here, however, as it turned out, Dr. Graves’ evidence was not needed to satisfy the certification requirements.[^6] These requirements, and in particular the common issue requirements, were readily satisfied with other evidence. Dr. Graves’ report added value, to be sure, but it was not essential. And yet, about $135,000 was spent getting this evidence before the court.

[14] In my view, given the amount of the disbursement and the limited value of the expert evidence, it would be fair and reasonable to allocate half of the Graves’ disbursement to the costs request herein and the other half to be recoverable in the cause. In other words, reduce the disbursements total by $67,880 to $113,118.

[15] The only other disbursement that falls within the “excessive” category is the $2208 for “legal research.” I am deleting this amount for the reasons set out in footnote 4. The revised total for legal fees ($139,552) and disbursements ($110,910) is therefore $250,462.

(iii) Consider the defendants’ costs outline

[16] As already noted, if the unsuccessful party wants to argue unreasonableness (beyond hourly-rate compliance or obvious excesses) it should submit its own certified costs outline showing what it actually spent (on a partial indemnity scale) on the certification motion. The key phrase here is “what it actually spent” not what it would have “sought to recover.” The defendants’ submission that it would have “sought” no more than $200,000 had it prevailed on the certification motion, is frankly of no assistance. I have absolutely no doubt, given the enormous amount of time that the defendants devoted to merits-based pursuits, that “what they actually spent” was two or three times more than the plaintiff.

(iv) Historical costs awards in similar cases

[17] As explained above, the adjusted costs request is $250,462. The average costs award on certification motions for plaintiffs seeking less than $500,000 is $169,250.[^7] This historical average, although not determinative, should be accorded some weight as I stand back and finalize the costs award.

(v) Stand back and reassess

[18] Standing back and reassessing the costs submissions, I am inclined to find in all the circumstances, including the factors set out in Rule 57.01(1) and the historical averages just discussed, that an award of $210,000 all-inclusive is fair and reasonable, with a further $68,000 being deferred “in the cause.”

[19] Because I found that the plaintiff was 95 per cent successful,[^8] these amounts are reduced to $199,500 payable immediately and $64,600 in the cause – rounded up to $200,000 and $65,000.

[20] Some may suggest that the effort by this court to constrain the costs of certification motions is worrisome and wrong-headed. I remind them that the certification requirements under the Class Proceedings Act[^9] are modest at best and that legal fees should reflect this reality. And, as I have already noted, the monetary reward for assuming the many risks of class action work will not be found in costs awards but in court-supported “presumptively valid” contingent fee agreements.[^10]

[21] Costs are fixed (in my view quite generously) at $200,000 all-inclusive payable to the plaintiff by the defendants forthwith and a further $65,000 payable to the plaintiff in the cause.

Belobaba J.

Date: February 9, 2016

[^1]: Dine v. Biomet, 2015 ONSC 7050. [^2]: Crisante v. DePuy Orthopaedics, 2013 ONSC 6351. [^3]: Dugal v Manulife Financial, 2013 ONSC 4083; Rosen v BMO Nesbitt Burns, 2013 ONSC 2144; Crisante v DePuy Orthopaedics, 2013 ONSC 5186; Brown v. Canada (Attorney General) 2013 ONSC 5637; and Sankar v Bell Mobility, 2013 ONSC 5916. Followed and applied in Quinte v. Eastwood Mall, 2014 ONSC 1661 and Baroch v. Canada Cartage, 2015 ONSC 1147. [^4]: An obvious fees-related excess: too many counsel at the cross-examinations or at the hearing. An obvious disbursement excess: charging for “legal research.” Lawyers are, of course, entitled to charge fees for legal research. But they should not charge electronic subscriptions as a disbursement – any more than a lawyer should not charge clients for print subscriptions to the DLR’s or various law journals. [^5]: See the discussion in Goldsmith v National Bank of Canada, 2015 ONSC 4581 at paras. 7-11. To repeat a point that I have often made: class counsel should not look to certification costs awards (which should be modest at best) as a way to fund their work as class counsel. The compensation objective is better addressed through court-supported contingency fee agreements: see Cannon v. Funds for Canada Foundation, 2013 ONSC 7686. [^6]: Dine v. Biomet, 2015 ONSC 7050 at para. 62. [^7]: See the historical analysis set out in the cases cited supra, note 1. [^8]: Supra, note 1, at para. 68. [^9]: S.0. 1992, c. 6. [^10]: Supra, note 4.