Court File and Parties
COURT FILE NO.: (Asselstine v. Kia Canada Inc.) CV-19-627149-00CP (McBain v. Hyundai Auto Canada Corp.) CV-627147-00CP
DATE: 20210720
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CHANTAL ASSELSTINE, Plaintiff
AND:
KIA CANADA INC., KIA MOTORS CORPORATION, KIA MOTORS AMERICA, INC, KIA MOTORS MANUFACTURING GEORGIA, INC, HYUNDAI MOTOR COMPANY, LTD, HYUNDAI MOTOR AMERICA, INC, and HYUNDAI MOTOR MANUFACTURING ALABAMA, LLC, Defendants
AND BETWEEN:
KEITH McBAIN, Plaintiff
AND:
HYUNDAI AUTO CANADA CORP, HYUNDAI MOTOR COMPANY, LTD, HYUNDAI MOTOR AMERICA, INC, and HYUNDAI MOTOR MANUFACTURING ALABAMA, LLC, Defendants
BEFORE: Glustein J.
COUNSEL: Matthew D. Baer and Chelsea Smith, for the Plaintiffs in both actions
Cheryl M. Woodin, for the Defendants in both actions
HEARD: July 16, 2021
REASONS FOR DECISION
Nature of motion and overview
[1] The defendants in both Court File No. CV-19-627149-00CP (the Asselstine Action) and in Court File No. CV-19-627147-00CP (the McBain Action) (collectively, the Ontario Actions) seek production of Class Counsel’s non-privileged information about (i) how much time each lawyer spent on the steps taken in the Canadian Class Actions (as defined below), (ii) when such time was incurred, (iii) the nature of the work performed, and (iv) the hourly rate of each timekeeper at the relevant time (the Fee Details).
[2] Class Counsel is a consortium comprised of McKenzie Lake Lawyers LLP and Strosberg Sasso Sutts LLP (class counsel in the Ontario Actions), Merchant Law Group (class counsel in Papp v. Kia Motors America Inc., et al., Court File No. QBG 795/19 (Saskatchewan Court of Queen’s Bench) and in Pelletant v. Hyundai Auto Canada Corp., et al., Court File No. 500-06-0010103-198 (Québec Superior Court of Justice)), and Garcha & Company (class counsel in Killoran v. Hyundai Auto Canada Corp., et. al., Court File No. S-194327 (British Columbia Supreme Court)).
[3] I refer to all of the above class actions collectively as the Canadian Class Actions.
[4] The defendants in the Ontario Actions bring this motion for production in advance of a fee approval motion scheduled for September 10, 2021. In that fee approval motion, Class Counsel seek an order for payment by the defendants of “fair and reasonable” counsel fees as set out in the settlement agreement executed on October 22, 2020 (the Settlement Agreement).
[5] Class Counsel has provided fee information for the primary lawyers or clerks from the four law firms who form the consortium, limited to the docketed fees, total hours worked, and current hourly rate of those timekeepers. Class Counsel’s evidence is that the “collectively docketed time [is] $1,471,146.90 plus applicable taxes as of April 27, 2021”, with disbursements of $29,743, inclusive of applicable taxes.
[6] At the fee approval hearing scheduled for September 10, 2021, Class Counsel “is collectively seeking legal fees of $4,390,000.00 plus applicable taxes, plus disbursements of $29,743.00 for an all-inclusive total of $4,990,443.00”. In effect, Class Counsel seek a multiplier of approximately three on its docketed time.
[7] All law firms in the consortium have agreed that any order made by this court on this production motion will bind Class Counsel without the need for individual motions to be brought in each jurisdiction and without the need for these Reasons for Decision to be recognized or enforced.
[8] For the reasons below, I find Class Counsel must produce the Fee Details. The information contained in the Fee Details is required for the defendants and the court to assess whether the fees sought are fair and reasonable.
Facts
Canadian Class Actions
[9] The representative plaintiffs in the Canadian Class Actions sought damages from the defendants based on alleged negligence in the design, research development, manufacturing, advertisement, promotion, distribution, warning, sale, leasing, warranties, servicing, and/or repair of Theta II 2.0-litre and 2.4-litre gasoline direct injection engines in certain Kia and Hyundai vehicles sold at varying dates between 2011 and 2019 (the Settlement Class Vehicles).
[10] The Canadian Class Actions were all filed within four months of each other. Each of them was commenced by counsel that ultimately became members of the national Class Counsel consortium.
National Class Counsel Consortium
[11] The Canadian Class Actions were served beginning in March 2019.
[12] After the commencement of the Asselstine Action, counsel for Ms. Asselstine contacted Merchant Law Group LLP and Garcha & Company to suggest the firms work together to prosecute this litigation in both Ontario and Québec. The firms subsequently formed a national consortium for that purpose.
[13] Class Counsel’s evidence is that as a result of the formation of the national consortium, the following arose:
(i) “There were no carriage issues, and no time was spent on carriage issues”;
(ii) Prior to the formation of the consortium, (a) “[e]ach firm had done enough work on the file to research the background of the case and to draft their own pleading” and (b) the Merchant Law Group and Garcha and Company “had not coordinated with each other, or with McKenzie Lake or Strosberg Sutts Sasso”; and
(iii) “[T]here was no duplication of work, and counsel were able to resolve the litigation on a national basis”.
The Settlement Agreement
[14] The defendants were advised in the fall of 2019 that counsel in all of the Canadian Class Actions would be working together in a consortium. Settlement negotiations began in November 2019 and a settlement was reached in April 2020 in Canada.
[15] The parties executed the Settlement Agreement on October 22, 2020, resolving the claims related to the Canadian Class Actions. Certain actions are continuing with respect to non-settled claims (i.e., for vehicles not included in the Settlement Class Vehicles or for vehicles with different model years than those included in the Settlement Class Vehicles).
[16] The Settlement Agreement follows a parallel settlement in the United States arising from litigation commenced in 2017.
[17] This Court and the Superior Court of Québec approved the Settlement Agreement by reasons released concurrently on March 9, 2021, following a joint hearing on February 23, 2021.
[18] By orders dated April 6, 2021, the Court of Queen's Bench of Saskatchewan and the Supreme Court of British Columbia discontinued the Papp Action and the Killoran Action, respectively.
Class Counsel legal fees and disbursements
[19] Pursuant to s. 10.2 of the Settlement Agreement:
The defendants agree to pay the legal fees and disbursements of Class Counsel that are fair and reasonable in all of the circumstances, plus applicable GST, HST and/or QST, which were incurred for the prosecution of the claims in the Actions relating to the Released Claims and to produce this Settlement Agreement, as approved by the Courts (‘Counsel Fees’).
[20] Under the Settlement Agreement, Counsel Fees were payable over and above the benefits to the Settlement Class Members and other related settlement notice and claims administration expenses.
[21] The parties have not yet been able to agree on the amount of Counsel Fees.
[22] Section 10.5 of the Settlement Agreement provides that if the defendants and Class Counsel do not reach an agreement as to the amount of Counsel Fees, Class Counsel will bring a motion to the Ontario Superior Court of Justice for a determination of the issue of Counsel Fees as it relates to the National Settlement Class, and to the Superior Court of Québec for a determination of the issue of Counsel Fees as it relates to the Québec Settlement Class.
[23] The motions for determination of Counsel Fees is scheduled for September 10, 2021 at a joint hearing of this Court and the Superior Court of Québec.
[24] Pursuant to s. 12.3 of the Settlement Agreement, this Court has “jurisdiction to resolve any dispute that may arise in the implementation of this Settlement Agreement”. Such broad jurisdiction encompasses the dispute at issue in this motion, being whether Class Counsel’s Fee Details ought to be produced.
Fee information provided to the defendants
[25] Class Counsel has provided the following fee information to the defendants:
(i) In response to a request from the defendants dated May 15, 2020 (before the settlement) seeking Class Counsel’s collective time to date, Class Counsel advised by letter dated May 26, 2020 that its collective docketed time and disbursements at that point were just under $800,000;
(ii) On November 10, 2020 (after the settlement), the defendants requested Class Counsel’s collective work in-progress (WIP) and disbursements to date, as well as a summary outlining the lawyers who worked on the matter, their hourly rates, and the number of hours spent on each task/item. On November 23, 2020, Class Counsel provided a breakdown by primary lawyer of the WIP amount, number of hours, and hourly rates. At that point, the collective time was $1,031,004.45 plus applicable taxes;
(iii) On November 24, 2020, the defendants asked Class Counsel to identify the tasks on which Class Counsel had spent its time. On November 25, 2020, Class Counsel advised that:
(a) counsel in the Canadian Class Actions had each independently researched whether to bring an action(s) and then researched and prepared their respective pleadings;
(b) much of the research entailed reviewing the engine problems, the models which were impacted, the Canadian recalls and the U.S. complaints;
(c) the national consortium had the effect of streamlining the work on this matter;
(d) Class Counsel had spent significant time on confirmatory discovery (more than 40,000 files), which had been allocated amongst the firms to avoid any overlap;
(e) Garcha & Company (counsel in the Killoran Action) had incurred significant time with respect to reviewing the materials and settlement from similar U.S. litigation; and,
(f) McKenzie Lake Lawyers LLP (counsel in the Ontario Actions) had incurred the vast majority of time with respect to negotiating and finalizing the settlement, having the notices approved, and having the settlement approved.
[26] On December 9, 2020, the defendants requested a more detailed breakdown of Class Counsel’s WIP. In particular, the defendants requested that Class Counsel provide a breakdown of each lawyer's time on a task and time period basis, similar to what would be produced in a Costs Outline. In particular, the defendants requested that the breakdown indicate how much time each lawyer claimed for researching and drafting pleadings, preparing certification motion materials (if any), reviewing the defendants' productions for settlement purposes, conducting settlement negotiations, reviewing the Settlement Agreement, drafting approval hearing materials, participating in notice and claims administration, and any other relevant categories. The defendants also sought the date range in which the tasks were performed.
[27] Class Counsel declined to provide the information sought by the defendants.
[28] On May 27, 2021, during the cross-examination of counsel for the defendants who swore two affidavits in support of this motion, Class Counsel asked the defendants to provide the same Fee Details sought by the defendants from Class Counsel. The defendants have not produced the requested Fee Details.
[29] In an affidavit filed for this motion, Class Counsel advises the court that “if the Court wishes to see the details of Class Counsel’s WIP, it would be provided under seal for the Court to review”.
Analysis
[30] The onus is on class counsel to establish that its proposed fee is reasonable: Lavier v. MyTravel Canada Holidays Inc., 2013 ONCA 92, 359 D.L.R. (4th) 713, at para. 20. The same onus exists when the defendants agree to pay class counsel fees: Gariepy v. Shell Oil Co., 2002 CanLII 12911 (Ont. S.C.), at paras. 59-69.
[31] The court’s jurisdiction to determine fees arises out of the settlement agreement, and not from any prior contingency fee agreement: Lavier, at paras. 23-24.
[32] Regardless of whether a multiplier or contingency fee approach is sought under a settlement agreement, the court must be satisfied that the fees are fair and reasonable in the circumstances: Lavier, at para. 22.
[33] By way of example, the court may have concerns that the “real” multiplier is higher than the multiplier claimed by counsel because of duplicative docketed fees. In Bellaire v. Daya, 2007 CanLII 53236 (Ont. S.C.). Hoy J. (as she then was) expressed a concern at para. 75 that the 1.75 multiplier sought by Class Counsel was likely less than the “’real’ multiplier” since:
Given that three separate firms were involved - an alliance cobbled together to avoid a carriage dispute - one can safely assume, that, despite counsels' best efforts, there were some inefficiencies and unnecessary duplication. Four senior counsel, with hourly rates ranging from $500 an hour to $810 an hour, as well as junior counsel, attended the settlement approval hearing.
[34] Similarly, in Murphy v. Mutual of Omaha Insurance Co., 2000 BCSC 1510, the parties disputed the quantum of fees pursuant to a settlement agreement that, as in the present case, provided for the payment by the defendant of “reasonable fees and disbursements of class counsel in connection with this Agreement, as mutually agreed or determined by the Courts”: at para. 2.
[35] In Murphy, class counsel sought that fees be fixed at approximately $675,000 while the defendant proposed that “a fee in the range of $35,000 to $50,000 would be reasonable and appropriate”: at paras. 4-5.
[36] In Murphy, Holmes J. agreed with class counsel that production of dockets would not be generally required, “absent some basis to suggest impropriety or other unusual circumstances regarding the evidence as to the claimed time expended”: at paras. 41-42. However, Holmes J. commented, at para. 43, on the value to the court of the type of Fee Details sought in the present motion:
[C]lass counsel could reveal more general information summarized from their time records that would assist the Court in considering the complexity of their work, the seniority and abilities of counsel providing services, the nature of the services undertaken, hourly rates, efficiency of time expended and like matters. That would not breach any privilege nor unfairly require disclosing sensitive information to an opponent.
[37] In a fee approval motion, the court is generally asked to approve either a contingency fee or a fee based on a multiplier of incurred legal fees. Dockets are not typically required, and class counsel generally advises the court as to the global amount of docketed time and disbursements.
[38] I make no finding that a Costs Outline, let alone production of full dockets, is required for all fee approval motions. That is not consistent with the practice of the court, which generally determines whether the fee is fair and reasonable based on the settled factors in the case law. The total docketed time incurred is one such factor under the case law that is relevant in the present case: McDonald v. Home Capital Group, 2017 ONSC 5195, at paras. 11 and 22.
[39] In addition to the total docketed time incurred, relevant factors to assess whether the legal fees requested are fair and reasonable will also include (i) the time spent and work done, and (ii) the opportunity cost to class counsel in the expenditure of time in pursuit of the litigation and settlement: Brown v. Canada (Attorney General), 2018 ONSC 3429, at para. 40.
[40] Consequently, the court can consider underlying evidence of fees when appropriate to determine whether the fees sought are fair and reasonable, including a review of dockets. The court has taken such an approach in several decisions, reviewing either dockets or docket summaries: Banerjee v. Shire Biochem Inc., 2011 ONSC 7616, at para. 23; Robertson v. Thomas Canada Ltd., [2009] O.J. No. 2650 (S.C.), at para. 37; and Garland v. Enbridge Gas Distribution Inc., 2006 CanLII 41291 (ON SC), [2006] O.J. No. 4907 (S.C.), at para. 39.
[41] In the present case, Class Counsel relies on its affidavit evidence that (i) there were no costs incurred in relation to any potential carriage disputes and (ii) there was no duplication after the formation of the consortium since work was allocated between the firms to avoid the concerns of inefficiencies and duplication.
[42] Further, since the Settlement Agreement provides for payment of “Released Claims”, the Fee Details are required for the defendants and potentially for the court to assess Class Counsel’s position that the docketed fees relate to only the claims governed by the Settlement Agreement.
[43] The Fee Details are also relevant to the risk undertaken by the defendants, as the steps taken by Class Counsel in the Canadian Class Actions will have to be considered in light of the various steps undertaken in the U.S. litigation.
[44] Consequently, the Fee Details are required in addition to the information already provided as to collective docketed time, or total hours and current hourly rates of certain timekeepers.
[45] Further, there is no basis to require the defendants to produce their own Fee Details in response to the present motion for production of Class Counsel’s Fee Details.
[46] If the defendants fail to produce their Fee Details in response to the September 10, 2021 motion for fee approval, the court may consider that issue at that time: Granger v. Her Majesty the Queen in Right of the Province of Ontario, 2020 ONSC 4101, at paras. 16, 90, and 92. However, the defendants’ Fee Details are not relevant to the onus on Class Counsel to establish that the fees it seeks to be approved are fair and reasonable.
[47] There are no terms in the Settlement Agreement requiring any particular production of information in support of the payment of Class Counsel’s fees (whether between the parties or if ordered by the court). Class Counsel submits that as such, it is are not required to provide any details under the Settlement Agreement (and would not have agreed to such a term in the Settlement Agreement). However, the lack of any terms does not mean that no evidence is required (let alone preclude the court from requiring the necessary information to determine fair and reasonable fees), particularly when Class Counsel asserts in its affidavit that there is no duplication and no fees associated with the carriage motion.
[48] Consequently, the lack of terms in the Settlement Agreement governing what information is required to establish a fair and reasonable fee does not mean that Class Counsel is not required to produce relevant Fee Details to the defendants or to the court.
Order and costs
[49] For the above reasons, I order Class Counsel to produce the Fee Details. The parties agree that costs should be reserved to the fee approval hearing on September 10, 2021, and I so order.
Glustein J.
Date: July 20, 2021
COURT FILE NO.: (Asselstine v. Kia Canada Inc.) CV-19-627149-00CP
(McBain v. Hyundai Auto Canada Corp.) CV-19-627147-00CP
DATE: 20210720
ONTARIO
SUPERIOR COURT OF JUSTICE
CHANTAL ASSELSTINE
Plaintiff
AND:
KIA CANADA INC., KIA MOTORS CORPORATION, KIA MOTORS AMERICA, INC, KIA MOTORS MANUFACTURING GEORGIA, INC, HYUNDAI MOTOR COMPANY, LTD, HYUNDAI MOTOR AMERICA, INC, and HYUNDAI MOTOR MANUFACTURING ALABAMA, LLC
Defendants
AND BETWEEN:
KEITH McBAIN
Plaintiff
AND:
HYUNDAI AUTO CANADA CORP, HYUNDAI MOTOR COMPANY, LTD, HYUNDAI MOTOR AMERICA, INC, and HYUNDAI MOTOR MANUFACTURING ALABAMA, LLC
Defendants
REASONS FOR DECISION
Glustein J.
Released: July 20, 2021