Canada: Class Action Carriage Fight Revisited After Years Of Delay

Last Updated: November 6 2013
Article by Corry Lomer

Carriage disputes are a unique aspect of Canadian class action practice which occur when two or more plaintiffs' counsel compete to represent a proposed class in a yet-to-be certified action. In deciding carriage disputes courts weigh a variety of different factors including the experience of counsel, funding, and the litigation plan, among others depending on the facts of the particular case. Successful counsel earns the right to continue prosecution of the action as a putative class proceeding.  

In the most recent chapter of these types of disputes, Justice Belobaba of the Superior Court of Ontario addressed the novel issue of whether a court can revisit the issue of carriage, and reassign class counsel on the basis that the counsel initially assigned carriage had unreasonably delayed in moving the action forward.

The issue arose in the case of Waheed v Glaxosmithkline Inc.1, a proposed class action against Glaxosmithkline involving the manufacturing and distribution of the Avandia" diabetes medication2. In November 2010, a carriage motion being fought by the law firms of Kim Orr and McPhadden Samac Tuovi was heard before Justice Strathy regarding which of three actions would be allowed to proceed on behalf of the proposed class. Before a decision was rendered, counsel agreed to settle the motion on the basis that Kim Orr would be appointed counsel for the plaintiffs in the first action, while the action brought by McPhadden would be effectively stayed. This agreement resulted in a consent carriage order dated November 19, 2010.

Almost three years later McPhadden brought a motion – the first of its kind – to transfer carriage to them on the basis that Kim Orr had unreasonably delayed the progression of the case.

Justice Belobaba, sitting as case management judge, first addressed whether the Court has jurisdiction to hear a carriage transfer motion. Relying on the broad jurisdiction provided by section 12 of the Ontario Class Proceedings Act, 1992, he held that a case management judge has a wide-ranging supervisory function, including determining motions to remove and replace carriage counsel on the basis of unreasonable delay.

He noted that cases where a carriage transfer motion will be successful will be rare and, as a general rule, the court will respect plaintiffs' counsel's ability and discretion to run the case as they see fit. Although on the rare occasion of "clear and unreasonable delay", the court may intervene to replace carriage counsel. He then articulated a four part test to determine whether the court should intervene to replace carriage counsel on grounds of unreasonable delay:

  • the delay must be clearly unreasonable by then-current class action litigation standards;
  • there must be evidence of actual prejudice or harm to the putative class members;
  • the explanation for the delay must be inadequate; and
  • requiring the firm originally awarded carriage to bring the certification motion within a designated time period (or else be replaced by the moving firm) must be either unworkable or not in the best interests of the class.

All four criteria must be met in order for success on the motion.

In Waheed, the carriage transfer motion failed on all four criteria. McPhadden failed to show that most class proceedings are certified in less than three years or that this case was at odds with the "glacial pace" at which class proceedings typically move, and they provided no evidence of actual harm or prejudice to the putative class members. Kim Orr, on the other hand, provided explanations for the delay including the need to coordinate with experts in a parallel American proceeding, and they advised the court that it would be filing the certification motion in the action within two months of the hearing of the carriage motion.

Interestingly, Justice Belobaba denied Kim Orr costs of the motion because the threat of being removed as counsel had prompted them to commit to filing a certification motion quickly and thus benefited the class members.

This decision suggests that carriage transfer motions will be successful only in rare and exceptional circumstances. However, in cases where plaintiffs' counsel has fought hard to gain carriage of the case in the first place, this case may spur them to move more quickly towards certification rather than risk another fight over carriage.     

Footnotes

1 2013 ONSC 5792.

2 Gowlings acts as counsel to the defendants in this proceeding, and attended the motion but made no submissions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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