Waldman v. Thomson Reuters Canada Limited, a recent
decision denying approval of a proposed settlement, is perhaps a
signal that actions in which there may be a "prohibitively
high-risk" the class will not succeed are not ripe for
One reality in the class action context is that, once the
certification threshold is passed, a pure cost-benefit analysis
often leads to the conclusion that settling, whether the case is
likely to succeed on the merits or not, outweighs the cost of many
years of common issues and individual trials.
The United States Supreme Court recently heard argument that
very few cases in the United States proceed once a class has been
certified, and less than one-third of 1% ever get to a
verdict.2 While common issues trials are beginning
to increase in number in Canada, the balance may still be in the
favour of settlement if an action is certified and it is not
possible to determine the issues by way of summary judgment.
The recent Waldman decision may encourage defendants to
resist settlement if the class claim is only marginally
meritorious. Waldman is a certified class action in
which the class is made up of lawyers and others who have authored
court documents which then appeared on Thomson's Litigator
service through their Carswell products. Mr. Waldman argued
that the copyright class members have in these documents was being
infringed when Thomson sold the documents on their service without
seeking the permission of any authors.
The settlement proposed, among others, the following terms:
Thomson will modify its communications with subscribers in
order to obtain various acknowledgments of the limits of use of the
products to conform with the Copyright Act, as well as
acknowledge that some material available on Litigator may be
subject to third-party copyright;
Class Members would grant Thomson a non-exclusive licence in
respect of their court documents on Litigator;
Thomson would pay $350,000 to a trust fund in support public
interest litigation; and
If the settlement is not cancelled vis-à-vis other
operative terms, Thomson would pay $850,000 to class counsel for
The Court received numerous objections to the settlement.
Justice Perell agreed with some objections relating to counsel
fees, including that the "optics [of such fees] were
bad", looking more like the entrepreneurial efforts than the
advancement of class members' rights. However, the Court
concluded that it would not approve the settlement even if the
counsel fee amounts were reversed because the settlement overall
was not substantively fair.3
The case was distinguished from Robertson, a similar
class action regarding alleged copyright infringement in the online
publication of works authored by freelance writers.
Waldman, it was said, "was always about the principle
and not about the money."4 Justice Perell held
that the settlement terms proposed in Waldman amounted to
Thomson buying non-exclusive licenses, something of a substantial
value, without giving any remuneration to the class members, and
without ever admitting to doing anything wrong or having to submit
to any meaningful behaviour modification.
The settlement gave Thomson something that it otherwise could
not have achieved, even by a successful counterclaim, "namely,
copyright licences and releases of copyright infringement claims by
Class Members whose intention was to protect not to be paid for
their copyright."5 For these and other
reasons, it was ultimately concluded that the proposed settlement
was not in the best interests of the class.
In Kidd v. The Canada Life Assurance Company, Justice
Perell also noted that court rejection of settlements in Canadian
class actions is quite rare, and perhaps problematically so:
"Very few settlements have been rejected, and it would be
salutary for the institution of class actions if the standard for
settlement approval was elevated by having regard to the
institutional fairness of the settlement."6
While certainly not the norm or the standard, these decisions
may begin to pave the way for a more rigorous settlement approval
test going forward. At the very least, the case is a caution
to parties embarking on negotiations that settlement approval is
not simply a foregone conclusion in all cases.
5 Waldman, at para. 99. Recent decisions
by the Supreme Court of Canada regarding copyright infringement
provided a greater boon to Thomson's substantive defence that
no copyright had ever been infringed.
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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