It is common practice for defendants to enter into settlement
negotiations with plaintiffs' counsel before a proposed class
action is authorized or certified. However, as the recent decision
in Brunet c.
Zimmer demonstrates, defendants remain vulnerable during
such negotiations to individual and group claims commenced by other
prospective class members.
In 2012, Merchant Law Group LLP won carriage of a proposed class
action against the defendant regarding allegedly defective hip
implants (the "Wainberg Class Action"). The defendants
then entered into settlement negotiations with Merchant Law before
the class action was authorized. Eventually, the parties reached an
agreement in principle.
However, in 2014, Kugler Kandestin LLP – the law firm that
lost the carriage battle in 2012 – started a group action
against the defendant with respect to the same hip implant (the
"Brunet Group Action"). The defendant argued that the
plaintiffs in the Brunet Group Action were obliged to opt out of
the prospective Wainberg Class Action before they could pursue
their claims since this was a "precedent obligation"
pursuant to article 168(3) of the Quebec Code of Civil Procedure.
The defendants therefore sought to stay the Brunet Group
The Court denied the stay, finding that it could not be a
"precedent obligation" for the prospective class members
to opt out of the potential Wainberg Class Action since the class
action had not yet been authorized. The Court rejected the
defendants' argument that refusing to grant a stay would lead
to an inappropriate use of judicial resources.
Additionally, the Court held that the fate of the plaintiffs in
the Brunet Group Action should not be dependent on the outcome of
negotiations in the context of the not-yet-authorized Wainberg
Class Action, especially in light of the lack of significant
progress towards a final settlement between the filing of the
Motion to Stay in September 2014 and its hearing in February
Implications for Defendants
Entering into negotiations before authorization or certification
does not provide defendants with any guarantees that they are
negotiating a settlement of all potential class member claims
– even when plaintiff's counsel has been awarded carriage
of a potential class action. Defendants can still be hit with
individual or group actions spearheaded by enterprising
plaintiffs' counsel. Defendants should be careful to:
Apply for court approval of a
settlement as soon as possible once an agreement in
principle has been reached in order to head off other actions at
thresholds as part of the settlement agreement to ensure a
minimum value/number of claims are included in the settlement.
Be strategic about when to
commencenegotiations – in some
circumstances, it could make sense to wait until after
Consider the implications of
carriage battles, as plaintiffs' counsel excluded from
the settlement table may seek other ways to get a piece of the
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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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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