The case of Fulawka v. The Bank of Nova Scotia –
one of the "bank overtime" class actions – has had
a long procedural history, and attracted significant attention
since it was commenced December 10, 2007. The action
was certified as a class action February 19, 2010,
leave to appeal was then granted by the Divisional Court May 5,
2010, and certification on most common issues
upheld by the Ontario Court of Appeal June 26, 2012.
The First Settlement
After leave to appeal to the Supreme Court of Canada
was refused on March 20, 2013, the parties reached a settlement
The Settlement was approved by Justice Belobaba of the Ontario
Superior Court of Justice on August 12, 2014.
As we noted at the time, the Settlement was a "claims
made" settlement, where only class members who submitted
claims for unpaid overtime would receive payment. Justice Belobaba
remarked that both sides believed that the claims review
process was fair and reasonable, and in his
reasons approving the Settlement Justice Belobaba
"congratulated the parties and their counsel for achieving a
Claims were to be submitted by class members to Scotiabank by
October 15, 2014. Scotiabank then had until November 28, 2014 to
respond to the claims, and class members unsatisfied with
Scotiabank's response were permitted to appeal to an
The claims process did not go smoothly. In early November, 2014,
the representative plaintiff took issue with Scotiabank's
approach, alleging that it was not complying with the claims
process as set out in the Settlement (
including, among other things, by sending out
"template" witness statements, and reducing or rejecting
claims that did not include sworn evidence). Class counsel brought
a motion to address these concerns. Scotiabank then brought its own
motion to extend the November 28, 2014 deadline for responding to
the claims, and Justice Belobaba suspended the claims process until
the motions could be resolved.
The Action Settles – "For the Second Time"
After months of negotiation and a two-day mediation before the
Hon. George Adams, the parties agreed to a more streamlined payment
approach and the terms of the original settlement were revised (the
"Revised Settlement"). Scotiabank agreed to pay a further
$20.6 million, in addition to the $18.7 million it had already paid
out. Justice Belobaba
released his decision approving the Revised Settlement on March
The new approach involves dividing the claims into two
categories: those that had been reduced by Scotiabank, and those
that had been rejected. Within each category the claims are further
subdivided into bands, depending on the amount of the claim.
Claimants will receive a specified percentage of the amount claimed
depending on what category, and what band, they fall into.
Key Take-Aways for Class Action Defendants
The Settlement of this action took a flexible approach; however,
the parties' differing views on how that flexible approach
ought to unfold resulted in a breakdown of the claims process and
the necessary Revised Settlement. The months of negotiation and
mediation inherent in obtaining the Revised Settlement were costly,
with associated additional class counsel fees alone reaching $2.3
As we commented in respect of the original settlement in
August, 2014, "claims made" (versus "all in")
settlements often make good sense for defendants, and can limit a
defendant's overall exposure. The breakdown of the claims
process in Fulawka, however, may give pause to defendants
considering such an approach to settlement, as the additional costs
that can result from a breakdown of the claims process can be
significant. This is especially so when considered alongside the
uncertainty of payout and effort required to process claims. The
cost-savings resulting from a "claims made" settlement
may therefore not always be as high as perceived, and these
concerns should be seriously considered when a "claims
made" settlement is on the table.
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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