Canada: Representative Plaintiff Removed For Not Protecting Interests Of Class

Last Updated: September 24 2019
Article by Canadian Class Actions Monitor and Stephanie Sugar

In the recent decision of Azar v. Strada Crush Limited, 2019 ONSC 4436 Justice Morgan denied a motion brought by the representative plaintiff in a certified class action to appoint new counsel, and granted class counsel's cross-motion to disqualify the representative plaintiff. The decision affirms the Court's supervisory role as being to ensure the best interests of the class are protected, and also confirms the certification criterion under s. 5(1)(e) of the Class Proceedings Act—that the representative plaintiff fairly and adequately represent the interests of the class and not be in a conflict of interest with the class—must continue to be satisfied throughout the course of the litigation.

The Certified Claim

The underlying case is one of many overtime pay class actions, with the Class comprising past and present employees of the defendant company. The claim was certified as a class proceeding in August 2018, on behalf approximately 154 class members.1 At certification, the representative plaintiff advanced affidavit evidence of his duties and functions, which was found to be sufficient and appropriate to meet the plaintiff's burden of establishing "some basis in fact" for the claim and the proposed common issues.

At certification the Court held that there was no evidence of any conflict, that the "Plaintiff appears to be an appropriate representative", and was knowledgeable about most of the work-related issues in the claim. The Court concluded the Plaintiff as the representative "has been appropriately involved in instructing counsel to date and will doubtless continue to do so going forward."2

Plaintiff's Motion for New Representation

About one year later, the Plaintiff reportedly had a falling out with class counsel. He brought a motion to appoint new counsel, and this sparked two cross motions: one by class counsel seeking a determination that the Plaintiff was not competent and required a litigation guardian, and another by the defendants seeking to have the representative plaintiff disqualified.3

Underlying the dispute was a personal falling out between the Plaintiff and class counsel. The Plaintiff was first introduced to class counsel through a friend, Mr. Nunes, who was a former business partner and paralegal of class counsel. A falling out between counsel and Mr. Nunes in their business relationship then prompted litigation. Mr. Nunes attempted to convince the Plaintiff to fire class counsel and move the litigation over to new counsel, who was also representing Mr. Nunes in the business dispute.

In response, class counsel sought to have the Plaintiff declared incompetent. Justice Morgan rejected the competence motion, which he viewed as "not a very well thought out strategy", as the implication would be that there were demonstrable concerns with the Plaintiff giving instructions throughout the certification phase. Justice Morgan held that the arguments advanced regarding incapacity were insufficient evidence to indicate the Plaintiff was incapable of advancing the litigation. Class counsel argued the representative had been slow to give instructions and lacked math skills. Justice Morgan held, with the greatest respect, "if weakness in math and a tendency to procrastinate were signs of a lack of capacity, half the bar and bench, including myself, might have to submit to guardianship."4

However, Justice Morgan emphasized that the paramount consideration is the best interests of the class.5 By becoming involved in the business dispute, and seeking to appoint the lawyer who was representing his friend, "the Plaintiff has not put forward the best interest of the class he represents."6

Justice Morgan concluded that the certification criterion requiring the representative plaintiff to be free of conflict would not have been met if this dispute had occurred prior to certification.7 Further, he held "[s]ince those criteria for a suitable representative Plaintiff would not have been met at the time of certification, they likewise are not met now." Consequently, the representative As a result, the Court granted the defendants' motion to have the Plaintiff disqualified as representative plaintiff. Class counsel continues to represent the class, and the Court granted them 60 days to find a new representative plaintiff.8

Implications of the Decision

Relatively few cases deal with either the competence9 of a representative or the rejection of a representative plaintiff owing to a conflict of interest.10 The issues raise broader questions about unique aspects of the solicitor-client relationship between a plaintiff and class counsel. In Fantl v. Transamerica Life Canada11, the Ontario Court of Appeal discussed some of these issues in the context of evaluating a representative plaintiff's choice of counsel after the dissolution of class counsel's firm.

In Fantl, the Court endorsed three criteria to consider when reviewing a plaintiff's choice of counsel:

(1) Has the plaintiff chosen competent counsel?

(2) Were there any improper considerations underlying the choice made by the plaintiff?

(3) Is there prejudice to the class as a result of the choice?12

While the Court in Fantl rejected that the "only test to be applied" is whether the plaintiff's choice of counsel is in the best interests of the class,13 as Azar confirms, a decision based on personal considerations that are not based on advancing the interests of the class may be improper. The recent decision serves as a helpful reminder both that the certification criteria must continue to be satisfied throughout, as well as an example of when a conflict of interest may arise.

Footnote

1 Azar v. Strada Crush Limited, 2018 ONSC 4763, at paras. 13-18.

2 Ibid. at para. 48.

3 Azar v. Strada Crush Limited, 2019 ONSC 4436, at para. 1.

4 Ibid. at para 7.

5 Ibid. at para. 9

6 Ibid. at para. 11.

7 Ibid. at para. 11

8 Ibid. at para. 12.

9 While often repeated that the representative plaintiff must be "competent, diligent, vigilant, and committed to giving proper instructions" (e.g. Coulson v. Citigroup Global Markets Canada Inc., 2010 ONSC 1596), there is little case law actually delving into weighing the representative's competency. For example, in Casavant v. Cash Money Cheque Cashing Inc., 2008 BCSC 1556, the Court held the competence of the representative plaintiff is not an issue for certification, but a matter for counsel to determine: "The court can and must rely on the role of counsel, as an officer of the court, to determine whether or not a client is competent to give instructions and to understand the advice of counsel."

10 Circumstances where there is a concern of conflict have arisen with respect to considering third party funding arrangements (see e.g. Berg v. Canadian Hockey League, 2016 ONSC 4466), where the relief sought is potentially detrimental to the interests of the class (see, e.g. Keatley Surveying Ltd. v. Teranet Inc., 2012 ONSC 7120, rev'd 2015 ONCA 248; Paron v. Alberta Minister of Environmental Protection, 2006 ABQB 375; Baker v Tendle, 2016 BCSC 801), and where there are personal relationships that may create a conflict (see, e.g. Kerr v. Danier Leather Inc., 2001 CanLII 28392)

11 Fantl v. Transamerica Life Canada, 2009 ONCA 377

12 Ibid. at para 48-51.

13 Ibid. at para 51.

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