Canada: Who Drives The Bus? A Proposed Representative Plaintiff And Proposed Class Counsel Apply To Replace Each Other In Warner v Google LLC, 2020 BCSC 1108

Warner was a proposed class action commenced on behalf of users of Android smartphones against Google. Similar actions were filed in Ontario and Quebec. The parties reached a settlement agreement, but the BC plaintiff (Mr. Warner) and his counsel disagreed about how to implement it. Each ultimately applied to replace the other.

The court allowed proposed class counsel's application to replace Mr. Warner with a different plaintiff. The court found that Mr. Warner's proposal for implementing the settlement would have conferred an improper collateral benefit on him personally, such that he was not qualified to be a representative plaintiff. The court also held that, even before certification, proposed class counsel owes duties to proposed class members. Those obligations modify the duty of loyalty proposed class counsel owes to the plaintiff. The judgment demonstrates the significant control plaintiff-side counsel have over the conduct of a proposed or certified class action.

Background

The BC action was filed by two law firms acting as co-counsel (collectively, "Klein"). Mr. Warner was the proposed representative plaintiff in the BC action.

As part of the national settlement, Google was to pay $1,000,000 by way of a cy-près donation. The recipient was to be determined by mutual agreement of the parties and subject to court approval. Mr. Warner wanted the donation to benefit an American non-profit. Mr. Warner had drafted a letter characterizing the payment as a donation by him to the non-profit largely made for a specific purpose.

Google and the plaintiffs from other provinces proposed donating the money to the respective provincial law foundations, which is common practice in a cy-près donation. Mr. Warner refused to accept this agreement and suggested that Klein find a new plaintiff. Klein found a suitable candidate and filed an application to replace Mr. Warner. Klein argued that, following the settlement, Mr. Warner was not fairly and adequately representing the interests of the class.

Mr. Warner opposed the application  and filed an application to replace Klein as class counsel. Mr. Warner argued that Klein had disregarded his instructions.

Klein's Application to Replace Mr. Warner

Klein's application to replace Mr. Warner succeeded. Justice Tucker held that a plaintiff cannot give instructions regarding a cy-près donation that are tainted by an improper purpose. The draft donation letter written by Mr. Warner to the non-profit suggested Mr. Warner may have receive a personal benefit because of the donation. Justice Tucker found that although the personal benefit would have been collateral, a collateral benefit is sufficient to establish improper use. Further, there was no evidence that any other party would have agreed to a donation to the non-profit, so pursuing that position would have resulted in meritless delay.

Mr. Warner's Application to Replace Klein

Mr. Warner's application to replace Klein failed. Justice Tucker found that Klein did not breach any duty owed to Mr. Warner. Justice Tucker accepted that Klein owed Mr. Warner a duty of loyalty, but held that it was modified from the traditional duty of loyalty in solicitor-client relationships because, even before certification, proposed class counsel owes duties to proposed class members. Further, Justice Tucker found that there was no reason to replace Klein and that doing so would cause unnecessary cost and delay, to the prejudice of class members.

Justice Tucker went on to certify the action for the purposes of settlement.