The air cargo surcharges class action has been winding its way through the Ontario courts. In late October 2011 the Ontario Superior Court of Justice certified, on consent, the claims against SAS, Qantas, Cargolux and Singapore Airlines, solely for the purpose of settlement.(1) When certification is sought solely for this purpose, the court applies a much-less rigorous test for determining whether certification is appropriate.

As its contribution to the settlement, SAS agreed to pay C$300,000 for the benefit of class members. The court noted that SAS operated no flights into or out of Canada during the relevant period. Rather, its shipments between Canada and other countries were routed through the United States. The materials filed on the certification motion also indicated that a primary objective for class counsel in negotiating with SAS was ensuring the receipt of continued cooperation in the litigation. The amount paid was said to reflect "a significant portion of the fuel surcharges imposed" by SAS.

Qantas - which, along with SAS, was described as a minor participant in the Canadian air cargo market - agreed to pay C$237,000, the total fuel charges imposed by Qantas during the relevant period.

Cargolux, which pled guilty in Canada and settled its US litigation, agreed to pay C$1.8 million for the benefit of class members. It also agreed to provide substantial cooperation to the plaintiffs in the continued prosecution of the litigation. The court noted that this settlement was intended to be roughly proportional to the Cargolux settlement in the United States, plus a contribution to notice and administrative costs. Singapore Airlines, which has not pled guilty and has not settled its US litigation, agreed to pay C$1.05 million for the benefit of class members, of which up to C$250,000 is allocated towards Singapore Airlines' proportionate share of administration and notice costs, without refund should such costs be less. (In fact, its share of costs was C$47,000. The excess funds are to be distributed to the settlement class members.)

The court noted that Singapore's settlement roughly reflects the relative terms of the US Cargolux settlement, with accommodation for the fact that in Canada, Singapore was a "smaller defendant" and had a smaller volume of commerce relative to Cargolux during the class period. Singapore also agreed to cooperate in the prosecution of the litigation, but such cooperation will be "delayed until after the delivery of the relevant documents or information in the US litigation".

As was the case when Lufthansa agreed on settlement terms, SAS, Qantas, Cargolux and Singapore requested a bar order (which was not opposed by the class and the non-settling defendants) barring all claims for contribution and indemnity against these defendants (excluding claims made by persons who have opted out of the settlement).

According to the terms of the Lufthansa settlement, non-settling defendants were permitted, as of right, to require documentary and oral discovery of Lufthansa. In seeking approval of the present settlement, SAS, Cargolux and Singapore argued that the non-settling defendants should be required to obtain leave, by way of a motion made on notice to the settling defendants, before burdening them with discovery obligations. This would allow the settling defendants to challenge the right of the non-settling defendants to institute discovery in situations where the demands sought to be imposed on them might not be "proportionate" to their involvement in the chain of events leading to the litigation.

The court accepted this proviso, indicating that it represents a fair balancing of interests between the settling and non-settling defendants. The requirement for this "balancing of interests" comes from the Ontario court's decision in Ontario New Home Warranty v Chevron Chemical Co(2) and is reflected in recent changes to the Rules of Civil Procedure.

On this point, Qantas argued that it should not be required to submit to discovery because it had not previously been part of the action and was added only in the certification motion for the purposes of facilitating settlement. Qantas also argued that its position was bolstered by the fact that its settlement was explicitly made on the basis that it did not admit any liability and that it had agreed to this resolution solely for the purpose of avoiding any further expense, inconvenience and litigation burden. By returning the full value of the fuel surcharges collected, it should be able to "put to rest this controversy". The court accepted Qantas's submission. Qantas was added as a party to the litigation; the class was certified as against SAS, Qantas, Cargolux and Singapore Airlines; the settlement was approved; and the bar order was imposed.

For further information on this topic please contact Carlos P Martins at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800), fax (+1 416 982 3801) or email ([email protected]).


(1) Airia Brands Inc v Air Canada 2011 ONSC 6286.

(2) ([1999] OJ 2245 (SC).