Yet another class action settlement looks like it will have unclaimed funds at the end of the claims period. The settlement between AMT, Montreal’s transport agency, and a class consisting of more than 19,000 commuters from the West Island, was approved by the Quebec Superior Court last fall, yet has only resulted in approximately 1,000 applications for a share of the settlement proceeds.
This class action was commenced in early 2009 on behalf of commuters from the West Island of Montreal who, during the months of January and February 2009, were forced to wait for delayed commuter trains, some of which never arrived. The Quebec Superior Court approved the out-of-court settlement in November 2014 wherein eligible commuters would be entitled to claim a portion of $997,000 in settlement proceeds.
The Claims Process
The claims process was relatively simple, involving signing a two-page declaration which stated that the claimant was a monthly train or tram pass holder during the months of January and February 2009 and that they used the trains Monday to Friday during rush hour. Claimants also had to submit valid proof of identity. The claims period has been extended from January 20, 2015 to March 20, 2015, as a result of the low response rate. Additionally, claims forms have been distributed on the commuter lines in addition to traditional newspaper publication in order to encourage responses.
As we have previously discussed, courts are being increasingly called upon to decide how to distribute unclaimed funds from class action settlements. This can naturally lead to a question of whether the class action vehicle has achieved one of its stated purposes — that is enabling claimants to receive compensation where claims are too small to merit individual actions. A low response rate can call the merits or necessity of the class action into question.
Where class action settlement funds are left unclaimed and there are no other alternatives, recourse to the Cy-près doctrine can sometimes assist in distributing the funds. However, it appears that in the AMT settlement, the court will not need to look to the Cy-près doctrine to distribute the unclaimed funds since two non-profit organizations devoted to public transit were also named as beneficiaries of the settlement by the court and can receive the residual unclaimed funds. It is unclear whether there is a limit as to what percentage of the settlement funds these non-profit organizations can receive.
Class action counsel continue to look for ways to adapt to and combat low response rates for class action settlements. Increased use of technology to encourage claims and naming non-profit entities as beneficiaries of the settlement in the event that settlement funds remain unclaimed are two such adaptations. Where claims response rates are low, however, it does beg the question whether a class action was appropriate in the first place.