Joseph Fantl v. Transamerica Life Canada, 2009 ONCA 377
The Court of Appeal for Ontario has dismissed an appeal from the Divisional Court brought by the former law firm of a representative plaintiff seeking to remain on file as counsel of record, over the objections of the representative plaintiff. In doing so, Chief Justice Winkler made some interesting observations on the inherent supervisory jurisdiction of the courts in class actions, and the role of the representative plaintiff.
Kim Orr Barristers P.C. (KO) sought to strike the plaintiff's notice of change of solicitors and appoint themselves as counsel, or in the alternative, remove the representative plaintiff and appoint two new ones.
When the certification process began in 2006, counsel of record was the firm of Roy Elliott Kim O'Connor (REKO). Mr. Fantl subsequently assumed the role of representative plaintiff. REKO dissolved at the end of 2007. As a result, Mr. Fantl was forced to choose which successor firm, KO or Roy Elliott O'Connor (REO), he would retain to continue the matter. He decided on REO due to his relationships with certain partners at that firm and their class action experience. In response to Mr. Fantl's notice of change of solicitors, KO brought a motion under s.12 of the Class Proceedings Act (CPA) to strike the notice.
The motion judge sided with Mr. Fantl, ruling that a representative plaintiff has the right to retain counsel of their own choosing. In reaching this decision, the judge examined whether his choice of counsel was adequate. Notwithstanding the Court's supervisory role in class proceedings, interference with a plaintiff's choice of counsel was unwarranted unless it would result in a denial of adequate representation.
After the motion judge's decision, KO brought a competing and largely overlapping class action against Transamerica with a different representative plaintiff. The Divisional Court subsequently affirmed the motion's dismissal on these grounds.
KO argued before the Court of Appeal that the motion judge applied the wrong test. Considering the best interests of the class, the plaintiff should have been directed to retain KO for the remainder of the proceeding. In contrast, the respondent argued that the overriding consideration should be whether the plaintiff's decision caused prejudice to the class members.
For reasons different from those of the motion judge, Winkler CJO., writing for the Court, dismissed the appeal and exercised the Court's discretion to stay the new action.
Supervisory jurisdiction of the Court
Chief Justice Winkler noted that the existence of an absent proposed class, in addition to the representative plaintiff, engages the Court's supervisory jurisdiction throughout all stages of a class proceeding. However Chief Justice Winkler disagreed with both parties' interpretations of that jurisdiction.
The Chief Justice noted that while courts have a responsibility to absent class members, the responsibility of prosecuting the action still rests with the representative plaintiff and that the representative plaintiff in a class action is a genuine plaintiff who chooses, retains and instructs counsel and to whom counsel report. That said, the Court conceded that if the decision of the plaintiff is contested, the Court can review the plaintiff's choice of counsel.
Test for reviewing a plaintiff's choice of counsel
Winkler CJO. outlined a preferred approach for reviewing a plaintiff's choice of counsel. Rejecting the approaches of both the respondent and appellant, he outlined three key factors that should guide review of choice of counsel: (1) Has the plaintiff chosen competent counsel? (2) Were there any improper considerations underlying the choice made by the plaintiff? and (3) Is there any prejudice to the class as a result of the choice? Unless this line of inquiry yields an unsatisfactory finding, the Court should not interfere.
This test rejects the notion that the key consideration is whether the choice of counsel is in the "best interests of the class." Instead, those "best interests" are captured and addressed within the broader scope of the test.
Applying the three-part test to the facts, Chief Justice Winkler found that Mr. Fantl had the power to decide whom to retain as counsel and that the three-part test had been met.
While the Court held there is no question that class proceedings are entrepreneurial (an element that supports access to justice, an underlying goal of the CPA), the CPA was not designed to grant lawyers a vested interest in the subject matter of litigation which entitles them to override the choice of the representative plaintiff as to their counsel.
Given the lack of concerns arising from all three factors, Winkler CJO. dismissed KO's appeal.
Substitution of the representative plaintiff
The Court also found no reason to interfere with the selection of Mr. Fantl as the representative plaintiff in the proceeding, given his capable conduct in the action and his competent choice of counsel, affirmed by the above analysis.
With respect to the duplicative action brought by KO, the Court concurred with the Divisional Court's assessment that it was "most remarkable," ruled it an abuse of process, and stayed the action.
Perhaps offering a subtle signal that the courts should guard against "straw man" plaintiff cases driven by lawyers, Chief Justice Winkler in his reasons noted "the entrepreneurial lawyer is a means to an end, not an end in and of itself. Were it otherwise, one of the criticisms of the CPA, that it promulgates plaintiff-less litigation benefiting only the lawyers involved would be well-founded. Such is not the case."