In his April 21, 2016 decision in Parsons v. The Canadian Red Cross Society, Justice Perrell of the Ontario Superior Court refused to allow an intervenor to participate in a motion concerning the distribution of an approved settlement. The decision is of importance to class action practice, as it holds that well-intentioned “busybodies” are not to interfere in the distribution of approved class action settlements.
The decision arose from a settlement arising out of the Canadian tainted blood tragedy. The distribution of the settlement has resulted in numerous motions (some of which we have previously discussed).
The Intervention Motion
“Steering Committee,” an unincorporated group of seven eminent Canadian physicians, researchers, and scientists, sought to intervene in an upcoming motion “for the purpose of submitting that some of the actuarially unallocated funds should be allocated to the ‘National HCV Initiative’ of which the Steering Committee is the organizing group or steering committee.” The National HCV Initiative promotes improving delivering of care to all Canadians living with HCV, and improving future prevention, care and treatment of Hepatitis C through research.
Justice Perrell “did not necessarily” agree with the submission that the court did not have discretion to make an allocation to the Steering Committee or its National HCV Initiative. Nor did he decide whether the Steering Committee satisfied the conventional test under Ontario’s Rules of Civil Procedure about intervention as a third party in a lawsuit.
Instead, he refused the Steering Committee’s request to intervene on narrow grounds:
- the Steering Committee was a stranger to both the Settlement Agreement and to the litigation that spawned the Settlement Agreement;
- the Steering Committee was in conflict with both the Class Members and the Defendants, who had “no obligation to share the actuarially unallocated funds with strangers to the contract or to the litigation that was settled by a negotiated contract”;
- under the court-approved settlement, requests for an allocation of excess capital must come from a “Party” to the settlement, which the Steering Committee was not;
He ultimately concluded:
However commendable sharing any excess capital with all Canadians who suffer from Hepatitis C may be, the parties to the litigation, the plaintiffs and the defendants to the class actions, negotiated a settlement in their own self-interest and they are under no obligation to be altruistic in enforcing the bargain they reached. The Steering Committee has no substantive right to participate in what amounts to the administration of a contract that has been approved by the court. Its participation would create an opponent to the parties to the contract, and the Steering Committee’s participation would delay and potentially disturb the commencement of the long-scheduled hearing of the allocation motion.
Class action settlements are carefully negotiated contracts subject to court approval. This decision demonstrates that rights granted and obligations assumed pursuant to such contracts are rights of parties to the settlement, and are not to be interfered with by third parties.