Assessing Fees When Class Actions Follow Government Action

• Author: Misha Boutilier
• Pages: 279-313

279

Assessing Fees When Class Actions Follow

Government Action

Misha Boutilier

: The Supreme Court of Canada’s Sun-Rype and Fischer deci-

sions have recently focused attention on the relationship between

public enforcement and private class actions. This essay considers an

under-studied aspect of that relationship; namely, how courts should

calculate fees in a class action that follows and benef‌its from a prior gov-

ernment enforcement action. The author contends that class actions that

follow government actions are less risky for class counsel and are inferior

to independently initiated class actions at ensuring behaviour modif‌ica-

tion and access to justice. Accordingly, the author argues that Canadian

courts should follow the US Courts of Appeals for the Second and Third

Circuits and adopt a specif‌ic rule governing fees when class actions fol-

low government action. This rule would both reward plaintif‌fs’ attorneys

who independently initiate class actions with increased fees, and would

reduce fees for class actions that follow government action in propor-

tion to the benef‌it that class counsel receive from the prior government

action. This rule will allow courts to appropriately assess risk in light of

the reduced-risk prof‌ile that class actions that follow government action

generally present. It will also encourage independently initiated class

actions and thus help ensure behaviour modif‌ication and access to jus-

tice for wrongs in cases of government inaction.

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ASSESSING FEES WHEN CLASS ACTIONS

FOLLOW GOVERNMENT ACTION

Misha Boutilier*

A. INTRODUCTION

The Supreme Court of Canada’s decisions in Sun-Rype Products Ltd v

Archer Daniels Midland Company1 and AIC Limited v Fischer2 focus atten-

tion on the relationship between public enforcement and private class

actions. As the recent Volkswagen emissions testing scandal and the

ongoing air cargo price-f‌ixing class actions illustrate, government inves-

tigations and enforcement action can spark class action litigation.3 The

* JD with Distinction (University of Toronto). The author wishes to thank Michael E

Eizenga and Ranjan K Agarwal for the assistance and encouragement they provided

through the Class Actions Law and Practice course which the author took in fall

2017. The author is also grateful to Professor Albert H Yoon for providing feedback

and encouragement on the outline.

1 Sun-Rype Products Ltd v Archer Daniels Midland Company, 2013 SCC 58 [Sun-Rype].

2 AIC Limited v Fischer, 2013 SCC 69 [Fischer SCC].

3 For background on the Volkswagen scandal, see Russell Hotten, “Volkswagen:

The Scandal Explained” BBC News (10 December 2015), online: www.bbc.com/

news/business-34324772. For the Canadian car purchaser class action settlement,

see Quenneville v Volkswagen, 2017 ONSC 2448. Air cargo price-f‌ixing class actions

followed investigations by competition regulators in Europe, the United States, and

Canada that led to guilty pleas and criminal f‌ines. See Brent Jang, “Airlines Fined

$1.1 Billion over Cargo Price-Fixing Cartel” Globe and Mail (10 November 2010) B12;

Canada, Competition Bureau, “British Airways Pleads Guilty in Air Cargo Price-Fix-

ing Conspiracy” (30 October 2009), online: www.competitionbureau.gc.ca/eic/site/

cb-bc.nsf/eng/03147.html. The Canadian class action was certif‌ied in 2015: see Airia

Brands Inc v Air Canada, 2015 ONSC 5352. The Court of Appeal for Ontario recently

held that absent foreign claimants should be included in the Canadian class action:

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