Cy Pres Awards in Canadian Class Act Ions: A Critical Interrogation of What Is Meant By 'as Near as Possible'

AuthorE. Rebecca Potter and Natasha Razack
Pages297-329
297
Abstract: Recently it has become apparent t hat a troubling
trend is developing in the use of c y pres remedies in class ac-
tions ca ses. This paper offers a critica l interrogation of what is
meant by “as near as possible” in cy p res awards by exploring
the use of settlement funds in Canadian cl ass actions. Using
a comparative analysis of the use of different ty pes of cy pres
awards and the extent to which they achieve the clas s actions
objectives judicial economy, access to justice, and behavior
modif‌ication — this paper provides a comprehensive under-
standing of the doctrine’s use in class actions. Two alternative
methods of implementing the doctrine, informed by a more
thorough understanding of the use of cy pres in class actions,
are presented. In conclusion, the authors acknowledge that no
settlement is perfect, but this does not mean that the courts
should sit idly by while such inappropriate cy pres settlement s
continue to be negotiated. Instead the authors encourage the
courts to reconsider the recent, troubling trend and instead
seriously consider the regulatory nature of class actions and
the ways in which granting the award can serve a regulatory
pur pose , as w ell a s the u nderl yin g objec tive s of cl ass actio ns in
general. All this is to ensure that cy pres can continue to offer a
class actions remedy “as near as possible” to the ideal remedy.
Cy pRes
awaRds in Canadian
Class aCtions: a CRitiCal
inteRRogation of what is
meant by “as neaR as possible”
E. Rebecca Potter and Natasha Razack
CCAR Vol 6 No 2.indb 297 23/12/2010 1:03:40 PM
CCAR Vol 6 No 2.indb 298 23/12/2010 1:03:40 PM
299
Cy pRes
awaRds in Canadian
Class aCtions: a CRitiCal
inteRRogation of what is mea nt
by “as neaR as possible”
E. Rebecca Potter and Natasha Razack*
a. intRoduCtion
It has become apparent that the use of cy pres in class actions cases ha s
taken on a troubling trend. A good example of this occurred this year in
Cassano v. Toronto-Dominion Bank.1 In that case, the Toronto-Dominion
Bank acknowledged that it owed compensation to Visa credit card hold-
ers for charging undisclosed and unauthorized fees in respect of foreign
currency transactions. Due to the diff‌iculty of the task of identifying
many of the class members and of distributing appropriate compensation
to them,2 the court approved a settlement awarding direct compen sation
to the cla ss members who could be identif‌ied and the rest to be distr ib-
uted cy pres. Half of the cy pres distribution would go to the Law Founda-
tion of Ontario to be used to support projects relating to access to justice,
and the other half would go to a not-for-prof‌it organization providing f‌i-
nancial literacy training for economically disadvantaged Canadians.3 As
a result, approximately $28 million of the $39 million that was unjustly
taken from Visa card holders were given to charity.4
* E. Rebecca Potter, BSoc Sc (University of Ottawa), JD Candidate 2 011 (Osgoode
Hall Law Sc hool), 2011–2012 Student-at-Law (Thorstein ssons LLP). Natasha
Razack, M aster of Public Health (Univers ity of California Los A ngeles), JD
Candidate 2011 (Osgoode Hall La w School), 2011–2012 Student-at-Law (Ben-
son Percival Brown L LP). Special th anks are due to Professor Gar ry D. Watson
for his encouragement a nd support in writing t his paper.
1 Cassano v. Toronto-Dominion Bank, [2009] O.J. No. 2922 (S.C.J.) [Cassano 2009].
2 This was becau se it was likely to be so costly t hat it would largely, if not com-
pletely, dissipate the set tlement fund. See Cassan o 2009, ibid. at para. 10.
3 The organization wa s the Social and Enterp rise Development Innovations
(SEDI). See Cassano 2009, ibid.
4 Cassano 2009, ibid. at para. 15.
CCAR Vol 6 No 2.indb 299 23/12/2010 1:03:41 PM

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