In a recent decision, the Ontario Superior Court denied a paralegal’s motion to be paid for efforts of questionable significance
Class actions often involve matters of public interest. In some cases, this might drive multiple individuals to initiate separate lawsuits or class actions involving the same subject matter. Courts and the legislature are familiar with these kinds of issues and have tools to stay or eliminate duplicative proceedings. These tools are typically used to clear the way for the litigation of a single class proceeding.
A more complicated situation will arise where a class action is successfully settled and a third-party insists that their work helped drive the resolution. This was the case in Estate of Hugh Cullaton v. MDG Newmarket Inc., 2021 ONSC 7791.
The dispute arose out of a settled class action involving rental agreements for HVAC equipment. The plaintiff alleged, among other things, that the defendants’ agreements failed to comply with consumer disclosure laws and involved unfair practices. After years of litigation and negotiation, the class action was settled in June 2021 for $14.95 million, plus other relief. By the terms of their retainer agreement, class counsel was entitled to up to 25% of the amounts recovered.
John Robinson is a paralegal. He represented dozens of consumers in Small Claims Court actions based on substantially the same allegations advanced in the class action but had no contact with class counsel. His claims had been stayed pending the certification motion in the class action. After the class action settled, Mr. Robinson sought an order that class counsel pay him compensation. He asserted that his efforts assisted in the advancement of the class action and its ultimate resolution. Specifically, he said that he provided a benefit to the class by putting pressure on the defendants to settle.
The Court ruled that the facts were insufficient to establish any entitlement for Mr. Robinson, whose actions were done for his own clients. There was not evidence that class counsel encouraged or noticed his efforts. Instead “Mr. Robinson and class counsel were driving different vehicles toward the same destination completely independent and without regard for the other’s actions.” In the absence of evidence that Mr. Robinson influenced or benefited any party to the litigation, there was no basis for his claim for compensation. He was a stranger to the proceeding, and class counsel were not enriched at his expense.
While the absence of an identifiable impact on the proceedings weighed heavily in the Court’s reasoning in this case, similar arguments have been successfully raised in other contexts. In the United States, the common fund doctrine can permit lawyers whose work created a “common fund” for the benefit of a group of plaintiffs to receive reasonable legal fees from the fund. The doctrine may be applied when the work of non-lead counsel was identifiable and done on behalf of the class and with the reasonable expectation of being compensated out of the class’s recovery. Canadian law may offer a similar solution, and the Court’s decision in this case makes clear that a court could award money to a deserving lawyer on the basis of quantum meruit by awarding payment for services rendered.