Can class members appeal class action settlements? A study from British Columbia

Abstract

It is widely recognized that the review of settlement agreements executed by the formal parties to class action litigation—the representative plaintiff and the defendant—represents the most important and challenging task that judges presiding over such litigation face. In order to facilitate this judicial task the views with respect to proposed class action settlements are sought from those persons who will be bound by such compromises despite having had no involvement in the settlement negotiations and in the conduct of the litigation itself: the class members. If the trial court approves the settlement despite the filing of objections to the settlement (or aspects of the settlement) by one or more of the affected class members, can these dissatisfied class members or objectors seek the intervention of an appellate court? This general question has been considered by American appellate courts on numerous occasions. But in Canada this question has been considered only in Quebec and in a somewhat indirect manner, given that it has been held in that province that settlement approval orders are not appealable regardless of whether the appeal is filed by the representative plaintiff or one of the class members. The aim of this article is to explore the major issues that will need to be grappled with when the intervention of Canadian appellate courts will be sought by dissatisfied class members. This study will be undertaken with respect to British Columbia, which has Canada’s third longest-running class action regime.

Keywords

Class actions settlements appeals by class members British Columbia Ontario United States

Introduction

In traditional litigation, the judicial approach that is adopted with respect to the settlement of legal proceedings is that ‘a settlement is a contract, and normally the test for the fairness of a contract is strictly procedural: were the parties competent adults duly apprised of the basic facts relating to their transactions?’¹ Conversely, the settlement or discontinuance of class actions requires judicial approval.² This judicial endorsement will not be provided unless a finding is made that the proposed compromise is fair, reasonable and in the best interests of the class as a whole.³ The challenges faced by judges in undertaking this crucial role were aptly explained in January 2016 by Justice Belobaba of Ontario’s Superior Court of Justice:

It is widely recognized that the approval of class action settlements remains ‘the most difficult and problematic area of class action practice’. And it has often been said that class action settlements should be ‘viewed with some suspicion’ and ‘seriously scrutinised by judges’. The problems of ‘sweetheart’ and ‘blackmail’ settlements are well-known and have been the subject of study in the legal literature…

The core problem is that the only players at the settlement table—the defendants (or their counsel) and class counsel—have interests and incentives that can be aligned against the best interests of the class. The class action settlement is often ‘at the expense of the group that is not at the table: the absent class’.⁴

The importance of the judicial review of class action settlements stems in part from the ‘sui generis’⁵ status of class members. They ‘are not parties as that term is commonly understood’ given that they are not formal parties to the litigation and do ‘not have the same rights or obligations as a representative plaintiff’.⁶ But class members ‘are like or akin to parties’⁷ to the extent that, unless they opt out of the class action proceeding, they will be bound by its outcome; and settlement is the most frequent outcome of class actions. To address the potential problems created by the non-adversarial nature of the process followed to secure judicial approval of class action settlements, courts in Canada, the United States and Australia have occasionally looked elsewhere for independent information regarding the potential shortfalls or weaknesses of the proposed settlement agreement.

Thus third parties—such as special counsels/masters, guardians, amicus curiae and contradictors—have been appointed to assist trial judges in these three countries with the review of proposed settlements and/or particular aspects of them such as the award of legal fees to class counsel.⁸ Class members also have a role to play in this process. As explained by Ontario’s former Chief Justice, Winkler CJO, while Canada’s class action regimes do not:

expressly provide a process for receiving objections by class members, there is now a well-established practice of combining the settlement approval motion with a fairness hearing, on notice to the class, at which objections to the settlement are routinely received and considered by the court.⁹

The factors or criteria that Canadian courts consider when deciding whether to approve proposed class action settlements encompass the number of objectors and the nature of the objections.¹⁰

If the proposed settlement is approved by the trial court despite the objections put forward by some of the class members, who will be bound by the judicially sanctioned settlement, can some of the objectors seek the intervention of an appellate court? The mere formulation of this question may seem somewhat surprising given: (a) that all of the comprehensive regimes, that currently govern class proceedings in ten Canadian jurisdictions, expressly deal with the general question of whether class members can file appeals with respect to orders and judgments issued in the course of class action litigation;¹¹ (b) that most of these regimes have been in operation for over ten years; and (c) that, as already noted, settlement is the most frequent outcome of class action litigation.¹²

And yet whether dissatisfied class members can appeal judicially-approved settlements, or aspects of the settlements, is a question which has not, to the author’s knowledge, been considered judicially in Canada with the exception of Quebec. As noted by Branch, in Quebec it has been held that ‘there are no appeal rights from a settlement approval order, either by the representative or any other class member’ (Branch, 2010: para. 20.10 n. 2). It is the aim of this article to explore this important question¹³ which has, inexplicably, been ignored by Canadian scholars. This will be achieved by focusing primarily on the relevant provision (s. 36) of British Columbia’s Class Proceedings Act, RSBC 1996, c 50 (‘BC Act’), Canada’s third longest-running class action regime. References will also be made to some of the appeal provisions that are found in the other Canadian class action regimes and the way they have been applied and interpreted by courts. These provisions are very similar to s. 36 of the BC Act, thus rendering this article of direct relevance to the other Canadian class action jurisdictions.

Section 36 of the BC Act

Section 36(1) of the BC Act confers on parties to the proceeding the right to appeal to the Court of Appeal from four categories of orders and judgments. The first category encompasses orders certifying or refusing to certify proceedings as class proceedings. Certification is dependent on satisfying the court that the litigation in question satisfies five requirements or certification criteria. The first requirement is that the pleadings disclose a cause of action. The second requirement is that there is an identifiable class of two or more persons that would be represented by the class representative. The third requirement is that the claims of the class members raise common issues. The fourth requirement is that a class proceeding would be the preferable procedure for the resolution of the common issues. The final requirement is that there is a class representative who would fairly and adequately represent the interests of the class; has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding; and does not have, on the common issues for the class, an interest in conflict with the interests of other class members.¹⁴

The second category of orders that may be appealed by the parties pursuant to s. 36 of the BC Act are decertification orders. Section 10 of the BC Act empowers the court, at any time after a certification order has been issued, to amend the certification order, decertify the proceedings or make any other order it considers appropriate if the court is satisfied that the certification criteria are not satisfied. Once the proceedings are decertified, s. 10(2) of the BC Act empowers the court to permit the proceedings to continue as one or more proceedings between different parties and may order the addition, deletion or substitution of parties, the amendment of the pleadings or may make any other order that it considers appropriate.

According to s. 36 of the BC Act, the remaining two categories of appealable orders and judgments are judgments on common issues and orders made pursuant to one of the provisions found in Div 2 of Part 4 of the BC Act, other than orders that determine individual claims made by class or subclass members. This division contains the provisions that empower trial judges to make orders for an aggregate monetary award with respect to the defendant’s liability to class members.

The ambit of the orders delineated in s. 36(1) is directly relevant to the issue of what orders and judgments may be appealed by class members given that s. 36(2) provides that:

If a representative plaintiff does not appeal as permitted by subsection (1) within the time limit for bringing an appeal…or if a representative plaintiff abandons an appeal under subsection (1), any member of the class or subclass for which the representative plaintiff had been appointed may apply to a justice of the Court of Appeal for leave to act as the representative plaintiff for the purposes of subsection (1).

Section 36(3) imposes, with respect to leave applications filed under para. (2), a deadline of 30 days after the expiry of the appeal period available to the class representative; but, at the same time, it empowers the appeal judge to impose an alternative deadline. Section 36(4) provides that leave from a justice of the Court of Appeal is required before a class representative, a defendant or a class (or subclass) member is able to appeal to that court any order: (a) determining an individual claim made by a class (or subclass) member; or (b) dismissing an individual claim for monetary relief made by a class (or subclass) member.

Settlement appeals

In light of the practical importance of settlements in class action litigation and the fact that in the US the vast majority of the orders and judgments with respect to which appeals were filed by class members related to settlements (see Lopatka and Smith, 2012), it is surprising, if not astonishing, that appeals by class members of settlement-related orders were not expressly dealt with by the drafters of the BC Act and the country’s other class action regimes. But the philosophy underpinning this omission becomes apparent when one explores another feature of the appeal regime created by s. 36, namely the fact that no distinction is drawn between class members and the formal parties with respect to the types of orders or judgments that may be appealed.

One possible explanation for this latter feature might be that a careful review of the needs and interests of class members, in the appeal arena showed that they did not diverge from those of the formal parties. An alternative explanation is that this issue was not canvassed at all by the drafters of the BC Act, and the other Canadian regimes, as it was simply assumed that the types of orders/judgments that class members may need or wish to challenge, before an appellate court, would be identical to the orders/judgments that class representatives and defendants may need or wish to challenge.

A review of the Ontario Law Reform Commission’s (‘OLRC’) ‘seminal’¹⁵ 1982 report on class action reform shows that the latter explanation is the more accurate one. This report is directly relevant to s. 36 of the BC Act given that this provision was based on the OLRC’s analysis of, and recommendations on, class action reform. The starting point of the OLRC’s analysis of appeals in class actions entailed a determination of the types of orders and judgments that should be appealable by the formal parties to class action litigation. The ability of class members to file appeals was limited to a consideration of which of the orders/judgments—that may be appealed by class representatives—should also be appealable by class members, if class representatives fail to take this step, and whether they should be required to seek leave to appeal (Ontario Law Reform Commission, 1982: 810).

In light of the employment of this methodology it is not surprising that references, in the OLRC’s chapter on appeals, to appeals with respect to settlement-related orders/judgments were conspicuous by their absence. In fact, notwithstanding the fact that there have been a handful of instances of appeals from settlement orders filed by class representative in the US¹⁶ and that some US appellate courts have noted that ‘the assent of named plaintiffs is not a prerequisite to the approval of a settlement’,¹⁷ one does not normally expect (or even envisage) appeals, from orders that endorse proposed class action settlements, by class representatives. Thus, it made sense for the OLRC not to consider settlement-related appeals among the types of appeals that class representatives and/or their opponents may need or wish to file.

The OLRC was not alone in its failure to canvass the appealability of settlement-related orders/judgments by dissatisfied class members as the author has not identified any reports on class actions by law reform commissions and similar entities, in Canada (see Alberta Law Reform Institute, 2000: paras 366–368; Attorney-General’s Advisory Committee on Class Action Reform, 1990: 49; Manitoba Law Reform Commission, 1999: 44; and Rules Committee of the Federal Court of Canada, 2000: 90–93) and beyond (see, for instance, Australian Law Reform Commission, 1988: para. 245; Civil Justice Council of England and Wales, 2008: 218; Law Reform Commission of Ireland, 2003: para. 107; Scottish Law Commission, 1994: paras 7.96–7.99; South African Law Commission 1998: para. 5.21), that canvassed this dimension of appeals in class actions. The direct result of this omission is the lack of express guidance on appeals by class members, with respect to settlements, by the drafters of the Canadian class action regimes (a similar scenario exists in Australia: see Morabito, 2013a).

But this state of affairs may not necessarily preclude the ability of class members to file such appeals with respect to class actions filed in British Columbia. Such strategy may take one of two forms. The first option would rely on the contention that the term ‘judgments on common issues’, found in s. 36(1)(c), encompasses judgments dealing with settlements. However, as shown below, this strategy is not likely to be successful. A relevant ruling is the 1998 judgment of Ontario’s Court of Appeal in Dabbs v Sunlife Assurance Co of Canada.¹⁸ The class member/appellant in question challenged the trial judge’s approval of the settlement of the relevant class action while the class representative filed a motion to quash this appeal.

This latter motion rested on two major grounds: (a) the appellant was not a party to the proceeding and, accordingly, had no standing to bring the appeal; and (b) s. 30(3) of the Class Proceedings Act, SO 1992, c 6 (‘Ontario Act’), which is virtually identical to s. 36(1) of the BC Act, does not confer a right to appeal a judgment approving a settlement. The class member argued that the general provision governing appeals to Ontario’s Court of Appeal (s. 6(1)(b) of the Courts of Justice Act, RSO 1990, c C43) conferred on him the right to bring this appeal, in the event that no such right was provided by the Ontario Act. The Court of Appeal rejected this submission as it was of the view that s. 30(3) of the Ontario Act takes precedence over and excludes provisions of general application such as 6(1)(b). In so doing the court made the following pertinent comments:

Further, assuming, as [the class representative and defendant] argue, that s 30(3) does not confer a right to appeal a judgment approving a settlement, it would make no sense for the legislature to have provided for specific limited rights of appeal in s 30(3) if the general right of appeal in s 6(1)(b) was also to apply. Section 30(3) would be redundant and whatever limits result from its specific wording would be frustrated.¹⁹

This passage might be interpreted as suggesting some support for the class representative’s argument. But, logically speaking, judicial approval of the submission that judgments approving class action settlements do not fall within the concept of judgments on common issues would have rendered unnecessary a consideration of whether leave to appeal should be granted to a class member, pursuant to s. 30(5) of the Ontario Act, which is virtually identical to s. 36(2) of the BC Act. In fact, as is the case with its British Columbia counterpart, this provision empowers courts to grant leave to appeal to class members, only with respect to the orders specified in s. 30(3).

If the term ‘judgments on common issues’ found in s. 30(3) does not encompass settlement judgments, then the power to grant leave to appeal is never activated. And yet the Court of Appeal went on to briefly canvass whether leave of appeal should be granted. As noted above, it decided against the class member but no reliance was placed on this line of reasoning.²⁰ Accordingly, the guidance provided by Dabbs on whether settlement-related judgments may be described as judgments on common issues, for the purposes of s. 36 of the BC Act, is equivocal at best.

Far clearer was the same court in January 2015, when it observed that the Ontario Act ‘does not address the appeal route from an order refusing to approve a settlement agreement’.²¹

The OLRC’s chapter on appeals clearly indicates that when it employed the term ‘judgment on common questions’ it envisaged only judgments made following an adversarial setting such as a trial and not judgments with respect to consent decrees such as the judicial approval of settlement agreements proposed by class representatives and their opponents.²² The structure of the BC Act also leads to the same conclusion. It will be recalled that Div 2 of Part 4 of the BC Act, referred to in s. 36(1)(d), contains the provisions that empower trial judges to make orders for an aggregate monetary award with respect to the defendant’s liability to class members. But the provision governing the judicial review and approval of settlements, s. 35, is not found in this division.

The argument that an order issued by the trial judge—that extended the time allowed for registering claims pursuant to a judicially-approved settlement agreement—was made pursuant to one of the provisions found in Div 2 of Part 4 and could thus be challenged on appeal by a dissatisfied class representative, pursuant to s. 36(1)(d), was rejected by Justice Saunders of British Columbia’s Court of Appeal in Harrington v Dow Corning Corp.²³ This decision appears to display a judicial recognition of the fact that the BC Act draws a clear dichotomy between the procedures and regimes that are to apply to orders and judgments made following an adversarial setting, on the one hand, and the procedures and regimes that are to apply to consent decrees, on the other. However, in so-called ‘settlement class actions’²⁴ reliance may be placed by class members/aspiring appellants on s. 36(1)(a), which it will be recalled confers appeal rights with respect to, among other things, certification orders, given that in such proceedings certification and settlement issues are interwoven.²⁵

Paradoxically, should British Columbia’s Court of Appeal accept the conclusion foreshadowed above—that s. 36(1) of the BC Act confers no appeal rights with respect to settlement-related orders/judgments, which appears to be the judicial interpretation of Ontario’s corresponding provision—such a ruling might actually be beneficial to dissatisfied class members to the extent that it would force them to pursue another line of reasoning. This line of reasoning, if accepted by the Court of Appeal, would enable them to appeal settlement-related orders as of right and not simply, as is the case with s. 36(2), being able to seek leave to appeal. Such an ideal outcome for class members unhappy with orders/judgments concerning a settlement would be available in the event that the Court of Appeal accepted three propositions.

The first proposition relies on the argument that those orders/judgments that are not dealt with by s. 36 of the BC Act may still be appealed as long as the right or power is provided by the legislation that governs appeals in all proceedings, namely, the Court of Appeal Act, RSBC 1996, c 77 (‘CA Act’). Section 6(1)(a) of this statute provides that an appeal lies to the Court of Appeal from an order of the Supreme Court while s. 7(2) provides that where the appeal relates to an interlocutory order,²⁶ leave from a justice of the Court of Appeal is required.²⁷ This approach has been adopted by several single justices of British Columbia’s Court of Appeal.²⁸ Such an approach is also consistent with s. 40 of the BC Act, which provides that ‘the Rules of Court apply to class proceedings to the extent that those rules are not in conflict with this Act’.

The second step, leading to class members being able to appeal settlement orders/judgments as of right, is also easily attainable. It entails demonstrating that orders approving class action settlements are ‘final’ orders. In 2008 a five-member panel of British Columbia’s Court of Appeal held that the classic definition of the term final order:

refers to disposition of all the rights of the parties. It should now be understood to include partial dispositions whereby the order determines a substantive issue in the litigation. The reformulation responds to the fact that it has become increasingly common for parties to seek rulings on substantive issues that only partially dispose of the matter in dispute.²⁹

There is little doubt that settlement orders match this description. As noted by the US Supreme Court in 2002 in Devlin v Scardelletti, the judicial approval of a class action settlement amounts ‘to a “final decision of [a class member’s] right or claim” sufficient to trigger his right to appeal’³⁰ where the class member is bound by the settlement in question. Ontario’s Court of Appeal has also held that an order approving a class action settlement order constitutes a final, and not an interlocutory, order.³¹

The last ‘component’ of this suggested strategy entails persuading the Court of Appeal that class members dissatisfied with a judicially-approved settlement fall among the categories of litigants that are regarded, in British Columbia, as having standing to appeal. The general rule in British Columbia (and beyond) is that only parties to a proceeding may file an appeal with respect to any orders/judgments made during the proceeding.³² Thus, for class members to be allowed to file appeals, with respect to the orders/judgments that are not expressly covered by s. 36 of the BC Act, requires the judicial recognition of an exception to this rule for class members or, more likely, the recognition that, for the purposes of appeals, class members are to be regarded as parties to the litigation.

In Dabbs, Ontario’s Court of Appeal adhered to the view that class members are not parties for the purposes of the Ontario Act’s counterpart to s. 36 of the BC Act. The fact that both provisions draw a distinction between ‘parties’ and ‘class members’ dictated this judicial approach. But whether class members may be treated as parties for the purposes of the CA Act is an entirely different issue. Obiter dicta comments that appear in several judgments of British Columbia’s Court of Appeal tend to suggest a potential judicial willingness to consider the unique nature of class action litigation in the context of appeals.

The most important of these judgments is the 2008 case of Fontaine v Canada (Attorney General)³³ as it involved a three-judge panel of the Court of Appeal. The court unanimously held that the lawyer of a number of class members bound by a judicially approved class action settlement had standing to file an appeal with respect to an order made by the trial judge with respect to this settlement. The trial judge had declared that certain directions to pay and assignments of moneys owing to claimants under the settlement agreement were of no force and effect as against the Canadian Government. The court made the following pertinent passing comments:

One may ask, who will advance an appeal on this significant issue affecting numerous class members if not Ms Levesque? To insist a class member do so (acknowledging the class member is unlikely to be the representative plaintiff) is to put form over substance and to risk no appeal on this important point of administration. Such a result, in my view, is not in the interests of justice.³⁴

But these passing comments—that were made with respect to appeal issues that did not involve class members—hardly provide any meaningful guidance as to the status and standing of class members who seek to rely on the provisions of the CA Act. Thus, it is safe to conclude that, despite the existence of s. 36 of the BC Act, in the area of appeals with respect to settlement-related orders/judgments, British Columbia compares unfavourably with the US.

In fact, in Devlin v Scardelletti the US Supreme Court held that a class member who objected to a proposed class action settlement at a settlement hearing could be regarded as a party, for appeal purposes, and could therefore appeal the order issued by the trial court approving the settlement in question. The principal ground for this conclusion was that class members are:

bound by the settlement. It is this feature of class action litigation that requires that class members be allowed to appeal the approval of a settlement when they have objected at the fairness hearing. To hold otherwise would deprive nonnamed class members of the power to preserve their own interests in a settlement that will ultimately bind them, despite their express objections before the trial court.³⁵

Leave to appeal

Another significant difference exists between British Columbia and the US in the area of appeals by class members. It will be recalled that s. 36 of the BC Act expressly requires class members to secure leave before being able to appeal the orders and judgments referred to in this provision. As shown by the passage from Devlin quoted above, the only restriction that is imposed on class members in the US is that the objections and grievances that form the basis of an appeal must first be advanced before the trial judge. This requirement of leave is again attributable to a recommendation of the OLRC. The basis for this recommendation was simply that this requirement of leave was imposed on class members in Quebec and that in US federal class proceedings ‘an absent class member can seek leave to intervene in a class action for the purpose of appealing a negative certification order if the representative plaintiff has failed to do so’ (Ontario Law Reform Commission, 1982: 822).

But what the OLRC failed to appreciate was that in the US, being successful in a motion to intervene, pursuant to the terms of Rule 24 of the United States Federal Rules of Civil Procedure, entails being granted the status of party to the litigation, a procedure and process which is quite distinct from the process of seeking leave to appeal.³⁶ It should also be noted that in Australia, no leave requirement is imposed on class members. Some of the reasoning in favour of the Australian approach was revealed in 1994 by the Scottish Law Commission:

If the appeal is one for which the [class representative] would not require leave to appeal, we do not think that another member should require leave. In any event an application for leave might involve an undesirable investigation by the court into the reasons why the [class representative] has not appealed and why the other class member wishes to do so, since the judge in exercising his discretion whether to grant leave would be required to assess the circumstances of the particular case. (Scottish Law Commission, 1994: para. 7.99)

Attention should also be drawn to the fact that in class actions brought in the Federal Court of Canada a class member is not required to seek leave when seeking to appeal ‘any order determining or dismissing the member’s claim in respect of one or more individual questions’.³⁷ Similarly, the Scottish Law Commission indicated that monetary awards made by the court to individual class members should be appealable without leave as ‘they are comparable to judgments disposing of the subject-matter of the cause in ordinary actions, which are appealable without leave under the existing rules’ (Scottish Law Commission, 1994: para. 7.94).

No guidance is provided in s. 36 of the BC Act and in the proposed statute drafted by the OLRC as to what factors courts should consider when faced with a leave application. The few times that British Columbia’s justices have been faced with such applications, with respect to class action orders/judgments, they have employed the criteria that are applied in litigation generally. These criteria were recently described as follows, and applied in a class proceeding, by Justice Prowse of British Columbia’s Court of Appeal:

whether the appeal is prima facie meritorious;

whether the point on appeal is of significance to the practice;

whether the point raised is of significance to the action itself; and

whether the appeal will unduly hinder the progress of the action.³⁸

‘Leave to act as the representative plaintiff’

Another crucial feature of s. 36 of the BC Act is the need for class members to secure leave ‘to act as the representative plaintiff’ for the purpose of appealing orders/judgments that affect, not just their individual claims, but also the claims of other class members. An obvious question is whether this phrase is intended to direct judges to apply the ‘fair and adequate representation’ certification criterion set out above (or something similar to it) before they are able to grant leave to appeal to class members.

Section 30(5) of the Ontario Act also contains the phrase ‘leave to act as a representative party’. The way this provision was construed and applied in Dabbs suggests that such a scenario might exist in Ontario:

The court’s discretion to grant leave under s 30(5) is guided by the best interests of the class and in particular by a consideration whether the class member applying would fairly and adequately represent the interests of the class. There is nothing in the record which indicates that Maclean would adequately represent the interests of this class by bringing an appeal which seeks to set aside the settlement agreement. Courts in three jurisdictions have approved the agreement. Maclean is the only class member of an estimated 400,000 who now seeks to set it aside. The wishes of one class member ought not to govern the interests of the entire class.

Importantly, if Maclean is dissatisfied with this settlement, he has the opportunity under the terms of Sharpe J’s judgment and s. 9 of the Act to opt out of the class and pursue his claim against Sun Life in his personal capacity.³⁹

These comments bear a striking similarity to the approach adopted by a majority of US courts before Devlin. These courts denied to class members the ability to appeal; they justified such a rule partly on the basis that, unlike the class representatives, class members who desire to appeal have not demonstrated that they would adequately represent the interests of the class.⁴⁰

Where the aspiring appellants were the only class members who objected to the approval of the class action settlement before the trial court, these American courts used this fact to substantiate their conclusion, as did the Dabbs court, that such members would not represent adequately the interests of the class.⁴¹ But in the context of the Canadian appeal provisions, it is not entirely clear how the Dabbs court envisaged that the adequacy of the proposed appellant would be determined. For instance, is the relevant justice required to hold a hearing, not unlike a certification hearing? If so, who would be allowed to participate at such hearing?

An alternative explanation of Dabbs is that these comments were merely intended to display the Court’s strong objection to the overall conduct of this appellant. His conduct was described as follows by the trial judge:

In the present case, rather than asserting objections to the settlement on its merits, counsel for these objectors brought a motion which cast aspersions on the integrity of class counsel in negotiating the settlement. These allegations were found to be without merit.…The result…has been undue delay and expense incurred by all parties. Further, this delay potentially prejudiced the rights of the 400,000 class members who did not participate in or support those motions.⁴²

Attention should also be drawn to the following comments made in 2009, again by Ontario’s Court of Appeal, which do not appear to be entirely consistent with the proposition that Dabbs is authority for the need to impose a ‘fair and adequate representation’ requirement on leave applications filed by class members:

Their interests were those of the class and the same objections applied to all members of that class. They were, in effect, representational of some of the members of the class although not the representative plaintiffs.⁴³

The class members/appellants in this case filed a motion to quash an appeal filed by class counsel from an order fixing their fees, following the judicial approval of the settlement of the class action in question. There is no reference in this 2009 judgment to these class members being required to establish their ability to represent, on this appeal, the interests of the class.

The reasoning of the OLRC—as to whether the ability of class members to secure leave to appeal with respect to orders affecting other class members should be made dependent on persuading the court that they will adequately represents the interests of class members—is equally confusing. It expressed the view that ‘in the interest of safeguarding the rights of the absent class members’ (Ontario Law Reform Commission, 1982: 824) a similar provision to (the recently repealed) Article 1042 of the Quebec Code of Civil Procedure should be included in its proposed statute. Article 1042 provided that if the class representative failed to appeal the final judgment on the common questions (or if his appeal is dismissed for one of the reasons referred to in the section) a class member may apply to the Court of Appeal for leave to appeal. Article 1042 specified the criterion for the granting of such relief, namely, whether the court ‘is of the opinion that the interest of the [class] members so requires’.⁴⁴

The OLRC’s endorsement of Article 1042 is, thus, consistent with the comments of the Dabbs court. But then the OLRC went on to recommend that:

If the representative plaintiff does not appeal the judgment on the common questions or if he abandons his appeal, any member of the class should be able to apply to the Court of Appeal for leave to appeal on behalf of the class. [emphasis added] (Ontario Law Reform Commission, 1982: 824)

It will be seen that the ‘interests of class members’ requirement, found in the Quebec provision, is absent in the OLRC’s recommendation. Furthermore, the italicized phrase above may reasonably be interpreted as simply indicating that what the class members are seeking to do is to ‘apply for leave to exercise the right of appeal of [the class] representative’.⁴⁵

One would hope that the judicial consideration of the issue explored in this article would also encompass (whether or not expressly acknowledged) a recognition and review of the conflicting values or aims that are raised by appeals of settlements by class members, namely, fairness and efficiency. In the US, the Court of Appeals for the Fourth Circuit perceptively drew attention to the fact that the lack of judicial consensus, before the Supreme Court decision in Devlin, as to whether class members had standing to appeal could be explained as follows:

A crucial difference between the approach of the majority of courts…and that of the minority of courts… is the way in which the courts balance class management concerns against fairness concerns. A majority of courts require successful intervention as a prerequisite to appellate standing because they place a greater emphasis on the need for efficiency and effective class management…(relying upon the purpose of Rule 23 to ‘promote the efficient resolution of claims in cases involving multiple parties with similar claims’) whereas a minority of courts place a greater emphasis on the need to ensure the fairness and adequacy of class action settlements…(expressing concern that collective action and agency costs fail to ensure fair and adequate settlements).⁴⁶

When balancing these ‘management concerns against fairness concerns’, it is hoped that Canadian judges will not adopt the somewhat myopic approach that class members, unhappy with a judicially-sanctioned settlement, are treated fairly given that an opportunity is normally extended to them to opt out of the relevant settlement. In light of the fact that in most class actions the individual claims of most class members would not justify the filing of individual legal proceedings, opting out would provide an illusory remedy for those class members who feel that the settlement is unfair.⁴⁷ Recognition of this crucial fact has prompted American appellate courts to reject the proposition that the appeal rights extended to class members by the US Supreme Court in Devlin should be restricted to those class actions where class members were not provided with an opportunity to opt out of the settlement.⁴⁸

Conclusion

This article has shown that—while British Columbia’s class action appeals landscape is fundamentally different from the American scenario—this province’s Court of Appeal may actually need to turn to the American jurisprudence for guidance if faced, in the future, with an appeal filed by class members dissatisfied with settlement orders. It has been explained that this state of affairs stems from a failure, on the part of the drafters of the legislative regime that has been governing class actions in British Columbia since 1996, to consider the possibility that the potential needs of class members, with respect to appellate review, may differ from the needs of the class representatives and/or the class action defendants. The result of this serious deficiency, in the process or methodology followed in the drafting of the provision that governs class action appeals, is that class members have not been given any express appeal rights with respect to settlement orders. A similar omission may be found in the other nine Canadian class action regimes.

In order to have any chance of being permitted to file such appeals, class members need to place reliance on the general provisions governing appeals in all proceedings filed in British Columbia courts. Thus, despite the fact that class actions have been available in British Columbia for over 20 years, class members wishing to seek appellate review, and appeal justices, are currently confronted with the same uncertainty that faced American class members and appellate courts in 1966, when the redrafted Rule 23 of the United States Federal Rules of Civil Procedure came into operation, devoid of any provisions to govern appeals in class actions.

The fact that in British Columbia there have been no reported appellate reviews, stemming from applications filed by class members, of class action settlements approved by trial judges is not a healthy scenario even if one adheres to the view that, as held by a majority of US courts in the pre-Devlin era, the needs of efficiency are paramount. In this regard, it should be noted that the US scholars who have recommended measures to deal with class members who misuse the objection and appeal processes in order to extract payments that they are not entitled to, have not, at the same time, called for a legislative repeal of the Devlin decision. As explained by Fitzpatrick in 2009:

Forbidding objectors from appealing would basically leave appellate review of class action settlements to those instances where class counsel was unhappy with the fees that the district court awarded. This would leave class action settlements with very little appellate scrutiny, and scrutiny in only one direction…if anything, there should be more scrutiny of class action litigation, not less. (Fitzpatrick, 2009: 1658)

The reasons for Fitzpatrick’s conclusion are not difficult to ascertain; the responsibility of trial courts to protect the interests of class members⁴⁹ ‘is heightened by [their] responsibility to review the fairness of any compromise of the class action’.⁵⁰ Appellate courts are under the same duty.⁵¹

It is submitted that there is a need for a study to be conducted to ascertain the reasons for the lack of appeals by class members with respect to settlement orders in British Columbia as well as the other Canadian class action jurisdictions. A number of potential reasons come to mind. One reason might simply be that there have been few instances of objections to class settlements, before trial courts, to begin with. A number of Canadian judges⁵² have expressed the view that objections by class members constitute a rare phenomenon and empirical studies conducted in the US also reveal a very low level of participation by objectors (see Brunet, 2003: 435–437; Eisenberg and Miller, 2004: 1546; Fitzpatrick, 2009: 1630–1631). The potential reasons for this state of affairs have been described as follows by Justice Perell of the Ontario Superior Court of Justice:

Historically, objectors to class action settlements have been few in numbers, perhaps because they cannot afford to pay for legal representation and are intimated by the process or perhaps because the harm they individually suffered was never that much in the first place.⁵³

Other reasons might include the uncertainty, canvassed above, regarding the ability of class members/settlement objectors to file appeals; the greater willingness that Canadian courts have displayed in recent times to revisit judicially approved settlements;⁵⁴ or it may simply be that settlement agreements have usually been modified to address the objections of the class members in question. The data that would emerge from this study would enable Canadian law makers to make informed decisions as to what amendments, if any, it is desirable to make to the provisions that currently regulate appeals by class members. It would also permit a more accurate assessment of the barriers that are currently faced by objectors and the most appropriate measures to address these barriers.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

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