Firm fails in bid to replace class counsel over certification delay

A Superior Court judge has rejected a law firm’s motion to replace the class action counsel with carriage of the file in a drug case after finding lawyers may take as long as they see fit to move on a matter provided the delay is reasonable.

Kim Orr Barristers Professional Corp. had won a carriage motion over McPhadden Samac Tuovi LLP in Waheed v. Glaxosmithkline Inc., a class action involving a diabetes medication called Avandia. But after three years went by and Kim Orr hadn’t proceeded with the certification motion, McPhadden Samac Tuovi started getting impatient.

The firm said the delay was unreasonable and suggested the court should remove Kim Orr as counsel for the plaintiffs. If it replaced Kim Orr, the other firm also said it would bring a motion for certification immediately.

But in ruling on the issue on Oct. 8, Justice Edward Belobaba dismissed the application after finding a law firm has discretion to decide on the structure of a case, including its pace.

Won Kim of Kim Orr tells Law Times the firm was watching the proceedings in Martin v. Astrazeneca Pharmaceuticals PLC before taking any major steps.
Waheed is “a massive file,” he adds, noting “you don’t want to gamble.”

Kim says Belobaba got it right when he said class counsel know what’s best for the class members.

“As class counsel, we have a lot of confidential information that we couldn’t say. We were in the best position to make strategic decisions about where the case is going to go,” he says.

Belobaba reflected that sentiment in his ruling. “In my view, any test for the removal and replacement of plaintiffs’ counsel in a proposed or actual class action proceeding must recognize that as a general rule class counsel, acting on plaintiffs’ instructions, should be able to run the lawsuit as they see fit,” he wrote.

“This includes deciding the shape, content, and pace of the litigation. Class counsel may choose to slow matters down because of pending appeals, or developments in other jurisdictions, or indeed for any good reason that class counsel believes is in the best interests of the proposed or actual class.

“Generally speaking, no carriage transfer motion should ask the court to review and second-guess the action or inaction of class counsel.”

But there are still some occasions where it would be appropriate to replace a law firm that’s taking too long to get things done, Belobaba suggested. “One such case is where there is clear and unreasonable delay,” he wrote.

To successfully replace a law firm, according to Belobaba, a party moving a carriage transfer motion must prove the delay is unreasonable “by current class action litigation standards”; that there’s evidence of harm to class members; and that the firm’s explanation for the time lag is inadequate. Removal of a firm is also justifiable if bringing a certificate motion in due time is either unworkable or against the interests of the class, Belobaba added.

McPhadden Samac Tuovi’s motion “fails on each of the four criteria,” he continued. The law firm “failed to show that most class proceedings are certified in less than three years,” he noted.

“It is well-known that class proceedings generally move at a glacial pace. (One need only recall the difficulty that plaintiffs’ have in securities class actions of even commencing an action within the prescribed three-year time limit.) If a moving party alleges unreasonable delay on the part of carriage counsel, it must provide comparative evidence to support this submission. No such evidence was provided.”

McPhadden Samac Tuovi didn’t show any evidence of harm or prejudice to the class members, said the judge, who added he was satisfied with Kim Orr’s explanation of why the delay occurred. Counsel needed to co-ordinate with experts on the American side of the matter and wait for the outcome of appeal proceedings in a related case, he said, noting the reasoning was “credible, and certainly could not be described as ‘inadequate.’”

The issue was a novel one, according to Belobaba. Joel Rochon, who leads the class action practice at Rochon Genova LLP, says the judge set out a useful first framework. “His decision seems to have recognized the reality that there is typically a complex back story, an unseen choreography, which frequently informs the pace of class action litigation. This is particularly true in complex cross-border class actions,” says Rochon.

“That said, when delays become patently unreasonable and there is evidence of prejudice, motions to replace class counsel seem logical and will be demanded by class members who are left dangling through the perceived inaction of lawyers.”

Bryan McPhadden, counsel for McPhadden Samac Tuovi, says the firm applauds the court’s finding that subsequent carriage transfers are permissible.

“I think that will be helpful to prosecution of class actions,” he says. “That this kind of motion can be brought is significant. We applaud it.”

On the point that Kim Orr’s delay was reasonable, “We obviously felt differently,” he says.

McPhadden suggests the test for unreasonable delay set out in Belobaba’s decision will evolve over time.

Belobaba declined to award costs to Kim Orr after finding the motion had forced the firm to commit to speeding things up.

“I am denying costs because it was obviously this motion and the threat of being replaced as carriage counsel that encouraged Kim Orr to commit to filing a certification motion within two months,” he wrote.

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