Adding this language ‘will invite years of further, unnecessary litigation,’ says group
As Ontario’s legislative justice committee considers bill 161, the Toronto Lawyers Association offered submissions that raised concerns about the potentially “devastating” impact of the “full and frank disclosure on settlement approval” mandate.
The organization raised a series of issues about changes to the Class Proceedings Act, including offering support for 11 proposed changes. However, the bill also includes seven proposed changes that the organization either finds unnecessary or does not support.
One of the three changes the TLA opposed were the superiority and predominance tests, a topic which was discussed in depth during the hearings.
However, another topic was also raised by the TLA was the impact of the “full and frank disclosure on settlement approval” on solicitor-client privilege. The TLA’s submissions said the bill would mandate “full and frank disclosure of all material facts” including “the party’s best information respecting ... any risks associated with continued litigation.”
“It is not unusual for a class action to involve multiple defendants, and to be settled piecemeal. If class counsel is compelled to make full and frank disclosure of all the risks associated with continued litigation and the range of possible recoveries in the litigation, this could severely compromise the class’s case against the non-settling defendants,” said the TLA.
Class members do get information about the settlement in advance, and lawyers must “fairly and reasonably explains how the settlement was arrived at, and why the settlement is in the best interests of the class.” But the TLA said this requirement, while in line with the language used with ex parte motions, adding this language “will invite years of further, unnecessary litigation,” in the context of class action settlements.
“Particularly, if counsel must frankly disclose the perceived weaknesses in the case, or frankly concede the strengths of arguments being asserted by the parties opposite, this could be devastating to the remaining claims, and therefore contrary to the interests of the class, and the duty that the lawyer owes to her or his clients,” said the TLA.
“Mandatory full and frank disclosure to this level will have the deleterious effect of discouraging partial settlements and could force litigation to continue even though some of the parties are otherwise prepared to settle.”
The TLA differentiated between “full and frank” and “fair and candid” disclosure, saying if a change must be made, it should allow redacted affidavit evidence to opposing parties.
“‘Full and frank disclosure’ could be interpreted so broadly as to suggest that class counsel would be required to divulge matters that are protected by solicitor-client and litigation privilege. This is fundamentally at odds with lawyers’ duties to their clients and the class and would also provide an unfair advantage to the non-settling defendants,” said the TLA.
“This is another area where there is no demonstrated need for legislative amendment. . . . We reiterate that class actions are diverse, unique and highly complicated. As such, regulations that require evidence for settlement approval are unsuitable,” said the TLA.