Dolden Class Action Newsletter - July 2024 - Dolden Wallace Folick LLPDolden Wallace Folick LLP

July 30, 2024

Dolden Class Action Newsletter – July 2024

The Road to Approval: Embracing Reasonableness Over Perfection in Class Action Settlements

By Christine Galea and Jennifer Wu, Dolden Toronto
Email: [email protected] and [email protected]

The Federal Court of Canada has endorsed the Settlement Agreement (the “Agreement”) in Percival v Canada, 2024 FC 824 (“Percival”), marking a significant step towards justice for Indigenous peoples affected by the Indian Boarding Home Program (the “Program”). The Court’s approval underscores the complexities inherent in class action settlements and emphasizes that while perfection is not a requirement, fairness and reasonableness are pivotal.

Factual Matrix

The Program, initiated by the federal government (“Canada”) in 1951, forcibly removed approximately 40,000 Indigenous children from their families and placed them in non-Indigenous boarding homes. The Program left a legacy of physical, emotional, and psychological trauma among its participants, prompting a class action seeking redress for the abuses suffered.

The Agreement addresses two distinct classes: the Primary Class, comprising those directly involved in the Program, and the Family Class for individuals with derivative claims under the Family Law Act. Importantly, the Agreement excludes harms suffered in residential schools, focusing solely on claims arising from the Program’s placement of individuals into boarding homes.

Required Approval

The parties reached the Agreement in December 2023, culminating in a settlement of approximately $1.9 billion aimed at fostering reconciliation.

Pursuant to subrule 334.29(1) of the Federal Courts Rules, SOR/98-106, a class action settlement will be approved if it is “fair and reasonable and in the best interests of the class as a whole”. Underscoring the importance of crafting a fair and reasonable settlement, the Court can only approve or reject the settlement and possesses no powers to modify it.

The Path to Approval: Reasonableness not Perfection

Justice Pamel conceded that the Agreement was not perfect, but confirmed that perfection was not required. Settlements by their very nature are creatures of compromise. The path to approval may strive towards perfection but the Court will accept a settlement that is fair, reasonable and in the best interests of the class members.

Eligibility

For instance, Justice Pamel recognized that the class period was not perfect, but approved the class period because it was within the realm of reasonableness given the circumstances. The proposed class membership had a deeming provision, meaning all individuals who were placed in the Program during a specified time would automatically be entitled to a baseline compensation without having to prove harm. The class period was between September 1, 1951 (when the Program began) and June 30, 1992 (when Canada, for the most part, ceased administration of the Program). This single timeframe was an attempt to streamline the process for claimants, compared to the more complicated compensation plans in prior cases, such as the Residential Schools settlement.

Yet, the end date of the proposed class period was imperfect because the end date for Canada’s authority over the administration of the Program was questionable. Despite six years of documentary review and disclosure, the parties were unable to identify the date Canada ceased administration of the Program for all Indigenous bands. This, however, was not fatal to settlement approval. Instead, the Court approved an Exceptions Committee to address any claimants placed in boarding homes after June 30, 1992; entitlement to compensation for these claimants would require proof that Canada administered their placement in the Program.

Costs

Another aspect of the Settlement that was not perfect but within the range of reasonableness was legal fees incurred by independent legal counsel retained by eligible Class Members. The Court was mindful that its approval of up to 5% could be insufficient where independent counsel incurred additional travel time and expense to access remote Indigenous communities. However, the Court also recognized that a set amount of 5% was a step forward from past settlements in prior cases where no provision was made for the payment of legal fees to independent counsel.

Claims Administration

There were also challenges identified in the claims administration process arising from the remoteness of many Indigenous communities, such as the ability to communicate and properly complete the claims process. Again, the Court recognized these challenges but did not treat them as barriers to settlement approval. Shortcomings of the settlement were instead overcome through a flexible and streamlined paper-based claims process, and through the Court’s decision to maintain a supervisory role in overseeing the administration of claims to ensure claimants received the benefits they were promised.

Takeaway

Percival serves as a practical reminder that, while shortcomings in settlement agreements are inevitable given the compromises and concessions made by parties in the negotiation process, they will not necessarily act as a barrier to settlement approval by the Court.

When it comes to the “reasonableness” requirement for class action settlement approval, the threshold is not perfection. The Court’s approach in determining “reasonableness” will depend on the circumstances of each case, including whether the Class Members are comprised of a historically disadvantaged group whose claims involve experiences of significant trauma. What constitutes “reasonableness” for one group of Class Members will not necessarily be the same for a different group of Class Members.