Canadian Lawyer

January 2016

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10 J A N U A R Y 2 0 1 6 w w w . C A N A D I A N L a w y e r m a g . c o m I n late November, Ontario Superior Court Justice Paul Perell called out what he said could possibly be an "illegal" fee-sharing agreement cre- ated by Saskatchewan-based Merchant Law Group, ruling it unenforceable, and ordering the firm not to be com- pensated. Now that Bancroft-Snell v. Visa Canada Corp. has put up firmer barriers to questionable class action fee arrange- ments among plaintiff counsel, some lawyers say it could mean more battles for carriage. More frankly, others say things could get nasty. Perell wrote that not only did he find the MLG agreement potentially illegal because it would have had class members in Ontario "pay a ransom fee in order to stay late-arriving rival class actions in Alberta and Saskatchewan" but it did not serve the best interests of the class mem- bers and undermines the integrity of the class action regime. "The court has signalled that it will not approve fees payable to law firms who do not contribute to the prosecu- tion of an action in a meaningful way. In other words, class counsel can no longer pay law firms to go away because they commenced a copycat action in a far- flung province at the eleventh hour," Jay Strosberg, a partner at Sutts Strosberg LLP, told Law Times. "Unfortunately, liti- gation may result among law firms who currently have these arrangements in place and ultimately the court will need to determine whether these are bona fide consortium agreements. This could get ugly." If a fee is disallowed, a firm may com- mence an action and seek the fee that was contractually agreed upon. "It will be interesting to see how these situations play out," Strosberg says. In the case that involves interchange fees paid by merchants who accepted payment by Visa or MasterCard credit cards, Perell approved settlements, contingency fee agreements, and a class counsel fee of $3,384,571, but he ruled a fee-sharing agreement crafted between MLG and Camp Fiorante Mat- thews Mogerman was unenforceable and ordered Camp not to pay any sums from the settlement proceeds or from any other source, ever, "on account of the unauthorized and possibly illegal" fee- sharing agreement to MLG. Actions were launched in five prov- inces and, in August of 2014, class coun- sel, led by lawyers from Camp Fiorante and the late-coming MLG, attended a judicial dispute resolution conference that resolved an impasse for carriage in Alber- ta and Saskatchewan, after MLG agreed to stay its rival proposed class actions. Under that agreement, class counsel from Camp Fiorante assumed the responsibil- ity and cost of obtaining stays and agreed to indemnify MLG for any costs claims in the stayed Alberta and Saskatchewan actions. University of Windsor associate law professor Jasminka Kalajdzic says because these types of arrangements have been commonplace and now found unenforce- able, it will change class litigation in the country. "The judge went even further to make his point by ruling Merchant will not get paid; that really does bind the plaintiff counsel's hands. It means you cannot bargain away any carriage case by offering a portion of the fees." Kalajdzic says the ruling could lead to more carriage battles at court and the potential for more co-counsel arrange- ments. "But there has to be good will between counsel to do that," she says. "I think it will mean more carriage battles for Merchant." She adds that the ruling warns that counsel must be forthcoming with their agreements as judges will likely now probe deeper into the class cases and fee arrangements. "I think with this ruling, the call for greater disclosure and trans- parency has been heard," says Kalajdzic. MLG could not be reached for com- ment for this article. — NEIL ETIENNE neil.etienne@thomsonreuters.com A lberta Court of Queen's Bench Justice David Gates was ready to hear a defamation suit brought by long-time Calgary developer, Cal Wenzel against the city's progressive and quick-with-a-quip mayor, Naheed Nenshi. But in mid-December, both sides accept- ed an offer made by Gates from the bench to mediate a resolution. Gates was urging a settlement to avoid what he had earlier warned could become "a three-week spectacle in front of the media" if the February trial went ahead. Gates managed to bring about an out-of-court agreement between the parites. Neither side would comment on the full details but a one-page joint news release states that Nenshi "retracts and apologizes for the statements and characterizations he made about Cal Wenzel." Both sides agreed to "settle the lawsuit and dispute between them without costs." What set the defamation suit alight was a CBC Radio interview given by Nenshi dur- ing the 2013 Calgary municipal election. Days before that live radio interview a piece of W E S T \ AT L A N T I C \ C E N T R A L \ W E S T REGIONAL WRAP-UP CLASS ACTION CARRIAGE FIGHTS LIKELY TO HEAT UP Calgary Mayor Naheed Nenshi Calgary mayor and local developer settle lawsuit

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