Fights between plaintiffs’ counsel over which firm will represent the class have become increasingly hard-fought in recent years. In a sign of the times, earlier this month the Ontario Superior Court released its decision in Waheed v. Glaxosmithkline Inc., the first so-called “carriage transfer motion” to be heard by a Canadian court, where Firm B, which had previously lost a carriage motion to Firm A, moved to have Firm A replaced as class counsel on the basis that it was unreasonably delaying in moving the action forward. Over three years had gone by since Firm A had been appointed, and the case had not yet reached certification.
Justice Belobaba first considered whether the court had jurisdiction to hear such a motion, concluding that it did under the broad language of section 12 of the Class Proceedings Act, 1992. Next, he addressed the circumstances under which Firm A can be replaced. Justice Belobaba began by noting that class counsel are generally free to run the lawsuit as they see fit, including deciding the shape, content and pace of the litigation. However, he found that, although the occasions will be rare, there are circumstances in which a carriage transfer motion will be justified and class counsel may be replaced. One such case is where there is “clear and unreasonable delay.”
Justice Belobaba articulated a four-part test that should be applied to assess whether the delay is “clearly unreasonable.” First, is the delay clearly unreasonable by current class action litigation standards? Second, is there evidence of actual prejudice or harm to the putative class members? Third, has class counsel provided an adequate explanation for the delay? Fourth, would a court order requiring Firm A to bring the certification motion within an expedited time period (failing which it would be replaced by Firm B) be workable or in the best interests of the class?
In Waheed, Firm B failed on each element of the test. Justice Belobaba concluded that Firm B had offered no comparable evidence to support the argument of unreasonable delay by Firm A and had provided no evidence of any actual prejudice or harm to any putative class members. Firm A had a credible explanation for the delay, namely the need to coordinate with experts in parallel U.S. proceedings and await the outcome of an appeal in a related case, and had also (albeit in response to the threat of being replaced as carriage counsel) advised that it would file the certification motion within two months of the hearing of the carriage transfer motion.
Although Waheed sets a high bar, it does open the door to these types of “second stage” carriage fights following the initial carriage motion to appoint counsel. While defendants are largely on the side-lines of such disputes, increased pressure from competing plaintiff firms to hold class counsel’s feet to the fire may well result in more aggressive conduct by class counsel to move the action forward. Defendants in Canada should be mindful of this dynamic in developing their strategy for responding to the plaintiff’s claim.