Alberta Court of Appeal affirms finality of class action settlements
The Alberta Court of Appeal recently affirmed the fundamental importance of finality in class actions, particularly the finality of settlement approval decisions. Justice Slatter in R.T. v T.L. refused to extend the deadline for an absent class member to appeal settlement approval, holding that profoundly late appeals were “particularly unacceptable in the context of class proceedings.”
Background
R.T. v T.L. is the latest instalment in the long-running T.L. v. Alberta (Director of Child Welfare) class proceeding regarding the abuse of minors under the care of child welfare authorities in Alberta. T.L. was certified as a class action in 2008 and has at times been on the vanguard of developments in class proceedings law in Alberta. See, for example, our post addressing an earlier 2006 decision holding that failing to include all necessary parties may be fatal to class certification.
After over a decade of litigation, the Court approved a settlement in November 2015. As per usual, the settlement was submitted for court approval after being reached between the representative plaintiffs and the defendant. Six absent class members objected to the settlement. The court took their views into account but nevertheless found that the settlement was in the best interests of the class. This is not unusual. See our recent post on approving settlements notwithstanding objections.
The settlement in T.L. was picked up in the national new media. See, for example, Deb Zinck’s coverage for Global. Notwithstanding the national coverage of the settlement, no appeals were filed within the allotted time for doing so, either by the objecting class members or by anyone else.
Over a full year later, a class member (R.T.) sought leave from the Alberta Court of Appeal for an extension of time and to be made a representative plaintiff for purposes of appealing the settlement approval. R.T.’s application was directed by former class counsel who had been judicially removed from the record before the settlement was negotiated. The representative plaintiffs who had earlier approved the 2015 settlement also now apparently supported R.T.’s application and argued that the settlement was improvident and that they were misled by counsel.
Decision and Implications
R.T. v T.L. highlights an important aspect of class action appeal procedure. Under s. 36 of the Alberta Class Proceedings Act (and there are comparable provisions in other provinces), any class member may apply to the Court of Appeal for permission to act as the representative plaintiff for purposes of appealing a class action decision, if the existing representative plaintiffs either: (a) do not appeal within the time limit for doing so; or (b) commence an appeal only to abandon it later.
In Alberta, class members are allotted 30 days to invoke this rule following the expiry of the appeal period available to the representative plaintiff, subject to the Court of Appeal’s discretion to extend the time. For R.T., his deadline expired essentially one year before he commenced his application.
Given the court’s discretion under the Class Proceedings Act, class action settlements are not necessarily free from vulnerability on appeal even after the appeal deadlines expire. On the face of s. 36, any class member could surface and seek to appeal the settlement. However, R.T. v T.L. provides strong authority for finality, and the need for finality, in class actions. Justice Slatter held:
[T]he heart of class proceeding legislation […] assumes that a small group of representatives will sue on behalf of the entire class, and will prosecute or settle an action in a representative capacity, all under the supervision of the court. The class action system cannot operate if only those class members who are intimately engaged in the process are ever bound by any settlement or judgment.
Appeal periods are deliberately short, and reflect the importance of the finality of judgments. […] It would unacceptably undermine the civil justice system to permit profoundly late appeals of orders approving settlements in any context, and it is particularly unacceptable in the context of class proceedings.
On the facts of R.T. v T.L., the defendant would have been prejudiced from a late appeal. As Justice Slatter found, significant steps had been taken to implement the settlement, and hundreds of thousands of dollars had been spent in reliance on it. For defendants, carefully documenting reliance on a settlement agreement will bolster any future need to defend the settlement’s finality.