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CITATION: Leslie v.

Agnico-Eagle Mines, 2016 ONSC 532

COURT FILE NO.: CV-12-448410-CP
DATE: 20160212


and AMMAR AL-JOUND / Defendants

Justice Edward P. Belobaba

COUNSEL: Michael G. Robb and Ronald Podolny for the Plaintiffs

James Doris, Luis Sarabia and Chantelle Spagnola for the Defendants

January 20, 2016

Proceeding under the Class Proceedings Act, 1992

This securities class action, certified on consent,1 has settled for $17 million. The
plaintiffs now seek judicial approval of the settlement agreement and class counsels
legal fees.
For the reasons set out below, both the settlement and the legal fees are approved.
However, I hasten to add the following. The judicial approval of class action settlements,

Leslie v. Agnico Mines, 2013 ONSC 2290. The plaintiffs allege that the defendant gold miner, with producing
properties in Canada, Finland and Mexico, misrepresented the scope and effect of certain water inflow problems
at one of its gold mining properties in Quebec causing share purchasers to sustain losses. The defendant consented
to leave under s. 138.8 of the Securities Act, R.S.O. 1990, c. S.5 (OSA) and certification under s. 5(1) of the Class
Proceedings Act, 1992, S.O. 1992, c. 6 (CPA).

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especially securities class action settlements, leaves much to be desired. Judges should do
more to ensure that a proposed settlement is in the best interests of the class.
Approval of the settlement agreement
It is widely recognized that the approval of class action settlements remains the
most difficult and problematic area of class action practice.2 And it has often been said
that class action settlements should be viewed with some suspicion and seriously
scrutinized by judges.3 The problems of sweetheart and blackmail settlements are
well-known and have been the subject of study in the legal literature.4
In Ontario, of course, the concern about blackmail or strike-suit settlements is
lessened because of the statutory leave requirement in s. 138.8 of the OSA (which sets
out a preliminary merits test). But the concern about sweetheart settlements, in which
class members interests are compromised to those of class counsel, remains - especially
in the area of securities class actions that are almost always settled.5
The core problem is that the only players at the settlement table - the defendants
(or their counsel) and class counsel have interests and incentives that can be aligned
against the best interests of the class. The class action settlement is often at the expense
of the group that is not at the table: the absent class.6

Watson, Settlement Approval The Most Difficult and Problematic Area of Class Action Practice, (Unpublished
paper presented at the National Judicial Institutes Conference on Class Actions, Toronto, April 9, 2008).

Dobbs v. Sun Life Assurance, (1998) 40 O.R. (3d) 429 (Gen. Div.) at para. 30.

See, for example, Hay and Rosenberg, Sweetheart and Blackmail Settlements in Class Actions: Reality and
Remedy (2000) 75 Notre Dame L.Rev. 1377; Erichson,The Problem of Settlement Class Actions (2014) 82
Geo.Wash. L.Rev. 951; and Koniak,How like a Winter The Plight of Absent Class Members Denied Adequate
Representation (2004) 79 Notre Dame L. Rev. 1787.

According to class counsel, whose law firm is the leader in securities class action litigation in Canada, only one
securities class action has actually gone to trial Kerr v. Danier Leather Inc, [2004] O.J. No 1916 (S.C.J.), revd
(2005) 77 O.R. (3d) 321 (C.A.), affd 2007 SCC 44. Class counsel advises that his firm has commenced some 29
securities class actions, all of which were settled well before the common issues trial in amounts ranging from $1.3
million to $139 million. American data cited by class counsel describes a similar story: more than 99.6 per cent of
the securities class actions filed in the U.S. have settled before or just after certification. Only 21 of the 4300 cases
that have been filed since 1995 have gone to trial.

Koniak, supra, note 4, at 1797.

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The potential for conflict of interest, collusion and abuse of the class action
settlement procedure was recognized by the Ontario Law Reform Commission almost 35
years ago in its seminal Report on Class Actions:7
There is a real possibility that, without the benefit of appropriate
safeguards, parties and their counsel might be tempted to abuse the class
action procedure in reaching settlement The agreement reached could
be inadequate or unfair to the class members.8

Hence, s. 29(2) of the CPA requires court approval of every class action settlement
before it can take effect. Judges must be satisfied that the proposed settlement is fair and
reasonable and in the best interests of the class.9
But how does a judge do this? Judges are obviously not in position to secondguess the actual amount of the proposed settlement. Nor should they do so. The most they
can do, apart from making sure that the settlement was negotiated at arms length by
competent counsel, is (1) scrutinize the actual agreement and supporting affidavit
material for any so-called structural indicators that suggest collusion or conflict of
interest10 and (2) satisfy themselves that the settlement amount falls within a range or
zone of reasonableness.11
Unfortunately, class counsel rarely provides much information about why the
settlement falls within a zone of reasonableness. That is, information explaining why the
case settled for $17 million and not say $37 million or $57 million? Instead of providing
much-needed information about why the settlement is within a zone of reasonableness,
class counsel presents an unhelpful catalogue of self-serving (almost generic) reasons
why the settlement should be approved: the many litigation risks; the hard-fought
negotiation; the arms-length settlement; and class counsels impressive credentials and
litigation experience.

Ontario Law Reform Commission, Report on Class Actions (Toronto: Queens Printer, 1982).

Ibid., at 806.

Dobbs v. Sun Life Assurance, (1998) 40 O.R. (3d) 429 (Gen. Div.), affd (1998) 41 O.R. (3d) 97 (C.A.), leave to
appeal to S.C.C. refused Oct. 22, 1998.

For example: legal fees that are paid by the defendant directly to class counsel separate and apart from the monies
that are paid to the class; non-monetary settlement features such as coupons that are then monetized to enlarge the
amount of the so-called recovery by class counsel; or reversionary rights that require the return to the defendant of
any monies not taken up by class members.

Dobbs, supra, note 9, at para. 30 (Gen. Div.)

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[10] In the vast majority of class action settlements, the court hears a one-sided
presentation about how wonderful the settlement is and how aggressively class counsel
championed the absent classs cause.12
[11] The motivation behind what has now become a boiler-plate recitation of reasons
is undoubtedly well-intentioned but it doesnt help the court. It doesnt tell the judge
how you got from there to here.13 In Sheridan Chevrolet v. Furakawa,14 an auto parts
price-fixing settlement, I criticized class counsels use of boiler plate to support the
settlement approval motion. I said this:
The boiler-plate for settlement approval comes down to something like
this: Were experienced class counsel; we know what were doing;
there were lots of litigation risks; we negotiated the best possible deal for
the class members; trust us.
I am not denigrating class counsel I am criticizing the boiler-plate that
is found in too many of the settlement approval facta and the judges who
succumb to the were experienced class counsel - we know what were
doing trust us kind of argumentation.
If class action judges are to do their job (and be more than rubberstamps) in the settlement approval process, and ensure that the settlement
amount is indeed fair and reasonable and in the best interests of the class
(and not just class counsel) then at the very least class counsel should
provide affidavit evidence explaining why the actual settlement amount
is fair and reasonable or more specifically, clear reasons why the
settlement amount is in the zone of reasonableness.15

[12] I agree with American jurist Richard Posner that a high degree of precision
cannot be expected in valuing a litigation, especially regarding the estimation of the
probability of particular outcomes.16 However, as Posner goes on to explain, a ball park
valuation is nonetheless achievable and he urges the settlement approval judge to make
every effort to translate his intuitions about the strength of the plaintiffs case and the


Koniak, supra, note 4, at 1798.


Watson, supra, note 2, at 9.


Sheridan Chevrolet v. Furakawa Electric, 2016 ONSC 729.


Ibid., at paras. 10-12.


Reynolds v. Beneficial National Bank, (2002) 288 F. 3d. 277 (7th Circ.) at 284.

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range of possible damages into numbers that would permit a responsible evaluation of
the reasonableness of the settlement.17
[13] In Sheridan Chevrolet,18 I was not persuaded by the boiler-plate and I asked class
counsel to file further information estimating the amount of the over-charge and
explaining why the $10.4 million settlement amount fell within a zone of reasonableness.
To their credit, they understood my concern and filed a supplementary affidavit within a
few days. With this additional information about sales volume and estimated over-charge,
I was satisfied that the settlement was fair and reasonable and in the best interests of the
class and I approved the settlement.19
[14] Here I voiced the same concern. I knew that counsel had engaged in a one-day
mediation that helped frame the eventual settlement. I asked to see the mediation briefs
but counsel were reluctant to file confidential documents. So instead I pressed for more
information. Boiler-plate aside, I needed to know why class counsel believed that the $17
million settlement amount fell within a range or zone of reasonableness. And, here again,
as in Sheridan Chevrolet, class counsel agreed to file a supplementary affidavit
[15] The additional affidavit material filed herein described in more detail certain
recently discovered risks and the range of possible damage recoveries. The additional
affidavit explained how the high end of the damages range had dropped from some
$300 million to only $30 million and why the $17 million settlement was therefore within
the range of reasonableness.
[16] I am persuaded by this additional information and I am satisfied that the $17
million settlement is in the best interests of the class. The settlement is approved.
[17] A final comment. Judicial approval of class action settlements, especially
securities class action settlements, needs more rigour. Some American courts have gone
so far as to describe the settlement approval judge as a fiduciary of the class and thus
subject to the high duty of care that the law requires of fiduciaries.20 In Canada, some
commentators are saying the time has come for settlement approval judges to appoint
independent counsel that can review and oppose the settlement if it is not in the best




Sheridan Chevrolet, supra, note 14.


Ibid., at para. 15.


Reynolds, supra, note 16 at 280, and case law cited therein.

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interests of the class.21 The shared concern is obvious: class action judges must do more
than acquiesce to the self-serving submissions of class counsel that often amount to
nothing more than - were experienced class counsel - we know what were doing
trust us.
[18] I dont know what the future holds. Perhaps the time has indeed come for judges
in appropriate cases to appoint independent counsel (with his or her legal fees paid by the
parties) in order to add a much-needed adversarial dimension to the settlement approval
hearing. One thing, however, is clear: class counsel can no longer rely on boiler-plate
reasons that do nothing more than describe generic litigation risks or class counsels
so-called experience22 class counsel must at the very least provide the court with
information why the settlement amount falls within a range or zone of reasonableness.
Approval of the legal fees
[19] Based on the retainer agreement, class counsel is seeking a 29.5 per cent
contingency recovery which amounts to $4,094,000, plus disbursements and taxes. As I
explained in Cannon23 such a contingent fee arrangement is presumptively valid and
readily recoverable. I therefore have no difficulty approving $4,094,000 in legal fees plus
disbursements and taxes. I only ask that class counsel reduce the disbursements by $3828
for the legal research charge that, in my view, should not be billed as a disbursement.24
I also approve the payment of $700,000 to American law firm, Kessler, Topaz, Meltzer
and Check for legal assistance provided to class counsel, such payment to come out of
class counsels legal fees award.

Order to go accordingly.

Belobaba J.
Date: February 12, 2016


Watson, supra note 2, at 6 and 10.


Given that almost every class action is settled well before trial, class counsels litigation experience is actually
limited to motions work mainly certifications and summary judgment motions. If some securities class actions
were actually taken to trial, the boast about litigation experience would carry more weight.

Cannon v. Funds for Canada Foundation, 2013 ONSC 7686.


As discussed in Sheridan Chevrolet, supra, note 14, at footnote 3.

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