In August 2022, the Federal Court released its decision in Moushoom v Canada (Attorney General), 2022 FC 1212 (“Moushoom”), granting the Plaintiffs’ motion for an interlocutory order that no legal professionals other than class counsel, the Plaintiff Assembly of First Nations, or the Court-appointed administrator publish communications to class members regarding the class proceedings. Moushoom conveys the very serious ethical considerations that arise when entrepreneurial counsel interferes in matters where they do not represent the class.
By way of background, the underlying class action pertained to harms caused by the discriminatory provision of child and family services and essential services to First Nations’ children. Class members are undoubtedly some of the most vulnerable individuals in Canadian society: children and young adults who had experienced homelessness, substance misuse, disabilities, and encounters with the criminal justice system. The parties to the litigation reached a proposed settlement in late June 2022 which would provide $20 billion in compensation to class members, and the Court approved a notice plan developed by class counsel with detailed information relating to the settlement.
However, in advance of the settlement receiving court approval, a law firm with no involvement in the proceedings posted information about the settlement online and invited class members to “Join this class action” with no reference to class counsel. Rather, their websites offered contingency fee retainers to file claims on behalf of class members in the settlement process. As part of this process, the websites required a claimant’s narrative form description of the harm they suffered, a potentially re-traumatizing process.
Accordingly, the representative Plaintiffs brought their motion to prevent the law firm from advertising to and engaging with class members. Applying the test from RJR McDonald, Madam Justice McDonald ruled that it was just and equitable to grant the relief sought against the law firm. The Court took notice of a history of predatory activity on First Nations class action settlements, and that class members would suffer irreparable harm if the notice plan were not communicated in a culturally sensitive and trauma-informed manner. Indeed, the claims process was explicitly designed so that class members could participate without the need for retaining individual counsel, and so that they would not have to provide a lengthy description of the harm they suffered.
In circumstances where class members are vulnerable, and the nature of the harms suffered is sensitive, a non-party’s involvement may be predatory. Here, the law firm’s involvement had the appearance of being exploitative. For example, an affidavit filed on the motion reflected that when a class member saw the firm’s website, he believed this was how compensation was being provided, and that he would need to sign a contingency retainer that would charge 25% of any amounts recovered to claim compensation. He only learned that the firm was not associated with the class action and that he did not need to retain them by contacting class counsel.
Where claims processes become overly complicated, class members are disincentivized from participating. Even in the best cases, take-up rates in settlements are not 100% and counsel must thoughtfully design processes by which class members can make claims to be easy as possible. Here, there was added risk given the nature of the injuries, and class counsel went to great lengths to streamline the claims process to minimize the risk of re-traumatization to complainants by limiting the extent to which they had to describe their injuries. If the claims process designed by counsel was not followed, then there was a serious risk that class members would be re-traumatized as result of having to give a narrative about their experiences. The court got things right by preventing class members from falling into such a process. The law firm could be seen to have acted in a manner that would have harmed the ability of class members to participate in the settlement and minimized their recovery by extracting additional legal fees. The bottom line is that if a firm is not class counsel, it should not make representations that give such an impression.