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The Class Representative Has the Exclusive Right to Accept an Offer to Settle

2 minute read

The case of Berry v. Pulley is a rare class action in that it includes a plaintiff class, seven defendant subclasses, and a representative-nominal third party that was defending the main action. The action arises out the acquisition of Air Ontario by Air Canada and a dispute between the pilots of these two airlines about the preparation of an integrated seniority list.

Shortly before trial, class counsel for the plaintiffs delivered a settlement offer with respect to the two largest defendant subclasses. The offer to settle excluded the representative defendants of the two defendant subclasses and any other individual who was a member of one of the other five defendant subclasses. Class counsel for the plaintiffs insisted that the offer be passed on directly to the applicable individual defendant class members. This was not done.

The offer, if it was permitted to be accepted, essentially created a post-certification opt-out process for individual defendant class members. The representative defendants brought a motion to have the offer to settle declared impermissible under the Class Proceedings Act, 1992 (the “CPA”) and for directions that neither they nor the defendants' class counsel were obliged to make the offer available for acceptance by the applicable individual defendant class members.

In Berry v. Pulley, 2011 ONSC 1378, Justice Perell took as his starting point the fact that a class action is a representative action. In order to avoid being bound by a settlement approved by the court, an individual must opt-out of the class proceeding. Justice Perell held that after certification, “other than for the individual issues trial in a class action, an individual litigant loses the right to settle the action when he or she is a class member in a class proceeding”.

After certification and before the individual action stage, the right to accept an offer to settle made to a class rests solely with the class representative, whether a representative plaintiff or a representative defendant and any such offer to settle must be delivered to the class representative. Where the offer is unacceptable to the class representative, it need not be disclosed to the class. Where the offer is accepted by the class representative, it will be subject to court approval under s. 29 of the CPA. Individual class members may then oppose settlement in accordance with the CPA.

The content contained in these blogs is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice on any of the subjects discussed in a blog post, please contact the author.

Kevin L. Ross

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