I have been following the discourse over grants of honoraria to representative plaintiffs with great interest over the past few years, as it marks an unlikely flash point between popular opinion and principle.
Those of us that practice class actions law could easily point to a number of representative plaintiffs that, intuitively, feel undercompensated by the prevailing system that treats them identically to absent members of the class in terms of their compensation. Certainly I have felt in some cases that certain individuals have sacrificed so much, and so publicly, on behalf of people they have never met, that even from the defendant’s side of the table it seemed intuitively wrong to see them go home with less than what they achieved for some of their peers. This intuition has been reflected in a number of decisions authorizing honoraria: payments to a representative plaintiff augmenting their compensation as class members with modest additional amounts recognizing the extent of their additional efforts.
The Divisional Court has recently released a decision in Doucet v. Royal Winnipeg Ballet, 2023 ONSC 2323 reinforcing that these payments will be appropriate and authorized in certain cases, setting out the test to be followed in assessing whether or not a representative plaintiff’s contribution was sufficiently exceptional to warrant approval of an honorarium; and if so, at what quantum. In so doing, it overturned the decision of Justice Perell below, reported at 2022 ONSC 976, in which His Honour had regretfully concluded that as a matter of principle honoraria should not be granted regardless of the exceptional merit of some of the representative plaintiffs that have appeared before him.
Like Justice Perell, I have ‘approved’ honoraria in the past by including them in my settlement agreements. The amounts at stake are comparatively trivial, and in many cases the representatives have undergone some substantial hardship. Also like Justice Perell, however, upon reflection I am compelled to conclude that the practice should not have been continued.
This is, of course, a purely academic exercise on a settled issue. Because hearings on honoraria, like hearings of settlement approval motions generally, are not adversarial in nature, there is no one incentivized to appeal a decision favoring the plaintiff any further. For the same reason, it is unlikely that this matter will come before the Divisional Court again anytime soon.
To date, and in the leading decisions engaged on the topic, the debate seems to have been centered around assessing the incentives honoraria provide to representative plaintiffs. On that point, I have to confess that I am not an economist. Unlike some of my peers at the bar, I do not have the qualifications to assess the policy value of introducing honoraria into our class actions system, whether in exceptional circumstances or as a matter of course; or in a compensatory billed-hour model or one contemplating a nominal award. I am even less qualified to assess what dollar value would be appropriate in these cases. Those analyses seem to me more of a system of multifactorial policymaking than adjudication.
As a result, my inclination when respected authorities starkly disagree on a matter of pure principle, even when they are internally motivated to agree, is to steer clear of an outcome-based analysis and break the legal issue down to first principles. What emerges from that analysis is, in my view, a relevant point that appears to have been overlooked in the analyses to date. I will leave an analysis of the new regime as a whole for a future paper, and for the moment focus on the outcomes of that first-principles analysis.
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