Trudelle c. Ticketmaster Canada, 2024 QCCS 3853, involved a class action against Ticketmaster and certain insurance companies. The defendants sold event ticket protection insurance in an allegedly “misleading and deceitful manner” in violation of Quebec’s Consumer Protection Act and the Competition Act.
The class was said to contain more than 300,000 potential class members. The settlement agreement entered into was for $3.3 million. Class counsel had asked the court to approve fees of $990,000, and a preliminary payment of $500,000 was approved. Class counsel sought the additional fees in the amount of $490,000.
By the July 2024 claims deadline, 65,859 class members submitted a claim, which represented $1,961,309.23 and a take-up rate of 21.43 per cent. The administrator sent these claimants e-transfers totaling that amount. Of these, 61,399 class members (93.27 per cent) deposited the transfers and $796.35 in cheques were deposited.
The mandate between the plaintiff and class counsel provided for payment of 30 per cent of the sum received. It seemed to “imply that the percentage should be calculated on the amount received by Class Members as if all of them had presented a claim.”
However, it did not provide “that the percentage should apply to the total amount paid by Defendants.” Class Counsel submitted that the percentage should apply to the global settlement fund (i.e. $3,300,000), assessed at $990,000.
The court found that class counsel fees should be based on the amount that was eventually distributed to the class as this was “more respectful of the nature of contingency agreements, the ethical obligations that apply to class counsel and the duty of the Court to protect the interests of absent class members.”
Class counsel “acknowledged that the language used in his mandate was taken from the template mandate provided by the Barreau du Québec on its website,” which confirmed the view that the percentage should apply to sums that benefit the client as it stipulated.
Class counsel also submitted that “applying the percentage to the Settlement Fund is consistent with article 593 C.C.P., which states that professional fees are to be ‘out of the amount recovered collectively or before payment of individual claims.’”
The court disagreed as “the fact that the professional fees must be paid ‘out of’ the Settlement Fund does not mean that it should be calculated ‘on’ the amount of the Settlement Fund.” Further, it was noted that the reasonableness of the fees should be assessed in relation to what class members gain from the action. It was noted that clients pay fees based on what they receive.
This interpretation was also said to be consistent with lawyers’ ethical obligations. A decision applying class counsel percentage to disbursements or settlement administration costs was said to be beneficial to the lawyer but detrimental to class members.
The court also found that it is appropriate to decrease class counsel fees “where a portion of a settlement fund would be distributed cy-près,” as was true for the case at hand.
Applying the percentage to what the class members received ensured that class counsel “will oppose roadblocks that make it difficult for class members to submit claims” and would also incite them to “remain engaged throughout the claims’ process to make sure that more class members actually benefit from the settlement or judgment obtained.”
It was noted that the number of class members who presented a claim could reflect the fact many believed they were not actually deceived or the amount they were entitled to was not worth the effort, thus making the value of the settlement the $1.9 million amount.
“To take this into consideration, the Court divides the $1,961,309.23 by 0.7, which represents $2,801,870.33 and applies the 30 per cent to that number, which arrives at $840,561.10. This adjustment reflects that the class receives $1,961,309.23 net of Class Counsel Fees ($2,801,870.33 minus $840,561.10).”
Justice Martin Sheehan concluded that the percentage would be applied to the class benefit (the amount distributed to the class members). The administrator was directed to pay an additional $340,561.10 plus applicable taxes.
As well, the administrator was to “withhold 50 per cent of the first $99,000 of the balance remaining (after payment of Class Counsel Fees and final distribution of sums to the Class Members) plus 60 per cent of the balance between $100,000 and $200,000 as a deduction for the benefit of the Fonds d’aide aux actions collectives.”
Further, the administrator was ordered “to pay one-half of the amount held after payment of the FAAC levy to each of the charities designated by the parties in the Settlement Agreement.”
Counsel for the plaintiff were Joey Zukran and Léa Bruyère of LPC Avocats.
Counsel for the defendants were Christopher Richter and Rosalie Jetté of Torys LLP.
Counsel for Fonds d’aide aux actions collectives was Nathalie Guilbert.
If you have information, story ideas or news tips for Law360 Canada on business-related law and litigation, including class actions, please contact Anosha Khan at anosha.khan@lexisnexis.ca or 905-415-5838.