Alberta Court of Queen's Bench Finds Conflict of Interest for Class Counsel Also Representing Individual Claims

May 16, 2022

Written By Niall Fink, Keely Cameron and Justin Lambert

In Smith v Lafarge Canada Inc, 2022 ABQB 289 [Smith], the Court of Queen's Bench considered a preliminary application arising out of a proposed class action which involved claims advanced on behalf of the proposed class as well as individual claims specific to the proposed representative plaintiff. The Court found that the individual claims should be stayed pending certification and found an inherent conflict in counsel for the proposed class also representing the proposed representative plaintiff with his individual claims. The case demonstrates a strong presumption that class counsel should not act for plaintiffs in pursuing individual claims related to the class action before or after certification.

Background

Smith, a former employee of Lafarge Canada, brought an action on behalf of all current and former Lafarge employees, alleging that Lafarge underpaid amounts due to employees under employment standards and purposely omitted information from pay statements, depriving employees of the information required to ascertain whether their pay was properly calculated. The plaintiff also advanced an individual claim that he had been terminated on the basis of his age, constituting discrimination on grounds prohibited under the Alberta Human Rights Act.

Before the certification application could be heard, counsel for Lafarge applied to sever the age discrimination claim from the class proceedings, stay its prosecution to avoid overlapping claims, and have the employee's lawyer of record removed from either the discrimination claim or the class claim to avoid a conflict of interest.

Not Similar Enough to Join the Class Action

Key to the decision in Smith was whether the discrimination claim constituted a discrete claim, and not (as the plaintiff argued) an individual issue that would be resolved in the ordinary course of a class action.

Justice Eamon acknowledged that individual issues may arise in class proceedings. Conflicts of interest arising from individual issues are inherent in class proceedings, and may be justified by the objectives of the Class Proceedings Act in promoting access to justice, behaviour modification and judicial economy.

However, Justice Eamon found that the plaintiff's individual claim for discrimination lacked sufficient connection to the common issues of fact or law for the proposed class. Since the class included employees of various ages, age discrimination was not a common fact among all class members. As for issues of law, Justice Eamon found that a claim for age discrimination could only give rise to discrete damages under the Alberta Human Rights Act, which lack any obvious link to the common issues of systematic underpayment or mental distress arising from wrongful termination. The age discrimination claim bore only superficial connection to the class claims, and as such was discrete and severable.

Without dismissing the possibility that in some cases it might be desirable for separate individual claims to be tried within a class action, Justice Eamon indicated that joining separate claims inherently causes delay, expense and undue complication, contrary to the objectives of the Class Proceedings Act—indicating a strong presumption against joining claims. In the absence of any compelling reason to join the claims other than cost savings to the plaintiff, Justice Eamon ordered that the discrimination claim be stayed pending the outcome of the certification decision.

Not Different Enough to Avoid a Conflict

Justice Eamon found that the inherent nature of a class action creates sufficient risk of a conflict to bar counsel from joint representation of both the proposed class and individual claims.

Justice Eamon followed the lead of B.C. and Ontario courts in finding that class counsel assumes a solicitor-client relationship with members of a certified class. The relationship is akin to a joint retainer, with the important distinction that class counsel may not be able to fully communicate the potential for conflicts with all members of the class—particularly before the class has been certified, and the class members identified.

In Singh v RBC Insurance Agency Ltd, 2020 ONSC 5368 [Singh], Ontario's Superior Court recently removed a plaintiff's lawyer from representing the same client in both a significant individual action for wrongful dismissal and a proposed class action. While Singh and the cases it relied upon involved identifiable conflicts between the individual and the class, no clear conflict was identified in the Smith decision.

As Justice Eamon explained at paragraphs 62-63:

… Settlement negotiations are a significant consideration, because settlement discussions could occur early, even before the hearing of the certification application (as s 4 of the CPA contemplates), and many class actions eventually settle following certification. A lawyer must advise and encourage a client to compromise or settle a dispute whenever it is possible to do so on a reasonable basis....

…Combining resolution of separate claims with class claims may be in the interests of the holder of the separate claim but not in the interests of those holding only class claims. A lawyer representing both interests cannot reasonably advise on the best settlement strategy in the circumstances of this case.

On the basis of this potential for conflict, Justice Eamon ordered that the plaintiff's counsel of record be removed from either the class action or the discrimination claim, at the plaintiff's choice.

While class actions may lead to cost sharing and efficiency, Smith demonstrates that a plaintiff who decides to proceed with a class action should be aware that a different lawyer will be required for other claims against the same defendant and as a result, consideration should be given as to whether individual claims should be advanced in separate proceedings.

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