An Ontario Superior Court justice has found that the class action lawsuit brought against Deloitte LLP by lawyers who had reviewed documents for the firm constituted a success for the plaintiff class, and he has granted the representative plaintiff for the class a cost award.
Deloitte was hit with the $384-million class action in March 2015 on behalf of at least 418 lawyers who worked at a document-review company, ATD Inc., that Deloitte had acquired the previous year. The lawyers claimed they were improperly classified as contractors rather than employees of the company and, pursuant to Ontario’s employment standards legislation, they sued for unpaid overtime, vacation and statutory holiday pay. The class was certified on Jan. 16, 2018.
In his decision delivered on March 7, Justice Paul Perell of Ontario’s Superior Court of Justice granted a reduced portion of the plaintiffs’ request for costs on a partial indemnity basis for the certification motion.
Representative plaintiff Tarrie Phillip had asked for a cost award of $480,170, which Perell reduced to $353,791. The cost award requested was calculated at 60 per cent of the reduced docketed time expended on the certification motion.
Deloitte had asked for a cost award to the plaintiff class of $90,000 and that that award be further reduced to around $72,000 to reflect Deloitte’s cost of cross-examining the first representative plaintiff, who was rejected by the court.
Justice Perell wrote in his decision that "Deloitte’s objections to Mr. Phillip’s costs claim were very substantially weakened because Deloitte did not disclose how much time its lawyers expended on the run-up to and completion of the certification motion."
At the same time, Perell rejected the plaintiff’s argument that Deloitte had unnecessarily driven up the costs of certification.
“The certification motion was straightforward only in the sense that there were no complex factual and legal issues and no expert evidence filed,” he wrote. “Deloitte was entitled to resist certification, and while that resistance was unsuccessful, it was not frivolous or vexatious . . . ”
Deloitte also argued that the plaintiff’s cost award should be reduced because there was divided success on the certification motion, as Deloitte had successfully argued that the first representative plaintiff, lawyer Shireen Sondhi, was unsuitable, and she was subsequently removed. But Perell rejected this argument.
“That the action that was certified was narrower than the action that was initially proposed and that it took two rounds to find a suitable Representative Plaintiff is not cause for a distributive costs award,” he found.
This finding reflects the principle that “if you do win the war, there may be a few bumps along the road, but they shouldn’t be held against the successful party when they achieve what they set out to achieve,” says Andrew Monkhouse of employment law firm Monkhouse Law in Toronto, who represents the class along with Samuel Marr of Landy Marr Kats LLP in Toronto.
“Not every cause of action will be certified or endorsed,” Monkhouse told Legal Feeds. “That doesn’t mean there’s divided success. That would be a good key takeaway for people looking at this cost decision.”
Perell also rejected Deloitte’s argument that Phillip, the representative plaintiff, was not sufficiently well prepared or taking the case seriously. It is the job of the plaintiff’s counsel, not the plaintiff, to study and prepare for certification and presentation of the case before the courts, Perell noted.
In this class action lawsuit, though, the elephant in the room is who may provide legal services. Neither party in this case is arguing that the lawyers who conducted document review for Deloitte were engaged in the provision of legal services. Currently, only firms owned by lawyers may provide such services. In 2014, the Law Society of Upper Canada (now the Law Society of Ontario) dismissed a complaint by the class’s first representative plaintiff, who described herself as an “independent contractor” performing document review services for Deloitte that included tasks properly performed only by lawyers.
“I do think it’s part of a larger issue,” Monkhouse says. “Shireen Sondhi first started a claim with the law society saying [she was performing] legal work, and after the law society told her no, she started this class action. It’s regulatory inaction that sparked this.
“As lawyers in Ontario, we need to be concerned with what is legal work,” he says, and whether the public interest is being served by who is performing it. “The Law Society of Ontario decides that. It’s a live issue that’s being debated, and it’s a sub-context of this whole document review issue.”
Many lawyers in this class were upset, he says, because on the one hand they were told that they needed to be members of the bar and insured by LawPRO, the errors and omissions insurer owned by the Law Society of Ontario, in order to perform the document reviews, “but they were also told that high school students could do this work.”
The number of lawyers in the class could reach 450 at some point, Monkhouse predicts. “If you get 450 lawyers upset, someone’s going to do something about it. But I do think it's an underlying regulatory issue.”
Counsel for Deloitte declined comment while the matter is before the courts.