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mitment owed to putative class members.37 Counsel must be mindful of the
duty of commitment described in Singh and take care not to negotiate a settlement
for a proposed representative plaintiff that prejudices other members
of the putative class.38
POTENTIAL LIABILITY TO PUTATIVE CLASS MEMBERS
The fact that court approval of settlements and discontinuances is not mandated
by the CPA until after certification may create the false impression
that counsel in British Columbia may assist representative plaintiffs in
entering into out-of-court pre-certification settlements without running
afoul of duties to the putative class, including for settlements at a premium
to the representative plaintiff’s actual loss. Yet the policy rationale for
requiring court approval of settlements is equally applicable to class proceedings
in British Columbia, and there is no principled reason to determine
that the rights of putative class members are not engaged in a
proceeding filed under the CPA before certification. Judicial opinions on
counsel’s sui generis duty to putative class members and the courts’ emphasis
on protecting the interests of absent class members make it eminently
conceivable that our courts would recognize a novel cause of action in negligence
for breach of counsel’s sui generis duty by orchestrating a settlement
to the prejudice of the putative class.39 Effecting settlement before certification
without court approval or notice to putative class members could further
be seen as exploiting an oversight by the B.C. legislature to the
detriment of putative class members.
In a 2010 paper, Ward K. Branch, Q.C. (prior to his appointment to the
B.C. Supreme Court) and Luciana Brasil described the “range of tactical and
ethical quandaries” that can arise when counsel for a representative plaintiff
in an uncertified class action receives settlement offers and warned that
“both defendant’s and plaintiff’s counsel would be well advised to ensure
that absent members of the inchoate class will not otherwise be prejudiced
by discontinuance of the action, and, in particular, that plaintiff’s counsel
have not privately benefited at the expense or to the exclusion of the class”.40
In considering the tactical and ethical quandaries of pre-certification settlements,
counsel should be aware of British Columbia’s unique legislation
respecting class action settlements and ensure a proposed settlement complies
with counsel’s sui generis duty to putative class members. Counsel
should consider applying to the B.C. Supreme Court under its inherent
jurisdiction to approve a settlement and/or providing notice of the proposed
settlement to absent putative class members. Failing to do so risks
exposing counsel to liability in negligence for breach of their sui generis duty