A Futures Market for Class Actions

 The futures market has long been a place where investors act as intermediaries between producers and suppliers of raw goods, and the manufacturers who require those raw goods. Futures markets can exist for any situation where agreements are made today based on promises of future performance, projections and expectations.[1] A law suit is conceptually not terribly different, in that when an action is brought, it is done so not only because of a wrong, but with an expectation of remedy, which can be estimated based on myriad factors, and where performance by the defendant can be promised to the plaintiff by way of court order.

Due to many inherent features of class actions, they lend themselves quite nicely to third party investment,[2] and successively, a futures market. The class is made up of many smaller plaintiffs, which have come together with the expectation that collectively, they will be able to obtain a remedy from a common defendant. Upon first consideration, there would seem to be many issues, both practically and legally with the notion that class actions would make for a good venture which could be traded on a futures market; however, further consideration into the proposition shows that class actions may actually benefit from investment and subsequently, the investor’s ability to buy and sell their positions in an action on a futures market. 

WHY A FUTURES MARKET OVER SIMPLE THIRD PARTY FUNDING

While it would be possible to simply allow a third party to invest in a class action without a futures market, in order to incent the type of investor who would be both willing and capable of moving an action forward, the investor would also need to know that they can exit the investment at any time by selling the investment to someone else. The price a current investor can reasonably expect to be paid when selling any investment to the next investor is based largely on the amount of return, or profit with a discount based on time and costs, that the next investor can be expected to gain from the investment. In a class action, the gain would, by necessity, be based on the expected amount of an award (less various payouts) from the action; this premise means the investors are essentially trading in something that closely resembles the future performance of their investment. Plainly, the judgement amount cannot be a positive foregone conclusion, but when the investor trades in commodity futures,[3] the profit margin is not a certain amount either; the reason why people take the risk and invest is for the possible upside, which is based on combinations of information available and knowable relevant factors.

It would likely be very difficult to attract an investor to the litigation if the investor were not also able to resell their position in the action should their interest, preferences, or even level of satisfaction with the overall performance change. The concept is as simple as asking someone if they would buy a property presently, knowing that they would never be permitted to sell it, almost certainly the responses from the majority of potential purchasers would be in the negative.

WHAT THE FUTURES MARKET IS AND HOW IT WORKS

At its simplest level, the futures market is where investors buy and sell contracts of goods for future delivery, where delivery is generally considered to be the performance of the contract, or at the very least, the point at which money would change hands. Both producers (or suppliers) and manufacturers desire a level of predictability when it comes to revenue and costs, and the investor partaking in the futures market allows for both of those things.[4] 

To illustrate how the futures market works, consider an example of the type of contracts and future performance that arises in relation to the corn yield from a particular farm. The farmer may enter into a contract with a purchaser, the investor, for the entire yield of the farmer’s corn fields for the season at a fixed price for the crop, where a typical yield is 171 bushels per season.[5],[6],[7] The investor, as the purchaser of the corn from the farmer, is typically not the end user of the product, and will have also made subsequent sale agreements to sell the bushels of corn on to other parties based on the price the investor had originally predicted each bushel would cost the investor to buy; these other parties, or manufacturers, generally require the corn as a raw input good, but could, in practical application, be any party desiring the purchase of corn at a predictable or fixed price. Then, suppose that the corn farming season experienced optimal weather conditions such that it was possible for the farmer to harvest a greater number of corn bushels, which means that the investor, who guaranteed by way of contract a price for the entire yield of the crop, will now have paid less per corn bushel, or unit. The investor, now having paid the farmer less per unit, is able to garner a larger margin of return per unit on their subsequent contracts of sale to the manufacturing parties, as well as on the surplus of corn bushels the investor is now be able to sell on the open market at the current market price. The investor here, has been rewarded for his assumption of risk in guaranteeing the farmer a fixed price for his crop, and in making deals for future delivery of corn (performance) where the ability to perform is heavily influenced by the farmer’s crop. 

Understandably, had the farmer’s yield not been as high as anticipated, it is also possible for the investor purchasing from the farmer to lose money on the subsequent sale agreements, or even be forced into an efficient breach of contract on many of the subsequent sale contracts. In the unfavourable-to-the-investor scenario, the farmer will still have made the revenue he originally contracted for with the investor, and the manufacturers who contracted a purchase agreement with the investor, in theory, will have still been able to obtain their required units of input (corn) at the contracted price, but the investor will have garnered a lower profit per unit, or possibly even a loss on some bushels depending on the surrounding factors. It is also possible, depending on how the investor contracted with the various manufacturers, that the investor could be forced to either breach some contracts, or acquire the corn from elsewhere such as on the open market at the current market price, which could be higher or lower than the investor’s original contract price with the famer, in order to fulfill his contractual obligations of the subsequent sale agreements made with the manufacturers. 

We can see how the investor bears all the risk arising from the crop yield and relating market price fluctuations, while the farmer and manufacturer using the corn (raw good) enjoy the benefit of predictability by way of contract. While it would be possible for both the farmers and manufacturers to make many individual deals throughout the market themselves, levels of predictability have a value, and that value can be equated to the amount of profit the investor gains at the closing of his position when the contract is performed.

The investor in the example is also able to sell his position between the farmer (producer) and the manufacturers (users) to other investors, should other investors be interested in taking on the risk for the possibility of profit. The other investors can, and may, offer prices based on how much profit they think will be realized when the subsequent sale contracts for the raw goods are ultimately performed; the offering of those prices for the position is how the market is created. The same contracts can be bought and sold on the futures market several times up until the expiry date of the futures contracts; the expiry dates will coincide with the anticipated performance dates of the contracts. It should be noted that a futures markets can exist in any situation where more than one contract exists for the purchase and sale of raw goods or other widgets, and where a period of time shall elapse between when the agreements are made, and when performance of the contracts occurs. Futures markets began around raw agricultural goods and mined materials such as ore, but over time, futures markets in currencies, financial instruments, energy and even debt have emerged.[8]

HOW A FUTURES MARKET FOR CLASS ACTIONS COULD BE STRUCTURED

In order for the notion of a class actions futures market to work beneficially, a need exists for there to be a pre-defined way or at the very least, some guidance for how the investor could appropriately enter into the litigation process. Remembering that investors will need to be incented with the possibility of profit as just illustrated. The easiest way for the investor to gain the formal entrance, is for the investor to buy each potential plaintiff or class member’s position within the claim, that is, to compensate the potential plaintiffs, with the possible exception of the representative plaintiff(s). Each of these smaller claims would then be considered as pooled with the other claims, much the in same way as a bushel is created, such that the investor is holding the majority units of claims, where each unit of claim is associated with a harm that resulted by way of the defendant.

The investor buying their way in is, in essence, not terribly different to when the defendant settles portions of the class or a sub-class as the action moves closer to trial. However, when the investor has bought up the positions of each plaintiff, rather than the defendant settling portions of the claim, the investor can still pursue the defendant to recover for the value which the investor has already paid out; therefore, the defendant can still be forced to internalize the externality[9] they created, plus a premium for doing so. The premium paid by the defendant in theory being large enough to have the effect of modifying future similar harm-causing behaviours. In this way, as the investor has paid for the crop of corn, and will seek to cover that cost on the subsequent resale, the investor has financially invested himself into the class, and will seek to cover his costs in his next dealing while hopefully also finding remuneration for his assumption of risk.

While there are any number of specific ways an investment in a class action could be structured for a futures market, for the purposes of illustration and conceptual understanding of the premise, a possible structure at the simplest level could be derived along the following lines with certain basic information: 

o  Knowing that class members will have a base level, or low-end threshold tolerance limit of compensation they either believe they ought to receive, or need to recover from the action to compensate their situation; projection or estimation of the amount is possible based on the plaintiff’s individual influencing variable factors.

o  For an action to be considered, we would know there exists a possibility of an award; possibilities include the award being for a greater or lesser amount than the projected amount depending on any number of case specific factors which may overlap with any given plaintiff.

o  Allow an investor to pay out individual class members at a negotiated and agreed upon dollar amount based on the various plaintiff’s threshold level of compensation and estimated award. 

o  The exception to the payout scheme by the investor that may be required to exist relates to the representative plaintiff plus one. In order to maintain the status of a class as defined by the class proceedings acts in the various jurisdictions, a certain number of individuals (such as the representative plaintiff plus one in British Columbia) may need to remain attached as the action moves forward.[10]

o  Now, let the investor take the litigation through the court system to the appropriate end.

Essentially what would happen within this structure is that the investor will have covered the claims for the majority of the identifiable members of the class while still allowing an action that can proceed to be maintained via the representative plaintiff plus one.[11] This ensures the class members of the funds they desire, or require, to compensate them for their experienced harm, as well as taking into consideration the foreseeable and possible risks associated with pursuing action,[12] much the way the farmer, or producer, is assured of a price for their crop. 

This proposed structure would also ensure the defendant incurs an appropriate penalty for the harms they have caused; by way of the investor taking up the litigation with the intention of continuing with it until its natural end, the defendant would be unlikely to be able to escape either by way of blackmail of or sweetheart deal with individual plaintiffs.[13] The incentive of profit to the investor, being the spread between the initial compensation values paid out to class members and the eventual award, ensures that both a timely, and likely more reasonable payment to the victims, as well as the application of penalty to the defendant are possible; the alternative, leaving the class action to proceed in the traditional fashion, or along a standard course of procedure could lead to an incorrect legal result when the defendant looks for early settlement options or vulnerabilities among the plaintiffs to achieve premature settlement.

While it has previously been considered that the lawyers or the legal team of the class retain some similarities to an investor,[14] this does not necessarily have to be the case. An investor can actually be anyone willing to assume the risk; in the futures market, the investor really could be anyone, and in all likelihood, will probably be a non-lawyer or at the very least, a non-practicing lawyer. The investor does not need to have an intimate understanding of the case, merely an interest in taking on the risk in the interest of a potentially net-beneficial result upon the conclusion of the litigation.

THE CLASS MEMBERS’ POSITION IN THE LITIGATION, OR NOT

At this point it should be noted that the investor involvement is possible regardless of formal removal of individual plaintiffs. Either, the investor can compensate the class member and the class member can withdraw from active participation at that time, or, the investor and the class member create a contract of their own between them whereby the investor can pay a negotiated amount to the class member now and the class member agrees to pay the investor the class member’s portion of the damages award in full in the future.[15] Which specific avenue is likely to be pursued by an investor may ultimately fall with which option the courts will allow; if the court is insistent that the victims remain attached to the claim, clearly the latter option will be the way to go about investor entry, but if the court is willing to accept the investor as a more appropriate plaintiff than the class, then the former option is certainly simpler.

Class actions generally have a representative plaintiff, and as per section 4 of the British Columbia Class Proceeding Act, the representative plaintiff plus one, is a requirement of what constitutes a class for the purposes of certification.[16] Therefore, when looking at the investor’s involvement, there are two options, the investor can either be a silent party, occupying the places of the class members the investor has already compensated, or, there could exist an additional agreement between the investor and the representative plaintiff surrounding who is to direct counsel and act in the best interest of the class. Plainly, if the investor has acquired the position of the majority of the class by way of compensating the victims, if the action were a company itself, the investor would be the majority shareholder and would be the party making decisions about the course of litigation.

BEHAVIOUR MODIFICATION OF THE CORPORATION AND THE CLASS ACTION

One of the primary goals of tort law is behaviour modification; the other main goal being some form of recovery by the victim for a harm they have suffered. Arguably, behaviour modification should be the primary goal of tort law, for without a behaviour in need of modification, there would be no wrong or harm which could result in a cause of action and therefore no case to bring forward, meaning recovery for the would-be tort victim is a non-issue. Tort law exists because parties commit actions that result in a harm being caused to someone else. In a world where the optimists[17] and socially conscious rule, there would likely be an absence of behaviours that would require modification, and therefore also their resulting harms; in instances where the undesirable behaviours would occur, they would likely fall into the de minimus range, which in turn means there would likely be no need for tort law. Luckily enough for tort lawyers, the world in which we live comes with many non-criminal harms committed on a variety of scales, including mass harms which can give rise to a class action, some of which could be appropriate for investors and the futures market.

Mass harms that tend to come with the types of defendants worth pursuing will have a tendency to be of a tortious nature and committed by corporations during the course of conducting their business.[18] Plainly, a defendant who does not have any money or is otherwise capable of evading payment to plaintiffs is often not worth pursuing. When considering the corporations as a tort-feasor, we can understand the harms created by them as tending to fall into two broad, though rather unofficial, categories. The first being torts the corporation is aware exist, but that the corporation does not take steps to prevent; these are generally the type of harms where it is practically and economically desirable for the corporation to allow the harm to occur and subsequently pay the cost of the harm to the victim. In other words, it is more cost effective to simply pay for the litigation and probably also the remedy rather than taking an alternative action. The other type of torts being of the more traditionally thought of nature where something unanticipated or unplanned for has occurred, causing an unintentionally resulting harm for which a victim can seek recovery.

It is easily understandable that not all mass wrongs that could give rise to class actions are torts; it is possible for a company to be in breach or contravention to a standard form contract that it has engaged in with a multitude of parties, such as a licensing agreement, or perhaps to be operating against legislation or other public policy, both of which could easily give rise to actions arising from forms of economic loss.[19]

Regardless of how a harm is categorized, due to the very nature of a corporation, it is entirely possible, indeed even highly probable, that the harm has not been limited to just one individual, but that the same harm has occurred multiple times and in myriad instances. Individuals, be they tort-feasors or otherwise, can generally be thought to be aware of the harmful actions they commit, and almost certainly once they have been served a notice of claim, they will be aware of which actions have brought the suit upon them; but corporations are not individuals, even though we treat them as a person with status under the law.[20],[21],[22] In many corporations, the decisions to act which give rise to an interaction between the corporation and an outside party, are typically fairly removed from the person with whom the corporation interacts. This means that the person in a decision making position who issued the instructions that ultimately gave rise to the harm causing action may have no direct knowledge of the effects of their decision.[23]

It is probably a fair statement to say society generally would tend to prefer the public not fall victim to harms resulting from corporate actions, whether the corporation was aware of the harm or not. Therefore, when dealing with corporations, it would be reasonable to say that behaviour modification is of a higher degree of importance, relatively speaking, than compensation of the victim. As the aim of a corporation, via its directors and officers, is to act in the best interests of itself,[24] which, without going into a lengthy discussion on corporate law or the Canada Business Corporations Act, is generally considered to be ultimately the returning of a profit. Simply put, if the aim of an entity is to make a profit, than the way to modify the behaviour of that entity, is to affect their profit generating potential.

TYPES OF SUITS THAT GIVE RISE TO CLASS ACTIONS AND THE CORPORATION

Knowing that the types of torts corporations are capable of committing rarely only affect one person, and that on a broad spectrum, the type of harm will be unlikely to have a material variance between tort victims,[25] it is not unreasonable to say that if a corporation has committed a tort against one, there are likely to be others, therefore constituting a class by way of the required commonality as outlined, for example, in the British Columbia Class Proceedings Act.[26] Plainly, each potential plaintiff will have their own uniqueness which the corporation’s lawyers will be looking to emphasize such that many individuals will be able to be excluded from the class; but realistically, if a person has become a tort victim of a particular corporation’s action, the victim ought to share enough essential commonalities with other victims of the same tort in order to have put that particular person in the position of the tort victim in the given instance, and therefore, a member worthy of inclusion in the class.

As previously discussed, when it comes to the types of harms that make for reasonably viable class actions, there are a hand full of varieties that can fall under two main types, of which, the differences between them have little bearing on whether the action moves forward.[27] That is to say, whether the mass harm is one the corporation knew about, or if the harm is of a medical or a consumer transactional nature, or any other case specific variant does not have bearing on the procedural steps that must be taken in moving the action forward so long as a proper cause of action exists.[28]

The key structural element that gives rise to the creation of a class for the purposes of a class action is either, that the potential plaintiffs cannot afford to litigate the matter themselves, or that potential recovery is unlikely to be greater than the cost of litigation for any individual plaintiff. However, when the would-be plaintiffs are taken collectively, they can enjoy the economies of scale available from their commonalities.[29]

As already mentioned, a corporation’s main aim is to produce profits for its shareholders[30],[31] and as the corporation is not a human,[32] there are a limited number of ways to incent or control the corporation’s behaviour; the majority of feasible options of course involving some influence or impact on the corporation’s profits, which can include everything from a direct monetary penalty to the company’s ability to carry on business. It would be reasonable to understand that the corporation lacks the capacity to have a general preference to avoid causing the harms in the first place, and so, in the absence of preference, behaviour modification is needed in specific forms pertaining to profits. It is important to remember that in fact, a corporation, as an entity, is emotion neutral even though the directors, officers, and owners likely will not be. Furthermore, even though the corporation’s directors and officers may have emotions and preferences relating to the externalities of the corporation’s action, taking action that is in keeping with their preferences may not be in the best interest of the corporation, and so, are unlikely to be executed for possibility of being in contravention of the CBCA.[33]

THE EMOTIONAL PLAINTIFF BENEFITS THE DEFENDANT

In light of the imbalance that exists between the corporation and the plaintiff class created by a factor as basic as emotional attachment, in order for the plaintiffs to begin an action with a level position against a corporation, the plaintiff class would need to also be emotionally neutral. As the plaintiff class is, of course, comprised of the victims, emotional influence is invariably connected. The easiest solution to remove emotion from the plaintiff class, is to remove the plaintiffs themselves, substituting them with a single representative party that does not have a personal attachment. Arguably, the representative plaintiff is meant to fill this position; however, for the very reasons of commonality required among the plaintiff class, such as those in BC,[34] there are still inescapable influences that are likely to accompany the representative plaintiff’s decisions. The primary issue being that while the representative plaintiff is meant to represent the interests of the class and generally direct counsel with a view to the best course of action for the class, the representative plaintiff, as a victim of the harm, still comes with an emotional attachment and a personally vested interest in the outcome. The other weighty issue is how the representative plaintiff may handle settlement negotiations given the representative plaintiff’s predispositions and external life influences. Therefore, if the representative plaintiff is not truly a reasonable stand-in for the class, where the aim is to remove emotional influence with a view to creating a reasonable litigant, an alternative representative is needed. Failing either an altruistic person who has an affinity for being in the position of the representative plaintiff, or a legislative change allowing a class action to proceed as a class but without a representative plaintiff,[35] an alternate person will need to be incented to represent the class. A person who, for reasons of incentive or otherwise, takes on a position or project via the contribution of funds or other value (such as time, knowledge, or other available resources in kind) for the purposes of a net-positive result in the future, is most accurately described as an investor.[36] The investor, as a non-class member, will likely share none of the emotional attachments to the case as a victim of the harm, and so, puts the plaintiff class on more even footing with the corporation.

ALLOWING INVESTOR PARTICIPATION IN CLASS ACTIONS GENERALLY IS BENEFICIAL

Similar to matters of public interest standing where a more capable plaintiff may be allowed to proceed instead of the most correct plaintiff, here, the investor, being a more able party than the amalgamation of the victims of the harm making up the class, is able to bring the matter to the courts and see the litigation through until its natural end.[37]

Keeping in mind that the act of investing also includes the “devot[ion of] (one’s time or energy) to an undertaking with the expectation of a worthwhile result”.[38] We must remember that even though one of the primary features of an investor is the capital contribution they bring, the investor brings other resources as well. Investors tend to bring personal connections to other resources and sources of information which may prove to be useful in the search for the truth of the matter in preparation for trial.

We should be aware of the reality that commercial defendants, especially those worth pursuing, often have vastly superior resources than the plaintiffs’,[39] when a majority of the plaintiff class has an impending need of the funds or are afraid of how the litigation might turn out, the class may be inclined to take a lower settlement from the defendant than what the action would otherwise garner and as a result, the case may not be properly litigated; emotional parties thereby causing a lack of appropriate precedent creation, or not addressing a matter or known harm that ought to be dealt with before it has a chance to snowball. With the investor occupying the place of the plaintiffs and lacking the emotional element, the action stands a chance of proper litigation and a more correct legal result. Allowing the investor to get involved may also serve as an indicator of how strong the case actually is; it would be unlikely that an investor will want to take up the position of the class if the litigation is likely to fail.

Additionally, and perhaps more obviously, litigation is expensive both in real dollars as well as in time and personal non-monetary costs. Parties of the plaintiff’s class may not be willing or able to last the length of the litigation process and therefore opt out of the class early when the defendant approaches key plaintiff parties to either discourage their continued participation or to make them an attractive offer.[40] It is not difficult to see in the case of an environmental harm where an illness has resulted, that plaintiffs most affected by the defendant actions are also likely to be the most interested in a speedy end to the process for want of funds to pay for treatment.

The intentions of punitive damages are to penalize the defendant for their behaviour, thus encouraging modification of the behaviour, and not to compensate the plaintiff;[41] any award over and above the special and general damages, which would land with the investor would seemingly be an appropriate allocation of funds if we would truly prefer the plaintiffs to not benefit from litigation but simply to be restored. The aforementioned negotiated and agreed upon dollar compensation paid from the investor to the plaintiff class should be reflective of a combination of both special and general damages as well as the economic value the plaintiffs place on a predictable and ‘for sure’ dollar amount now as opposed to the possibility of an unknown amount of dollars in the future. In the hypothetical yet simplistic structure outlined above, the dollars from the judgement flow from the defendant to the investor well after the plaintiff class has been compensated and generally ‘removed’ from the action; if justification for why this direction of dollar flow is acceptable is needed, one can think of the award to the investor as compensation for time, resources, and any other factors the investor has advanced in the interest of litigating the particular issue. In this way, all parties will have ended up with the appropriate allocation of the award; the victims will have received a value equivalent to what they believe their general and special damages to be, and the investor will have been rewarded for taking the risk by way of the punitive amount. 

As mentioned, corporations are at a unique advantage in the litigation arena against individual or groups of persons as corporations are generally not emotionally invested in the outcome; by allowing an investor to take over the action, the playing field has been leveled in favour of the plaintiff-side since there are now two unemotional entities actually just arguing over the facts and law.

Allowing for investing in class actions could truly be of greater benefit to more people because the investor who has taken on the action will have compensated the plaintiffs in advance of the case actually being litigated. This returns us to the notion of the benefits of predictability that class members, as potential plaintiffs, can garner a certain level of enjoyment or comfort in knowing they have received an amount of compensation for their claim, even if the case is never actually litigated.

THE INVESTOR SOLVES ISSUES WITH NATIONAL CLASSES AND PLAINTIFF LOCATING

One of the greatest benefits of the investor involvement in class actions is actually for the courts as national classes present their own unique set of challenges. By allowing the investor to take on the position of class members across the country, levels of overall efficiency can be raised in that both time and money are saved. When the investor occupies the position of the class, multiplicities of filings and court appearances in different jurisdictions can be removed.[42] Plainly, the investor is not interested in needlessly expending resources for the purposes of re-litigating the same action across the country in each available jurisdiction, and more importantly, nor would they reasonably be permitted to do so. While a result in one jurisdiction can often be fairly determinative of a result in another, there are still resources expended and various parties time taken up needlessly. It would be far more efficient and reasonable to deal with would-be multiple classes in the various jurisdictions as sub-classes of the national class when the action runs into jurisdictional differences relating legislation.

Potential plaintiffs would also have the ability to simply approach one investor in order to have their position compensated, rather than finding a lawyer who would be willing to take up the class in their particular jurisdiction. Then the value of the compensated plaintiff’s unit of harm could be added to the value of the existing pooled national class. 

The investor, who will undoubtedly want the size of their investment, being the class of potential plaintiffs, to be as large as possible in an effort to maximize the return, is likely to undertake measures to find victims of the harm. Essentially, due to the interests of the investor, the act of locating the class members will likely end up being an undertaking of the investor pre-trial, rather than the conventional adverts and notice postings carried out by the defendant, as a result of the settlement agreement or judgement, post trial. Again, this would suggest that the investor ought to receive the benefit of finding the class; while the defendant usually ends up paying these costs, as they rightly should, the plaintiff’s counsel or plaintiffs themselves would typically have to put out the initial capital[43] to locate the class members.

Further, the investor, holding the national class, would also be likely to have a deterrence effect on parasitic action fillings. As plaintiffs, generally being considered risk averse, are more likely to prefer the certainty of compensation in the present as opposed to the risk no compensation in the future, plaintiffs could reasonably be expected to have a preference for joining the investor’s national class as opposed to an unaffiliated lawyer engaging in parasitic fillings, thereby substantially reducing the need for carriage motions.[44] Parasitic filings are a waste of time and other resources for the courts, as well as counsel for the defendants and the other plaintiffs who may have already filed. Plainly, the investor would also always be so likely to win any carriage motions for the reasons of “number, size and extent of involvement of the … representative plaintiffs … and the resources and experience of counsel.”[45] We can reasonably assume that the investor will assure the most appropriate counsel is retained, such that the investor has a reasonable probably for a chance of success.

For obvious reasons, the National Class Action Registry[46] could prove to be of great assistance for class actions already benefiting from the investor; when new potential class members learn of the action and are interested in joining a class, there already exists a method by which to locate the appropriate other parties. While this possible usage of the National Class Action Registry is realistically no different than how a potential plaintiff could currently go about joining a class, it would be reasonable to expect investors, again, in the interest of growing their class, to take efforts to create an awareness among the public of the Registry.

PRECERTIFICATION INVESTMENT

Naturally, investor involvement following certification of the class is a more secure investment for the investor, however, post-certification is not the only time at which an investor could choose to begin their involvement. In order for the position in the plaintiff class to be available for purchase and sale on the market, and for investor involvement generally, an initial investor will have to assemble the action by way of compensating enough plaintiffs to comprise a reasonable sized class. That initial investor is taking the biggest risk, especially when the undertaking is pre-certification, with the knowledge that the action may fail to be certified, and thus, the investor’s entire capital investment could evaporate.

The investor involvement pre-certification, while risky to the investor, arguably increases the benefits to the harmed plaintiffs, for they will have had the opportunity to receive compensation where compensation otherwise may not have been possible. The plaintiffs receiving compensation are not being unjustly enriched however, as unjust enrichment requires not only the “enrichment of the [plaintiff and] a corresponding deprivation of the [defendant]”[47] but also the “the absence of a juristic reason for the enrichment”[48], where the qualification of a “juristic reason” is one of “an explanation based upon law”[49]. In the situation of a class action which fails to be certified, a failure in certification does not mean an actionable harm or breach of legal duty by the defendant to the plaintiff was absent, but that the class failed to meet the steps for certification as required by various jurisdictions Class Proceedings Acts.[50],[51]

Investor involvement pre-certification may also serve to increase the class’ likelihood of achieving certification. The initial investor is likely to engage in those steps necessary to increase the possibility of certification in an effort to increase the security of the investment. The steps, as previously mentioned, may include greater efforts to find class members and better vetting of those that are found, but also retaining the most appropriate counsel the investor can locate, negotiating the contingency or alternate fee structure with class counsel, as well as providing other resources that may be necessary for successful certification. From a purely logical stand point, an investor is not likely to sink a bunch of capital into an investment and then sit back and hope it all works out; the prudent investor will do what they can to increase the likelihood of success of their investment, and in this case, success starts with certification of the class.

THE CLASS PROCEEDINGS FUND IS SIMILAR TO THE INVESTOR

In 1992, The Law Foundation of Ontario started The Class Proceedings Fund[52] to “[provide] financial support to approved class action plaintiffs [and indemnify] plaintiffs for costs … against them…” as “[w]ithout it, potential … plaintiffs could be discouraged from pursuing their claims.”[53] In the same way, the investor can provide the plaintiffs with financial support and indemnification against costs. However, where The Class Proceeding Fund levies an amount of 10% on any awards or settlement in favour of the plaintiffs,[54] the investor in our instance will have paid the plaintiff for their position, and so, should reasonably be able to expect, at the very least, to receive the equivalent amount to what has already been paid out as well as compensation for the investor’s time and efforts at the conclusion of the law suit, should plaintiff’s case be successful.

CY-PRèS AWARDS AND LOGISTICS OF NOT KNOWING EACH CLASS MEMBER

Plainly, not every class action will be appropriate for investment. Actions arising from economic harms are one of the excellent example candidates for the investor, where the harm may not actually be sizable enough in the amount of damage caused to an individual plaintiff for many plaintiffs to be interested in doing anything about it, but where the corporation ought to have a penalty enforced upon them. In situations where the award per plaintiff is likely to be low, plaintiffs may not have much incentive to come forward or even fill out a simple mail in form.[55] In the absence of a plaintiff to collect their portion of the settlement or award, one of two things can happen, either a cy-près[56] award can be made, or the monies remaining are transferred back to the defendant. A transfer of funds back to the defendant makes for not much of a penalty at all, and so, courts will sometimes consider the cy-près award;[57],[58] cy-près awards are not new to class actions and have been applied in the United States for longer than in Canada.[59]

We should not think of the plaintiffs as being disadvantaged in the situations where awards of a cy-près nature ultimately land with the investor. In the structure where the investor steps in to pay out individual plaintiffs’ positions, the plaintiff is neither being forced nor intimidated into settling; what the investor is offering to the plaintiff is the surety of having the funds they are after now, rather than taking the risk of none later.[60] While that might not appear to be any different than when the defendant settles a plaintiff’s position, it is different in that the investor paying a plaintiff ought to have no bearing on the strength of the case. What a plaintiff taking the offer from the investor shows is that the plaintiff needed or wanted the money now, whereas the plaintiff settling with the defendant suggests the amount settled upon is all the plaintiff believed their harm was worth, even if that is not the case. Therefore, the investor being the beneficiary of what would otherwise be the cy-près award is simply yet another form of benefit the investor ought to be able to receive as both the incentive and award for taking on the risk and pursuing the litigation. Indeed, the BC CPA section 34(4) provides that the court may make an order for unclaimed amounts “even if the order would benefit (a) persons who are not class members”.[61]

It is also of course possible for courts to make an order when the investor receives a cy-près award, that the investor create a fund with the cy-près amount such that the plaintiffs who are latent in their awareness of the litigation may have a slightly extended window in which to collect even a partial amount of the award. Thus the equitable factors surrounding the notion of an investor is raised further still. This is not to say that latent potential plaintiffs should be able to recover indefinitely, that would be both unreasonable and a major deterrent to the investor; rather than the potential plaintiff being incapable of any recovery due to their lack of proper identification in the class at the time of litigation, there may be options for recovery once the litigation has concluded.

THE RULE AGAINST CHAMPERTY AND MAINTENANCE

Champerty[62] and maintenance would prima facie seem to be the chief issue with allowing any sort of investment in, and a futures market for, class actions, but it may not be so. While the statute arises out of Ontario, it has worked its way into the common law, although not with any great success and seemingly often under a narrow reading.[63] 

The Act itself is not so easy to find, however, conveniently, in Li v Li, “[a]mongst the authorities cited by the defendants [was] An Act respecting Champerty[, and] Osgoode Hall law School has consolidated various items of Ontario law in a Digital Commons … (see 36TUhttps://digitalcommons.osgoode.yorku.ca/rso).”[64]

The Act, which many point to as the original, or founding bases of reason for disallowing investments of any kind in law suits, reads (in its entirety) as follows:

An Act respecting Champerty, RSO 1897, c 327 (“Champerty Act”)

His Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows :–

1.      Champertous be they that move pleas and suits, or cause to be moved, either by their own procurement, or by others, and sue them at their proper costs, for to have part of the land in variance, or part of the gains. 33 Edw. I.

2.      All champertous agreements are forbidden, and invalid. (Added in the Revision of 1897.)[65],[66],[67]

At paragraph 43 of Li v Li, the court goes on to note that “in more recent years Ontario’s lawyers have been permitted to participate in a contingent fee system in order to amongst other things, enable [l]itigants to participate on a bases other than advancing their own cash”,[68] which suggests that the Act is being interpreted along a fairly literal vein. Where the litigation is not without merit, the inflow of funds cannot be construed as being champertous.[69]

While champerty and maintenance are no longer crimes in Canada,[70] the long standing common law rule against champerty and maintenance would prima facie appear to exclude the possibility of investing in class actions. This common law rule, like the Champerty Act itself, is unlikely to actually apply in as many instances.[71] As Lord Denning said, “The reason why the common law condemns champerty is because of the abuses to which it may give rise.”[72] According to an 1860 decision of the Privy Council, “[champerty and maintenance] must be something against good policy and justice, something tending to promote unnecessary litigation, something that in a legal sense is immoral and to the constitution of which a bad motive in the same sense is necessary.”[73] This rule has subsequently been upheld and continues to be so, but the rule is not as wide reaching as some would think.

The rule specifically references the “promot[ion of] unnecessary litigation” and being “against good policy and justice”.[74] Which should mean, that provided the litigation is not unnecessary, as in, a valid cause of action does exist, and that the litigation does not offend good policy and justice, third-party backing of litigation would seem to not actually be against the rule of champerty and maintenance. Plainly, if the litigation were truly unnecessary, a court could dismiss the case early on with the defendant’s motion to dismiss or strike, and at which point, champerty may be advanced in the defendant pleadings. Should the court choose not to dismiss the action or strike the pleadings, then the case would seem to have passed the fundamental question of justice and whether a question ought to be litigated. Likewise, if there is a cause worth litigating, then it would also be likely to satisfy the notion of good policy to do so. In the alternative, the litigation may ultimately result in a modification of policy for the public benefit; such a change in policy can also be understood as the pursuit of good policy.[75]

A relatively recent 2005 decision from the Ontario Superior Court of Justice addressed the issues of both champerty and maintenance.[76] While the court was concerned with whether the contingency fee agreement was champertous per se, the explanation the court provides is illuminating none-the-less. The court notes that the concept of both champerty and maintenance are essentially the same as when the Act was originally written[77] and that the fundamental aim of the rule against champerty and maintenance has always been to protect the administration of justice from abuse.[78] Effectively, “[c]hamperty is an egregious form of maintenance” or “officious intermeddling” by the maintainer.[79] Where the court in Morgan v Steffanini defines maintenance[80] according to Lord Denning in Re Trepca Mines Ltd. as: “improperly stirring up litigation and strife by giving aid to one party to bring or defend a claim without just cause or excuse”[81] and that as Forgarty DCJ states in S v K, “if that interest of such party arises genuinely from an interest in the outcome, it is not maintenance.”[82] Further, the court follows Monteith v Calladine as affirmed in Buday v Locator of Missing Hairs Inc. that champerty, relatively simply put is “maintenance plus an agreement to share in the proceeds”.[83]

After some consideration of McIntyre Estate v Ontario (Attourney General) and Buday v Locator of Missing Heirs Inc. along with the cases cited within, the court in Morgan affirms four guiding principles “of the common law of champerty and maintenance:

·        Champerty is a subspecies of maintenance. Without maintenance, there can be no champerty.

·        For there to be maintenance, the person allegedly maintaining an action or proceeding must have an improper motive … There can be no maintenance if the alleged maintainer has a justifying motive or excuse.

·        The type of conduct that has been found to constitute champerty and maintenance has evolved over time so as to keep in step with the fundamental aim of protecting the administration of justice from abuse.

·        When the courts have regard to statutes … they have not interpreted those statutes as cutting down or restricting the elements that were otherwise considered necessary to establish champerty and maintenance at common law.[84],[85]

The court in Morgan goes on to distil these principles while taking guidance from McIntyre Estate, in which Abella J. (as she then was) agreed, and looked towards two factors when determining whether champerty is present:

·        The conduct of the parties involved, and,

·        The propriety of the motive of the alleged champertor[86]

Again, we cannot help but arrive at the conclusion that the motive of the investing party is what ultimately determines whether there has been an action counter to the Champerty Act, for if the investor is not motivated by an improper purpose, maintenance is absent, and then so too, is champerty.

It would seem that courts, in the contemplation of investment in litigation, have so far limited their discussion to funding by a third-party, contingency agreements, or other forms of a share in the proceeds of a successful plaintiff’s case. However, the previously mentioned option of allowing class actions to be traded on a futures market allowing for both predictability for plaintiffs and the possibility of a properly litigated claim, is not terribly different to other forms of funding agreements already being considered not champertious. Therefore, champerty is only likely to be found if, despite all of the aforementioned benefits, the courts determine that the investor lacked belief in the probability of success or underlying merits of the primary cause of action itself, being the harm incurred.

Plainly, in order for an investor to take on the litigation, the investor would have to believe in the merits of the cause of action.[87] Prudent investors are not apt to invest their time, money or other resources in a venture they do not believe will be successful, and in instances of litigation, success requires claims to have both merit and proper purpose. If the investor did not believe in the merits of the claim, or its probabilities for success, the investor would not undertake to support the bringing of suit. Admittedly, the investor will be incented to participate on the plaintiff’s side of the class action for the profits the investor may garner, but purely the chance of profit is almost certainly not enough incentive. Proper investment is not based in chance alone, but with a mind to the purpose,[88] merits and motivation of the overall undertaking in which the investor is contributing their capital.[89] Infusing capital into a venture without having an alignment of purpose is at the very least is gambling, and nothing more than a game of chance; while taking the chance may work in games of dice and wheel-spinning, investing based on chance is patently foolish[90] when complex issues are present and adjudication based on the merits is to be conducted by learned third parties who, by design, are in positions fairly well insulated from influence. For a simple example of this concept, consider an investment of capital into Ford Motor Company; plainly, both the investor and Ford Motor Company want more people to buy Ford products. It would be absurd to suggest that the investor ultimately wants anything extraneous from an investment into Ford Motor Company than what the company itself is pursuing. In the same way the investor has an aligned interest in the result of an undertaking as Ford Motor Company, the investor in the class action must have an aligned interest with the plaintiffs whose position the investor supports.

THE CLASS PROCEEDINGS ACT

In British Columbia, the Class Proceedings Act,[91] contains provisions relating to class members beyond merely the representative plaintiff(s). Other provinces, of course, have Class Proceedings Acts[92],[93] as well, all of which are very similar to each other and which may pose similar issues. However, the issues should not prevent the entertainment of the notion of compensating the majority of the class by the investor; the presence of the investor does not prevent the information from any individual class member from being obtained nor the overall pursuit of justice. Much the same way as witnesses are generally not also considered a party to an action, but the information they hold is still considered accessible by the court should the information be of material relevance, so too would be an already compensated (possibly former) class member.[94] 

Interestingly, the Class Proceedings Act does not deal directly with any form of investing in the litigation process. Section 15 of BC’s Class Proceedings Act, Participation of class members, does note that “to ensure the fair and adequate representation of the interest of the class … the court may, …, permit … members to participate in the proceeding.”[95] BC’s section fairly closely echoes Ontario’s Participation of class members section of their Class Proceedings Act.[96] Plainly, if the class members are no longer participating in the action, their participation may be complicated to achieve, though participation is not impossible; in many class actions, the entirety of the class is not known even at the time of trial and so, not any class member could be called to participate in those instances either. Furthermore, if a victim did strongly want to participate in the action, and their contribution would be useful to the plaintiff’s case, it would seem unlikely that the investor would object to such participation if the court had already agreed.

Section 4 of the BC CPA, Class certification, states that the class must be certified if “all of the following [conditions] are met”.[97] Among those conditions, the ones that could cause issue for allowance of an investor are section 4(1)(b) “there is an identifiable class of 2 or more persons”[98] and section 4(1)(c) “the claims of the class members raise common issues…”.[99] While section 4(1)(b) does not explicitly specify that (a member of) the identifiable class must bring the action, when read in combination with section 2(2)[100] of the BC CPA (“[t]he person who commences a proceeding under subsection (1)” where 2(1) says “[o]ne member of a class of persons who are resident in British Columbia …”[101]), it is not difficult to understand that the intent is that the class of plaintiffs, via the representative plaintiff, bring the action. If the action were not against an emotionally void and personally detached corporation, that may be an acceptable way to understand the BC CPA, but as previously addressed, the playing field is not level at the start when the plaintiff class is comprised of victims.

NOT EVERY CLASS ACTION AND NOT EVERY INVESTOR

While it is understandable that not every class action will make an appropriate investment or be suitable for trading in a futures market, those actions that would make good candidates for such an undertaking could certainly experience many aspects of benefit. Similarly, due to the nature of the type of undertaking a class action would likely be, requiring more involvement than perhaps the typical futures investment, not every investor will be attracted to such a venture. We can think of this particular type of investment and market as more of a niche and for a particular type of investor which would be likely to self-select. 

As the public deals with ever more large multi-national corporations which are seemingly unaware of the harms they cause, and the costs of legal services increase, it would behoove the legal profession to reconsider their instinctual response to capital contributions to litigation by seemingly unrelated third-parties.[102] Plainly, if the litigation is already on track to proceed towards and through the court system, a third-party can hardly be seen as stirring up litigation and strife. In light of the conceivable benefits available to the potential plaintiffs, including the ability for the victims to mitigate further risk or perhaps protect themselves from further risk entirely, the investor should be not only allowed, but encouraged to contribute to the plaintiff’s action. With regard to the notions of the most capable party to carry through the litigation and being a more appropriate plaintiff, if anything, disallowing investors, and the accompanying futures market, from stepping in, is manifestly disadvantageous to the victims of mass harms.

In many areas in life, investors help achieve what otherwise may not be possible, and class actions are no different.

BIBLIOGRAPHY

JURISPRUDENCE

Buday v Locator of Missing Heirs Inc., 1993 OCA, 108 DLR (4th) 424.

Dugal et al v Manulife Financial Corporation et al, 2011 ONSC 1785, 105 OR (3d) 364.

Fischer v Kamala Naicher, [1860] 19 ER 495.

Hill v Church of Scientology of Toronto (1995), 2 SCR 1130, 56 ACWS (3d) 495.

Jiang v Peoples Trust Company, 2017 BCCA 119.

Joel v Menu Foods Genpar Ltd., 2007 BCSC 1428, 163 ACWS (3d) 21.

Li v Li, 2016 ONSC 7410 at 40, 274 ACWS (3d) 512.

McIntyre Estate v Ontario (Attourney General) (2002), 218 DLR (4th) 193, 116 ACWS (3d) 527.

McSherry v Zimmer GMBH, 2012 ONSC 4113, 226 ACWS (3d) 351.

Monteith v Calladine (1964), 47 DLR (2d) 332.

Morgan v Steffanini, 2005 ONSC.

Newswander v Giegerich [1907] 39 SCR 354.

Re Trepca Mines Ltd. [1962] 3 All ER 351.

S v K (1986) 55 OR (2d) 111.

Salomon v Salomon & Co [1897] AC 22 (HL (Eng)).

Schenk v Valeant Pharmaceuticals International Inc., 2015 ONSC 3215.

Syncrude Canada Ltd v Hunter Engineering Co (1989), 1 SCR 426, 35 BCLR (2d) 145.

VitaParm Canada Ltd. v F Hoffmann-La Roche Ltd. (2000) OJ 1-1 ACWS (3d) 472.

Whiten v Pilot Insurance Co, 2002 SCC 18, [2002] 1 SCR 595.

LEGISLATION

An Act respecting Champerty, RSO 1897, c 327.

British Columbia Business Corporations Act, SBC 2002 c 57.

Canada Business Corporations Act, RSC 1985.

Class Proceedings Act, RSBC 1996, c 50.

Class Proceedings Act, SA 2003, c 16.5.

Class Proceedings Act, SO 1992, c 6.

Criminal Code, RSC 1985, c 46.

 SECONDARY SOURCES: BOOKS & MONOGRAPHS

Canada Business Corporations Act & Commentary, (Markham: LexisNexis Canada Inc., 2015).

The Canadian Securities Course (Toronto: Carswell Printing, 1967).

The Canadian Securities Course, Volume I (Toronto: CSI Global Education Inc., 2010).

The Concise Oxford Dictionary, 10th ed.

Pocket Dictionary of Canadian Law, 5th ed.

Boies, Wilber H. & Latonia Haney Keith, “Class Action Settlement Residue and Cy Pres Awards: Emerging Problems and Practical Solutions” (2014) 12:2, Va L Rev 267 at 270 (36Thttps://www.vjspl.org/wp-content/uploads/2014/03/3.25.14-Cy-Pres-Awards_STE_PP.pdf36T).

Hay, Bruce & David Rosenberg. “Sweetheart and Blackmail Settlements in Class Actions: Reality and Remedy” (2000) 75:4 Notre Dame L. Rev. 1377.

Jones, Craig E. Theory of Class Actions (Toronto: Irwin Law Inc., 2003).

Puri, Poonam. “Financing of Litigation by Third-Party Investors: A Share of Justice?” (1998) 36:3 Osgood Hall LJ 515.

Puri, Poonam et al. Cases, Materials and Notes on Partnerships and Canadian Business Corporations, 5th ed (United States: Carswell, 2011).

Samuelson, Paul A & Anthony Scott. Economics, An Introductory Analysis (Toronto: McGraw-Hill, 1966) at p 649.

Walker, Janet et al. The Civil Litigation Process, Cases and Materials, 8th ed (Toronto: Emond Montgomery Publications Limited, 2016) at 297.

SECONDARY SOURCES: ARTICLES & ONLINE

“An Act respecting Champerty” (Ontario: Statutes at Osgoode Digital Commons 1980) online: <36Thttps://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=2129&context=rso36T>.

Bentham IMF “Maintenance and Champerty” (30 August 2016) online: <36Thttps://www.benthamimf.ca/legal-landscape/maintenance-and-champerty36T>.

“Canadian DRAM Class Action”, online: <36Thttps://www.themoneyismine.ca/36T>.

Law Foundation of Ontario, “Class Proceedings Fund”, online: <36Thttps://www.lawfoundation.on.ca/class-proceedings-fund/36T>.

The Canadian Bar Association “Class Action Database” online: <36Thttps://www.cba.org/Publications-Resources/Class-Action-Database36T>.

Baert, Kirk. “The case for cy-près distributions”, Canadian Lawyer (24 June 2013) online: <36Thttps://www.canadianlawyermag.com/4696/The-case-for-cy-pres-distributions.html36T>.

Investopedia “Futures Contract”, online: <36Thttps://www.investopedia.com/terms/f/futurescontract.asp36T>.

Fodden, Simon. “1275 and the Business of Law”, Slaw (2 January 2008) online: <36Thttps://www.slaw.ca/2008/01/02/1275-and-the-business-of-law/36T>.

Grey, Jeff. “The risky business of investing in lawsuits”, The Globe and Mail, (2012 June 26), online: <36Thttps://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/the-risky-business-of-investing-in-lawsuits/article4372582/36T>.

Guyer, Paul & Rolf-Peter Horstmann. “Idealism”, online: 2015, Stanford Encyclopedia of Philosophy <36Thttps://plato.stanford.edu/entries/idealism/36T>.

Laurer, Joe. “Methods for Calculating Corn Yield”, (2002 January), Agronomy Advice, online: <36Thttps://corn.agronomy.wisc.edu/AA/pdfs/A033.pdf36T>.

Maverick, J.B. “What types of futures contracts are typically sold on an exchange?” (18 March 2015), Investopedia, online: <36Thttps://www.investopedia.com/ask/answers/031815/what-types-futures-contracts-are-typically-sold-exchange.asp36T>.

Murphy, William J. “U.S. Commercial Bushel Sizes”, (17 July 2001), Agricultural Publication G4020, online: <36Thttps://www.unc.edu/~rowlett/units/scales/bushels.html36T>.

Niedoba, Sarah. “How companies are using “litigation financing” to invest in winning lawsuits”, (2016 November 17), online: <36Thttps://www.canadianbusiness.com/innovation/litigation-financing/36T>.

Thiesse, Kent. “USDA crop report increases yield”, (2015 October 13), Corn+Soybean Digest, online: <36Thttps://www.cornandsoybeandigest.com/blog/usda-crop-report-increases-yield36T>.

FOOTNOTES

[1] The Canadian Securities Course, Volume I (Toronto: CSI Global Education Inc., 2010) at 10·27.

[2] The Concise Oxford Dictionary, 10th ed, sub verbo “invest”.

[3] The Canadian Securities Course, Volume I (Toronto: CSI Global Education Inc., 2010) at 10·26.

[4] Investopedia “Futures Contract”, online: <https://www.investopedia.com/terms/f/futurescontract.asp>.

[5] Joe Laurer, “Methods for Calculating Corn Yield”, (2002 January), Agronomy Advice, online: <https://corn.agronomy.wisc.edu/AA/pdfs/A033.pdf>.

[6] William J Murphy, “U.S. Commercial Bushel Sizes”, (17 July 2001), Agricultural Publication G4020, online: <https://www.unc.edu/~rowlett/units/scales/bushels.html>.

[7] Kent Thiesse, “USDA crop report increases yield”, (2015 October 13), Corn+Soybean Digest, online: <https://www.cornandsoybeandigest.com/blog/usda-crop-report-increases-yield>.

[8] J.B. Maverick, “What types of futures contracts are typically sold on an exchange?” (18 March 2015), Investopedia, online: <https://www.investopedia.com/ask/answers/031815/what-types-futures-contracts-are-typically-sold-exchange.asp>.

[9] The Concise Oxford Dictionary, 10th ed, sub verbo “externality”.

[10] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(b).

[11] Supra.

[12] Dugal et al v Manulife Financial Corporation et al, 2011 ONSC 1785, 105 OR (3d) 364.

[13] Craig E Jones, Theory of Class Actions (Toronto: Irwin Law Inc., 2003) at 20 citing Bruce Hay & David Rosenberg, “Sweetheart and Blackmail Settlements in Class Actions: Reality and Remedy” (2000) 75:4 Notre Dame L. Rev. 1377 at 1388.

[14] Craig E Jones, Theory of Class Actions (Toronto: Irwin Law Inc., 2003) at 43.

[15] Poonam Puri “Financing of Litigation by Third-Party Investors: A Share of Justice?” (1998) 36:3 Osgood Hall LJ 515 at 531.

[16] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(b).

[17] Paul Guyer & Rolf-Peter Horstmann, “Idealism”, online: 2015, Stanford Encyclopedia of Philosophy <https://plato.stanford.edu/entries/idealism/>.

[18] Craig E Jones, Theory of Class Actions (Toronto: Irwin Law Inc., 2003) at 21.

[19] Jiang v Peoples Trust Company, 2017 BCCA 119.

[20] Salomon v Salomon & Co [1897] AC 22 (HL (Eng)).

[21] British Columbia Business Corporations Act, SBC 2002 c 57, s 30.

[22] Canada Business Corporations Act & Commentary, (Markham: LexisNexis Canada Inc., 2015) at 3.

[23] Craig E Jones, Theory of Class Actions (Toronto: Irwin Law Inc., 2003) at 22.

[24] Canada Business Corporations Act, RSC 1985, c 44, s 122(1)(a).

[25] Craig E Jones, Theory of Class Actions (Toronto: Irwin Law Inc., 2003) at 22.

[26] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(c).

[27] Schenk v Valeant Pharmaceuticals International Inc., 2015 ONSC 3215.

[28] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(a).

[29] Craig E Jones, Theory of Class Actions (Toronto: Irwin Law Inc., 2003) at 48.

[30] Canada Business Corporations Act & Commentary, (Markham: LexisNexis Canada Inc., 2015) at 86.

[31] Canada Business Corporations Act, RSC 1985, c 44, s 122(1).

[32] Poonam Puri et al, Cases, Materials and Notes on Partnerships and Canadian Business Corporations, 5th ed (United States: Carswell, 2011).

[33] Canada Business Corporations Act, RSC 1985, c 44, s 122.

[34] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(c).

[35] Class Proceedings Act, RSBC 1996, c 50.

[36] Pocket Dictionary of Canadian Law, 5th ed, sub verbo “investor”.

[37] Janet Walker et al, The Civil Litigation Process, Cases and Materials, 8th ed (Toronto: Emond Montgomery Publications Limited, 2016) at 297.

[38] The Concise Oxford Dictionary, 10th ed, sub verbo “invest”.

[39] Jeff Grey, “The risky business of investing in lawsuits”, The Globe and Mail, (2012 June 26), online: <https://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/the-risky-business-of-investing-in-lawsuits/article4372582/>.

[40] Supra.

[41] Whiten v Pilot Insurance Co, 2002 SCC 18, at para 92 [2002] 1 SCR 595 citing Hill v Church of Scientology of Toronto (1995), 2 SCR 1130, 56 ACWS (3d) 495.

[42] McSherry v Zimmer GMBH, 2012 ONSC 4113 at 89, 226 ACWS (3d) 351.

[43] The Canadian Securities Course, Volume I (Toronto: CSI Global Education Inc., 2010) at 1·6.

[44] Joel v Menu Foods Genpar Ltd., 2007 BCSC 1428 at 15, 163 ACWS (3d) 21 citing VitaParm Canada Ltd. v F Hoffmann-La Roche Ltd. (2000) OJ 1-1 ACWS (3d) 472.

[45] Supra.

[46] The Canadian Bar Association “Class Action Database” online: <https://www.cba.org/Publications-Resources/Class-Action-Database>.

[47] Syncrude Canada Ltd v Hunter Engineering Co (1989), 1 SCR 426 at para 79, 35 BCLR (2d) 145.

[48] Pocket Dictionary of Canadian Law, 5th ed, sub verbo “unjust enrichment”.

[49] Pocket Dictionary of Canadian Law, 5th ed, sub verbo “juristic reason”.

[50] Class Proceedings Act, RSBC 1996, c 50, s 5(7).

[51] Class Proceedings Act, SO 1992, c 6, s 5(5).

[52] Law Foundation of Ontario, “Class Proceedings Fund”, online: <https://www.lawfoundation.on.ca/class-proceedings-fund/>.

[53] Supra.

[54] Supra.

[55] “Canadian DRAM Class Action”, online: <https://www.themoneyismine.ca/>.

[56] Pocket Dictionary of Canadian Law, 5th ed, sub verbo “cy-pres”.

[57] Class Proceedings Act, RSBC 1996, c 50, s 34.

[58] Kirk Baert, “The case for cy-près distributions”, Canadian Lawyer (24 June 2013) online: <https://www.canadianlawyermag.com/4696/The-case-for-cy-pres-distributions.html>.

[59] Wilber H Boies & Latonia Haney Keith, “Class Action Settlement Residue and Cy Pres Awards: Emerging Problems and Practical Solutions” (2014) 12:2, Va L Rev 267 at 270 (https://www.vjspl.org/wp-content/uploads/2014/03/3.25.14-Cy-Pres-Awards_STE_PP.pdf).

[60] Paul A Samuelson & Anthony Scott, Economics, An Introductory Analysis (Toronto: McGraw-Hill, 1966) at p 649.

[61] Class Proceedings Act, RSBC 1996, c 50, s 34(4).

[62] An Act respecting Champerty, RSO 1897, c 327.

[63] Poonam Puri “Financing of Litigation by Third-Party Investors: A Share of Justice?” (1998) 36:3 Osgood Hall LJ 515 at 525.

[64] Li v Li, 2016 ONSC 7410 at 40, 274 ACWS (3d) 512.

[65] Supra.

[66] “An Act respecting Champerty” (Ontario: Statutes at Osgoode Digital Commons 1980) online: <https://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=2129&context=rso>.

[67] Simon Fodden “1275 and the Business of Law”, Slaw (2 January 2008) online: <https://www.slaw.ca/2008/01/02/1275-and-the-business-of-law/>.

[68] Li v Li, 2016 ONSC 7410 at 43, 274 ACWS (3d) 512.

[69] Buday v Locator of Missing Heirs Inc., 1993 OCA at 35, 108 DLR (4th) 424.

[70] Criminal Code, RSC 1985, c 46, s 9(a).

[71] Bentham IMF “Maintenance and Champerty” (30 August 2016) online: <https://www.benthamimf.ca/legal-landscape/maintenance-and-champerty>.

[72] Re Trepca Mines Ltd. [1962] 3 All ER 351 at 355.

[73] Newswander v Giegerich [1907] 39 SCR 354 at para 19 citing Fischer v Kamala Naicher, [1860] 19 ER 495.

[74] Supra.

[75] Poonam Puri “Financing of Litigation by Third-Party Investors: A Share of Justice?” (1998) 36:3 Osgood Hall LJ 515 at 528.

[76] Morgan v Steffanini, 2005 ONSC at para 9, Carswell 9030.

[77] Supra.

[78] Supra.

[79] Morgan v Steffanini, 2005 ONSC.

[80] Supra, at para 9.

[81] Re Trepca Mines Ltd. [1962] 3 All ER 351 at 355.

[82] Morgan v Steffanini, 2005 ONSC citing S v K (1986) 55 OR (2d) 111 at 117.

[83] Buday v Locator of Missing Heirs Inc., 1993 OCA at 35, 108 DLR (4th) 424.

[84] McIntyre Estate v Ontario (Attourney General) (2002), 218 DLR (4th) 193, 116 ACWS (3d) 527.

[85] Buday v Locator of Missing Heirs Inc., 1993 OCA, 108 DLR (4th) 424 citing Monteith v Calladine (1964), 47 DLR (2d) 332.

[86] Morgan v Steffanini, 2005 ONSC at para 10, Carswell 9030.

[87] Poonam Puri “Financing of Litigation by Third-Party Investors: A Share of Justice?” (1998) 36:3 Osgood Hall LJ 515 at 529.

[88] Pocket Dictionary of Canadian Law, 5th ed, sub verbo “improper purpose” and “purpose”.

[89] The Canadian Securities Course, Volume I (Toronto: CSI Global Education Inc., 2010) at 1·5.

[90] The Canadian Securities Course (Toronto: Carswell Printing, 1967) at 45.

[91] Class Proceedings Act, RSBC 1996, c 50.

[92] Class Proceedings Act, SO 1992, c 6.

[93] Class Proceedings Act, SA 2003, c 16.5.

[94] Class Proceedings Act, RSBC 1996, c 50, s 17.

[95] Class Proceedings Act, RSBC 1996, c 50, s 15(1).

[96] Class Proceedings Act, SO 1992, c 6, s 14.

[97] Class Proceedings Act, RSBC 1996, c 50, s 4.

[98] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(b).

[99] Class Proceedings Act, RSBC 1996, c 50, s 4(1)(c).

[100] Class Proceedings Act, RSBC 1996, c 50, s 2(2).

[101] Class Proceedings Act, RSBC 1996, c 50, s 2(1).

[102] Sarah Niedoba, “How companies are using “litigation financing” to invest in winning lawsuits”, (2016 November 17), online: <https://www.canadianbusiness.com/innovation/litigation-financing/>.