UK funder Therium approved to finance $12-billion class action against Amazon
Funding firm’s potential fees capped at $100 million in alleged price fixing claio
The Federal Court of Canada has given the green light to U.K.-based Therium Litigation Finance Atlas AP IC to finance a $12-billion price-fixing class action against online retailer Amazon and several of its affiliates.
Under the terms of the litigation finance agreement approved by Federal Court Chief Justice Paul Crampton, Therium could collect as much as $100 million, but lawyers involved say the contract also provides for one of the largest advances of funding ever in a Canadian case.
However, the exact amount available to the plaintiffs will not be made public after the judge agreed the information is commercially sensitive and should remain confidential.
“I have concluded that it would be in the best interests of justice to approve the LFA,” Justice Crampton wrote in his April 15 ruling. “Among other things, the LFA is necessary to facilitate access to justice by the Class Members, it is fair and reasonable to current and prospective Class Members, it will make a meaningful contribution to deterring wrongdoing, and it will protect the interests of the defendant.”
David Wingfield, a partner at Strosberg Sasso Stutts LLP, tells Court Report Canada the decision is more evidence that this country’s class action regime is entering a new stage of development.
“Canada is coming of age when it comes to large sophisticated class actions, and part of that process is to recognize that sophisticated funders who are providing enormous amounts of capital require certain commercial terms to make their investment worthwhile,” says Wingfield, who argued the LFA approval motion on behalf of the plaintiffs. “I think the courts are recognizing this reality.”
“This is a substantially different way of thinking about class actions than when they first arose 30 years ago,” he adds, acknowledging that lawyers have long been expected to bear the financial risk of prosecuting class proceedings themselves.
“It’s obvious that for any sophisticated class action, lawyers aren’t providing the capital,” Wingfield says. “They can’t, so third party litigation funding is necessary to ensure access to justice.”
According to Justice Crampton’s ruling, the proposed Amazon class action alleges the retailer breached criminal prohibitions in the federal Competition Act in its agreements with third party sellers, allegedly fixing retail e-commerce prices.
Three groups of plaintiffs are identified in the proposed class action: anyone in Canada who purchased a product on an Amazon site; anyone who purchased Amazon’s own products on one of their sites; and anyone who purchased products from any non-Amazon website.
The LFA was signed in December 2020 – following three months of negotiations – when Therium agreed to provide the plaintiffs with certain redacted amounts for disbursements, as well as coverage for awards of adverse costs or security for costs, up to certain undisclosed limits.
Should the claim succeed, Therium will be reimbursed for its advances, and receive the larger of five times its committed funds or 10 per cent of the claim proceeds, up to a cap of $100 million.
Amazon took no position on the LFA, but Tom Curry – managing partner at Lenczner Slaght LLP – was appointed amicus curiae to assist the court. In submissions, he wrote that the plaintiffs were unlikely to get a better deal than the one on the table, and that the LFA could “level the playing field” with an opponent who would spare no expense to protect itself.
However, Justice Crampton took issue with the potential funding fee Therium stood to receive in the event of a recovery at the lower end of the scale. If the class is awarded less than $150 million, the LFA, combined with the 25-per-cent contingency fee due to plaintiffs’ counsel would leave “only a trivial amount” for the class members, the judge noted.
At Justice Crampton’s prompting, the plaintiffs obtained an amendment to the LFA alleviating his over-compensation concerns, by rejigging the priority over recovered funds to provide class members with an entitlement to $19 million immediately after Therium’s reimbursement for advanced funds.
After approving the LFA, Justice Crampton addressed what he called a “troublesome” aspect of the motion:
“In brief, the Court was essentially presented with a ‘take it or leave it’ proposition,” he wrote, warning that the court is not a “rubber stamp.”
“It is not prudent to expect that the Court will approve a proposed LFA without requiring certain modifications,” Justice Crampton added, urging class counsel and litigation funders to prepare a “plan B” to account for the possibility of judicial concerns.
“An even better way in which to proceed would be to structure proposed LFAs in a manner that more fairly calibrates and balances the returns to the litigation funder, class counsel and class members along the continuum of possible outcomes,” the judge concluded.
Wingfield says the court has a meaningful role to play and that Justice Crampton’s comments should be read in the context of his limited concerns about overcompensation for the funder at the low end of recovery.
“I would not want it to be interpreted by another judge to mean that negotiations take place from scratch at the funding approval hearing, because that would make the process largely unworkable,” he says.
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