In a recent decision, Cameron-Gardos v. Crawford and Company (Canada) Inc., 2024 ONSC 700, Justice Perell heard a rare motion for leave to sue a class action administrator. In addition to reviewing the applicable law, Justice Perell’s decision offers several takeaways concerning claims against class action administrators.
Background
The plaintiffs were class members in a tainted blood class action that obtained Court settlement approval in 2007. The Settlement Agreement and its compensation scheme were based on complex actuarial predictions, and class members could file claims for several forms of compensation.
In 2009, the plaintiffs filed claims under the Settlement Agreement, which was administered by the defendant claims management company, Crawford and Company (Canada) Inc. To seek compensation for economic losses, the plaintiffs were required to elect between receiving a fixed sum or having their claims assessed and paid out of a segregated $93 million fund. The plaintiffs made the latter election, allegedly based on representations from Crawford that this election would result in a “significantly larger compensation amount”. However, the segregated $93 million fund proved to be insufficient to cover all the claims for economic losses and became insolvent. Ultimately, the $93 million fund was distributed pro rata, which reduced the plaintiffs’ compensation by approximately 80%.
After receiving their (diminished) compensation, the plaintiffs commenced a claim against Crawford, asserting claims for breach of contract, negligence, and breach of fiduciary duty in respect of the approximately $400,000 in settlement funds that they had not been paid. As Justice Perell explained:
… the essential allegation of wrongdoing is that Crawford – which as Administrator would necessarily have known that the PELD Fund was insolvent with no assurances that there would be a rescuing surplus from the general Compensation Fund – was advising Mr. Cameron-Gardos and Ms. Cameron about elections about compensation. Knowing what it knew, allegedly Crawford was organizing futility.
Please log in to read the full article.