It's Settled — The Binding Nature Of Class Settlement Agreements

It is a common feature of class certification and settlement that many class members will be unaware of the existence of either. While adequate notice of certification and settlement is a mandatory requirement under class action legislation, the binding nature of each is not dependent on actual notice to each and every class member.

Two recent cases involving class settlement agreements illustrate this point and highlight the importance of carefully scrutinizing the terms of the release when class members who did not opt out later seek to bring individual claims.

3113736 Canada Ltd. v. Cozy Corner Bedding Inc., 2020 ONCA 235

The respondent, Valle Foam, pleaded guilty to charges under the Competition Act and entered into an agreement to settle a class action on terms that did not include any payment to the class. Immediately after it agreed to settle the class action, Valle Foam filed for CCAA insolvency protection.