User:Oceanflynn/sandbox/AG Canada vs MLG

AG Canada vs Merchant Law Group (MLG) is a lengthy multi-year lawsuit launched in January 2015 by the Attorney General of Canada on behalf of the federal government against Tony Merchant's Regina, Saskatchewan-based law firm—Merchant Law Group (MLG)—which stemmed from the 2006 Indian Residential Schools Settlement Agreement (IRSSA). Merchant Law Group, has been described as a "class action firm" and, according to a CBC report, Anthony Merchant, "is known as the king of class action lawsuits in Canada." The case was first launched in Regina, Saskatchewan—one of the nine judicial centres of the Court of Queen's Bench for Saskatchewan, a superior trial court. The choice of trial location of the trial is based on which judicial centre is nearest to the place "where the action arose" or where the defendant carries on business or resides. Appeals of a Queen's Court's decision can be heard by the highest court of Saskatchewan, the appellate court known as the Court of Appeal for Saskatchewan. Any further appeals are heard by the Supreme Court of Canada. The 2015 case against MLG was first launched at the Queen's Court, and appealed at the Court of Appeal before it was heard by the Supreme Court of Canada in 2018.

Merchant Law Group LLC

According to official website of Tony Merchant, Q.C. and Merchant Law Group LLP, the firm represented about fifty per cent of "all known individuals in Canada pursuing class action lawsuits" against the Canadian federal government as survivors of residential schools. In November MLG and "other groups negotiated a National Settlement with the Canadian Government...which provided $1.9 Billion in compensation for Common Experience Payments". MLG also negotiated about $3 billion in compensation through the Independent Assessment Process (IAP) which is for "Survivors who suffered sexual and serious physical abuse."

Background

According to a May 19, 2016 Aboriginal Peoples Television Network (APTN) report, in the late 1990s and early 2000s, lawyer Tony Merchant was a "familiar figure" at gatherings of residential school survivors, where he signed up over 7,000 clients for a class action lawsuit. The lawsuit had a "settlement-driven legal fees arrangement", where lawyers from the Merchant Law Group (MLG) received "nothing until a class action settlement was secured".

In Regina, Saskatchewan, on December 15, 2006, Justice Dennis Ball, approved the "settlement of class and individual residential school claims" under the Indian Residential Schools Settlement Agreement (IRSSA). The $5-billion IRSSA, which was intended to "resolve claims of abuse" at over 130 residential schools in Canada, is "believed to be the largest class-action settlement in Canadian history" according to CBC News.

The federal representative for the Canadian government signed the IRSSA "with a clause that allowed it to require proof from Merchant that showed it had indeed done at least $25 million worth of work on the file."

When the IRSSA was finalized, Anthony Merchant submitted a claim of $80 million for MLG's legal services on behalf of survivors, to retired Supreme Court of Canada justice Frank Iacobucci—retained as federal representative in the IRSSA negotiations. Merchant's invoice and documentation had raised the suspicions of the former justice.

During the approval hearing for the settlement in Saskatchewan, lawyers for the federal government argued that the "agreement did not require that it pay Merchant Law Group a minimum of $25 million."

Justice Dennis Ball disagreed and "found the amount reasonable, noting that substantial time had been spent on the case and the complexity of the litigation." Justice Ball ruled that MLG was "entitled to a minimum of $25 million and a maximum of $40 million for its work, pending verification."

In March 2007, the Saskatchewan Court of Appeal dismissed Canada’s appeal. In December 2007, Canada argued in court that it "shouldn’t have to pay Merchant until a verification process to review the firm’s billing records was complete."

In 2008, Justice Neil Gabrielson ruled that the "verification process was not complete but that Canada must pay."

The Court of Queen's Bench for Saskatchewan in December 2009 ruled that MLG had to provide Ottawa with "an extract of its electronic billing records, without client names or personal information". MLG submitted records but they were never "deemed unacceptable by the government." By January 2014, Deloitte had completed their investigation of the records MLG had to provide.

In January 2015, after MLG's billing records database had been disclosed and reported by Deloitte, Justice Canada lawyers filed a new lawsuit, alleging that MLG had committed “fraud, fraudulent misrepresentation and deceit” during the negotiation of IRSSA. In their January 27, 2015 Statement of Claim, commencing the lawsuit, they filed for "$25 million plus interest since the date of payment, over what it claims were inflated legal fees" stemming from MLG’s 1997-2005 work" for survivors of the residential schools clients under the IRSSA. and should pay back legal fees to the Canadian government." The federal government said that an outside auditor who reviewed the MLG's IRSSA work, "had spotted alleged irregularities from MLG", which included "billing for excessive hours." The law suit says that "A large proportion of [MLG]'s time entries were intentionally inflated, duplicated or simply fabricated." MLG denied all the allegations.

On January 30, 2015 MLG said that the Group had filed a $20 million counter claim at the Court of Queen's Bench against the federal government, claiming that the government had "disclosed no reasonable cause of action, was scandalous, vexatious and was an abuse of process." MLG said that "the government claim filed on January 27, [2020] is simply a regurgitation of a position they have been putting forward to judges since 2007."

In April 2016, the AG's lawyer Kelly Keenan appeared before three Appeal Court judges of the Saskatchewan Court of Appeal and said that the federal government "would not have entered into an agreement a decade ago to pay the firm $25 million if it had known there were concerns about how much time the company spent working on residential school claims."

In a 69-page January 25, 2016 ruling of the Regina Court of Queen's Bench, Justice Brian Barrington-Foote struck down the federal government's case in which it had tried to "claw back $25-million" from MLG. Justice Brian Barrington-Foote dismissed Canada's claim, saying Canada "did not have the information it now claims to have about Merchant’s billing records, but that it was well aware of the possibility there had been misrepresentations and agreed to pay $25 million regardless." He said that "Canada nonetheless chose to make that bargain. It did so in order to conclude the settlement despite its serious concerns as to the ‘accuracy and veracity’ of Merchant’s representations." In his ruling, Justice Barrington-Foote said that the the IRSSA had "provided that one of the law firms which had played an extraordinary role in advancing the cause of residential school survivors — the Merchant Law Group LLP — would be paid by far the largest fee."

In October 2016, the government of Canada appealed Justice Barrington-Foote January 2016 decision.

On August 10, 2017, Saskatchewan Court of Appeal Justices Ralph Ottenbreit, Peter Whitmore and Jacelyn Ryan-Froslie ruled that the federal government could appeal Justice Barrington-Foote's striking out of its claim against MLG.

On March 15, 2018 the Supreme Court of Canada declined to strike down the fraud action against MLG in a Supreme Court case Merchant Law Group LLP v. Attorney General of Canada on behalf of Her Majesty the Queen in Right of Canada.The federal government can continue with its damages suit against Merchant Law Group.

Other MLG IRSSA and class action cases

On August 2, 2018, the Supreme Court of Canada dismissed Merchant Law Group (MLG)'s appeal to retain $21,310.83 of a residential school survivor’s compensation" for "outstanding legal bills." The survivor's January 2014 $93,000 IRSSA Independent Assessment Process (IAP) compensation is protected under a 2006 Supreme Court of British Columbia the IRSSA and the Financial Administration Act. Under that Act, lawyers are "expressly forbidden to assign any part of IAP compensation"..."because IAP claimants were considered especially vulnerable." Since 2000, MLG had represented the client and her son. The adjudication secretariat routinely checking IAP files found the deduction for the previous legal bills." MLG was told to return the money. and MLG was told to pay that money back. MLG appealed to retain the money for the legal fees.

In a November 2015 ruling in McCallum-Boxe v. Sony, Justice Edward Belobaba of the Ontario Superior Court, said that the "settlement-driven legal fees arrangement" used by the class action law firm, MLG, were the "very antithesis of what is in the best interests of the class." Justice Belobaba said that because "MLG had no written retainer agreement, no contingency fee arrangements, did not require the class to pay any fees or costs whatsoever and intended to recover its legal fees from defendants as part of settlement agreements," which encourages "encourages only a minimal commitment on behalf of the class leading to sub-optimal settlements negotiated by class counsel who are primarily interested in recovering a generous legal fees payment." He added that, "because every dollar that can be deducted from the class members' settlement amount is a dollar that can potentially be added to class counsel's legal fees amount." Kirk Baert of Koskie Minsky agreed with Justice Belobaba that, MLG's approach in the Sony PlayStation class action lawsuit for example, "clearly accomplished nothing for the class but demanded that the defendant pay a huge fee. The defendant rightly resisted that request and the court backed them up. To not have a signed retainer agreement in a class action in 2015 does not meet the standard one would expect of a firm with the experience of the Merchant Law Group. According to the judge, it’s not an isolated phenomenon."

However, according to Canada's online law magazine SLAW, said that, "While there are many unsavoury and arguably unethical practices for which Merchant may be justly criticized, this fee arrangement does not merit the same level of excoriation." According to SLAW, in the United States, "there is no written fee agreement between class counsel and the rep plaintiff". The court awards the fee, just as Justice Belobaba awarded MLG its $30,000 fee, "superfluous."