Merchant Law Group - GLGI Fees
The Claim: In 2016, after the Tax Court of Canada found that the Global Learning Giving Initiative tax shelter (the “Gift Program”) was a sham, Merchant Law Group LLP (“MLG”) commenced the Piett Action, a proposed Saskatchewan class action, on behalf of individual donors who participated in the Gift Program.
The action against MLG alleges that MLG, Mr. Piett and others commenced a campaign to convince Gift Program participants to “sign up” for the Piett Action by paying a fee of $500 to MLG. As part of its campaign, MLG (directly and also indirectly through its proxy Donors4Donors), represented that:
- affected individuals could only be part of the Piett class action if they signed up with MLG;
- in order to sign up, individuals had to make a “retainer” payment of $500 to MLG;
- these payments would be used to pay Merchant Law Group’s fees and expenses in the Piett action; and
- individuals who did not make the payment might “technically” be part of the Piett class action, but they would receive less notice and information than those who did pay.
In fact, affected individuals do not have to “sign up” to participate in Canadian class actions because they are automatically included if they meet the class definition, unless they choose to exclude themselves by opting out. MLG’s misleading representations resulted in over 3,500 former Gift Program participants making unnecessary “retainer” payments, totalling approximately $1.7 million collected by MLG.
When MLG applied to have the Piett Action certified as a class action, the Saskatchewan Court of King’s Bench found that the action was an abuse of process and struck it out. Among many reasons for making this decision, the Court found that MLG had been working together with individuals who were responsible for promoting/selling the sham Gift Program, in order to profit from the Gift Program participants, yet again. In particular, the Court found that MLG paid substantial finder’s fees to those individuals for each Gift Program participant that they convinced to “sign up” with MLG. As a result, most of the $1.7 million collected was paid out in finder’s fees. MLG also paid itself at least $368,700 in legal fees and expenses, for its work on another matter in which it had been retained by Mr. Piett and others. The claim alleges that the “retainer” funds were misused by MLG and should be returned to the payors.
For more information on the certified Ontario Gift Program/GLGI class action, see here.
The Class: All persons who made a retainer payment to Merchant Law Group LLP in respect of Piett v. Global Learning Group Inc., QBG 590/16 (the “Piett Action”), and excluding Lorne Piett, Randy Shoeman, Ryan Mitchell, and any Defendant or Third Party in the Piett Action or in Ontario Superior Court of Justice Court File No.: CV-17-583573-00CP (the “Class”).
November 25, 2022: Notice of Civil Claim filed in Vancouver, BC.
In late 2023, Merchant Law Group brought a court application arguing that the action should have been started in Saskatchewan, not BC. The court rejected this argument. MLG tried to appeal the decision, but the appeal was not allowed.
The Plaintiffs are now proceeding with the application for certification of the action as a class proceeding. The hearing of that application will be taking place on April 23 – 25, 2025 in Vancouver.
- Notice of Civil Claim
- Justice McCreary’s decision in Piett
- SK CA decision denying leave to appeal in Piett
- BC SC jurisdiction decision dismissing application
- BC CA jurisdiction decision dismissing appeal
What is a class action?
A class action is a special form of lawsuit in which one plaintiff brings a claim against one or more defendants based on allegations which are common to a group, or class, of people. In order for the action to become a class action, it must proceed through a stage known as “certification”.
Who brings a class action lawsuit forward?
A statement of claim is issued on behalf of a “representative plaintiff”. The representative plaintiff’s role is to work with class counsel to bring the action forward and to represent the class members in court.
What is certification?
In order for an action to proceed on behalf of the entire class, a judge must decide (among other things) whether the members of the proposed class have common issues, and whether a class action is the preferred way to resolve the issues. The process to decide these issues is known as the “certification motion”. If the judge is satisfied that the case meets all of the requirements for certification, he or she will issue an order which certifies the action as a class action.
Do I have to do anything to “join” the lawsuit?
No. If the lawsuit is certified, and you are included in the class as defined, you are automatically included in the lawsuit.
Once I am part of the class do I have to do anything?
No. We will work primarily with the class representative.
What if I do not want to be included in the lawsuit?
Those who do not wish to remain in the class will be given the option to opt-out by sending an opt-out form at the appropriate time to us.
What are the benefits of proceeding as a class action?
Certification as a class action will enable us to prove the facts in a single lawsuit rather than in numerous individual lawsuits. This has obvious benefits to the class members and to the courts.
How long does it take for a class action to be resolved?
There is no timeframe. We will move the case forward diligently but it can take a considerable period of time to reach trial.
Can a class action lawsuit be settled without going to trial?
Many class actions settle and thereby remove the need for a trial. However, we cannot predict with any certainty whether or not there will be a settlement in a given action.
What are the chances of winning the action?
The chances of “winning” can never be accurately predicted.
Will be liable for any costs or legal fees?
Class action lawsuits are typically brought on a contingency fee basis. This means that the lawyers will only be paid if the action is successful at trial or results in a settlement in favour of the plaintiffs. Legal fees would then be paid out of the settlement or judgment proceeds as approved by a judge.
Disbursements (i.e. out-of-pocket expenses, including expert reports) may be dealt with in one of two ways.
Most commonly, the lawyers will absorb the cost of disbursements. The lawyers may seek funding assistance from the Class Proceeding Fund, which may provide funding for disbursements if granted.
In some cases, disbursements may be funded by the class members, including the class representative. This typically occurs in smaller class actions brought on behalf of an organization or network of individuals where each member of the class is easily identifiable and known to the representative plaintiff. If the class action is successful, amounts advanced for disbursements are re-paid from the proceeds of any judgment or settlement to class members (and others).
Will I be liable for costs of the action if it is unsuccessful?
Only the class representative may be liable for costs of the common issues portion of the action if it is unsuccessful.
When can I expect to receive a payout from this class action?
A “payout” or an award for damages is never certain.
The action may settle or it may proceed to trial, at which time a judge will determine the amount of damages, if any, to which the class members are entitled to. Regardless, the amount of “payout” cannot be predicted, and we cannot predict when the action may settle or when the trial will conclude.
How will counsel keep me updated on the progress of the case?
If the lawsuit is certified as a class action, you will receive a formal notice from the court explaining the nature of the case and providing you with the opportunity to opt out if you wish. General information about the lawsuit will be posted on Sotos LLP’s website at https://www.sotosclassactions.com.
Where can I send any documents that I have that may be relevant to a class action?
We ask that you keep a copy of any documents, correspondences, records, invoices, receipts, etc. that you feel might be relevant to your individual claim in the class action. If there is a “payout,” this documentation may be required in order to support your claim for compensation.
It is not required that you send any documents to us at this time.