From the Globe and Mail Report on Business Magazine
He’s aggressive, controversial and a threat to a growing number of big-name corporations. But is lawyer Tony Merchant becoming a class action king or risking the title?
***
Regina lawyer Tony Merchant is the most talked-about class action litigator in Canada, having recently settled a high-profile case on behalf of former residential school students-and netted a minimum, eyebrow-raising $25 million in legal fees for his efforts. But Merchant may also be the most intense and driven individual practising law in the country today. And that is the more important detail about the man. In fact, to describe Tony Merchant as “intense” is to politely understate the matter. In court, as in person, Merchant doesn’t so much mount an argument as unleash it: torrents of ideas, streams of disputation, avalanches of words. Answers to my questions routinely stretch to pages of transcription, with clarifications continuing to arrive by e-mail, fax and courier days later.
And all of this, more impressively, is sustained over a workweek that is epic, even by the workaholic-friendly standards of the legal community. It’s not atypical for the 63-year-old barrister to rise at 2 a.m. and be in the office two hours later. He claims to have billed a stunning 5,300 hours in 2005-yes, you read that correctly-in a profession where 2,000 hours is considered a punishing workload. That’s 14 1/2 hours times 365 days of the year, which leaves just over nine hours in an average day to accomplish anything else in life that doesn’t involve billing a client.
No wonder Merchant doesn’t golf. Or eat breakfast. Or have lunch. Or drink fluids during the day. “Go ahead if you have to, but I don’t eat,” he tells me during a court-imposed lunch break in hearings in connection with a class action proceeding against pet food manufacturer Menu Foods. Then he finds himself a corner table in the lawyers’ lounge at Vancouver’s provincial courthouse, and spends the next hour highlighting documents, cellphone pasted to his ear, a trembling pinkie finger pressed to his temple. Which is right about the point I find myself recalling the film This Is Spinal Tap and thinking about how other high-powered lawyers might function their whole lives with the volume dial cranked to 10 and yet never touch this man. Because Tony Merchant goes up to 11.
You could read this near-neurotic intensity as having served Merchant’s interests-as well as those of his clients-very well up to now. Legislated into existence in most provinces over the past 15 years, class action law in Canada is currently in the gold rush phase-one legal expert refers to it as a “tsunami”-with corporations ranging from drug manufacturer Merck Frosst and toy giant Mattel to CIBC and KPMG now facing major lawsuits. Merchant’s practice has boomed over this same period; what began as a Regina-based criminal defence and family practice in the late 1960s (clients included the notorious Colin Thatcher) has become the 12-office Merchant Law Group (MLG), stretching across Western Canada, plus Montreal, and carrying on one of the busiest class action businesses in the land.
Merchant’s profile, meanwhile, has vaulted consistently upward with the size of his plaintiff groups and the awards they receive. He recently settled a case against the retail chain Winners related to the loss of credit card and driver’s licence information that affected about 55,000 Canadians. A suit against the federal government on behalf of Canadian Forces personnel exposed to Agent Orange as part of experiments during the ’60s will involve a plaintiff group approaching half a million people. And his groundbreaking residential school settlement could eventually be dwarfed by an even larger payout, given the scale of one of his newest cases: Merchant was recently certified to represent plaintiffs disputing up to $20 billion of “system access fees” alleged to have been charged wrongfully over the past decade to millions of Canadian cellphone users.
For all this success, however, Merchant’s rapacious style may be taking its toll in other areas. In a legal environment where an increasing number of class action cases are now handled by national consortiums-groups of firms across the country that have agreed to share the work, risk and fees of a file-Merchant stands resolutely alone, in most circumstances refusing to opt for a team approach.
It’s a matter of principle and choice, he says. He didn’t like working with other kids in grade school either, he points out. But then, unleashing a typically encyclopedic answer on the topic of how consortiums are generally bad for plaintiffs, Merchant describes how groups of lawyers settle more readily than individual lawyers, how they’re more costly, how the teams are invariably Ontario-led. By the end of this answer-which incorporates a naval analogy touching on the Spanish Armada and Dunkirk-I find myself wondering how anyone can work, let alone bill, 5,300 hours a year when every question means booking off an hour for a proper reply.
It’s difficult to avoid the conclusion, however, that Merchant may be flying solo for other reasons, too. He has rubbed plenty of people the wrong way over the years in courtroom confrontations. He has repeatedly pushed the limits of propriety in promoting his own practice, racking up a history of sanctions with the Law Society of Saskatchewan in the process. And many in the legal community are frankly amazed that anyone could ever have billed 5,300 hours in a single year. A lawyer at one of the most respected class action firms in Canada, who reviews partner and associate billings as a member of its managing committee, responds to the question coldly: “If someone claimed they had billed that many hours at this firm, I would consider that person not to have written down their hours in the customary manner.”
But what may be even more troubling for Merchant going forward is the attitude of certain key members of the class action bar who now seem to have concluded that they can no longer work with him at all.
“Life is too short,” says Harvey Strosberg of Sutts, Strosberg LLP in Windsor, Ontario, a major class action player. “I think you have to work with people who you’re going to feel comfortable working with. I haven’t been able to achieve that level of comfort yet with Tony’s firm. I just don’t think that philosophically I’m satisfied that we’re on the same page.”
All of which suggests one of two things: Tony Merchant may be the principled solo artist he purports to be, fighting in service of client interests against national consortiums on cases such as Menu Foods. Or he may be the most aggressive and controversial lawyer in Canadian class action history, fighting a more defensive battle altogether: a late-stage attempt to hold ground in a legal environment that has turned against him.
Merchant back home in Regina-like that grade-school kid he describes handling group assignments on his own-certainly radiates the energy of a man ferociously self-directed and robustly at home with his ego. Not to say he is flashy or forced. He is neither. The double-breasted suit he wore in Vancouver was light blue. The identically cut suit he’s wearing today is black. White shirt, red tie. He shakes hands with medium pressure, doesn’t smile much or raise his voice in agitation.
Yet, in the confines of his office headquarters, it’s evident that a teeming industry issues forth from this slight-framed man who seems unconcerned with making a big-city, white-shoe impression. The tour he offers of his ground-floor office block on Saskatchewan Drive includes glimpses of utter chaos: boxes stacked in every hallway; shelves exploding with paper in every office; heaps of files on every desk. Merchant points and interprets, naming the cases, voice flat and all-knowing: residential schools; Vioxx; cellphones; Agent Orange; 13,000 outbound letters on one file here; 1,129 responses from plaintiffs on another file over here.
His own office-in the corner, windows looking out over a stretch of sidewalk and an empty side street-is spare by comparison. But even with the door closed, the firm pulses and thrums. Indeed, work rarely stops at the Merchant Law Group. Administrative staff answer phones from 7 a.m. to midnight every weekday. The firm has placed a Yellow Pages ad for the seemingly impartial “Lawyer Referral Service,” which, in fact-were you to dial the number after having been arrested, for example-links you directly to an automated response program that will track down one of the Merchant Law Group lawyers, on their cellphones if necessary. This includes Merchant, who fields at least one such call during the hours we spend talking.
A lot of the calls come from RCMP stations, from suspects who suddenly find themselves in need of counsel. Merchant chuckles: “They’re trying to get some guy to confess. I know the RCMP will pay $5.95 a minute [for the call].”
What fuels this ravenous appetite for work is not a question easily answered, even by his friends. John Gormley, a Saskatoon lawyer and radio personality, says only this: “It both mystifies and amazes me, in a positive way.” Doug Richardson, another Saskatoon lawyer who has known Merchant for 35 years, stammers uncertainly before finally saying, “I honestly don’t know the answer to that question.”
Merchant’s family background may offer a clue. Born a twin in Saskatoon in 1944, he was raised by his mother, Sally, after his father, Evatt, was killed near Nijmegen during the Battle of the Bulge, just over a month after Merchant’s birth; 11 months later, Merchant’s twin, Michael Vincent Reynolds, also died. From the beginning, Merchant was surrounded by driven people, and wired by these family connections into the legal and political elites of Saskatchwean.
Merchant’s maternal grandfather, Vincent Smith, was a judge and Liberal MLA; it was his house at 901 University Dr. in Saskatoon where Sally moved after her husband’s death, and where the young Tony was largely raised. Tony’s sister, Adrian, would go on to marry Otto Lang, who was dean of law at the University of Saskatchewan before beginning his long political career with the federal Liberals, culminating in his appointment to the positions of attorney-general and minister of justice.
If possible, Sally Merchant was the most motivated member of this family of achievers. A Liberal MLA from 1964 to 1967, she was also a local celebrity, host of the popular television show Sally Time. Not finished after just two successful careers (three if you include single mother), she went on to become a member of the Canadian delegation to the United Nations, then a senior federal bureaucrat, then a lecturer at three universities: Alberta, Manitoba and Saskatchewan.
The legacy Merchant might have felt compelled to live up to is plain enough. And he certainly didn’t waste time getting on with the project. When he left Saskatoon to work in Regina in the mid-’60s, he started what amounted to several separate jobs at once. He began working on criminal cases while articling and went 29-0 in his first court appearances. He was a serious private investor, too, hanging out at the local investment firm James Richardson & Sons, where they had an open ticker, talking to the old-timers and reading every financial paper he could get his hands on.
Every morning, meanwhile, Merchant also worked as an open-line talk-show host, the ’60s Prairie version of Howard Stern: To commemorate VE Day, he phoned Hermann Göring’s daughter; during another show, he called a sex help-line at the University of Alabama. He also promoted his own practice on air, which brought him into conflict for the first time with the Law Society of Saskatchewan. They found him guilty of conduct unbecoming a lawyer. He appealed and won. “So then the law society wrote new rules to get me off the radio,” he says.
The move succeeded, and had what was no doubt an unintended effect. Left with merely one day-job and hanging around watching the ticker-well, that and running 60 miles a week, he tells me-Merchant decided to fill the empty space yawning open in his schedule and follow the family firm into Liberal politics. It wasn’t the best timing for such ambitions, as the tide had turned deeply anti-Trudeau and anti-Liberal in Saskatchewan by the mid-’70s. But this may only have played to Merchant’s doggedly combative side. After election to the Saskatchewan Legislature as a Liberal in 1975, he lost his subsequent runs at federal office in 1979 and 1980 only after exhausting seemingly every effort-including distributing truckloads of flowers to supporters (as many as 28,000 in 1979). “Every possible campaign exercise that can be undertaken, Tony’s done it,” Doug Richardson remembers. “Standing at the top of the bridge with the sign that says ‘Tony.’ Standing there waving early in the morning and late at night. He was indefatigable.”
It was a quality he did not lose on leaving politics. Where once he pursued voters, Merchant now turned his relentless energy toward the pursuit of clients. But several of his efforts have again earned him sanction from the Law Society of Saskatchewan. In both the residential schools case in 2000 and a separate action on behalf of residents of Estevan, Saskatchewan, against CP over a train derailment in 2004, for example, Merchant enticed potential plaintiffs to the firm with a letter later deemed to misrepresent the cost-risk to plaintiffs.
Within Saskatchewan, any notoriety he may have earned for his handling of these cases is balanced by much home-field admiration. Merchant is knit into the local establishment here: He lives in a genteel 1920s-era house in Lakeview, Regina’s version of Shaughnessy or Rosedale. His wife, Pana, is a Liberal senator. As a former resident of Saskatoon and political watcher put it, Merchant is a “black prince of Saskatchewan.” John Gormley phrases it differently, although to similar effect: “I think to this day there are people who are critical of him for the wrong reasons. I think a little bit of it is envy. You criticize somebody for being braver than you.”
Outside Saskatchewan, his aggressive style has not always played as well. In the class action realm, Merchant’s go-it-alone approach has frequently made him the lone dissenting voice in carriage disputes-hearings into which firm or group of firms should be certified to represent plaintiffs-all over the country.
In Ontario, the dispute over a class action proceeding in connection with the Merck & Co. drug Vioxx-which was alleged to increase the risk of heart attacks and stroke-turned especially ugly. The judge ordered Merchant Law Group and a proposed national consortium led by class action powerhouse Siskinds LLP to discuss joining forces, which would obviate the hearing, but Merchant rejected an offer providing his firm equivalent terms to all others involved in the case.
“We didn’t think that their plan would work,” he says. “Their plan was to get everybody together and then try to settle with Merck.”
Siskinds partner Mike Peerless flatly denies Merchant’s description of the consortium’s plan. But he also appears surprised his colleague would make such a statement in public: After all, were it true, Merchant would have just divulged the group’s confidential strategy for handling a case that’s still unfolding. Not terribly sporting. But the Ontario case hadn’t been a relationship-builder on other fronts, either. The Merchant Law Group lawyers, including Merchant’s son Evatt, 34, brought to the table all the aggression for which the founding partner is known. They filed what Peerless remembers as a stack of documentation several feet high on the day before the hearing-more reading than humanly possible in the time available. Worse, Merchant’s group was revealed to have a second class action in progress on behalf of Merck shareholders, potentially placing them in a conflict of interest if they continued acting for the shareholders while simultaneously suing the company on behalf of a third party.
But the most controversial and damaging issue arose when they turned to arguing what class action lawyers refer to as the “resources and experience” of counsel. In this part of a carriage argument, opposing counsel are forced to critique each other’s ability as lawyers, invariably commenting on ethics and disciplinary histories. And here, in their zeal, Merchant and his colleagues made what Justice Warren Winkler called “scandalous statements” about their opposition that they later retracted.
Merchant accepts no blame, personally. He wasn’t in the courtroom at the time, he says, which is an important point, although perhaps not for the reason he’d give. In fact, Merchant wasn’t there because it’s unclear he would have been allowed to appear-he hasn’t been called to the bar in Ontario. And having a disciplinary history, he must apply for permission to litigate in an Ontario courtroom. He didn’t do so in the case of Vioxx, preferring instead to have MLG represented by other partners.
Anyone with a multisanction disciplinary history, Peerless points out, would have to wonder about their chances of success. His comment underscores the successful argument the consortium made during the carriage dispute: that Merchant represented the vast bulk of the class action know-how at his firm and that there was no evidence he could even be there to lead the litigation. “He’s obviously the most experienced guy they have,” says Harvey Strosberg, whose firm was in the consortium. “They don’t call it the Merchant Law Group because his son is a partner.”
To be hamstrung in its pursuit of certification for cases in Ontario would be bad news for any class action firm. But potential shifts in the current legal environment may sharpen the issue for Merchant. The Uniform Law Conference of Canada, an independent body dedicated to harmonizing provincial laws, has published a set of proposals aimed at streamlining class action procedures across the country by eliminating the duplication that exists within the current system. The basic principle seems obvious: In the case of class actions that are national in scope, there should be a single carriage decision honoured countrywide, followed by national class action litigation, rather than separate actions in different provinces. (Merchant continues to pursue certification for a Vioxx action unopposed in Saskatchewan, for example, though whether Merck will be much concerned about that action relative to one of national scope in Ontario is a separate question.) Enough judges were sympathetic to the notion that filing to a national class-action database-so that duplication can be flagged early and possibly avoided-has been made mandatory by the Superior courts of B.C., Alberta, Ontario, Quebec and the Yukon.
National classes are contentious, constitutionally. But Merchant opposes them on other levels, too. Chief among his objections is that national actions would tend to be run out of Ontario, where the bar is most experienced and the bench most amenable to the national-class idea. That would not be good for plaintiffs, Merchant argues: Ontario is a “costs regime,” the only province where, if a class action fails, a single representative plaintiff might be ordered to pay millions of dollars in costs. (It happened in 2007, when activist shareholder Rick Durst’s case against Danier Leather failed, and he was ordered to pay what could be more than $1 million in legal costs.)
A system run out of Ontario wouldn’t necessarily be friendly news for the Merchant Law Group, either. There is the outstanding issue of whether Merchant can appear in court there and whether, in his absence, junior MLG partners could win the “resources and experience” beauty contest against more established lawyers and firms. But Merchant also reveals a certain Prairie sensitivity to Central Canadian hegemony, a feeling captured in one of several follow-up letters he sent during the weeks we were talking, in which he commented on the media’s tendency to espouse the view that “the best accountants and the best doctors and the best lawyers and the best best are all in Central Canada; even the business people in Calgary are oddities and nobody much cares about the multimillionaires in Halifax and Vancouver and Edmonton because they are not normal (living in Central Canada).”
Of course, heading up cases out of the Western provinces remains an option. Merchant is called to the bar in Manitoba, Saskatchewan, Alberta and B.C. And certainly his access to these courts will be of heightened importance to him given the financial pressure the firm has faced in recent years. His firm still hasn’t been paid for the residential school settlement-the federal government appealed the issue of legal fees and has called for an independent audit of MLG’s accounts. And the impinging effect of the costs accumulated on the massive file has been greatly concentrated by the many partners who left the firm as the case dragged on. As many as a dozen gave up their partnership, Merchant says, either becoming associates or leaving the firm entirely. He won’t say how many partners he has now, only noting: “My family hasn’t been drawing income for a long time.”
Short of the feds not paying him at all, however, the worst development possible for Merchant and his firm could be to face another disciplinary sanction that would jeopardize access to another provincial court system. But he now faces that risk in connection with a case called Chudy v. Merchant Law Group/Earl Shaw.
Handed down in February, 2007, by Justice Barry Davies of the Supreme Court of British Columbia, the decision awarded Clifford Chudy and his wife, Linda, a total of more than $300,000 in damages and punitive charges after the judge decided Merchant Law Group had wrongfully billed them $250,000. Justice Davies outlined how MLG billed the couple a contingency fee where no valid fee agreement existed, and in the absence of an actual contingency situation-because the case had already been settled. The decision also harshly criticized Merchant for billing and accepting monies on a file brought into the firm by a lawyer, Earl Shaw, who had subsequently declared personal bankruptcy. “At minimum, [this was] a duplicitous attempt to deceive Mr. Shaw’s creditors,” wrote Justice Davies, who characterized Merchant’s conduct as “unethical and obstreperous,” and his evidence as “deliberately misleading or untruthful.” And in what may be the harshest paragraph of all, the judge suggested Merchant’s actions reflected poorly on his “honesty and character.”
Merchant is currently appealing the decision, but the Law Society of British Columbia, which is holding off on its formal investigation pending the appeal decision, described the file as “a very serious matter, since credibility is at issue here.” And even if disbarment is unlikely, the decision won’t help Merchant’s case in future carriage hearings when the issue of “resources and experience” of counsel arises.
For his part, Merchant doesn’t think it will amount to much. When he won certification for the Agent Orange class action filed in New Brunswick, the judge didn’t weigh his disciplinary history against him, he says. Besides, he adds, he doesn’t believe other lawyers would stoop to that kind of mudslinging-any animosity between him and the rest of the bar is overblown. He’ll be working with the other class action players again, he says, pointing out that he has done so in the past. “Animosity is just not accurate,” he says. “It’s just like guys in the legislature, insulting each other, then going out for drinks.”
A nostalgic memory, perhaps, from the former Saskatchewan MLA. But not a feeling seemingly shared by the colleagues in question. Mike Peerless puts it bluntly: “I would find it extremely difficult to work with Mr. Merchant on any case.” As for Strosberg, he cites a recent carriage hearing for a Menu Foods class action in Ontario. As with the Vioxx hearing, Merchant did not appear, leaving Strosberg to face junior lawyers from MLG. One set of their submissions, in particular, was illuminating: The Merchant Law Group asked the judge to order the two sides to work together. So the judge asked Strosberg what he thought of the proposal. “And I said literally one word,” the lawyer says. “No.”
The response suggests that fences may be harder to mend than Merchant thinks. But then, perhaps he doesn’t believe they can be mended either. In a separate letter, Merchant wrote to me of courtroom action as he experiences it: “Every eye glares. [A partner] accompanying me one day said he understands what Rambo must feel when jumped by 20 toughs.”
Facing challenges ahead-strategically cold shoulders, shifting judicial regimes and legal problems of his own-Merchant describes it differently: “I feel more like the Crimea and the Charge of the Light Brigade.”
It’s near 8 p.m. when Merchant and I head out into the dark, now-empty Regina streets, climbing into his Jaguar sedan for a quick tear across the city to pick up his wife, Pana, before we head out for dinner. At the house, Tony pours drinks-dark rum and Coke for him-and shows me the front room with the flip-top desk where he works late into the evening.
In every other place I’ve seen Merchant, he has carried his work like an agitated aura around him. But here in the elegant old house-even as he reminds me again of his gruelling schedule, his near-sleepless existence in the face of all the work that remains to be done-his family history seems to lean in close, like the branch of one of the old Lakeview oaks outside, sloughing leaves and tapping at the glass.
Sally Merchant passed away in April, 2007. There are pictures of her on a sideboard, a beautiful woman in her day. It’s impossible not to see the charm, drive and energy. I pick up the printed eulogy Merchant wrote for her, and he remembers some family lore from their Saskatoon days: His sister, Adrian, had been invited to a sleepover at a friend’s house and returned with a new understanding of the world.
Merchant, with a smile: “She came back and asked me, ‘Did you know that some families all sit down to eat breakfast together?’”
And then the well-worn punchline: “So I told her, ‘Well, every family is abnormal in its own way.’”
We tour the neighbourhood on the way to dinner, Merchant looping the block to show me the dense gathering of the Regina legal community along these leafy streets. Justice Gary Lane, a former Liberal MLA from Merchant’s time in the legislature, lives here. The Chief Justice of Saskatchewan lives over there. He pauses briefly in front of Ted Malone’s house-a judge too, but also the man who beat Merchant for the leadership of the provincial Liberal Party in 1976, a defeat that may have meant more to Merchant than any other.
“I don’t think I’ve ever cared about anything as much as I cared about that leadership race,” he’d said earlier. “I had a plan. I knew what I wanted to do and I would have been wonderful for Saskatchewan.”
We’re almost at the restaurant: Memories, a Greek place, which is Pana’s heritage. When the black prince and his wife enter, there will be embraces and offers of free drinks, the latter declined. There will be a pack of matches embossed “Tony Merchant” on the table, although he doesn’t smoke. There will be extra-attentive service. Then there will be the food. Merchant will eat three courses-salmon, soup, then the half-chicken “Hella”-knifing and forking through it with anti-epicurean indifference. A lot of food, it seems, until I remember that it’s fuel for 24 hours.
But we’re not there, just yet. We’re still cruising across the bridge, heading downtown. Slipping through the navy blue night into the town where Merchant established his career 40 years ago, barely a grown-up, working two jobs, hanging with the veterans watching the ticker. Entirely a veteran himself now, of course, but still watching that ticker, waiting to see what might rise in value and what might fall.