The Community Foundation of Mississauga is one of 16 foundations across Canada that are dividing up $190,000 from a settlement in a class action involving allegations of price fixing in the chemical industry.
In addition to bus tickets, the money is being used to buy a truck to deliver food to seniors in Saskatoon, develop recreational activities for low-income families in Newfoundland and help pay for transportation of special needs children in London, Ont.
None of the foundations had anything to do with the class action but they are benefiting from a move by the courts to use charities as a vehicle to distribute settlements.
In the past two years, more than $50-million in class-action settlements has flowed to dozens of charities ranging from universities and research organizations to the Boys and Girls Clubs of Canada, Breakfast for Learning and the Canadian Goat Society.
"There is some pretty major money that can come out," said Charles Wright, a lawyer at Siskinds, a London, Ont.-based firm that specializes in class actions.
Judges turn to charities when a group of potential claimants in a class action is too large to realistically compensate. For example, the chemical case involved a settlement by Chemtura Corp. of Connecticut. It was one of several companies investigated in 2004 by regulators in Canada, the United States and Europe over allegations that they fixed the price of chemicals used in plastics, rubber tires and other products. Chemtura paid $57-million (U.S.) in fines and settled class actions around the world.
The Canadian settlement totalled about $4.5-million (Canadian) and Mr. Wright said it would have been impractical to compensate all consumers who bought products made out of the chemicals.
"To give 4 cents to everybody who bought a tire doesn't make any sense at all," he said. Instead, he said the law allows the court to do "the next best thing."
In this case, that meant earmarking part of the settlement to community foundations in order to get the money to organizations that benefit Canadians."That's what we exist to do, support our communities," said Martha Powell, director of development and donor services at the London Community Foundation, which worked with the court to distribute the money.
Monica Patten, who heads Community Foundations of Canada, said courts are beginning to recognize that these groups can play an important role in class-action cases. "The court recognizes that community foundations are somewhat neutral, are right across the country, know how to get this money out quickly and know how to get the money out fairly," said Ms. Patten, whose organization represents 155 community foundations.
Other cases have involved much larger payments to charities. The United Way of Greater Toronto recently received $9-million as part of a settlement in a case involving late penalty charges by Enbridge Inc. Last year, 10 universities got $20-million in total from a case over the price fixing of vitamins. That same case also saw more than $22-million go to 50 charities and industry associations.
