Looking Forward: Canadian Class Actions in 2013

by Bennett Jones LLP
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Looking Forward

2012 was an active year for class actions in Ontario. Bennett Jones has been involved in some of 2012’s leading cases, including the putative class proceedings commenced in Trustees of the Labourers’ Pension Fund v. Sino-Forest Corporation and Sharma v. Timminco.

What follows is our discussion and analysis of trends and likely developments in class actions in 2013. We predict that in the coming year, class action litigation in Ontario will experience major shifts, perhaps altering this jurisdiction’s reputation for being plaintiff-friendly.

Securities

A number of important but often conflicting decisions were released dealing with statutory limitation periods, evidentiary thresholds on leave motions and the impact and interplay between regulatory proceedings and class actions in the securities context. These decisions were significant and, in some cases, provide an indication of where the battle lines will be drawn in similar proceedings in 2013.

Limitation Periods

Part XXIII.1 of the Securities Act (Ontario) requires plaintiffs seeking to advance a statutory cause of action for alleged misrepresentations to obtain leave of the court. Pursuant to section 138.14, the statutory cause of action must be commenced within three years of the date of the alleged misrepresentation.

In Sharma v. Timminco, the Court of Appeal for Ontario provided guidance on the application of this statutory limitation period in cases where plaintiffs seek an order declaring that the limitation period was suspended under section 28 of the Class Proceedings Act (which suspends limitation periods on the date a class proceeding is commenced). The issue before the Court was whether the cause of action under the Securities Act had been asserted for the purposes of the Class Proceedings Act, suspending the limitation period even though leave had not yet been granted to the plaintiff to commence the action.

At first instance, Justice Perell granted the order and declared the limitation period suspended on the basis that the plaintiff had mentioned the Part XXIII.1 claim in its statement of claim. The Court of Appeal overturned Justice Perell’s decision, finding that leave must first be obtained from a court before the limitation period for the Part XXIII.1 cause of action can be suspended pursuant to the Class Proceedings Act.

The Timminco decision compels class action plaintiffs to bring leave motions on an expedited basis and would seem to strongly discourage the current common practice of combining a leave motion with a motion for certification. Timminco was followed by three other (conflicting) decisions on this issue, as class action plaintiffs tried to find a way to obtain relief from expired limitation periods with varied success.

The first case to follow Timminco was Green v. Canadian Imperial Bank of Commerce, in which the plaintiff shareholders sought leave under Part XXIII.1 and also sought to have the action certified. Justice Strathy concluded that the plaintiffs had met both the test for leave and for certification. However, following Timminco, he found that the right to pursue the Part XXIII.1 cause of action was statute-barred. The plaintiffs proposed two ways to get around the fact the claim was statute-barred: granting leave nunc pro tunc (which would essentially backdate the leave motion) and the special circumstances doctrine (which gives courts discretion to extend certain limitation periods when special circumstances exist but which is no longer applicable to the general Ontario Limitations Act). Justice Strathy determined that neither of these arguments could circumvent the statutory limitation period and the plaintiffs’ motion was dismissed.

Less than two months after Justice Strathy’s decision in Green v. CIBC was released, Justice van Rensburg released her decision in Silver v. IMAX. The plaintiffs commenced the action in 2006 asserting common law claims and pleading that the plaintiffs intended to bring a motion for leave under Part XXIII.1. The leave motion was heard in December 2008 and Justice van Rensburg released her decision on December 14, 2009. She granted the plaintiffs leave to proceed with the Part XXIII.1 claim against all but two of the proposed defendants. After the release of Timminco, the defendants delivered an amended statement of defence, asserting the expiration of the statutory limitation period.

Justice van Rensburg found that “unless the order granting leave and the amendment to the claim to assert the statutory cause of action can be given effect within the limitation period, the statutory claims in proceedings would be statute-barred.” As such, the main issue before Justice van Rensburg was whether there was any jurisdiction to amend the leave order so as to make it effective and not statute-barred. Contrary to Justice Strathy’s decision, Justice van Rensburg found that such jurisdiction did exist. Justice van Rensburg found that the causes for delay were outside the control of the plaintiffs, who could have done nothing more to comply with the limitation period, given the decision was under reserve when the limitation expired. On this basis, she made the order nunc pro tunc, circumventing the expired limitation period. Although this decision appears inconsistent with Green v. CIBC, Justice van Rensburg reasoned that the facts in this case were distinguishable. Justice van Rensburg briefly considered the special circumstances doctrine, but found that it was not necessary to decide this issue (although she did state that it did not fit within the framework of the Securities Act).

Less than two months after IMAX was released, Justice Perell released his decision in Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica Inc., in which the defendants brought a motion to strike portions of the plaintiffs’ claim on the basis that, among other things, their claim was statute barred under section 138.14 of the Securities Act. Justice Perell purported to follow Timminco, but found that he could provide relief from the expired limitation period through the doctrines of nunc pro tunc and special circumstances. Justice Perell found that although the special circumstances doctrine is no longer available under the Ontario Limitations Act, it was available in this case given that the limitation period provided by section 138.14 of the Securities Act was not in the Limitations Act. Justice Perell concluded that there were special circumstances justifying an order granting leave nunc pro tunc.

The decision in Timminco promised a more defendant-friendly future for securities class actions in which the three-year limitation period would be strictly upheld. This view was upheld in Green v. CIBC. However, the somewhat conflicting decisions in IMAX and Celestica provide plaintiffs with potential avenues for relief. Due to the conflicting decisions, this issue is once again in need of appellate guidance, which we expect to see sometime in 2013. Until the limitation issues are conclusively addressed and resolved, we expect that plaintiffs’ counsel will attempt to enter into tolling agreements with defendants and, absent such agreements, will be obliged to proceed more expeditiously with motions for leave.

Evidentiary Threshold on Leave Motion

In Gould v. Western Coal Corporation, Justice Strathy provided guidance for future leave motions under Part XXIII.1 of the Securities Act, comments which serve as a reminder to plaintiffs and defendants to closely examine the evidence submitted on such motions.

With respect to the Part XXIII.1 claim, Justice Strathy confirmed that the leave analysis requires an evidence-based analysis of whether the plaintiff’s claim has a reasonable possibility of success. The threshold for satisfying the leave test is low: the plaintiff need only establish more than a “mere” possibility of success at trial. Justice Strathy noted that none of the plaintiffs’ evidence reflected any first-hand knowledge of the transactions at issue or the underlying facts. By contrast, the defendants put forward affidavits from 15 different individuals, all of whom were personally involved in the relevant events. Justice Strathy concluded that leave for Part XXIII.1 should not be granted because the plaintiffs’ claim had no reasonable possibility of success at trial.

While the decision in Gould confirms this low threshold for plaintiffs’ obtaining leave, Justice Strathy also clearly articulated that the leave test should be considered a meaningful hurdle for plaintiffs to surmount. The result suggests that the low threshold will not prevent the court from engaging in a robust evaluation of the evidence before it and that the standards applied to expert opinions will not be relaxed in the context of leave motions. Ultimately, the decision reinforces the need for counsel and parties alike to scrutinize the evidence they are putting before the court on leave motions.

Regulatory Settlements and Class Proceedings

The interaction between proceedings before regulatory bodies, such as the Ontario Securities Commission (OSC), and the commencement of related class proceedings is an issue that will likely become more prevalent in the future. The decision in Fischer v. IG Investment Management, 2012 ONCA 47, released January 27, 2012, suggests that absent unique circumstances, a settlement reached in a regulatory proceeding will not preclude or bar a related class proceeding. In Fischer, the market timing case, the defendants entered into settlement agreements with the OSC, under which they paid $205.6 million compensation to their investors (who constituted the majority of the proposed class members).

The defendants argued that the preferable procedure in this case was the then-completed regulatory proceeding. The plaintiffs argued that the OSC settlement ($205.6 million) did not amount to full compensation and the actual damages suffered could be significantly higher. The plaintiffs also relied on the fact that they had not participated in the OSC negotiations, nor were they signatories to the OSC settlement agreements, to argue that they had not yet had their day in court.

At first instance, Justice Perell agreed with the defendants and dismissed the motion for certification. However, the Divisional Court overturned the decision. The Court of Appeal upheld the decision of the Divisional Court (but for different reasons). In doing so, the Court of Appeal set out how the preferable procedure inquiry should be conducted, finding that the court must examine not simply the amount of compensation generated by the alternative proceeding, but rather the fundamental characteristics of the proposed alternative proceeding, including: (1) the impartiality and independence of the forum; (2) the scope and nature of the jurisdiction and remedial powers of the alternative forum; (3) the procedural safeguards that apply in the alternative proceeding, including the right to participate and the transparency of the decision-making process; and (4) the accessibility of the alternative proceeding, including the costs associated with accessing the process and the convenience of doing so. These characteristics must then be compared to those of the putative class action in order to determine which action will be the preferable means of fulfilling the goals of class proceedings: judicial economy, access to justice and behaviour modification.

Following this analysis, the Court of Appeal concluded that the proposed class action was the preferable procedure in this case.

This decision highlights the reality that, going forward, defendants may face significant financial liability in regulatory proceedings and in a follow-on class action. The Court of Appeal did not dismiss the possibility of a regulatory proceeding, holding instead that the outcome will be factually specific. However, based on the criteria established by the Court, unless the alternative proceeding provides for meaningful participation by the plaintiffs, and a meaningful opportunity for recovery similar in scope and nature to that of a class action, it seems likely that class proceedings will continue to be viewed as the preferable procedure.

The Supreme Court of Canada granted the defendants leave to appeal the Court of Appeal’s decision, meaning that the class actions bar should soon receive guidance, likely in 2013, from the highest court regarding the interplay among regulatory proceedings, settlements and class actions.

Employment

For most companies and defence counsel, 2013 will likely be a slow year for employment class actions. In June, the Ontario Court of Appeal released its reasons in three leading Canadian employment class actions: Fresco v. Canadian Imperial Bank of Commerce, Fulawka v. Bank of Nova Scotia and McCracken v. Canadian National Railway Co. In two of these cases (CIBC and Bank of Nova Scotia), the unsuccessful employer has sought leave to appeal the decision to the Supreme Court of Canada. The plaintiffs in CN Railway did not seek leave to appeal.

If the Supreme Court grants leave to appeal (because it finds that the cases raise an issue of public importance), the cases likely will not be heard until early 2014 and decisions will not be released until late 2014 or early 2015. As such, it is unlikely that plaintiffs will be commencing new overtime class actions until the Supreme Court settles the matter. In the interim, the Court of Appeal’s decisions are instructive to employers and counsel who may be facing certification motions in 2013.

The Bank Cases

Fulawka and Fresco are both off-the-clock cases. The class members, who are all front-line staff, allege that the banks’ overtime policies required them to obtain prior approval to be paid for overtime work even though the overtime was required or permitted to be performed. Further, they assert they were not paid for that overtime because they did not receive prior approval.

Despite the fact that both Fresco and Fulawka involved similar allegations and employers, the cases were initially treated differently. Fulawka was originally certified; Fresco was not. Under the Class Proceedings Act, Fresco proceeded directly to the Court of Appeal. Fulawka was appealed to the Divisional Court, where a 2-1 majority upheld the certification order. Both appeals to the Court of Appeal were heard consecutively in December 2011. The plaintiffs were represented by the same counsel in both cases.

Notwithstanding CIBC’s efforts to distinguish its case from the decision in Fulawka, the Court of Appeal ultimately concluded that “both certification motions should either succeed or fail together”. In its view, both cases are appropriate for certification. That being said, the Court rejected the availability of aggregate damages assessed on a class-wide basis.

In Fulawka, the Bank of Nova Scotia (BNS) argued that the common issues certified by the motion judge are not substantial ingredients of the class members’ claim and, as such, would not advance the litigation. In an effort to demonstrate how these issues would not assist in resolving their claims, BNS made admissions or concessions about the existence of certain implied contractual terms in the class members’ employment contracts (which CIBC had also made at the certification motion). The Court rejected these arguments on the basis that such concessions are not determinative of the commonality question and, in any case, would not be enforceable by putative class members if the case were not certified. Moreover, the Court concluded that the proposed common issues, including claims of systemic defects in BNS’s overtime policies (such as whether BNS had a duty to record hours worked or prevent class members from working non-compensable hours), would assist in resolving the class members’ claims.

In Fresco, the Court of Appeal criticized the merits-based approach taken by the lower courts to the issue of whether CIBC’s overtime policy breached the Canada Labour Code. In the Court’s view, the legality of CIBC’s policies is an issue for trial, not for certification. The Court then applied its reasoning on the common issues in Fulawka to Fresco, concluding that a trial judge may “find there is an evidentiary basis that could support a conclusion that all uncompensated hours were required or permitted by CIBC.”

In both bank cases, the Court rejected the plaintiffs’ claim for an aggregate assessment of damages. Instead, the Court accepted BNS’s argument that statistical evidence can be used to “design and successfully implement a satisfactory compensation system”. The Court provided no guidance on what such a system might be.

McCracken

The Court took a different approach in McCracken, which is a misclassification case. The class members alleged that CN did not pay them overtime because it classified them incorrectly as managers or superintendants. Under the Canada Labour Code, employees who exercise managerial responsibilities are exempt from being paid for time worked in excess of 40 hours per week.

The motion judge, relying largely on the reasoning in Fulawka, certified the class. He agreed with CN that individualized assessments of the class members’ job duties and responsibilities were necessary. But, instead of rejecting certification, the motion judge recast the common issue to focus on what minimum requirements are necessary to be a managerial employee at CN.

The Court of Appeal found that there was no evidence to support a “core commonality” concerning the class members’ duties and responsibilities. As such, it allowed the appeal.

What To Look For

It seems unlikely plaintiffs will be commencing new overtime class actions until the Supreme Court settles the matter. If new class actions are commenced, they are likely to be off-the-clock cases. Misclassification cases are proving harder to certify in Canada notwithstanding the contrary U.S. experience. In early June 2012, the Superior Court refused to certify another misclassification case in Brown v. Canadian Imperial Bank of Commerce.

That being said, enterprising plaintiffs’ counsel may be on the search for other types of employment cases, including mass lay-off cases, discrimination claims or other types of wage-and-hour cases (for example, cases involving allegations of unpaid vacation pay or holiday pay).

Further, the overtime class actions to date have focused on federally-regulated employers that are governed by the Canada Labour Code. In an effort to find new types of claims, plaintiffs’ counsel may focus their efforts on wage-and-hour claims under the provincial employment standards statutes.

Competition

Last year we predicted a slow 2012 as plaintiffs and defendants waited for the Supreme Court of Canada to decide whether Canada would follow the U.S. approach and prohibit indirect purchasers from bringing antitrust class actions.

Our prediction proved accurate. The three appeals in Pro-Sys Consultants Ltd. v. Microsoft Corporation, Sun-Rype Products Ltd. v. Archer Daniels Midland Company, and Option Consommateurs v. Infineon Technologies AG highlighted the year. However, until the Supreme Court releases its reasons in the appeals, we can expect the low level of activity in this area to carry forward into 2013.

At the October 2012 hearing of these appeals, the Supreme Court engaged squarely with the U.S. Illinois Brick rule and the indirect purchaser issue. The Court questioned plaintiffs’ counsel about the evidentiary complexities of indirect purchaser actions: how does one conceptualize a class action without some basis to determine which Canadians had actually been wronged? How can compensation be distributed to effectively remedy any harm? On the other side, the Court appeared sympathetic to the risk that defendants would face multiple liability if indirect purchaser actions continued. Ultimately, it wanted evidence that multiple liability was a practical reality and not simply a theoretical possibility.

How the Supreme Court will rule is uncertain. What is clear is that its decision will have far-reaching and lasting impacts on Canadian antitrust class actions. In cases involving foreign defendants, indirect purchasers make up the vast majority of Canadian antitrust plaintiffs, in part because Canada has few direct purchasers. Thus, Canadian plaintiffs’ counsel depend on joint direct-indirect purchaser classes to launch economically viable actions. Loss of indirect purchaser class members will mean fewer Canadian antitrust class actions, and in particular, fewer actions alleging international conspiracies. Classes made up of only direct purchasers currently do not exist or will inevitably prove too small to justify the costs and risks of litigation. A small number of direct purchasers may also prefer to bring actions on their own behalf rather than as part of a class.

With the viability of so many ongoing actions threatened by the possible outcome of the appeals at the Supreme Court, many Canadian actions were largely inactive in 2012. Procedural and pre-certification issues dominated what little activity there was. For example, in Fairhurst v. Anglo American PLC, British Columbia’s Court of Appeal confirmed plaintiffs must meet a very low threshold when pleading a connection between British Columbia and non-Canadian defendants. At the same time, it established a practically insurmountable barrier to foreign defendants alleging a lack of jurisdiction. The defendants in Fairhurst have sought leave to appeal to the Supreme Court of Canada.

Even less occurred in other cases. In Pro-Sys Consultants v. Infineon Technologies AG (the DRAM action), the parties agreed to a stay pending a decision from the Supreme Court. In other cases, such as Godfrey v. Sony Corporation (the Optical Disc Drive action), plaintiffs’ counsel have advised courts that they will not insist on certification materials from defendants until the Supreme Court releases its decision. Watson v. Bank of America Corporation (the Visa/Mastercard class action) appeared to be somewhat anomalous with the parties preparing for a 2013 certification hearing.

Looking forward, we expect the first half of 2013 to look much like 2012. We expect plaintiffs to continue to address procedural issues and to prepare certification materials in anticipation of a decision from the Supreme Court in mid-2013.

Despite what we anticipate to be a slow start to 2013, once the Supreme Court releases a decision, we expect a flurry of activity. A favourable result for plaintiffs will unleash a flood of certification records, scheduling demands, and perhaps even new actions that were otherwise held back over the last two years. A favourable result for defendants will prompt a string of decertification motions, motions to strike, or summary judgment motions. Whatever the Supreme Court’s decision, 2013 will set the stage for the next decade of antitrust class actions in Canada.

Product Liability

Jurisprudential developments in product liability class actions in 2012 indicate that Canadian courts are transitioning away from what has previously been viewed to be a relatively plaintiff-friendly environment to a more cautious approach to certification. Prior to 2012, certification of a proposed class action against manufacturers and distributors of allegedly defective products, particularly medical products, was almost assured. The bar for certification was applied in a relatively low fashion in respect of these claims. As a result, most product liability cases settled long before reaching a common issues trial and often before certification.

However, a series of decisions in 2012 (some of which are outlined below) suggest that the pendulum has swung to a more central position as the courts appear to be applying greater scrutiny, and in some cases refusing certification. In 2012, the doctrine of waiver of tort also received judicial treatment that may limit the scope of its application going forward.

In light of what has transpired in 2012, we anticipate that, in 2013 and beyond, courts will continue to advance a cautious, balanced approach to the certification of product liability class actions. As such, plaintiffs in medical product class actions may have a tougher time achieving certification.

Andersen v. St. Jude Medical, Inc. demonstrated the complexity and expense involved in a common issues trial in a medical product liability class action. The trial lasted a total of 138 days spanning over two years. It involved 2,293 documents and testimony from 17 fact witnesses and 23 experts. In Andersen, the plaintiffs questioned the safety of the Silzone-coated mechanical prosthetic heart valves that had been the subject of a 2000 Canadian recall. Justice Lax ultimately found there was insufficient evidence to support the allegation that Silzone materially increased health-related risks to patients. The Court held that the propriety of a manufacturer’s conduct must be assessed with reference to the information available to the manufacturer at the time of the alleged negligence and not information available at the time of trial or at some future date. The Court dismissed the action and held that the evidence did not make out a case in negligence against the dependant at either the pre-market design and testing stage or the post-market surveillance and marketing stage. An appeal is currently pending but is unlikely to be heard and decided before 2014.

Although pharmaceutical product liability cases have frequently been certified, Justice Horkins refused to rubber-stamp the certification motion in a proposed class proceeding based on the drug Seroquel in Martin v. AstraZeneca Pharmaceuticals PLC. Although a case involving a similar pharmaceutical product had been certified, the Court reaffirmed that each case is to be decided on its own record. In this case, the Court excluded evidence from the plaintiffs’ expert and found that the statement of claim was deficient, failing to disclose a tenable cause of action. The Court also held that whether a common issue has been certified in another, similar class proceeding is not dispositive of its appropriateness as a common issue in the particular proceeding. Ultimately, Justice Horkins held that the claim failed to satisfy many of the certification criteria and awarded the defendants approximately $750,000 for costs and disbursements of the certification motion. An appeal in relation to both the certification and costs decisions is presently outstanding and is expected to be heard in 2013.

In Arora v. Whirlpool Canada, the plaintiffs sued Whirlpool in relation to an alleged design defect in front-loading washing machines. Justice Perell denied certification and held that, in the context of non-dangerous products, a manufacturer has no duty to disclose design defects. Moreover, the Court held that, as a general rule, a pure economic loss claim for negligent design in a non-dangerous product cannot succeed. Like the 2011 decision in Smith v. Inco in the environmental context, this case demonstrates the difficulties plaintiffs will face in the absence of safety or health risks.

Doctrine of Waiver of Tort

Waiver of tort is a legal doctrine providing the victims of certain torts the option to base a claim on the disgorgement of the tortfeasor’s gains rather than compensation for their losses. In 2004, Justice Cullity, in Serhan v. Johnson & Johnson, certified waiver of tort as an independent cause of action. This decision was upheld by the Ontario Divisional Court. Since then, the Ontario courts have often certified waiver of tort as a potential cause of action and have been reluctant to answer the ultimate question of whether waiver of tort is an independent cause of action or more properly classified as a remedy.

Going into 2012, the Ontario class actions bar eagerly awaited the trial decision in Andersen v. St. Jude which was expected to provide guidance on how waiver of tort claims would be treated at trial. Unfortunately, the trial decision did not provide the clarity that had been hoped for and, instead, exposed some of the reasons that a definite answer to the waiver of tort debate may be elusive. In light of a finding of no wrongdoing, Justice Lax was not required to deal with the issue of waiver of tort. Notwithstanding the foregoing, Justice Lax proceeded to comment on the doctrine and raise policy questions for consideration. She stated that the determination of waiver of tort would not require a trial or evidence. However, given its far reaching effects on the society and businesses, would the doctrine be more appropriate for the Legislature or the Court to resolve the issue? It is not clear how her comments will affect future certification decisions in 2013.

The doctrine of waiver of tort was the subject of judicial commentary in other cases in 2012. In Parker v. Pfizer Canada Inc., citing the comments made by Justice Lax in Andersen v. St. Jude, Justice Perell also questioned the appropriateness of waiver of tort as a common issue. Although he certified the issue on an interim basis, he held that it was open to the defendants to bring a motion to decertify it. He went on to say that such a motion would involve determinations of a matter of pure legal policy, and would thus not necessitate the need for an evidentiary record. Then in Arora v. Whirlpool Canada LP, Justice Perell, having certified no other causes of action, refused to certify waiver of tort as a cause of action on the basis that there was no wrongdoing upon which to support a claim of waiver of tort as a remedy.

In British Columbia, the courts have been even more hesitant to apply the waiver of tort doctrine. In Koubi v. Mazda Canada Inc., the British Columbia Court of Appeal decertified a class action and held that a claim for waiver of tort did not disclose a reasonable cause of action when the governing consumer protection statute already provided an exhaustive code with statutory remedies.

Going forward into 2013, it is questionable whether the doctrine will continue to be helpful to plaintiffs seeking certification.

Procedural Developments

Outlook on Global Classes

In a world where commerce and the exchange of information have become increasingly globalized, the appeal of global class actions is evident. The concept of global class actions avoids a multiplicity of smaller proceedings in different jurisdictions which can drive up the costs for all parties, decrease the incentives to settle and increase the likelihood of overlap and jurisdictional conflict. While attractive, from a practical perspective, global class actions present a number of challenges, including the potential for overlapping actions, questions as to jurisdiction, multi-jurisdictional orders and settlements, and problems with respect to how to provide adequate notice.

Notwithstanding these inherent challenges, Ontario courts have chosen to depart from the U.S. approach, where the inherent challenges ultimately led to the U.S. Supreme Court’s decision in Morrison v. National Australia Bank. The decision in Morrison has essentially closed the door to U.S.-based global class actions (at least in the securities context).

In contrast, the Ontario Superior Court of Justice has taken a much different approach in Silver v. IMAX. Upon making the determination that a real and substantial connection existed between the dispute and Ontario, the Court in IMAX proceeded to certify a class in which a significant number of the plaintiffs are likely to be non-residents of Canada. In the leave to appeal decision at the Divisional Court, while the certification of the global class was upheld, the Court noted that the implementation of a global class would be an ongoing issue for evaluation as the Canadian and parallel U.S. proceedings advanced.

Whether this wait-and-see approach to certification of a global class will ultimately prevail remains to be seen. At present IMAX appears to have ushered in a new global era for Ontario’s courts and, with it, the possibility of a migration of global class actions, particularly in securities, from the United States to Canada.

If IMAX indeed signifies a growing willingness on the part of Ontario courts to certify global classes, defendants situated in the U.S. in particular may find themselves at an increased risk of litigation exposure in Canada. Although IMAX involved a Canadian defendant, it is inevitable that Canadian plaintiffs will eventually seek to certify global classes against U.S. defendants where there is at least some basis for asserting a connection with the jurisdiction. The likelihood of this development appears to have been broadened following the Supreme Court of Canada decision in Club Resorts Ltd v. Van Breda, in which the Court ushered in further predictability and stability to the law governing the assumption of jurisdiction by Canadian courts. The increased certainty surrounding the establishment of a real and substantial connection, coupled with the wait-and-see approach adopted in IMAX favouring certification may serve as an impetus for an increase in class actions commenced in Ontario against foreign defendants.

Delivery of a Statement of Defence Prior to Certification

On the heels of the 2011 decision in Pennyfeather v. Timminco, Justice Perell issued another decision in 2012 questioning the long-standing convention surrounding the delivery of statements of defence in class proceedings in Ontario. If adopted by other class action judges in 2013, Justice Perell’s proposed approach will cement what might be described as a matured outlook on the appropriate timing conventions with serious implications for defence counsel.

Until recently, the convention in class proceedings in Ontario has been for defendants to wait until a prospective action is certified before delivering a statement of defence. The practice developed initially because of the presumed likelihood that a statement of claim would be reformulated post-certification as common issues were redefined, and as a result of the perception that a defence would serve little utility before the common issues were clearly defined. This convention was first called into question in a 2011 decision of Justice Perell’s, Pennyfeather v. Timminco, which suggested that requiring defendants to plead prior to certification would refine the issues to be decided at the certification motion.

In 2012, Justice Perell dealt with the issue for the second time in Smith v. Sino-Forest Corp., where he offered additional considerations in support of closing the pleadings in a proposed class proceeding prior to certification. With the benefit of well-developed class actions jurisprudence, Justice Perell reasoned that a certified claim is less likely to require significant amendments, since the guiding principles concerning when particular causes of action should be certified are now well developed in the case law. Furthermore, Justice Perell suggested that the reluctance of defendants to plead is merely tactical – to avoid early disclosure of their case – which is not consonant with the requirements of the Rules of Civil Procedure.

If other judges adopt this approach, we would expect more motions to strike pleadings prior to certification and more summary judgment applications brought alongside certification. While this may further complicate the initial stages of class proceedings, there is also a potential benefit: the possibility of a direct appeal to the Court of Appeal (bypassing the Divisional Court) from a certification motion heard in conjunction with a motion for summary judgment.

Costs and Third-Party Litigation Funding

The past year has also seen some positive developments with respect to cost awards resulting from certification motions. While the courts only rarely make cost awards to successful defendants commensurate with the risk and significance of the certification motion for defendants, there has been an increasing recognition that certification is a crucial and potentially decisive battleground in which higher cost awards may bse appropriate. In 2012, the courts also positively addressed several practical realities of the costs regime for class proceedings. These include the indemnification of proposed representative parties by class counsel and third-party litigation funding.

In both of Williams v. Canon Canada Inc. and Martin v. AstraZeneca Pharmaceuticals PLC, the Court rejected the proposition that a costs award made to defendants after a failed certification motion should be limited by low historical precedents from the early years of practice under the CPA. In particular, Justice Strathy commented in Williams that certification motions had since become longer and more complex, and that “[c]osts awards have reflected this expansion of the certification motion well beyond what was initially contemplated in 1992. Costs awards have increased to reflect these changes.”

These decisions have more than pecuniary significance for defendants against whom proposed class proceedings have been or may be brought. The traditional loser pays costs regime applicable to ordinary civil litigation was preserved in Ontario’s class proceeding regime, in part, as a disincentive to unmeritorious litigation. The apparently diminishing reluctance of courts to order significant costs against plaintiffs not only promises better cost recovery, but also strikes a more appropriate balance between promoting access to justice for plaintiffs and ensuring fairness to defendants.

Finally, the decision in Fehr v. Sun Life Assurance Co. of Canada is also notable for its role in ensuring that the costs regime remains effective for class proceedings. The case dealt with the procedure for seeking court approval of third-party funding arrangements. The plaintiffs in Fehr asked the court to permit the approval motion to proceed without notice to the defendants, in the absence of the public, and to have the motion materials sealed in the court file.

Among the issues raised by third-party funding agreements, they have been criticized for interfering with the discipline imposed by the costs regime by off-loading the risk of adverse costs awards from representative parties or their counsel. Fehr was thus a welcome development for defendants. Justice Perell decided that “the propriety of third party funding agreements is controversial and problematic,” and accordingly, “should not be allowed to operate clandestinely.” A third-party funding agreement should be disclosed to the court promptly, and the approval motion should take place in open court with notice to the defendant.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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