In British Columbia (Securities Commission) v. BridgeMark Financial Corp, 2020 BCCA 301, the British Columbia Court of Appeal upheld a decision of the British Columbia Securities Commission (Commission) to release documents obtained during an investigation and filed as evidence at a hearing to consider whether to extend a temporary cease trade order. A firm of class action lawyers (the Law Firm) requested access to the evidence for use in a class action against the subjects of the investigation. The persons subject to the investigation appealed the Commission’s decision to grant access to the Law Firm.… Continue Reading
In Miller v. FSD Pharma Inc. (Miller), a decision released June 23, 2020, Morgan J. of the Ontario Superior Court of Justice granted leave to proceed with a putative secondary market securities class action under s. 138.3 of Part XXIII.1 of the Ontario Securities Act (OSA) against FSD Pharma Inc. (FSD), a new entrant into the Ontario cannabis production market. The Miller decision is significant for two reasons. First, the Court applied the “market impact” test for assessing the materiality of the alleged misrepresentations. Second, the Court adopted a contextual approach to … Continue Reading
On October 1, 2020 the Ontario Superior Court approved a securities class action settlement agreement in the amount of $700,000 and a plan of allocation providing for the distribution of the settlement amount, net of legal fees, disbursements and taxes, to two investor protection legal clinics.
The Cy-près Distribution of the “Uneconomic” Net Settlement Amount
During the class period, the defendant’s securities traded on both the Nasdaq and the TSX, with trading volumes on the TSX accounting for less than 1% of the trading volume on the US exchanges. Most class members in the Ontario … Continue Reading
The recent decision of the Ontario Court of Appeal in Wright v. Horizons ETFS Management (Canada) Inc. (2020 ONCA 337) is significant for two reasons. First, it recognizes the existence of a duty of care owed by a fund manager to purchasers of units of the fund in relation to the allegedly negligent design of the fund. In addition, it opens the door to potential claims under s. 130 of the Ontario Securities Act against fund managers in relation to misrepresentations in the fund’s prospectus notwithstanding that the funds are sold over a stock exchange.
The proposed class … Continue Reading
The Quebec Superior Court, in California States Teachers’ Retirement System v. Bausch Health Companies Inc. (2020 QCCS 275), recently clarified the rules applicable to limitation periods in the context of secondary-market liability actions under the Quebec Securities Act (QSA).
Much like its Ontario counterpart, s. 225.4 QSA provides for an authorization mechanism whereby applicants wishing to institute a secondary-market liability claim against a public issuer must convince the court that their actions are taken in good faith and have a “reasonable possibility of success”. While such actions can take on the form of class … Continue Reading
The price at which securities of many Canadian issuers are trading has been significantly affected by the global coronavirus pandemic. This will almost certainly impact their risk of litigation arising from the accuracy their public disclosures. For companies that are dual listed in the United States, the risks are likely enhanced.
These risks appear to be exacerbated for issuers whose shares trade on Canadian exchanges as a result of the recent suspension of Ontario limitation periods, giving security holders a longer time within which to commence litigation.
With this in mind, issuers are well advised to continue to work closely … Continue Reading
Climate change has been a focus in the United States for quite some time now, and the US Securities and Exchange Commission (SEC) published interpretive guidance on climate change disclosures a decade ago. However, the times are changing—and the potential liability for directors and officers has never been higher. Climate change disclosures have been debated at the highest levels of the SEC, and the Plaintiffs’ bar can be expected to broaden their lawsuits beyond the usual fossil fuel producer or utility targets.
The Ontario government’s recent announcement of proposed changes to Ontario’s class proceedings legislation bodes well for defendants and their insurers. If the amendments become law, they would provide greater latitude to defendants seeking to narrow or dismiss claims prior to certification, make certification a somewhat steeper hill for class counsel to climb, and provide mechanisms to prevent duplicative multi-jurisdictional class actions from proceeding in Ontario. Details of certain of these proposed changes include the following:
Early dismissal motions and dismissal for delay
Prior to the motion for certification, motions by defendants that may dispose of the proceeding in whole or … Continue Reading
In a recent class action settlement approval hearing, Justice Belobaba of the Ontario Superior Court affirmed the value of early “ice breaker” settlements in complex class actions involving multiple defendants. In such a settlement, one defendant settles ahead of the rest for what may be viewed as a “token” amount, along with a pledge to provide cooperation to the plaintiffs. (Di Filippo and Caron v. Bank of Nova Scotia et al, 2019 ONSC 3282).
In the case in issue, the proposed settlement would resolve two class actions each involving substantially the same group of defendants, all … Continue Reading
On March 5, 2019, the United States Court of Appeal for the Second Circuit affirmed the dismissal of a class action claim alleging securities fraud based on purportedly misleading statements made by an Issuer regarding its regulatory compliance efforts. The Second Circuit concluded that the Issuer’s statements were too generic to cause a reasonable investor to rely on them, and rejected the claim as a “creative attempt to recast corporate mismanagement as securities fraud.” Singh v. Cigna Corp., No. 17-3484-cv, 2019 U.S. App. LEXIS 6637 (2d Cir. Mar. 5, 2019).
In early 2012, Cigna Corporation (Cigna or … Continue Reading
In February 2019, the Alberta Securities Commission (ASC) declined to stay the hearing of pending ASC enforcement proceedings on the basis of the existence of parallel, pending class action proceedings.
In June 2018, Staff of the ASC issued a notice of hearing against Alberta divisions of the Lutheran Church-Canada and several of their former officers and directors (the Respondents), alleging that the Respondents had made misrepresentations contrary to s. 92(4.1) of the Alberta Securities Act (material misleading statements) in connection with securities offered to members of the Lutheran Church.
The allegations followed the financial collapse of … Continue Reading
The Court of Appeal for Ontario recently set aside a decision approving the legal fees of class counsel on the condition that counsel would donate 40% of the approved fees to charity.
The appeal provides useful guidance for practitioners on fee approval motions in class actions.
The Settlement Agreement
Welsh v. Ontario, 2019 ONCA 41 involved a class action commenced in August 2015 under the Class Proceedings Act, 1992, S.O. 1992, c. 6 alleging that the province of Ontario had, for decades, negligently operated schools for the deaf and had breached its fiduciary duty and duty of care … Continue Reading
The Ontario Superior Court (ONSC) issued two back-to-back decisions on acceptable litigation financing agreements, both involving the same third party funder. While the ONSC continues to approve classic litigation financing arrangements, uncertainty remains as to whether third party financiers may profitably fund counsel fees in the context of class actions.
Classic funding schemes continue to receive unfettered court approval
In David v. Loblaw, 2018 ONSC 6469, Morgan J. approved IMF Bentham’s funding agreement in a class action regarding the alleged price-fixing of bread without modifications, recognizing litigation financing as a potential tool for access to justice.
The … Continue Reading
Justice Perell’s decision in Fantl v. ivari, teaches class action defendants an important lesson in being careful what they wish for. In a rare decision, he ordered that a defendant contribute the majority of the costs of providing potential class members with notice of certification.
When a class action is certified by a court, efforts must be made to notify potential class members of the decision so that they are able to exercise their right to opt-out of the class. Notice is usually provided by newspaper publication, advertisements and dedicated website, among other things.
Typically, the successful plaintiff … Continue Reading
In the recent decision of Paniccia v MDC Partners Inc., Perell J. refused to grant leave to proceed with a putative secondary market securities class action under Part XXIII.1 of the Ontario Securities Act (OSA) against MDC Partners Inc and certain of its officers on the basis that the alleged misrepresentations were not material. The decision presents valuable insight into the assessment of materiality, an issuer’s obligation to disclose a regulatory investigation, and a plaintiff’s obligation to plead a corrective disclosure under Part XXIII.1.
Background to the Decision
In August 2015 the Plaintiff brought a putative … Continue Reading
Companies confronting serial class actions won much needed relief from the US Supreme Court yesterday, in a decision that held that a class action tolls statutes of limitations only for putative class members’ individual claims, and not for later-filed class actions. A second class action must be filed within the limitations period, or it is barred. The opinion in China Agritech v. Resh (“Resh”), written by Justice Ginsburg, is a welcome development for companies that have been subject to repeated class action lawsuits raising the same claims.
The Resh decision stems from a perceived ambiguity in earlier decisions … Continue Reading
On May 31, 2018, the Supreme Court of Canada denied SouthGobi Resources Ltd.’s application for leave to appeal the decision of the Ontario Court of Appeal, which I provided an update on October 7, 2018. The Court of Appeal decision provides guidance concerning the availability of the defence of reasonable investigation to a claim under Part XXIII.1 of the Ontario Securities Act in the context of a restatement, and the test for leave to bring such a statutory claim.
On March 9, 2018, the Law Commission of Ontario (LCO) released its Consultation Paper entitled “Class Actions: Objectives, Experiences and Reforms”. The Consultation Paper is the next phase of the LCO’s Class Actions Project which is set to conduct a general review of the class action landscape in Ontario, with a view to providing a final report with recommendations for law reform where appropriate.
It has now been 25 years since the passage of the Ontario Class Proceedings Act, and this is said to be the first systematic review of the class action regime in Ontario … Continue Reading
(The author was a member of the CBA National Class Actions Task Force 2016-2017)
At the CBA Annual Meeting on February 15, 2018, a resolution to approve, as best practices, a revised Canadian Judicial Protocol for the Management of Multi-Jurisdictional Class Actions was approved. The resolution also urges Canadian courts that administer class actions to adopt the revised Canadian Judicial Protocol.
The Revised Protocol builds on the existing CBA Protocol providing for the creation of a Notification List of all counsel involved in class actions involving the same or similar subject matter, and the approval and administration of settlements through … Continue Reading
In the U.S. there has been an notable uptick in class action lawsuits launched against companies in the cryptocurrency market in late 2017. As public attention turned to the roller-coaster ride of cryptocurrency markets over the past year, it is not surprising that ambitious class counsel have jumped on the ride by issuing their first putative class actions against companies funded through initial coin/token offerings (ICO) and companies that are otherwise active in the cryptocurrency space. With over $3 billion dollars raised through ICOs in 2017, and few signs of the market dynamics changing any time soon, we … Continue Reading
Plaintiffs in class action claims for misrepresentation in the secondary market recently scored a victory when the Ontario Superior Court of Justice determined that not only does it have jurisdiction over these claims brought by Canadians who purchased shares of a company registered in Canada on a foreign stock exchange, but that Canadian securities and tort law should apply to such claims.
In August 2015 Mr. Paniccia commenced a class action against MDC Partners Inc and its officers (together, “MDC”) in Ontario for both a statutory misrepresentation claim under Part XXIII.1 of Ontario’s Securities Act and negligent … Continue Reading
In a previous post, You Get it Right and it’s Still a Misrepresentation: the Paradox in Pretium, we reported on the decision of Justice Belobaba in Wong v Pretium Resources Inc. granting leave to the plaintiff to commence an action for secondary market misrepresentation under Part XXIII.1 of the Ontario Securities Act.
On December 1, 2017 the Divisional Court dismissed the defendants’ motion for leave to appeal.… Continue Reading
The Yip v. HSBC Holdings plc saga continues with the granting of a costs award in the amount to $1,000,455.22 to the successful defendants following a successful motion by the corporate defendant to stay the action on jurisdictional grounds and an unsuccessful cross-motion by the plaintiff for a declaration that the corporate defendant was a responsible issuer (discussed in our post here). That decision is under appeal.
The decision is a cautionary tale for entrepreneurial plaintiffs bringing big dollar claims that may be perceived as overreaching.
The Allegations and Motions
Yip sued HSBC Holdings plc (HSBC) … Continue Reading
No Common Law Duty of Care Owed by Underwriters to Investors in a Bought Deal: LBP Holdings Ltd. v. Hycroft Mining Corporation, 2017 ONSC 6342
On October 24, 2017, Justice Perell of the Ontario Superior Court of Justice dismissed a motion to certify claims for negligent misrepresentation and negligence against two underwriters primarily on the basis that a class action was not the preferred procedure. The Court also held that the plaintiff’s common law negligence simpliciter claim did not disclose a cause of action. The foreseeability and proximity stages of the Anns v Merton test arguably were … Continue Reading