Topic: Class actions

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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

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.[1] 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[2] test arguably were … Continue Reading

A Cautionary Tale for Defendants Opposing Certification

Perhaps in tongue and cheek, perhaps not, Perell J. begins his decision in Berg v. Canadian Hockey League, 2017 ONSC 5382, by quoting Winston Churchill’s famous World War II speech :

We shall defend our island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender.

The quote sets upon the razor sharp line between zealous advocacy and over pleading – dubbed “Churchillian resistance”[1] –  in certification motions.

In … Continue Reading

Mitigating Securities Litigation Risk From Software Problems

Public companies can face significant securities litigation risk over defective algorithms, data errors and software glitches. As securities class action filings continue to increase across the board, plaintiffs lawyers have attacked numerous companies over stock price declines that occur after software problems are revealed. Recent court decisions denying dismissal in securities class actions against Fitbit and OSI Systems illustrate the risks that technology companies face when there is a gap between their public disclosures and the actual status of their software, including undisclosed defects in software algorithms. Short sellers have also targeted companies with negative investigatory “reports” over alleged software … Continue Reading

No Room for Double Talk: The Ontario Court of Appeal Addresses Restatements, the Reasonable Investigation Defence and the Test for Leave in Rahimi v. SouthGobi Resources Ltd.

The recent decision of the Ontario Court of Appeal in Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719 provides further guidance concerning the role of the judge on a motion for leave to commence a secondary market class action pursuant to s. 138.8(1) of the Securities Act (the Act) and the application of the defence of reasonable investigation.

In particular, the decision stands for the following:

  1. On a motion for leave under s. 138.8, the motion judge’s obligation is to critically scrutinize the entire body of evidence filed on the motion, including gaps in the evidence filed by the
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The Horror Show Continues: Application of the Limitation Period in s. 138.14 of the Ontario Securities Act in Kaynes v BP, PLC

In Kaynes v. BP, P.L.C. [2017] ONSC 5172, Justice Perell characterizes his decision about the operation of the limitation period set out in s. 138.14 of Part XXIII.1 of the Ontario Securities Act (the Act) as “the latest sequel or prequel in what has turned out to be the case law equivalent of a horror-movie franchise”.

Background

The decision arises from a Rule 21 motion brought by BP for a ruling that the putative class members’ statutory misrepresentation claims were statute-barred under s. 138.14.  The motion was brought prior to argument of the motion for leave under … Continue Reading

Third party litigation funding of class actions in Ontario: “A work in progress”

In the most recent Ontario decision on third-party litigation financing, Justice Perell provides further guidance concerning the circumstances in which such funding arrangements will receive court approval.

In Houle v. St. Jude Medical Inc., 2017 ONSC 5129, Bentham IMF Capital Inc. (Bentham), an Australian-based litigation financing firm, entered into a financing agreement with Mr. and Mrs. Houle, plaintiffs in a proposed class action alleging negligent manufacture and distribution of implantable cardiac defibrillators and failure to warn of rapid, premature battery depletion.

Pursuant to the agreement, Bentham committed to pay, on a non-recourse basis:

  1. the disbursements incurred by
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You Get it Right and it’s Still a Misrepresentation: the Paradox in Pretium

A gold mining company chooses not to disclose preliminary mineral sampling results that it viewed as unreliable. Further testing eventually proves the preliminary sample to be inaccurate. In Wong v Pretium Resources, 2017 ONSC 3361 the Ontario Superior Court of Justice granted leave for a plaintiff to proceed with a securities class action under s. 138.3 of the Ontario Securities Act (the OSA) alleging secondary market misrepresentation for failing to disclose the preliminary results. What gives?

Is there gold in the hills?

Pretium Resources (Pretium) is a mineral exploration company listed on the TSX and NYSE … Continue Reading

Dual-listed companies beware

Securities class action filings have hit record highs in the United States. In 2016, the United States observed the highest number of securities class action filings since “the early 2000s dot-com crash.”[1] By July of this year, 246 new securities class actions claims were filed in U.S. federal courts.[2] This phenomenon comes as little surprise; these numbers reflect the recent upward trend in securities class action claims observed over the past number of years in the United States.

Canada, on the other hand, is not yet experiencing the same trend. In 2016, nine new securities class action claims … Continue Reading

OSC Approves Its 9th No Contest Settlement

On July 13, 2017, the Ontario Securities Commission (OSC) announced that it had approved yet another “no-contest” settlement resolving unproven allegations by OSC Staff that there were inadequacies in certain mutual fund dealers’ systems of controls and supervision which resulted in clients paying excess fees that were not detected or corrected in a timely manner, constituting a breach of section 11.1 of National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations, and  conduct contrary to the public interest. The  dealers neither admitted nor denied the allegations.

As in a string of other similar no contest … Continue Reading

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