Law Times

November 17, 2008

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A.NEUMAN ASSOCIATES INC. Call 416.223.5991 Investigative & Forensic Accounting Specialists Proven Expertise $3.55 • Vol. 19, No. 36 ealogical-EAR_LT_Nov17_08.indd 1 11/11/08 2:36:29 PM $550-million class action first of its kind Lawsuit targets AIG BY ROBERT TODD Law Times listed on the TSX, targeting U.S. insurer American International Group, a com- pany that fell apart in September after the bottom fell out of mortgage-backed securities it had gambled on. "We feel that Canadians, notwithstand- is an American corporation, if S ing this they've sustained losses as a result of the ac- tions alleged within the claim, should have the opportunity to seek a remedy in their courts under their own legal regime. And there are distinct advantages to them doing that," says Dimitri Lascaris, the Siskinds lawyer prosecuting the lawsuit. The $550-million class action was filed last week under Part 23.1 of the Ontario Securities Act on behalf of all Canadian residents and entities that acquired AIG se- curities from Nov. 10, 2006, to Sept. 16, 2008. It is aimed at AIG, AIG Financial Products Corp., and directors and officers of the companies, Siskinds says. "The AIG class action arises out of iskinds LLP has filed the first class action on behalf of Canadian in- vestors against a corporation not under Part 23.1 of the Ontario Securities Act, says Lascaris, but this is the first time he knows of in which a section of that part has been used against a corporation not listed on the Toronto Stock Ex- change. That section says "you can assert claims under Part 23.1, against companies that are not reporting issuers, if there's a real and substantial connection between that company and the juris- diction of Ontario," Lascaris paraphrases. The benefits to class members pursuing the matter here, he says, include the fact that U.S. courts would force them to show that the de- fendants acted with scienter, meaning fraudu- lent intent. But in Ontario courts, he says, defendants in this type of matter would we liable if negligence is proven. Also, if a misrepresentation were established, the burden of proof in Ontario courts is on the defen- dants to show they were not negligent, he says. Courts here also expect defendants to show what caused the class members to sustain dam- ages, whereas plaintiffs must demonstrate that in U.S. courts, he says. A series of decisions in the U.S. make it difficult for plaintiffs to establish that defendants caused damages, says Lascaris. He says he expects AIG to challenge Ontario Dimitri Lascaris says there are 'distinct advan- tages' to launching the lawsuit against American International Group in Ontario. AIGFP's credit default swaps and the crip- pling decline in AIG's stock price when the true effect of those credit default swaps became known to the investing public," says a release from the London, Ont., firm announcing the lawsuit. "The AIG disclosures out of which the class action arises are currently the subject of investigation by law enforcement authorities, and are alleged in the class action to have caused massive losses to Canadian investors." Siskinds had yet to serve AIG the pleading at press time, and Lascaris says he hopes to have that done "as soon as possible." Joe Norton, director of public relations for AIG, says the company "doesn't comment on matters before the courts, or on lawsuits." There previously have been 12 cases filed courts' right to hear the case. "We've turned our minds to it and gave a great deal of thought to that before we agreed to pursue this matter," he says. AIG initially received $85 billion from the U.S. government to help it stabilize after the collapse, but in November the Federal Reserve kicked in more money to bring the total to $150 billion. "Obviously a company that had been a great favourite with investors in numerous jurisdictions including Canada has been brought to its knees," says Lascaris. "We feel the causes of that are something that definitely merit litigation." LT Firms deny grapevine layoff rumours BY ROBERT TODD Law Times R umours continue to swirl that the economic slow- down has hit Bay Street's legal community through lawyer layoffs, but firms targeted by that speculation were quick to refute the claims last week. Fraser Milner Casgrain LLP chairman and CEO Michel Brunet told Law Times that the firm has let go about 40 staff — including 10 lawyers — overall in response to budgetary deliberations. But he notes that with an overall staff of about 1,400, the departures won't have a significant impact on the firm. Brunet, who is based in the firm's Montreal office, says about half of the layoffs involved offices in On- tario. He declined to offer the exact number of lawyers let go in indi- vidual offices but said the number in Toronto "barely qualifies." He says "a good deal" of the fired law- yers were based in offices in Western Canada, and all were associates. Steve Sigurdson, co-managing partner of Osler Hoskin & Har- court LLP, put an end to rumours suggesting his firm had discharged a group of lawyers. He adds that the firm hasn't laid off any support staff, and no future layoffs involving law- yers or other staff are planned. Law Times was unable by deadline to confirm or deny ru- mours of lawyer layoffs at one other major firm. "Obviously these are challeng- ing economic times, but our view of these things is we take the long-term approach," says Sigurdson. "We're diversified, just like other firms are." Brunet says FMC's layoffs are part of the firm's yearly examina- tion of areas to improve efficiency. While he says the move to cut em- ployees is not out of the ordinary for the firm at budget time, he acknowledged that tougher eco- nomic times forced it to look at expenses more carefully. "As we do each year, we exam- ine whether there is redundancy, whether there is room for im- provement in our ratios," he says. "But we're talking about numbers that are negligible in the overall scope of things." Brunet says he remains posi- tive in the midst of the economic downturn, and says FMC is well positioned to weather a slowdown that he predicted could last up to four years. He noted that half of the firm's resources are in Western Canada, and that the firm has a strong presence in markets that haven't been hit hard. He also pointed to FMC's in- solvency and restructuring group — one of the country's largest in the area — as a strength. He says lawyers in that group are taking on an increasing workload. At the end of the day, says Bru- net, the firm has a responsibility to serve its clients and its employees. "You owe it to your clients and you owe it to your people to have a serious look at your operations and make them more efficient, and keep your people motivated," he says. Gowling Lafleur Henderson LLP's David Cohen, who is the cli- ent team leader for the firm's finan- cial services department, says big Ca- nadian firms haven't been hit yet by See Canuck, page 4 Covering Ontario's Legal Scene ntitled-6 1 November 17, 2008 1/8/08 3:28:10 PM Inside This Issue 3 ABCP Wrapping 7 The Hill 9 Focus On Labour and Employment Law Quote of the week "Employees are wasting 1.6 billion hours a year in what we call cyber-slacking — surfing the net, playing games, chatting to friends and misusing e-mail. Employers need to have some policies in place setting out when, how, and what the employee can access through the company computer or even laptop." –– Colleen Dunlop, lawyer, Emond Harnden LLP See New, page 9 Advocate_LT_Nov17_08.indd 1 11/11/08 3:10:12 PM

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