Law Times

Law Times • February 4, 2013 Page 11 FOCUS Appeal court helps U.S. plaintiffs gather evidence BY Julius Melnitzer For Law Times A recent decision of the Ontario Court of Appeal has made it clear that our judiciary is only too willing to help U.S. class action plaintiffs gather evidence from Canadians even where doing so might undermine an individual's right to remain silent. "This is true even where Canadian prosecutors couldn't get the same testimony because the deponent is a target of a criminal investigation and Canadian plaintiffs couldn't get it because they don't have the same discovery rights," says Chris Naudie of Osler Hoskin & Harcourt LLP's Toronto office. "But it does seem a little odd for U.S. plaintiffs to get first crack at the evidence in a Canadian-based case." The issue arose in Treat America Ltd. v. Leonidas, in which the appeal court allowed American plaintiffs in a cross-border class action to depose the former chief executive officer of a Canadian company on Canadian soil. The class action originated with a criminal and regulatory investigation by Canadian authorities that prompted a number of parallel class actions in Canada and the United States against various companies and individuals. The U.S. actions were consolidated in Pennsylvania. The supervising judge there agreed to issue a letter of request for the examination of Robert Leonidas, the former president and CEO of Nestlé Canada Inc. Canadian courts have discretion to grant or deny such requests. They may grant them if the evidence is relevant, necessary for trial, and is otherwise not available; doing so wouldn't be contrary to public policy or unduly burdensome; and the applicants identify the documents they want with reasonable specificity. In granting these requests, Canadian courts have emphasized the importance of the public interest in international comity even in cases where an individual would have a right to silence under Canada's Charter of Rights and Freedoms. "It's a balancing act between personal rights, comity, the Evidence Act, and the Charter in which the proceedings can get really unpredictable," says JonDavid Giacomelli of Cambridge LLP's Burlington, Ont., office. At first instance, the Ontario Superior Court granted the order but attached conditions that Leonidas have the opportunity to respond to any action taken by Canadian authorities to access transcripts of the depositions or by others to make the evidence public before trial. Leonidas appealed. His counsel, Jay Naster of Toronto's Rosen Naster LLP, argued that granting the order would be contrary to public policy as it infringed on Leonidas' Charter rights by allowing authorities to access the testimony and gain a strategic advantage in potential criminal proceedings. But Justice Kathryn Feldman, writing for a unanimous Court of Appeal bench that also consisted of justices Stephen Goudge and Robert Blair, noted that Canadian evidentiary statutes and the Charter prohibited use of the U.S. evidence in a Canadian criminal case. As for the argument that authorities could gain a strategic advantage by accessing the evidence, Feldman noted the authorities had agreed not to seek it. Whether any attempt to do so was in and of itself unconstitutional, however, was an open question. "Treat is consistent with the prevailing jurisprudence in Canada that suggests that Canadian courts will try to enforce letters of request wherever possible provided there is a true need for the evidence in question and that the request does not offend Canadian public policy," says Naudie. "What is particularly interesting is the practical demonstration of the extent courts will go to in fashioning remedies to guard against offending such policies while still granting the request." Still, Naudie is skeptical as to the efficacy of the protections afforded by the court. "The court did put in a wide array of protections, but if the cork becomes unpopped, the genie's out of the bottle," he says. For his part, Giacomelli is concerned that counsel will find it hard to advise clients in similar cases. "What the courts did here was fashion a complete one-off where [the Superior Court] threw in a couple of safeguards and then the Court of Appeal threw in a couple more and at the end Leonidas was still exposed," he says. "And because the courts will bend over backwards to hammer out a practical solution to the balancing act between immunity and comity, it would be very difficult to advise a client with any certainty as to what they might be able to negotiate." LT Mexico launches labour reforms BY Julius Melnitzer For Law Times F orty-two years of labour law stagnation ended in Mexico in November when the country's congress and president approved a wide-ranging labour reform bill comprised of some 1,000 articles. "The new law is very modern," says Juan Carlos Pró-Rísquez, a partner in Despacho de Abogados Miembros de Norton Rose S.C.'s Caracas office. Most importantly for Canadian and other foreign businesses, the legislation — which is retrospective but not retroactive — allows for regulations that will dictate the terms under which companies can hire Mexicans to work abroad and creates additional obligations for mining industry employers. The law also makes it easier to hire and fire workers and creates a process for simplifying and shortening labour disputes, partly by restricting the right to strike. More particularly, the legislation creates six categories of labour contracts. They include job-specific contracts; contracts for a determinate period of time; seasonal jobs; indeterminate hiring; probationary hiring; and trainee hiring. The law also codifies the circumstances under which dismissal without liability may occur; limits back salaries for unlawful dismissal to 12 months; prohibits discrimination and sexual harassment; ensconces international standards of dignity for employees; promotes environmental sustainability; allows outsourcing under certain conditions; and mandates on-the-job training. Many observers believe the changes will reverse a long-standing trend that has discouraged formal hiring and let a vast underground economy engaging an estimated 29 per cent of Mexican workers ferment. "This is a huge and important reform that is a positive for the business community as it will create greater certainty regarding the terms of employment and generate more jobs," says Manuel Limón, a labour and employment partner at Baker & McKenzie S.C.'s Mexico City office. By way of example, Limón cites the limitation on back pay in severance actions. "Considering that a severance case may take two or three years to resolve, back-pay liability was often higher than the severance pay itself and was payable in full whether or not the terminated employee found another job," he says. "The 12-month limitation in the new law will reduce the contingency costs of litigation and provide certainty regarding these costs, whereas the old law could bankrupt some small companies." In another nod to the business community, the reform measures dilute seniority rights by making them less significant in promotion decisions. On the other hand, outsourcing is now limited to tasks that have a specialized character. "The labour courts and labour authorities will have the final say on what work is of such specialized character," Pró-Rísquez tells Law Times. "It's all part of a general trend in Latin America to make outsourcing more difficult." Companies that don't comply with restrictions on outsourcing may be deemed the employers of the individuals doing the outsourced work. "That could make affected companies liable for profitsharing and other benefits to these individuals," Limón says. Otherwise, the minimum wage will change from an hourly to a daily rate. Finally, the new law seeks to instil some professionalism into the dispute resolution process. "The government wants a professional labour board, professional conciliators and mediators, and representation by professional attorneys," Pró-Rísquez says. He adds that when Venezuela went to a professionalized system about a decade ago, labour and employment settlement rates rose from the 10- to 20-per-cent range to about 90 per cent. From another perspective, however, employers are disappointed that legislative compromises stripped away certain measures imposing greater transparency and accountability on Mexico's powerful unions whose membership comprises some 25 per cent of the country's workforce. Critics of the current regime allege that the divide between the individual worker and the union is in some cases so great that unions negotiate first agreements before workers for new factories are even hired. They also claim many union members have no idea as to which union represents them and takes their dues. LT CYNTHIAKUEHL Toronto Office 416-601-2363 ckuehl@lerners.ca JASONSQUIRE Toronto Office 416-601-2369 jsquire@lerners.ca We guide foreign and domestic clients through the complexities that they face when their business disputes cross borders. In its recent US Guides to Leading Cross-Border Litigators, Lexpert named Cynthia Kuehl and Jason Squire as "Litigators to Watch". We welcome the opportunity to discuss any questions you have about cross-border litigation. Contact Cynthia or Jason today. Toronto: 416 867 3076 London: 519 672 4510 www.lerners.ca www.lawtimesnews.com ntitled-2 1 13-01-29 8:45 AM

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