Law Times

Page 10 March 16, 2015 • Law Times www.lawtimesnews.com FOCUS Class counsel awaiting guidance on carriage disputes Divisional Court expected to shed light on the rules judges should apply By JULiUs meLNiTZer For Law Times he Divisional Court will soon shed light on the rules courts should apply when deciding which of two or more competing plaintiffs' law firms gets to control a class action. In this context, competing firms or groups of them resort to carriage motions when they file separate cases regarding the same subject matter and can't agree on how to split the pie. In late December, Justice Ian Nordheimer of the Ontario Supe- rior Court granted leave to appeal in Mancinelli v. Barrick Gold after two groups of law firms each filed multibillion-dollar class actions against Barrick Gold Corp. al- leging the company had made misrepresentations that caused its share value to drop. "The issue of who obtains car- riage of a class proceeding is one that has, to date, been the subject of only one decision by the Divi- sional Court," Nordheimer noted. "It is a matter of importance to the law of class proceedings gener- ally. This is especially so in a case, such as this, that the motion judge described as 'one of the largest se- curities class actions in Canada.'" The proceedings against Bar- rick originated in 2013 after the company disclosed that local court orders and the environ- mental regulator had suspended operations at its Pascua-Lama project in Chile. The company's shares dropped dramatically and numerous proposed class actions in Canada and the United States followed. Superior Court Justice Ed- ward Belobaba, who heard the motion at first instance, awarded carriage to a group consisting of Rochon Genova LLP, Saskatchewan-based Merchant Law Group LLP, and Toronto's Rosen Naster LLP over a competing group led by Koskie Minsky LLP that included Siskinds LLP, Sutts Strosberg LLP, and Groia & Co. PC. But Nordheimer granted the Koskie Minsky group leave to appeal Belobaba's decision. "In so concluding, I am cogni- zant of the fact that decisions on carriage motions will generally involve the exercise of discretion," wrote Nordheimer. "In this case, however, seri- ous issues had arisen regarding the appropriate principles to be applied in the exercise of that discretion." "Justice Nordheimer lists a number of matters of concern about Justice Belobaba's deci- sion on carriage," says Kirk Baert, lead counsel for the Koskie Min- sky group. Both groups had told Be- lobaba it would be in the best interests of the proposed class, fair to the defendants, and con- sistent with the policy objectives of the Class Proceedings Act if he granted carriage to them and stayed the actions brought by the other consortium. Making up his mind, howev- er, was "not a difficult decision," Belobaba noted. "On the two significant dif- ferentiating factors, theory of the case and state of preparation, RGG [Rochon Genova Group] . . . clearly and decisively came out ahead," he wrote. But as Nordheimer saw it, there was a "fundamental dis- agreement" between Belobaba's reasoning and the Divisional Court's judgment in Locking v. Armtec Infrastructure Inc. In Locking, the court ruled that a carriage motion could require additional analysis of the claims beyond the question of whether they were frivolous. Belobaba took issue with that, stating that a more detailed or nuanced analysis amounted to an assessment of a claim's likeli- hood of success, something the rules don't permit on a carriage motion. Belobaba's suggestion that there was "nothing wrong" with costs and complexity in a class action also conf licted with existing jurisprudence. "Multiple or broader or more complicated claims will likely prolong the proceedings by increasing the length and breadth of the discovery pro- cess and the time necessary to get to trial and, thus, delay any recovery that the members of the class may ultimately achieve," wrote Nordheimer. Such claims could also re- duce the chances for certifica- tion and other allegations, like an assertion of fraud, could in- hibit a court's ability to resolve the core complaints. "All of these potential difficul- ties means that the ultimate ob- jective of the Class Proceedings Act, 1992, is not achieved by the broader and more complicated claim," wrote Nordheimer. Also at issue was whether it was proper in assessing the po- sition of the competing groups to consider steps taken after the need for a carriage mo- tion emerged. Here, the main factors Belobaba relied on for his finding that the Rochon Genova group was in a better position to take on the proceeding related to steps taken after setting the carriage motion for a hearing. "The concern expressed in [a conf licting case], which I share, is that, if consideration is given to steps taken after the carriage motion is known, it sets up somewhat of a 'moving target' for the hearing of that motion," wrote Nordheimer. "It also encourages each side to try and leapfrog over the oth- er by taking additional steps (or copying steps taken by the other side) in an effort to gain the up- per hand." Nordheimer also questioned Belobaba's treatment of the re- sources and experience of coun- sel. "In other words, the motion judge appears to treat this factor as only requiring a showing of a baseline of experience as op- posed to requiring an analysis of the relative experience of coun- sel," he wrote. "The motion judge's ap- proach to this factor differs from the approach taken in oth- er cases . . . where a comparative analysis was done." Overall, then, there was "good reason to doubt the cor- rectness of the decision." LT C A N A D I A N L AW Y E R M A G A Z I N E Offi ces in Toronto & Brampton Referral Fees Respected Tel: 1-866-285-6927 www.singerkwinter.com Untitled-3 1 2015-03-11 7:56 AM E. V. Litigation & Financial Services Inc. Elaine G. Vegotsky, CMA, CFE, CFI Assisting you in Litigation & Forensic Accounting, Financial Investigations x a F r o e n o h p e l e T 0 0 9 e t i u S 0 7 3 1 - 0 3 9 ) 6 1 4 ( , t s a E e u n e v A d r a p p e h S 5 4 Willowdale, Ontario M2N 5W9 (905) 731-5812 evlitigation@rogers.com E. V. Litigation & Financial Services Inc. Elaine G. Vegotsky, CMA, CFE, CFI Assisting you in Litigation & Forensic Accounting, Financial Investigations x a F r o e n o h p e l e T 0 0 9 e t i u S 0 7 3 1 - 0 3 9 ) 6 1 4 ( , t s a E e u n e v A d r a p p e h S 5 4 evlitigation@rogers.com Toronto, Ontario M2N 5W9 (905) 731-5812 CFA, CPA, Vlit_LT_Mar10_14.indd 1 14-03-04 10:18 AM T 'Justice Nordheimer lists a number of matters of concern about Justice Belobaba's decision on car- riage,' says Kirk Baert. class action filed over document-review work By david dias Law Times rofessional services firm Deloitte LLP is facing a $384-million class action on behalf of hundreds of lawyers working at a docu- ment-review company it acquired last year. In a statement of claim filed last week, representative plaintiff Shireen Sondhi, a Toronto lawyer, alleges Deloitte and ATD Legal Ser- vices PC saved millions in payroll deductions and benefits by misclas- sifying employees as independent legal contractors. None of the allega- tions have been proven in court. While the Law Society of Upper Canada has yet to take a firm posi- tion on whether or not document review constitutes legal services, the plaintiff argues the work she did for ATD wasn't legal work. As a result, Sondhi claims the company denied her and her colleagues statutory labour protections such as notice of termination. It also alleg- edly deprived them of entitlements such as vacation pay and overtime with even bathroom breaks docked from their overall compensation. "These workers were supervised in Deloitte's offices, they didn't provide their own tools, or control their own schedules," said plaintiff 's counsel Andrew Monkhouse in a statement. The conf lict arose after Deloitte acquired ATD in January 2014. The claim alleges that, upon Deloitte's acquisition, the new parent compa- ny imposed new terms on document-review workers. Sondhi and a number of her colleagues objected to the new terms, something she claims resulted in her termination without notice via e-mail. LT P

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