Law Times

Page 10 August 8, 2016 • LAw times www.lawtimesnews.com Securities class actions becoming big business BY JIM MIDDLEMISS For Law Times I f you don't think that secu- rities class actions have be- come big business in Canada, think again. Between 2008 and June of 2016, Canada has seen 37 settle- ments of securities class actions amounting to $662.8 million, according to proxy advisory firm Institutional Shareholder Services. Only halfway into 2016, and public companies have already paid out $32 million in settle- ments, which exceeds last year's $26.5-million total. And that's only settlements. Millions of dol- lars more are being spent prose- cuting and defending claims. Take the recent Ontario Superior Court of Justice cost ruling in Green v. Canadian Imperial Bank of Commerce, where Justice G.R. Strathy or- dered CIBC to pay the plaintiffs costs of $2.7 million for a case that has yet to reach trial. Andy Cottrell, associate di- rector, head of class action client service at ISS, says Canada has become a world leader in securi- ties class actions, fighting with Australia for second spot. He says that, five to six years ago, the U.S. was the automatic choice of jurisdiction for filing most securities class actions; how- ever, the 2010 U.S. Supreme Court ruling in Morrison v. National Australia Bank Ltd. changed that globally. That's when the U.S. Supreme Court shut down access to its courts for investors whose shares trade on foreign exchanges. "Since that decision has been made, Australia has really got- ten significantly more active," he says. Now, Canada and Australia are leapfrogging each other for second place. He says the num- ber of cases each year varies. "It ebbs and f lows," he says. Currently, though, some ques- tion if we are entering a lull. Linda Fuerst, a partner at Norton Rose Fulbright LLP, says that, in 2015, there were only four statutory securities class actions launched in Canada, the lowest since the 2008 financial crisis. Yet, the U.S. saw 234 filings in 2015, the high- est since 2008. Canada also saw a bumper crop of 18 initial pub- lic offerings filed in 2015, which often results in some filings. Yet, none have surfaced. "It's puzzling why that hap- pened last year," says Fuerst, spec- ulating that the fact that many of the IPOs outperformed the mar- ket possibly held down the filings. "There haven't been a ton of new filings," agrees Mike Robb, a plaintiff class actions lawyer at Siskinds LLP in London, Ont. "They tend to happen when the markets are rough." Nonetheless, there is still a strong pipeline of cases and it seems that every month a new ruling springs up adding to the case law. For example, carriage motions, where plaintiffs fight for control over a class suit, saw two rulings back to back in the early part of summer, a rarity. In early June, in Kowalyshyn v Valeant Pharmaceuticals In- ternational, Inc., the Ontario Superior Court provisionally granted carriage of the Valeant class action to a consortium of Sutts Strosberg LLP and Koskie Minsky LLP, representing Joyce Kowalyshyn, over a team of Sis- kinds and Rochon Genova LLP, representing Lorraine O'Brien, in what Justice Paul Perell called a "hard fought" motion. He noted "determining car- riage was very difficult. . . . the proposed class actions are very complex and advance gargan- tuan claims for many billions of dollars, and the carriage battle was between well matched Class Counsel, whose firms collectively would have undoubtedly already invested a great deal of money for the proposed class actions." "The rival law firms were ar- rogantly proud about the merits of the design of their respective class actions and aggressively dismissive of their rival's plans." Perell examined 16 factors to consider when determin- ing carriage, and sided with the Kowalyshyn team, staying the O'Brien case, subject to further possible stay motions involving a similar Quebec action. Then, in July, the Ontario Court of Appeal issued its car- riage motion ruling in the Man- cinelli v. Barrick Gold Corpo- ration appeal, a case involving disclosures around the gold miner's Pascua-Lama mine. The appeal court upheld the lower court ruling and awarded carriage to a group headed by Rochon Genova, which included Merchant Law Group LLP and Rosen Naster LLP, over the dream team of Koskie Minsky, Siskinds, Sutts Strosberg and Groia and Company. The court held that the lower court was "entitled to defer- ence" and "the appellants demon- strated no legal error in the appli- cation of the [carriage] test." The Koskie consortium ar- gued that its claim was more fo- cused and streamlined, and that its team had greater expertise in securities class actions. They also took issue with Merchant's presence in the consortium, given its history of disciplinary action and judicial criticism, but those arguments didn't f ly with the appeal court. LT FOCUS The rival law firms were arrogantly proud about the merits of the design of their respective class actions and aggressively dismissive of their rival's plans. Justice Paul Perell Mike Robb says there tend to be more class action filings when the economy is not doing well. SKIMMING THE SURFACE IS FINE UNTIL A DEEPER DIVE IS REQUIRED. Start with Practical Law Canada. Whether you need a surface view or a deeper understanding of a legal issue, Practical Law Canada offers up-to-date, straightforward how-to guides, annotated standard documents, checklists, and more. Our expert lawyer-editors have significant practice experience. They create and maintain hundreds of practical resources to match the needs of practitioners in the following practice areas: • Capital Markets & Securities • Corporate and M&A • Commercial Transactions • Employment • Competition • Finance • Corporate & Commercial Litigation • Personal Injury Litigation For more information or to sign up for a free trial, visit www.practicallaw.ca © 2016 Thomson Reuters Canada Limited 00234QL-A53139-NK Untitled-2 1 2016-07-29 11:30 AM

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