The Year Ahead – our publication looking at key developments in global litigation and arbitration for 2021 – is now available in English, Spanish and Mandarin. COVID-19 and its effects have triggered many disputes, with litigation volumes in some jurisdictions having already doubled, and our clients expect us to help them spot trends and plan for the future. Our report features economic analysis from The Economist Intelligence Unit, and legal analysis from our team of more than…
The Supreme Court of Canada has authorized a Quebec class action against an investment fund dealer and investment fund manager. The class members are customers who allege they were insufficiently informed about the risk profile of two investment products. See Desjardins Financial Services Firm Inc. v Asselin, 2020 SCC 30. The decision to authorize the class action does not confirm the merits of the allegations. The Supreme Court reaffirmed that “the threshold for authorizing a…
In Godfrey v Pioneer, 2019 SCC 42 (“Godfrey“), the Supreme Court of Canada has lowered the bar for certifying price-fixing class actions brought under the federal Competition Act, while also allowing new categories of claimants to participate as class members. The decision arose from a class action filed in British Columbia against a group of 42 foreign companies who manufactured optical disc drives and related products. The plaintiff alleged that the defendants conspired to fix…
CANADA – In Godfrey v Pioneer, 2019 SCC 42 (“Godfrey”), the Supreme Court of Canada has lowered the bar for certifying price-fixing class actions brought under the federal Competition Act, while also allowing new categories of claimants to participate as class members. The decision arose from a class action filed in British Columbia against a group of 42 foreign companies who manufactured optical disc drives and related products. The plaintiff alleged that the defendants conspired…
Overtime class actions are in the headlines again. On February 22, 2019, a class action claim seeking damages of over $100 million was filed against Flight Centre, an Australia-based travel services provider with stores in Canada and internationally. The claim alleges that Flight Centre systematically failed to pay overtime to its retail sales employees, referred to as “travel consultants”, requiring them to consistently work more than their scheduled hours, and implemented policies that fail to…
CANADA – The Ontario Superior Court has dismissed a proposed class action involving the securities of a foreign company purchased on foreign exchanges. In a recent decision, Justice Belobaba found that Ontario lacked jurisdiction simpliciter or, alternatively, was forum non conveniens. This decision reinforces “[t]he prevailing international norm that securities litigation should take place in the forum where the securities trading took place.” Background In 2015, a German carmaker (the “Manufacturer”) admitted that it had…
CANADA – Allegations of “Add-on pricing”, or “drip pricing”, have become a hot topic in recent years as consumers have moved towards making more purchases online. Drip pricing can be thought of as the incremental disclosure of additional fees. Bit-by-bit, these add-ons can cause a discrepancy between the final price of an item and the original listed price. One common example is the addition of airline baggage fees, which can dramatically increase total airfare prices. Other examples of drip pricing include:
- delivery fees for event tickets;
- municipal taxes charged by hotels;
- rental car insurance fees; and
- bank withdrawal fees.
While the concept of drip pricing has existed for some time, the advent of e-commerce has given rise to increased litigation and regulatory risk for businesses selling online services and products. Website interface design allows businesses to be more flexible in how they display and structure their pricing, however, the same flexibility can lead to pitfalls, prompting consumers to respond with class proceedings based on allegations of deceptive marketing practices.
CANADA – In Lavender v. Miller Bernstein, 2017 ONSC 3958, a recent class action decision of the Ontario Superior Court, the auditor of a now-insolvent securities dealer was found liable for financial losses sustained by the dealer’s clients. The decision of Justice Belobaba focuses on the question: does an auditor have a duty of care to its client’s clients, including where there is no direct relationship with or reliance by these third party clients?
The dealer, Buckingham Securities (the “Dealer”), held the investments of roughly 1000 retail customers (the “Class Members”). The defendant auditors, Miller Bernstein LLP (the “Auditor”), was found to have negligently signed-off on Form 9 reports, which are filed annually with the Ontario Securities Commission (the “OSC”), the provincial securities regulator, to ensure compliance with segregation of assets and minimum free capital requirements. The Dealer had not segregated the Class Members’ funds, which it later misappropriated causing an alleged loss of $10.6 million. These facts were later admitted by the Auditor in disciplinary proceedings against the Auditor.
CANADA – Concurrent class proceedings can raise procedural and substantive issues, chief among which is how to avoid conflicting judicial determinations from separate courts adjudicating on the same issue. When seeking approval from multiple courts of a global class action settlement, one approach may be to have the various courts preside over the same hearing.
A recent decision of the Supreme Court of Canada in Endean v. British Columbia, 2016 SCC 42 (“Endean“) held that judges of superior courts from different provinces may sit together to hear a motion arising out of concurrent class proceedings in their respective jurisdictions.
In Canada, superior courts are those with general rather than statutorily-granted jurisdiction. There is a separate superior court in each Canadian province.
The Endean decision arose from three concurrent class proceedings which had been commenced in the superior courts of Ontario, British Columbia and Quebec on behalf of individuals infected with Hepatitis C through the Canadian blood supply. It was common ground that each superior court had personal and subject-matter jurisdiction over the parties and issues in their respective proceedings.
All three actions were ultimately certified. The Ontario class included residents in every province except British Columbia and Quebec, meaning all affected Canadians were class members to one of the proceedings.
The Ontario Court of Appeal in Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP 2016 ONCA 916, has overturned two lower decisions, certifying a securities fraud class action against a Canadian auditor in which 98% of the class members were not Canadian. The judgment offers helpful guidance to parties seeking to bring or defend global class actions in Ontario.
The class action is based on allegations of negligence and negligent misrepresentation over an audit report prepared by Schwartz Levitsky Feldman LLP (“SLF”). Excalibur is a Toronto-based fund and was one of 57 “accredited investors” that invested a total of $7.5 million in Southern China Livestock International Inc. (“Southern China”), a Nevada company that owned and operated hog farms in China. One other investor was a Canadian resident, 50 were American and the remaining investors resided in the Cayman Islands, Samoa, Malaysia and the United Kingdom. In 2010, SLF prepared a one-page audit report of Southern China’s financial statements that was appended to a private placement memorandum. The essence of the claim is that in light of the true state of Southern China’s all-cash business, SLF could not have provided a clean audit report in accordance with generally accepted accounting principles, as it had professed to.