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In Philipp v. Federal Republic of Germany, No. 17-7064, 925 F.3d 1349 (D.C. Cir. 2019), the United States Court of Appeals for the District of Columbia Circuit affirmed an earlier decision allowing a lawsuit involving art taken by the Nazis to proceed in district court in Washington, D.C., but also highlighted judicial disagreement regarding the application of the Foreign Sovereign Immunities Act (“FSIA”). [1] The FSIA generally bars claims against foreign governments, but specifically provides…

The general rule in the United States is that litigants are not required to post security bonds with the court in the event that they ultimately may be liable to the other party. Indeed, in what is often called the “American Rule,” each party to litigation bears its own costs and expenses, including attorneys’ fees, no matter the outcome. US rules often allow a prevailing party to recover “costs,” but only costs other than attorneys’…

In Shippitsa Ltd. v. Slack, No. 18-CV-1036, 2019 U.S. Dist. LEXIS 121994 (N.D. Tex. July 23, 2019), a federal district court reiterated the standards applicable to determining whether there is personal jurisdiction over a foreign defendant in the context of online web businesses and allegations of trademark infringement,. The court found that under federal law, the Cyprus-incorporated and -headquartered defendant’s interactive website allowing the commercial exchange of information with Texas customers was sufficient for the…

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.

Both of Canada’s primary insolvency statutes, the Bankruptcy and Insolvency Act (“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”) provide for an automatic stay of all legal proceedings when an insolvent debtor files for or seeks insolvency protection. The purpose of the stay is to provide breathing space to a debtor attempting to restructure its business so as to avoid “death by a thousand cuts” and also to ensure similarly situated creditors are treated equally. While it is an integral part of Canada’s insolvency regime, the stay of proceedings is not inviolable and there have been a number of noteworthy cases where Canadian courts have considered whether to lift the statutory stay and permit proposed class actions to proceed where the plaintiff has alleged fraud.