Canadian Lawyer InHouse

April 2015 6 INHOUSE news roundup Settlement privilege doesn't trump Crown's disclosure obligations T wo major chocolate manufacturers who co-operated in a high-profi le price fi xing investigation have lost an attempt to prevent company information from being disclosed to competitors. Ontario Superior Court Justice Ian Nor- dheimer ruled in R. v. Nestlé Canada Inc., that "settlement privilege" does not trump the Crown's disclosure obligations in a criminal prosecution against another party. "Settlement privilege is not to be ap- proached, or treated, in the same fashion as solicitor/client privilege or informer privilege. It does not occupy the highest rank of privi- lege in terms of its inviolate nature nor can the rationales employed to justify the very narrow 'innocence at stake' exception garner the same support," wrote Nordheimer. The decision is part of an ongoing crimi- nal proceeding against Nestlé Canada Inc., Mars Canada Inc., ITWAL Ltd., and three former senior executives. The charges were initially fi led in July 2013 by the federal Competition Bureau. It alleges the defendants "conspired, agreed or arranged to fi x prices," of chocolate products. The issue before the Superior Court was whether information that Cadbury Canada Inc. and Hershey Canada Inc. provided to the bureau, must be disclosed to the defen- dants as part of the Crown's normal Stinch- combe obligations in a criminal case. Cadbury fi rst approached the bureau in 2007 and pursuant to the federal agency's "immunity program," the company provided information about an alleged "domestic price fi xing cartel," the court heard. Cadbury was granted immunity by the bureau. Soon after, Hershey also began discus- sions about co-operating with the bureau and signed a memorandum of agreement in 2010. Three years later, it pleaded guilty to one count of price-fi xing and was fi ned $4 million. The application before the Superior Court stemmed from disclosure made by the federal Crown in the criminal case, which it later determined should have been protected by settlement privilege. It asked for the ma- terial to be returned or deleted. Lawyers for Nestlé, Mars, and the individual defendants declined. Cadbury and Hershey were granted inter- vener status and argued against any disclo- sure of the information they provided to the Competition Bureau. The scope of settlement privilege in a criminal proceeding has been rarely ad- judicated, noted Nordheimer. One of the only decisions in this area was in the pros- ecution of serial murderer Paul Bernardo. Justice Patrick LeSage ruled that informa- tion related to the plea bargain with Karla Homolka, must be disclosed to Bernardo. "The purpose of the privilege is to protect the negotiating parties from prejudice or risk," wrote Nordheimer, in adopting the reasoning of LeSage. The privilege is not to be extended when a plea agreement is "rel- evant to another accused person and his or her right to make full answer and defence," Nordheimer wrote. As part of its deal with the bureau, Cad- bury and Hershey are contractually obli- gated to co-operate "throughout the pros- ecution of the accused, including providing the evidence of certain offi cers and employ- ees," stated Nordheimer. "A consequence of this reality is that it does not lie comfortably in the mouths of Cadbury or Hershey to now complain that the disclosure of information (that was pro- vided by them to the Bureau in these cir- cumstances and that has evidentiary value), to persons who are accused, is somehow unfair to them or is an unexpected result," he wrote. The disclosure obligation is restricted to "factual information" and not legal opin- ions or negotiations over wording of agree- ments. Lawyers for Cadbury were unavailable for comment. Lead counsel for Hershey declined comment. communicating in a crisis: Why in-house should be on the tweet deck W hen a crisis hits, in-house counsel can be an important part of the risk man- agement team and that includes paying close attention to the risk to be man- aged in social media. When it comes to social media in a crisis, be prepared to have to communicate more widely than you expect, says John Ratchford, general counsel with communications com- pany Navigator Ltd. Ratchford was speaking at the Ontario Bar Association/Canadian Corporate Counsel Association's Institute 2015 in February on the role of in-house counsel in a crisis. He says social media tends to ratchet up the importance of strategic communication and reputation considerations when you consider the speed a message can travel, and the geographic dissemination of a message is unlimited and virtually permanent. "You get to choose your message and the way in which you deliver it, but you don't get to choose your audience," said Ratchford. "We ourselves have found that it's not up to us to decide how much interest there will be in a story — we have to feed that beast so we're better off from the get go communicating more widely." Before a crisis even hits, organizations should be ready with a plan in place, says Ratch- ford. "It's less obvious when a story hasn't broken — when you get that dreaded e-mail from [investigative reporter] Kevin Donovan at the Toronto Star about an investigation, or you

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