Legal news and trends for Canadian in-house counsel and c-suite executives
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"If I'm working on class actions in the U.S. for, say, American Widgets Inc., and it turns out that American Widgets of Canada has had a couple of similar incidents, I'll go back to my client and talk through what we think the story is in the U.S. on both the merits and on certifi cation." ANDREW TRASK, McGuireWoods LLP common law — is the requirement that "the pleadings or the notice of appli- cation discloses a cause of action." A similar rule does not exist in the U.S. "It allows you to attack the merits of the claim early on in a way that you can't in the U.S. unless you've already filed a motion to dismiss," says Trask. U.S. class actions for damages also force plaintiffs' counsel to show "com- mon issues will predominate over indi- vidual issues." In Canada, however, it must only be shown that there are common issues. Typically, it is easier to get an action certified in Canada than the U.S. Trask says studies have shown that about 75 per cent of Ontario class actions are certified, while less than 50 per cent get the green light in the U.S. That means it's important for in- house counsel to keep in mind that a class action that has been shot down in the U.S. could very well be certified in Canada. "If I'm working on class actions in the U.S. for, say, American Widgets Inc., and it turns out that American Widgets of Canada has had a couple of similar incidents, I'll go back to my client and talk through what we think the story is in the U.S. on both the merits and on certifica- tion," says Trask. "At that point, we'll look at whether those same stories will work in Canada. The certification story will have to be stronger if we're going to oppose certification in Canada, but it's not insurmountable to get there." Trask's firm has also started to give careful consideration to the role of U.S. class counsel in the Canadian action. If the Canadian litigation appears to be of the copycat variety, Trask will investigate how close the ties are between Canadian and U.S. class coun- sel. "My understanding of the case law as I've read it, is at this point Canadian courts are somewhat suspi- cious of cases that have heavy involve- ment from American counsel," he says. "They don't really want to be viewed as a spillover from American courts." This observation is in line with the Ontario Superior Court's handling of the pro- posed Poulin class action. Counsel must also consider the option of including Canadian events in a U.S. action, or litigating separately in Canada. McMillan's Kent suggests a case-by-case approach is best here, as money spent north of the border could be worthwhile in certain actions with a worldwide reach. For example, in a worldwide vitamins cartel class action, in which Kent acted as the defendant's counsel, several in-house lawyers were based outside of Canada and the U.S. Many wanted to first battle the action in Canada, suggesting the Canadian jus- tice system would offer a more reason- able outcome to bring to other courts across the globe. "They didn't want to have litigation in Australia and be faced with some crazy U.S. jury verdict, and be told by Australian plaintiffs, 'Well, that's what you've got to measure up to here,'" explains Kent. "They thought the Canadian court system was more like other jurisdictions, so they thought it was worth spending some money on litigating in Canada to see if they could get a more modest outcome, whether by settlement or by litigation, and use that as the precedent for resolving things in other jurisdictions." In the end, settle- ments were reached for US$1 billion in the U.S. and $140 million in Canada. While corporate counsel in the short term will have to remain flexible when it comes to the defence of cross-border class actions, efforts are afoot to make their lives easier through enhanced col- laboration between courts in Canada and the U.S. The need to foster a uni- form approach became evident fol- lowing the 2007 global settlement for parallel class actions involving Nortel Networks Corp. in New York, Ontario, British Columbia, and Quebec. Larry Lowenstein, a Toronto-based partner with Osler Hoskin & Harcourt LLP, was involved in that litigation. He says the U.S. and Canadian counsel involved in the action were forced to create procedures for the notification and administration of the settlement. Then-regional senior justice Warren Winkler of the Ontario Superior Court of Justice — who is now Ontario's chief justice — noted the need for such mea- sures in his ruling approving the settle- ment. "The differences in the juris- prudence between the two countries highlights some of the potential dif- ficulties that may arise in cross-border litigation, particularly in respect of class actions," wrote Winkler. "Given the increasing trends toward globalization, it is likely that cross-border litigation will increase. . . . It would be useful if more formal protocols were developed Visit for our new online monthly column by Sanjeev Dhawan, senior counsel at Hydro One Networks Inc. and ACC Ontario chapter president. INHOUSE DECEMBER 2010/JANUARY 2011 • 19 Get the canadianlawyermag.com/inhouse latest views on issues affecting the in-house bar .