Canadian Lawyer InHouse

NOVEMBER/DECEMBER 2015 6 INHOUSE B eleaguered engineering giant SNC- Lavalin Group Inc. — which has been rocked by multiple corruption scandals in recent years — has appointed a new general counsel and has expanded the role to include formal oversight of ethics and compliance. Taking on the position of executive vice president and general counsel is Hartland Paterson, who is currently general counsel, chief compliance offi cer, and secretary at CAE Inc., a builder of fl ight simulators also based in Quebec. His term at SNC-Lavalin began on Sept. 10. In February, the RCMP charged SNC with fraud and corruption relating to allega- tions of bribery in Libya and ties to the for- mer Gadhafi regime. The scandal prompted the departure of at least seven executives, as well as a shakeup in April in which former general counsel Réjean Goulet announced his retirement. SNC spokesman Louis-Antoine Paquin has stated that Goulet's retirement was un- related to the RCMP charges, but analysts have expressed doubt over the matter. (Both Paterson and SNC-Lavalin declined com- ment for this story.) David Taylor, president of IA Clarington — an investment fi rm that has amassed a sizeable stake in SNC — has publicly derid- ed the company for having allowed Goulet to retain his position for so long. The ap- pointment of someone with specialized eth- ics and compliance experience may signal an increased focus on the area at SNC-Lavalin. In a press release, the company stated: "Mr. Paterson will oversee both the Legal and Ethics & Compliance functions, in or- der to facilitate even tighter coordination and links between these complementary functions that work in tandem across all facets of the business. "This is a natural evolution as the compa- ny aligns with excellence and best practices in large, global and complex organizations. . . . Mr. Paterson brings both legal and ethics & compliance executive-level experience in Canada and internationally. . . ." Enhanced compliance oversight can also be gleaned by a shift in organizational structure, with chief compliance offi cer David Wilkins and senior vice president of legal affairs Jean Eric Laferrière both reporting to Paterson. Richard Stock, founder of Catalyst Consulting, which consults to law departments across the country, says the idea of formalizing the oversight of ethics and compliance under the general counsel makes a lot of sense for SNC, given what's happened over the last three years. "It may simply be that the compliance and ethics functions are already reporting to the general counsel at many companies across Canada, except that it hasn't gotten the visibility. It's a good idea for SNC and it makes an awful lot of sense for them." Stock also points out the emphasis on compliance may signal a greater investment in the area. "It's likely not just a shifting of the boxes on the organizational chart. In or- der to do this and be serious about it, they really need to invest some re- sources into it." It remains to be seen, how- ever, whether the new general counsel at SNC will be given enough independence to ex- ecute meaningful compliance oversight. Paterson will re- port directly to new chief executive offi cer Neil Bruce. But Stock points out that the chief eth- ics and compliance offi cer at any company needs a direct line to the chairman of the board; otherwise, the perception of corrup- tion within managerial ranks may remain. "The reporting line is critical, so there's some independence to this," he says. "Whether you also give this person a re- porting line to the board for the compliance and ethics function is a really key question. If they report too low in the organization, they may feel hamstrung." — David Dias 'No harm, no foul' in airline surcharge fee A decision from the British Colum- bia Supreme Court is expected to "stem the tide" of consumer protec- tion class action claims where the plaintiffs haven't suffered any real damage or loss. On Aug. 18, Justice Elaine Adair dis- missed fi ve class action certifi cation applica- tions in Unlu v. Air Canada, brought against fi ve airlines including AC, Lufthansa, Delta, United, and British Airways. The plaintiffs made claims regarding the way fuel sur- charges appear on a passenger ticket receipt. The decision follows a trend in B.C. dis- missing certifi cation of consumer protec- tion class actions where the plaintiffs have not suffered any real damage and limits the scope for class-wide remedies pursuant to the B.C. Business Practices and Consumer Protection Act, says Robin Reinertson, a partner with Blake Cassels & Graydon LLP in Vancouver. "It's premature to say consumer protec- tion class actions are dead in British Co- lumbia, but plaintiffs' counsel are going to have to think about how they craft them and when it's appropriate to get class-wide dam- ages — that's the stumbling block for them now," says Reinertson. "We've seen this kind of decision in a few cases now," says Reinertson, pointing to Clark v. Energy Brands, a case in which she and a co-counsel acted, as well as Ileman v. Rogers Communications Inc. She says all the decisions have followed a trajectory where the B.C. courts have been saying there are two ways to get a remedy under the BPCPA — s. 171 and s. 172. "Section 171 is a traditional damages sec- tion so you can only get relief under that section if a plaintiff has suffered damage or loss. The courts have recently clarifi ed that requires proof of causation — and there had been a battle for a few years about whether proof of causation had to be established indi- vidually or whether you could establish class- wide reliance, which is an approach they have taken in California, for example," she says. The recent cases have reiterated that in order to establish s. 171 damages you have to establish causation for each class member. SNC appoints new GC with expanded ethics oversight News Roundup A roundup of legal department news and trends HARTLAND PATERSON

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