Michael Ford (post until Oct. 31/19)

Lerners LLP: Jason Squire and Rebecca Case

You sunk my carriage battleship!

Lerners LLP

By Jason Squire 

A carriage motion is meant to determine which one of a number of competing proposed class proceedings may proceed in a province. When there are parallel or related class proceedings in other jurisdictions, the situation is more complex as there is no real mechanism for the court of one jurisdiction to stay or make a determination of preferability on class proceedings in another jurisdiction.

In Kowalyshyn v Valeant Pharmaceuticals Inc., 2016 ONSC 3819, two competing securities class actions, O’Brien and Kowalyshyn, were present in Ontario. In addition, there were two similar class proceedings in BC, one in Quebec and several in the US. Each class action was with respect to alleged misrepresentations made by Valeant Pharmaceuticals that cost investors approximately $60 billion worldwide. One of the Ontario actions, Kowalyshyn, was associated with the two BC proceedings and the other, O’Brien, with the Quebec proceeding.1 Plaintiffs’ counsel in the two Ontario actions, O’Brien and Kowalyshyn, ultimately proceeded to a carriage battle to determine who should control the litigation.

Justice Perell compared the two claims using the traditional factors considered on carriage motions. All but two of those factors were neutral and two slightly favoured the O’Brien action.2 Justice Perell also considered a new factor, the interrelationship of class proceedings in other provinces. For Justice Perell, this new factor ultimately determined the motion.3

After summarizing the problem of multiplicity of class actions, Justice Perell identified and described six problems that confront the goal of judicial economy and the avoidance of a multiplicity of class proceedings in class actions. These are:

  1. the right of a putative class member to opt-out (right of individual actions to proceed alongside class actions);
  2. influence and importance of class size and class member loyalty;
  3. law firms prospecting for quick profit from class action work;
  4. defendants double dealing;
  5. absence of ability to consolidate proceedings that are initiated in multiple jurisdictions; and
  6. rarity of local class actions and prevalence of parallel regional, national or global class actions that are difficult to cull.4

Justice Perell found that the O’Brien action was really a camouflaged stay motion brought by Ms. O’Brien on behalf of the Quebec plaintiff, Mr. Catuci. As the Catuci action was global in scope it was not clear what the purpose was for commencing the Ontario O’Brien action, unless it was to protect the viability and strength of the Quebec action. Ms. O’Brien argued that the Catuci proceeding was the most advanced and allegedly superior of all the Canadian proceedings and initially advised that she intended to hold the O’Brien action in limbo if granted carriage in Ontario.5

In these circumstances, what was most appropriate was forcing the parties to deal directly with the matters really in issue - the multiplicity of national class actions, how many class actions were needed to serve the purposes of the class action regimes across the country and whether one was really needed in Ontario – which questions could not be determined on a carriage motion.6

As a result, carriage was provisionally granted to Ms. Kowalyshyn by temporarily staying the O’Brien action subject to the stay being lifted if Mr. Catuci or the defendants brought a motion to stay the Kowalyshyn action in Ontario. Similarly, if Ms. Kowalyshyn wished to continue to pursue a national class action, then she would need to bring a stay motion in Quebec of the Catuci action. The stay might also be lifted if Ms. O’Brien was able to show strong cause why this should be so. Finally, Justice Perell noted that if Ms. Kowalyshyn agreed that Ms. O’Brien’s action could be consolidated with her action the temporary stay could also be lifted.7

This decision serves as a cautionary tale to plaintiffs’ counsel to carefully select the type of motion that they will bring if they are unable to reach agreement with competing plaintiffs’ counsel.

The content contained in these blogs is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice on any of the subjects discussed in a blog post, please contact the author.


 

1Kowalyshyn v Valeant Pharmaceuticals Inc., 2016 ONSC 3819 at paras 5-7, 52

2Ibid at paras 143-144, 175, 179, 182, 183, 189, 191, 194, 201, 202, 206, 210, 216, 221-223

3Ibid at para 10

4Ibid at paras 239-257

5Ibid at paras 9, 269-271. See also para 58 where it is set out that the Kowalyshyn consortium intended to discontinue one BC proceeding and maintain the other BC as it asserted an oppression remedy claim.

6Ibid at paras 271-272

7Ibid at paras 12, 273, 276

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