This presentation offers a comprehensive overview of recent trends in class actions, including statistics related to class certification motions and certification decisions, employment and securities cases of note, trends in Canadian Securities Class Actions, as well as limitation periods and class actions, litigation holds and document retention policies.

1. Class Actions:
The Latest Word – April 2012
Presented by:
Michael D. Schafler Chloe Snider
michael.schafler@fmc‐law.com chloe.snider@fmc‐law.com
+1 416 863 4457 +1 416 863 4674

2. Certification Test (Class Proceedings Act, 1992)
s. 5(1) The court shall certify a class proceeding on a motion… if,
(a) the pleadings or the notice of application discloses a cause of action;
(b) there is an identifiable class of two or more persons that would be
represented by the representative plaintiff or defendant;
(c) the claims or defences of the class members raise common issues;
(d) a class proceeding would be the preferable procedure for the resolution
of the common issues; and
(e) there is a representative plaintiff or defendant who,
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable
method of advancing the proceeding on behalf of the class and of
notifying class members of the proceeding, and
(iii) does not have, on the common issues for the class, an interest in
conflict with the interests of other class members.
2

3. Class Certification Motions
20 17
18
16
14 12
12
10
8 6
x
5
6
3 3
4
2
0
Total Contested Certification Certification
Certification Granted/Certification Dismissed/Certification
Motions/Total Appeals Granted on Appeal Denied on Appeal
and Leave Motions
*All data relates to certification motions and appeals (including leaves to appeal) decided between January 1, 2011 – December 31, 2011
3

4. Class Certification Motions
• Number of class actions being certified continues to increase
– 71% of certification motions resulted in certification of the class action
in 2011 (12/17)
• Appeals of Certification Orders
– Half of appeals/motions for leave to appeal resulted in certification
– Half of appeals/motions for leave to appeal resulted in denial of
certification
4

5. Certification Decisions by Subject Matter
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*All data relates to certification motions and appeals (including leaves to appeal) decided between January 1, 2011 – December 31, 2011
5

6. Employment Cases of Note
Fulawka v. Bank of Nova Scotia, 2011 ONSC 530
• Alleged failure to pay overtime pay
• Certification granted (Div. Ct.); refusal to pay overtime resulted
from policy, not individual decisions
• Awaiting decision from Court of Appeal
• CIBC and CN decisions also pending
Kafka v. Allstate Insurance Company of Canada, 2011 ONSC
2305
• Alleged constructive dismissal resulting from new centralized
business model
• Certification denied: no common issues
6

7. different Kafka…
7

8. Securities Cases of Note
Fischer v. IG Investment Management Inc., 2011 ONSC 292
• OSC found that IG failed to act in the public interest with respect to market timing
activities
• Plaintiffs claim the balance of losses not recovered through OSC proceeding
• Certification granted (Div. Ct.); OSC proceeding irrelevant to preferable procedure
requirement
• Court of Appeal upheld certification (2012 ONCA 47)
Dobbie v. Arctic Glacier Income Fund et al, 2011 ONSC 25
• Negligence, negligent misrepresentation, anti‐trust conspiracy and statutory cause
of action under s. 130 of the OSA alleged based on the Income Fund’s public
disclosures in primary and secondary markets
• Certification granted; leave to appeal granted in respect of decision to certify
certain negligence and negligent misrepresentation claims (2012 ONSC 773)
Silver v. IMAX Corporation et al., 2011 ONSC 1035
• Allegation that decline in share price caused by IMAX misrepresentations
• Granted leave under s. 138 of the OSA (Div. Ct.)
• Certification granted (Div. Ct.)
8

9. Trends in Canadian Securities Class Actions:
2011 Update (NERA Economic Consulting)
• 15 new Canadian securities class action: highest number to
date
– 45 active Canadian securities class actions on December 31, 2011 (only
28 active cases as of December 31, 2010)
– Represents $24.5 billion in outstanding claims
– Continuous disclosure obligations and secondary liability pursuant to
Bill 198 represented 9 of the 15 new class actions
• More than half of all Canadian securities class actions to date
have been brought against defendants in the financial sector
or the energy/minerals sectors
Courtesy of NERA
9

10. Canadian Securities Class Action Filings
Courtesy of NERA
10

11. 11 Settlements in Bill 198 Cases
Courtesy of NERA
11

12. Abdula v. Canadian Solar, 2011 ONSC 5105
• Defendants brought motion seeking a dismissal of claims for negligent
misrepresentation and statutory cause of action pursuant to s. 138.3 of the
Securities Act based on the alleged lack of jurisdiction of the Ontario courts
• Canadian Solar was incorporated under the CBCA; its principal place of
business was China; and it traded only on the NASDAQ
• Court held that it had “presence based” jurisdiction, as Canadian Solar was
federally incorporated and therefore within the jurisdiction
• Court also had jurisdiction over the Securities Act claims
– “[A] company which chooses to be incorporated in Canada, have its principal
office in Ontario and carry on business in Ontario must also expect to be
required [to] comply with Canadian and Ontario laws. The disclosure obligation
on a company whose shares are publicly traded is not restricted to filings with
a stock exchange. The disclosure obligations apply to any material
misrepresentation. Therefore it should come a no surprise to Canadian Solar
that it is potentially subject to the Ontario Securities Act for
misrepresentations that it makes in its public disclosure in Ontario.”
12

13. Seidel v. TELUS Communications Inc (2011 SCC
15)
• Plaintiff commenced class action despite arbitration clause in contract
with TELUS, which required arbitration of disputes
• BC Court of Appeal stayed the action in favour of arbitration
• SCC asked to determine whether stay was properly granted and, in doing
so, considered the role of arbitration in the Canadian judicial system
– Schism between majority and minority regarding the value of arbitration
proceedings
• Majority held that the BC legislation required the action to proceed in
the courts:
– In the consumer context, declarations and injunctions are the most
efficient remedies in terms of protection of consumers’ interests and
the deterrence of wrongful suppliers conduct
– Arbitrations are “private and confidential” and lack precedential value
13

14. S. 28 of Class Proceedings Act, 1992
Limitations
28. (1) Subject to subsection (2), any limitation period applicable to a cause
of action asserted in a class proceeding is suspended in favour of a class
member on the commencement of the class proceeding and resumes
running against the class member when,
• (a) the member opts out of the class proceeding;
• (b) an amendment that has the effect of excluding the member from the
class is made to the certification order;
• (c) a decertification order is made under section 10;
• (d) the class proceeding is dismissed without an adjudication on the merits;
• (e) the class proceeding is abandoned or discontinued with the approval of
the court; or
• (f) the class proceeding is settled with the approval of the court, unless the
settlement provides otherwise.
14

15. 15

16. Limitation Periods and Class Actions
Coulson v. Citigroup Global Markets Canada Inc., 2012 ONCA
108
• 1998 class action commenced:
– s. 130 misrepresentation claim asserted therein was dismissed
– appeal did not seek a reversal of the dismissal of the s. 130 claim
• 2003 class action commenced based on same facts
• As the 1998 plaintiff did not appeal the s. 130 finding, s. 28 of
the CPA did not continue to suspend the limitation period
– The suspension provided by s.28 ended when the appeal period lapsed
• Purpose of s. 28 CPA is to protect class members from
limitation periods without the need to themselves pursue
individual actions in order to avoid being ‘out of time’
• Appeal dismissed; limitation period not extended
16

17. Limitation Periods and Class Actions
Sharma v. Timminco Limited, 2012 ONCA 107
• Claim indicated plaintiffs would seek an order granting leave to
assert the statutory cause of action for misrepresentation
provided by s. 138.3
• Issue on appeal was whether s.28 of the CPA operates to
suspend the limitation period applicable to the statutory cause
of action for misrepresentation under s.138.3 of the OSA
before such an action is commenced.
• Indicating an intention to seek leave does not constitute
‘asserting’ a cause of action, and does not activate the
limitation period suspension under s. 28 CPA
• Appeal allowed; limitation period not extended
17

18. Litigation Holds
• A litigation hold should be issued as soon as litigation is
anticipated
– to identify and preserve information from destruction through (i) the
normal accessing and use of electronic and other information, or (ii)
through the application of document retention schedules mandating
destruction
• A litigation hold explains what electronic and paper‐based
documents need to be preserved and provides instructions on
how to implement the hold over electronic and other records
• Follow‐up with recipients of the litigation hold to demonstrate
that the organization took steps to ensure compliance
18

19. Litigation Holds
• Must be able to establish that the actions taken were
reasonable in the circumstances and that all relevant material
was retained (and produced)
• Consider retaining an outside expert to take a “snapshot” of
electronic data in order to preserve point‐in‐time archives
– Document retention “insurance”
19

20. Spoliation
• The destruction or material alteration of relevant evidence
when litigation is existing or pending
• Raises a rebuttable presumption of fact that the lost or
destroyed evidence would be unfavourable to the spoliator
– for the presumption to be rebutted, the alleged spoliator must
demonstrate that the destruction was in the ordinary course of
business before litigation was commenced
• Other remedies for spoliation include the exclusion of expert
evidence, adverse assessments of credibility, and costs
• Independent tort of spoliation exists in the United States (but
not yet recognized in Canada)
20

21. Document Retention Policies
• Policies should determine what, where and for how long
documents are stored
• Not every document has to be kept forever
– costs of gathering and reviewing extensive stores of data in the event
of document production can be significant
• Document, publish and communicate policy, and audit
compliance
21

22. Avoid this…
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23. Document Retention
• Statutory requirements to retain certain documents
– Articles
– Bylaws
– Minutes of shareholders and directors meeting
– Resolutions of shareholders and directors
– Securities certificates
– Tax Records
– Personal Information
– Employment Records
• Statutes also mandate minimum periods for retaining certain
documents
– e.g. tax records – 6 years; employment records – 3 years
• Limitation periods should also be considered
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24. The preceding presentation contains examples of the
kinds of issues companies dealing with class actions
could face. If you are faced with one of these issues,
please retain professional assistance as each situation
is unique.

25. Michael D. Schafler
michael.schafler@fmc‐law.com
+1 416 863 4457
Chloe Snider
chloe.snider@fmc‐law.com
+1 416 863 4674