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Class action lawyers hoping for clarity on carriage

Barrick ruling headed to Divisional Court after losing firms granted leave
|Written By Michael McKiernan

Class action lawyers are hoping the Divisional Court ruling will bring some much-needed clarity to carriage motions after it agreed to a hearing on the tightly contested battle to lead the multibillion-dollar claim against Barrick Gold Corp.

‘These carriage battles are getting more common, so I’d say the more direction the courts can give, the better,’ says Brian Radnoff.

On Dec. 11, Ontario Superior Court Justice Edward Belobaba awarded carriage of the Barrick class action to a group of law firms led by Toronto’s Rochon Genova LLP and also including Rosen Naster LLP and Saskatchewan-based Merchant Law Group.

However, just 12 days later on Dec. 23, Ontario Superior Court Justice Ian Nordheimer granted the losing coalition of law firms leave to appeal Belobaba’s decision at the Divisional Court. That group consists of four more class action heavyweights: Koskie Minsky LLP, Sutts Strosberg LLP, Siskinds LLP, and Groia & Co.

Barrick faced a host of claims in the United States and Canada after publicly announcing local courts had suspended its Pascua-Lama mining project in Chile in April 2013, a move that precipitated a dramatic drop in the company’s share price.

In his ruling, Belobaba said it “was not a difficult decision” to award carriage to the Rochon Genova group, noting it “clearly and decisively came out ahead” over its opponents in terms of both its theory of the case and its state of preparation.

By pleading additional claims over the Koskie Minsky group, which opted for a more streamlined case focused on environmental violations, Belobaba concluded the Rochon Genova group better favoured the interests of the class by not putting “all its eggs in” one basket.

The judge also looked favourably on the advanced level of preparation by the Rochon Genova group that included a trip to Chile for meetings with potential witnesses as well as governmental and legal officials.

Within weeks, Nordheimer had granted the Koskie Minsky group leave to appeal after it convinced him there were “good reasons to doubt the correctness” of Belobaba’s decision.

In his decision, Nordheimer said Belobaba had “set up” an “asserted conflict” in previous case law centred on a judge’s ability to assess a claim’s likelihood of success when deciding a carriage motion. “Assuming that this conflict exists, it is important that it be resolved by the Divisional Court,” wrote Nordheimer.

He also raised concerns about the weight Belobaba gave to the relative experience of counsel in making his decision since it acknowledged the losing Koskie Minsky group had more experience in securities class actions than the successful Rochon Genova team.

Jim Orr, a co-founder of plaintiff class action firm Kim Orr Barristers PC, says he’s happy the Divisional Court will get a chance to flesh out the rules for carriage motions considering the dearth of existing case law in the area.

Having won and lost major carriage battles, he finds the unpredictability of the process frustrating.

“From the perspective of counsel, I couldn’t tell you who’s going to win carriage, even in a case I have intimate knowledge of, until you tell me who the judge is,” he says.

“Some like a broader, more inclusive case and some like a more focused case. I have a great deal of sympathy for the judges because it puts them in a very difficult position where they’re trying to assess things that courts don’t normally want to get into, such as the competence of counsel and the merits of the claim. It’s impossible to determine with any degree of accuracy which is the better case at a point when there is virtually no discovery or anything.”

David Klein, head of the class action group at Toronto- and Vancouver-based Klein Lyons, agrees it’s important to have a “clear understanding” of the factors at play in a carriage motion “so we can govern ourselves accordingly.”

“When you look at the amount of money the Rochon Genova group must have spent without even knowing if they have carriage, that concerns me from an access to justice point of view. There are already very few plaintiff class action firms because the barriers to entry are so high, and this certainly raises them even further,” says Klein.

Brian Radnoff, a partner in the Toronto office of Lerners LLP, says the trend of experienced class action law firms teaming up on specific claims makes appellate guidance all the more urgent.

“Both sides really know what they are doing, which makes it very difficult to say that either one lacks expertise,” he says.

“These carriage battles are getting more common, so I’d say the more direction the courts can give, the better.”

Orr says he would like to see Canada look south to the United States for guidance on settling carriage of class actions. Courts there have developed a system for securities class actions in which they presumptively award carriage to the law firm acting for the representative plaintiff with the largest losses.

“It doesn’t have to be ironclad but generally it allows the marketplace to decide who gets carriage rather than the judge,” says Orr.

“It also brings in large institutional players into the litigation on the plaintiff side. I’m not saying it will be the answer in all cases but it makes the whole thing less of a crapshoot.”

A hearing has yet to be set for the Barrick carriage appeal, but Nordheimer suggested the process should move forward quickly. David Rosenfeld, a lawyer with Koskie Minsky involved in the case, says the firm was happy to get a full hearing for the appeal.

“We certainly think there should be greater appellate direction because there hasn’t been a lot,” he says.

Joel Rochon of Rochon Genova expressed disappointment that Belobaba’s “quite decisive” judgment didn’t settle the carriage motion but says he respects the appellate process and hopes it will add clarity to the carriage issue.

Rochon says he’s looking forward to putting the issue behind him in the Barrick case since he’d “rather be sharing a beer with” fellow plaintiffs’ counsel than facing them in court.

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