A new Divisional Court ruling upholding an earlier decision granting carriage to a group of law firms in the Barrick Gold Corp. class action has failed to provide the guidance many had hoped for, some lawyers say.
While Justice Ian Nordheimer had raised significant doubts about the carriage ruling when he granted leave to appeal in December, some of the lawyers involved say the Divisional Court ruling on the issue last month failed to address the concerns. “They paid no regard to it,” says Koskie Minsky LLP’s Garth Myers.
“They had opportunity to create some law that would be extremely helpful to the class action bar” and gave up that chance, adds Myers, an associate at one of the firms on the losing side of the carriage battle.
On May 21, the Divisional Court upheld Justice Edward Belobaba’s carriage decision from early December 2014.
The ruling included a statement that reviewing courts should defer to such decisions in the absence of an error of law.
The decision dealt with a bid by a group of law firms led by Toronto’s Rochon Genova LLP and including Rosen Naster LLP and the Merchant Law Group LLP in competition with another group of class action lawyers led by Koskie Minsky and including Sutts Strosberg LLP, Siskinds LLP, and Groia & Co. to represent shareholders in a proposed class action against Barrick Gold and four of its executives.
In the latest ruling, a three-member panel of the Divisional Court affirmed December’s decision by Belobaba to grant the Rochon Genova group carriage based on the many claims it had advanced and the relative state of preparation. The Koskie Minsky group had advanced a single claim arguing for a leaner approach.
In the decision last month, Justice Alison Harvison Young noted the broad discretion granted to judges and said the reviewing courts should defer to their decisions in the absence an error of law. She also found the primary concern is to determine which group is most likely to advance the interests of the class.
“The appellants argue that although the motion judge articulated the correct factors, he failed to apply them such that he did err in law and/or principle, and also that he misapprehended the evidence or record so that his findings also fell into palpable and overriding error. I disagree. In my view, [the Koskie Minsky group’s] submissions amount to no more than an attempt to convince this court to reweigh the factors applied by the motion judge and do not demonstrate any reversible error in the exercise of his discretion to determine which group should obtain carriage of these class proceedings,” wrote Harvison Young for the panel.
After announcing two years ago that Chilean courts had suspended its Pascua-Lama mining project, Barrick’s share price dropped. That development prompted several class actions by shareholders in Canada and the United States alleging misrepresentation about the progress of the mine. None of the allegations have been proven in court.
Joel Rochon of Rochon Genova says the latest decision provides plaintiff counsel and trial-level courts with further direction when it comes to the issue of which lawyers or firms should have carriage in a class action. The Barrick Gold case, he says, outlines the unique facts that drove the motion judge to decide in favour of the team led by his firm.
“The divisional court has certainly provided a level of clarity in releasing the decision,” says Rochon.
Peter Jervis, senior counsel at Rochon Genova, says each carriage decision turns on its own facts and circumstances but notes the theme emphasized by the latest decision is that ultimately the court will consider which counsel team is best able to represent and advance the interests of the class.
While lawyers with the other group have until June 4 to indicate if they will appeal the latest decision, Myers says that in granting carriage to the Rochon Genova group, the Divisional Court didn’t address the issues raised by the judge hearing the motion for leave to appeal in which he criticized Belobaba’s findings.
In granting leave to appeal, Nordheimer found Belobaba’s “reasons reveal a fundamental disagreement with the basic principle” of previous case law. He also found a problem with Belobaba’s determination that the court wasn’t to assess a claim’s likelihood of success on a carriage motion.
The Divisional Court decision, says Myers, encourages competing counsel to spend more time and money to present as much evidence as possible and doesn’t provide the direction sought. “Predictability is a crucial element of our justice system and I think this decision introduces unpredictability in terms of who gets carriage of a class action,” says Myers.
That the appellate courts will give significant deference to the motions judge’s discretion in the absence of a legal error provides some clarification, says Lawrence Thacker of Lenczner Slaght Royce Smith Griffin LLP.
“Once the correct legal test is identified, there will be deference given to the application and the facts and the weighing of the evidence that establishes those facts,” says Thacker.
“It makes it clear simplicity or complexity in itself is not a deciding factor.”
Brian Radnoff, a partner at Lerners LLP, sees some clarification in the decision but says it leaves a lot of discretion to the motion judge. In a situation such as this that involves very qualified counsel on both sides, the outcome is likely to be uncertain, he suggests.
“These kinds of carriage battles are going to come up again and again,” says Radnoff.
“The bottom line is there’s not going to be a lot of certainty about who’s going to win these motions.”
Perhaps one approach to stem the litigation, Radnoff suggests, is for more law firms to group together to represent the same class and avoid taking the carriage motion to court.
Dimitri Lascaris, leader of Siskinds LLP’s securities class actions group, sees flaws in the jurisprudence around class action carriage motions. He believes the courts are reluctant to engage in a vigorous examination and comparison of the competing groups. Siskinds is one of the four firms, along with Koskie Minsky, seeking carriage in this case.
“They’re just too quick, in my view, to put us in the same hopper,” says Lascaris.
Lascaris says the plaintiffs’ bar for class actions in Canada is relatively small. He suggests carriage decisions should focus more on the areas of law in which the firms practise rather than giving equal weight to the various players. Having expertise in class actions procedure, he says, only represents a limited part of the legal work involved. Knowledge of the relevant area of law can distinguish one firm from another, he adds, suggesting the Barrick Gold case requires counsel to have a background in securities law.
One option for dealing with the issue would be the use of an arbitrator to determine which firm should have carriage of a class action, according to Lascaris. Using an arbitrator could lead to a quicker and less expensive resolution, says Lascaris, who also sees a potential benefit from a closed-door discussion before someone other than the judge who will ultimately manage the case.
“We need to fundamentally reform the way we do carriage motions in this country,” says Lascaris.
While Justice Ian Nordheimer had raised significant doubts about the carriage ruling when he granted leave to appeal in December, some of the lawyers involved say the Divisional Court ruling on the issue last month failed to address the concerns. “They paid no regard to it,” says Koskie Minsky LLP’s Garth Myers.“They had opportunity to create some law that would be extremely helpful to the class action bar” and gave up that chance, adds Myers, an associate at one of the firms on the losing side of the carriage battle.
On May 21, the Divisional Court upheld Justice Edward Belobaba’s carriage decision from early December 2014.
The ruling included a statement that reviewing courts should defer to such decisions in the absence of an error of law.
The decision dealt with a bid by a group of law firms led by Toronto’s Rochon Genova LLP and including Rosen Naster LLP and the Merchant Law Group LLP in competition with another group of class action lawyers led by Koskie Minsky and including Sutts Strosberg LLP, Siskinds LLP, and Groia & Co. to represent shareholders in a proposed class action against Barrick Gold and four of its executives.
In the latest ruling, a three-member panel of the Divisional Court affirmed December’s decision by Belobaba to grant the Rochon Genova group carriage based on the many claims it had advanced and the relative state of preparation. The Koskie Minsky group had advanced a single claim arguing for a leaner approach.
In the decision last month, Justice Alison Harvison Young noted the broad discretion granted to judges and said the reviewing courts should defer to their decisions in the absence an error of law. She also found the primary concern is to determine which group is most likely to advance the interests of the class.
“The appellants argue that although the motion judge articulated the correct factors, he failed to apply them such that he did err in law and/or principle, and also that he misapprehended the evidence or record so that his findings also fell into palpable and overriding error. I disagree. In my view, [the Koskie Minsky group’s] submissions amount to no more than an attempt to convince this court to reweigh the factors applied by the motion judge and do not demonstrate any reversible error in the exercise of his discretion to determine which group should obtain carriage of these class proceedings,” wrote Harvison Young for the panel.
After announcing two years ago that Chilean courts had suspended its Pascua-Lama mining project, Barrick’s share price dropped. That development prompted several class actions by shareholders in Canada and the United States alleging misrepresentation about the progress of the mine. None of the allegations have been proven in court.
Joel Rochon of Rochon Genova says the latest decision provides plaintiff counsel and trial-level courts with further direction when it comes to the issue of which lawyers or firms should have carriage in a class action. The Barrick Gold case, he says, outlines the unique facts that drove the motion judge to decide in favour of the team led by his firm.
“The divisional court has certainly provided a level of clarity in releasing the decision,” says Rochon.
Peter Jervis, senior counsel at Rochon Genova, says each carriage decision turns on its own facts and circumstances but notes the theme emphasized by the latest decision is that ultimately the court will consider which counsel team is best able to represent and advance the interests of the class.
While lawyers with the other group have until June 4 to indicate if they will appeal the latest decision, Myers says that in granting carriage to the Rochon Genova group, the Divisional Court didn’t address the issues raised by the judge hearing the motion for leave to appeal in which he criticized Belobaba’s findings.
In granting leave to appeal, Nordheimer found Belobaba’s “reasons reveal a fundamental disagreement with the basic principle” of previous case law. He also found a problem with Belobaba’s determination that the court wasn’t to assess a claim’s likelihood of success on a carriage motion.
The Divisional Court decision, says Myers, encourages competing counsel to spend more time and money to present as much evidence as possible and doesn’t provide the direction sought. “Predictability is a crucial element of our justice system and I think this decision introduces unpredictability in terms of who gets carriage of a class action,” says Myers.
That the appellate courts will give significant deference to the motions judge’s discretion in the absence of a legal error provides some clarification, says Lawrence Thacker of Lenczner Slaght Royce Smith Griffin LLP.
“Once the correct legal test is identified, there will be deference given to the application and the facts and the weighing of the evidence that establishes those facts,” says Thacker.
“It makes it clear simplicity or complexity in itself is not a deciding factor.”
Brian Radnoff, a partner at Lerners LLP, sees some clarification in the decision but says it leaves a lot of discretion to the motion judge. In a situation such as this that involves very qualified counsel on both sides, the outcome is likely to be uncertain, he suggests.
“These kinds of carriage battles are going to come up again and again,” says Radnoff.
“The bottom line is there’s not going to be a lot of certainty about who’s going to win these motions.”
Perhaps one approach to stem the litigation, Radnoff suggests, is for more law firms to group together to represent the same class and avoid taking the carriage motion to court.
Dimitri Lascaris, leader of Siskinds LLP’s securities class actions group, sees flaws in the jurisprudence around class action carriage motions. He believes the courts are reluctant to engage in a vigorous examination and comparison of the competing groups. Siskinds is one of the four firms, along with Koskie Minsky, seeking carriage in this case.
“They’re just too quick, in my view, to put us in the same hopper,” says Lascaris.
Lascaris says the plaintiffs’ bar for class actions in Canada is relatively small. He suggests carriage decisions should focus more on the areas of law in which the firms practise rather than giving equal weight to the various players. Having expertise in class actions procedure, he says, only represents a limited part of the legal work involved. Knowledge of the relevant area of law can distinguish one firm from another, he adds, suggesting the Barrick Gold case requires counsel to have a background in securities law.
One option for dealing with the issue would be the use of an arbitrator to determine which firm should have carriage of a class action, according to Lascaris. Using an arbitrator could lead to a quicker and less expensive resolution, says Lascaris, who also sees a potential benefit from a closed-door discussion before someone other than the judge who will ultimately manage the case.
“We need to fundamentally reform the way we do carriage motions in this country,” says Lascaris.
