Ontario Superior Court of Justice, Divisional Court

Court File Nos.: 82/2001; 90/2001; 91/2001; 115/2001 Date: 2002-04-10

Before: Farley, Matlow and Roy JJ.

Counsel: John F. Rook, Q.C., and Derek J. Bell, for appellants/defendants, Takeda Canada Vitamin & Food Inc. and Takeda Chemical Industries Ltd. François Baril, for appellant/defendant, Hoffmann-La Roche Limited. Donald Houston and Jennifer Roberts-Logan, for appellant/defendant, Alusuisse-Lonza Canada Inc. David Kent, for appellant/defendant, BASF Canada Inc. C. Scott Ritchie and Michael A. Eizenga, for respondents/ plaintiffs, Vitapharm Canada Ltd. et al.

Endorsement

[1] Matlow J. (Roy J. concurring) (endorsement):—Each of the four appeals is dismissed with costs fixed at $1,500 payable forthwith.

[2] The appellant in each of the appeals argued together before us with leave seeks an order setting aside the order of Cumming J. made on January 26, 2001.

[3] By that order motions made by the appellants for orders enjoining the respondents from proceeding with certain motions before Judge Thomas F. Hogan in the United States District Court for the District of Columbia were dismissed. Those motions were brought in the context of related consolidated litigation brought against the appellants and others in the U.S. The relief sought included the conferring of status on the respondents to bring the motions before Judge Hogan and exemptions for them from a protective order which protects the confidentiality of documents and information disclosed during the discovery process in the U.S. litigation. An order conferring the status sought by the respondents has now been granted and the balance of the motions stands adjourned pending the outcome of these proceedings.

[4] The attack against the order in appeal is based principally on the characterization by the appellants of the order sought by the respondents before Judge Hogan as an order allowing discovery in the U.S. in the actions pending in this Court. In contrast, the respondents take the position that the motions brought by them were not brought for the purpose of obtaining any rights of discovery whatsoever. Rather, it is their position that the purpose of the order sought by them was to secure access to the fruits of discovery conducted by the parties in the U.S. litigation that might be of probative value in the actions pending in this Court. They do not seek the right to examine any person or compel production of any document in the U.S.

[5] Cumming J. accepted the respondents' characterization of their motions before Judge Hogan and held that the respondents were seeking "access to discovery evidence" rather than discovery itself.

[6] It was fairly conceded by counsel acting for the respective appellants that, if we should agree with this finding, it must follow that the appeals must be dismissed because the arguments advanced on their behalf were based on their characterization of the relief sought by the respondents which was rejected by Cumming J.

[7] With the greatest of respect, I prefer to rest my ultimate disposition of this appeal on this narrow issue. I agree with this finding made by Cumming J. and am compelled to impose the fatal consequence contemplated by the appellants' concession.

[8] It would be beyond belief that a foreign court would purport to assume jurisdiction over an action pending in Ontario and even contemplate granting interlocutory relief for discovery. It is trite to assert that only this Court has jurisdiction to control its own process.

[9] All that could reasonably be sought from the U.S. court presided over by Judge Hogan by the respondents, and perhaps granted, would be assistance to further their investigations and provide evidence that might be of assistance to advance their claims in the pending litigation here. If relevant evidence could be obtained by them by that means, that evidence would still be subject to the control of this Court with respect to its admissibility.

[10] It follows, therefore, that the U.S. motions should be governed by the applicable U.S. law in a U.S. court. Whether to entertain the motions or grant any relief are matters entirely for that court to determine.

[11] I appreciate and adopt the following laudable principle of judicial co-operation set out by Cumming J. in para. 27 of his Reasons For Decision [reported 2001 ONSC 28239, 11 C.P.R. (4th) 230]:

If both societies are to maximize the benefits of expanding freer trade and open markets, the legal systems of both countries must recognize and facilitate an expeditious, fair and efficient regime for the resolution of litigation that arises from disputes in either one or both countries.

[12] However, judicial co-operation cannot extend to surrendering or adopting jurisdiction without a proper basis. It would be unseemly for a court in one country to purport to assume jurisdiction over proceedings pending in a court of the other country and I do not construe the observation of Cumming J. to support such an approach.

[13] It follows, therefore, that even if the respondents had sought the intervention of the U.S. court in the litigation pending here, it would not be necessary to grant injunctive relief prior to the hearing of the motions. It would be preferable, in my view, to await the decision of the U.S. court.

[14] The jurisdiction of this Court to enjoin litigants from seeking relief from a foreign court for relief that is available only in that foreign jurisdiction is, with respect, doubtful and should await determination in another case if the issue should squarely arise.

[15] Finally, in my respectful view, for the reasons set out above it would be an inappropriate intrusion for this Court to address the merits of the respondents' U.S. motions or to provide guidance to Judge Hogan as sought by him in his Reasons For Decision for granting intervener status to the respondents. The merits of such a motion should be considered only by the court to which it is made.

[16] Farley J. (concurring):—The defendants BASF Canada Inc., Hoffmann-La Roche Limited, Alusuisse-Lonza Canada Inc. and Takeda Canada Vitamin & Food Inc./Takeda Chemical Industries, Ltd. appeal the order of Cumming J. dated January 26, 2001 dismissing the defendants' motion for an order preventing the plaintiffs from gaining access to documentary and deposition evidence from discovery in litigation in the United States dealing with claims analogous to those comprising the various Canadian class proceedings [reported 2001 ONSC 28239, 11 C.P.R. (4th) 230]. There are seven Ontario class actions which allege price fixing of vitamins and vitamin products, with parallel actions in British Columbia and Quebec. The defendants had asserted to Cumming J. that the plaintiffs in these class proceedings, by seeking access to such evidence, were acting contrary to the purposes and provisions of the Class Proceedings Act, 1992, S.O. 1992, c. 6 ("CP Act") and the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 ("Rules"). Access to the U.S. evidence was sought by the plaintiffs moving to intervene in the litigation in the U.S. (In re: Vitamins Anti-Trust Litigation, MDL No. 1285) so as to obtain discovery evidence being given in that litigation. The defendants requested that Cumming J. require the plaintiffs to discontinue their motion in the U.S. Court. I have had the benefit of reviewing Matlow J.'s draft reasons. While I come to the same conclusion as he has in dismissing the defendants' appeal, I felt that the issue involved merited a somewhat more extensive analysis.

[17] In this appeal, the defendants asked that Cumming J.'s order be set aside and that this court grant an order as follows:

(a) declaring that the plaintiffs are acting contrary to the purpose and provisions of the CP Act and the Rules by moving to intervene in the U.S. Litigation for the purpose of obtaining discovery from the U.S. defendants in that U.S. Litigation ("the U.S. Motion");

(b) requiring the plaintiffs to take all necessary steps to discontinue and withdraw the U.S. Motion and/or to refrain from taking any steps under any eventual U.S. order granting the relief sought by the plaintiffs in the U.S. Motion;

(c) for the costs of this appeal, of obtaining leave to appeal and of the original motion; and

(d) for such further and other relief as this Honourable Court may deem just.

[18] In the U.S. Litigation, there is a U.S. Protective Order which limits access and use of documentary and disposition evidence produced in that litigation to the parties to that litigation as opposed to the general U.S. provision that such material would be openly accessible. This should be contrasted with the Canadian approach to litigation which restricts access to discovery evidence.

[19] On March 19, 2001 U.S. District Judge Hogan presiding over the U.S. Litigation determined that the plaintiffs met the criteria for permissive intervention but deferred ruling on the portion of the U.S. Motion seeking modification of the U.S. Protective Order, access to Verilaw and attendance at depositions of the Niacin Defendants until the appeals process in the Canadian courts is exhausted or otherwise concluded or until such time as Judge Hogan determines that it is otherwise appropriate to decide those issues. At pp. 14-15 of his decision Judge Hogan stated:

In the instant case, such a determination would require this Court to engage in an exegesis of Canadian procedure and discovery principles. Although Justice Cumming has stated that granting access to Plaintiffs does not offend Canadian procedure, this is only one Ontario court's interpretation of existing Canadian law.²⁰ And the decision does not purport to be binding on the litigation pending in other Canadian provinces.²¹ A decision by this Court to modify the Protective Order would surely require this Court to engage in its own evaluation of various Canadian provincial procedures. Based on pragmatic considerations, this Court determines that such an inquiry, if undertaken at all, is best left until the conclusion of the Canadian appellate process. This Court is reluctant to rule on issues that are a matter of first impression not only in the U.S., but in Canadian courts as well, particularly in light of the fact that the subsequent Canadian appellate decisions may effectively moot the Motion pending before this Court.²² Even if the Canadian courts decline to overturn Justice Cumming's denial of the injunction sought by the Defendants, the appellate opinions are likely to provide valuable guidance to this Court in making its determination.

At footnote 21, Judge Hogan also raised an enquiry:

21. As an additional consideration, the Canadian court asserts that it has "plenary jurisdiction to control its own process" and thus the authority to grant or deny the requested injunction, id. ¶ 25, at 9-10, but this Court queries whether such jurisdiction extends to supervising Movants' compliance with provisions of a U.S. protective order. The Canadian Plaintiffs have agreed to submit to the jurisdiction of this Court for the purposes of enforcing the provisions of the Protective Order, but Defendants argue that there is no realistic way for this Court to enforce the Protective Order against the Canadian Plaintiffs. Defs' Opp. Mem. P&A at 19. In his Reasons for Decision, Justice Cumming notes that the Canadian Plaintiffs "will consent to an order of this court if the defendants see that to be of assistance in maintaining confidentiality and the sanctity of the Protective Order." Reasons for Decision ¶ 47, at 13. Unfortunately, the Canadian court does not provide this Court with any insight as the nature of such a hypothetical order. Nor does the Canadian court clearly delineate the jurisdiction of the Canadian court to enforce a U.S. protective order.

With respect to Judge Hogan's footnote concerns, I am of the view that reference should be had to the approach of Canadian courts to comity as exemplified in the following cases: United States v. Ivey (1995), 1995 ONSC 7241, 27 B.L.R. (2d) 221, 130 D.L.R. (4th) 674 (Ont. Gen. Div.), affirmed (1996), 1996 ONCA 991, 27 B.L.R. (2d) 243, 139 D.L.R. (4th) 570 (Ont. C.A.), leave to appeal to S.C.C. refused [1997] 2 S.C.R. x, 145 D.L.R. (4th) vii; Arrowmaster Inc. v. Unique Forming Ltd. (1993), 1993 ONSC 5510, 17 O.R. (3d) 407 (Gen. Div.); ATL Industries Ltd. v. Han Eol Ind. Co. (1995), 36 C.P.C. (3d) 288 (Ont. Gen. Div.), all applying the principles enunciated in Morguard Investments Ltd. v. De Savoye, 1990 SCC 29, [1990] 3 S.C.R. 1077, 76 D.L.R. (4th) 256.

[20] Then J. in granting leave to appeal Cumming J.'s order summarized in his reasons of March 6, 2001 the points of contention at paras. 2-5 [summarized 103 A.C.W.S. (3d) 1094]:

The reasons of Cumming J. for dismissing the Defendants' motion may be fairly summarized, inter alia, as follows:

a) the Ontario Court had jurisdiction to grant the relief sought (paras. 25-28); and

b) the Ontario Court had a valid role in this matter even though the U.S. Motion itself is subject to U.S. law and requires a ruling by Judge Hogan (paras. 29, 37-43); but

c) the Plaintiffs were not seeking U.S. discovery but rather "access" to U.S. discovery (para. 31);

d) Canadian courts are generally reluctant to prevent extraterritorial evidence gathering (para. 45);

e) the pending attacks on the jurisdiction of the Ontario Court were irrelevant (para. 46);

f) only one moving party before him was a party to the U.S. Litigation (para. 47);

g) access to U.S. discovery would give the Plaintiffs an early evaluation of what evidence is relevant to the Canadian litigation and would generate significant savings in litigation costs (para. 49); and

h) the Plaintiffs' U.S. Motion is not unfair to the Defendants in the Canadian litigation and would generate significant savings in litigation costs (para. 49).

The Defendants contend that the effect of the U.S. Motion will be to achieve a result in the U.S. Litigation for the purposes of the Canadian Litigation, to which the Plaintiffs are currently not entitled in the Canadian Litigation. As there has been no certification of the proceedings as a class action, the Defendants contend that the Plaintiffs have no current right of discovery in the Canadian Litigation as there is no right to discovery on the merits until the action has been certified as a class action. Stern v. Imasco Ltd. (1999), 1999 ONSC 14934, 38 C.P.C. (4th) 347 (Ont. S.C.J.) at 359.

The Defendants contend that, apart from certification, there are proceedings pending attacking jurisdiction which if successful would terminate the Canadian proceedings against the successful Defendants and thus terminate the Plaintiffs' right to discovery against those Defendants. Finally, some of the U.S. Defendants are not parties to the Canadian proceedings and would not be subject to discovery in Ontario without leave of the Ontario Court.

The Defendants submit that in the circumstances, the Plaintiffs' U.S. Motion represents an end run around Ontario's discovery policies codified in the Rules of Civil Procedure which provide [inter alia in Rules 30, 31 and 36]:

(a) there is no right to discovery of a defendant until after the close of pleadings and after the delivery of the plaintiff's affidavit of documents;

(b) discovery of a defendant is limited to information related to matters "in issue in an action";

(c) discovery of a corporate defendant is limited to single representative of the corporation;

(d) there is no right to discovery of a non-party without leave of the Court;

(e) if leave is granted, discovery of a non-party is limited to information "relevant to a material issue in the action"; and,

(f) evidence of persons outside the jurisdiction of the court may be obtained by letters rogatory, but only with leave of the court.

I am of the view that the foregoing (a) to (f) is an accurate summary of our approach in Ontario, subject to the adjustment to (f) as set forth below:

(f) compelled evidence of persons outside the jurisdiction of the court may be obtained by letters rogatory, but only with leave of the requesting court and the acceptance of same by the foreign court. [Emphasis indicating adjustment.]

I would also note that in the present Canadian cases, although correctly styled as "Proceeding under the Class Proceedings Act, 1992", these proceedings have not been certified as class actions. Rather they are proposed class actions with putative representative plaintiffs, which actions are only at the pre-discovery stage.

[21] Judge Hogan on the U.S. side and Cumming J. and Then J. on the Canadian side as well as the parties to this appeal all recognize that this is a question of first impression.

[22] The Canadian plaintiffs assert that significant deference should be given to Superior Court justices who have developed expertise in the area of class proceedings relying on Anderson v. Wilson (1999), 1999 ONCA 3753, 44 O.R. (3d) 673 at p. 677, 175 D.L.R. (4th) 409 (C.A.); Campbell v. Flexwatt Corp., 1997 BCCA 4111, [1997] B.C.J. No. 2477 (QL) (C.A.), at para. 25 [reported 15 C.P.C. (4th) 1]; Carom v. Bre-X Minerals Ltd., 2000 ONCA 16886, [2000] O.J. No. 4014 (QL) (C.A.), at para. 36 [reported 196 D.L.R. (4th) 344]. Cumming J. has earned an excellent reputation in the field of class proceedings. However it seems to me that the aspect of deference must be appropriately modified in this appeal for two reasons: (a) As observed above, Cumming J. recognized that he was stepping into unknown territory and (b) while certain elements of his decision were in the bailiwick of class proceedings, other elements were outside that purview.

[23] I would note that (as I understand it) but for the U.S. Protective Order, the Canadian plaintiffs here could have gone to the U.S. and subject to any residuary rules or polices, they would have been able to interview the U.S. plaintiffs and their counsel and review the discoverable information and documents then existing (or as may be forthcoming).

[24] To my view the question for this Canadian court is whether the Canadian plaintiffs (if permitted by Judge Hogan) will be accessing this discovery evidence in the passive sense of merely looking at that which has been produced in the ordinary course in the U.S. Litigation but not in the active sense of asking U.S. counsel to pursue avenues (which U.S. counsel would not have otherwise travelled) for the purpose of assisting the Canadian plaintiffs. If they were to proceed in the active sense, then in substance and effect, the Canadian plaintiffs would be engaging in discovery prior to the time that they are entitled to under our Rules and in a way which would be a breach of those Rules.

[25] The Canadian defendants have raised the spectre that Canadian counsel will use their co-operative liaison with their U.S. counterparts so as to have the latter act as their stalking horse to get discovery in the active sense. I would think that there are two safeguards against that inappropriate behaviour. Firstly, I would presume that Judge Hogan, if inclined to relax the U.S. Protective Order, would be concerned about irrelevant discovery being pursued in the U.S. Litigation and he would require terms which would ensure that the Canadian plaintiffs got nothing more than would otherwise be discovered in the U.S. (that is, as if the Canadian proceedings did not exist). Secondly, I would be of the opinion that if the Canadian plaintiffs did engage in active sense discovery, then this (Canadian) Court would determine (a) whether the fruits of that labour could be employed in the Canadian proceedings and (b) the other sanctions for infringement of our discovery rules. However if the Canadian plaintiffs are permitted by Judge Hogan to have access to what has otherwise been discovered in the U.S. Litigation and they conduct themselves in the passive sense, then I do not see that there is a conflict between our principles on (a) gathering evidence in a foreign jurisdiction (see South Carolina Insurance Co. v. Assurantie Maatschappij "de Zeven Provincien" NV, [1986] 3 All E.R. 487 (H.L.)) and (b) the right to privacy (see Ontario (Attorney General) v. Stavro (1995), 1995 ONCA 3509, 26 O.R. (3d) 39, 129 D.L.R. (4th) 52 sub nom. Ontario (Attorney General) v. Ballard Estate (C.A.); Goodman v. Rossi (1995), 1995 ONCA 1888, 125 D.L.R. (4th) 613 (Ont. C.A.)).

[26] In the South Carolina case, Lord Brandon (with whom the other law lords agreed) stated at p. 497:

... I cannot see that the defendants, by seeking to exercise a right potentially available to them under the Federal law of the United States, have in any way departed from, or interfered with, the procedure of the English court. All they have done is what any party preparing his case in the High Court here is entitled to do, namely to try to obtain in a foreign country, by means lawful in that country, documentary evidence which they believe that they need in order to prepare and present their case.

[27] In Stavro, our Court of Appeal stated at pp. 47-48:

In making the fairness assessment required by rule 30.10(1)(&), the motion judge must be guided by the policy underlying the discovery regime presently operating in Ontario. That regime provides for full discovery of and production from parties to the litigation. It also imposes ongoing disclosure obligations on those parties. Save in the circumstances specifically addressed by the rules, non-parties are immune from the potentially intrusive, costly and time-consuming process of discovery and production. By its terms, rule 30.10 assumes that requiring a party to go to trial without the forced production of relevant documents in the hands of non-parties is not per se unfair.

In Goodman v. Rossi, our Court of Appeal further observed at pp. 621-22:

... the [implied undertaking] principle is based on recognition of the general right of privacy which a person has with respect to his or her documents. The discovery process represents an intrusion on this right under the compulsory processes of the court. The necessary corollary is that this intrusion should not be allowed for any purpose other than that of securing justice in the proceeding in which the discovery takes place.

The rationale for the implied undertaking rule is compendiously stated Matthews and Malek's Discovery (1992), at p. 253:

"The primary rationale for the imposition of the implied undertaking is the protection of privacy. Discovery is an invasion of the right of the individual to keep his own documents to himself. It is a matter of public interest to safeguard that right. The purpose of the undertaking is to protect, so far as is consistent with the proper conduct of the action, the confidentiality of a party's documents. It is in general wrong that one who is compelled by law to produce documents for the purpose of particular proceedings should be in peril of having those documents used by the other party for some purpose other than the purpose of the particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery. A further rationale is the promotion of full discovery, as without such an undertaking the fear of collateral use may in some cases operate as a disincentive to proper discovery. The interests of proper administration of justice require that there should be no disincentive to full and frank discovery."

[28] If the Canadian plaintiffs have access to discovery in the passive sense, then they are merely evidence gathering as opposed to engaging in discovery of the Canadian defendants or non-parties. There is no compulsory disclosure thereby in the sense that someone is being coerced to provide material to the Canadian plaintiffs which is not already required solely for the U.S. Litigation. Further there will be no intrusion into the privacy of these persons since they will not be subjected to any further questioning or document production than they would have been already required to do even if there were no Canadian proceedings. As well, but for the U.S. Protective Order these persons do not have any protected privacy rights in the U.S. Litigation. It was raised by the Canadian defendants that if the Canadian plaintiffs were allowed to come in under a relaxed U.S. Protective Order, there will be an increased risk that the confidentiality which the U.S. Protective Order seeks to maintain will run an extra risk of (inadvertent) disclosure. That is not for this Court to consider, but rather for Judge Hogan. I have a similar view of their concern that the Canadian plaintiffs will see material which is not germane to the Canadian proceedings. Further the defence position that the Canadian plaintiffs are trying to end run our rule dealing with letters rogatory is untenable in an access to discovery passive sense situation; they are not able to use the coercive power of the court to compel answers and production in that sense but they are able to inspect what would otherwise be the U.S. public record.

[29] Notwithstanding that the Canadian plaintiffs may have employed some loose language which could be interpreted as their having requested Judge Hogan to allow them to discover the U.S. defendants (as opposed to having access to that which has already been discovered), it appears clear to me that they in fact are asking him that the U.S. Protective Order be relaxed to allow them to review that which has otherwise been discovered in the ordinary course of the U.S. Litigation (as if the Canadian proceedings did not exist). On that basis, I would dismiss the appeal of the Canadian defendants and their request that the Canadian plaintiffs be enjoined from proceeding with their U.S. Motion.

[30] If the Canadian plaintiffs were in fact asking that they be permitted to directly or indirectly engage in discovery in the active sense, then I would have come to an opposite conclusion. Simply put, that request would not be mere evidence gathering but the use of the coercive power to require discovery answer and production of documents which would infringe the privacy rights as discussed in Stavro and Goodman v. Rossi. That would be an end run around our Rules 30, 31 and 36 as discussed above. In the end result I am of the view that the appeal of the defendants should be dismissed on the basis that the Canadian plaintiffs are only seeking access to discovery material which would exist independently of (a) the Canadian proceedings and (b) the Canadian plaintiffs and their counsel.

[31] Given the novelty of the question I am of the view that each party should bear its own costs.

[32] Appeal dismissed.