ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 12-CV-447546CP
DATE: April 2, 2012
BETWEEN:
Frank Tucci
Plaintiff
- and -
Smart Technologies Inc., Apax Partners L.P., Apax Partners Europe Managers Ltd., School S.A.R.L., Intel Corporation, Morgan Stanley Canada Limited, Deutsche Bank Securities Limited, RBC Dominion Securities Limited, Merril Lynch Canada Inc., Credit Suisse Securities (Canada) Inc., Stifel Nicolaus Canada Inc. (fka Thomas Weisel Partners Canada Inc.), David A. Martin, Nancy L. Knowlton, Salim Nathoo, Arvind Sodhani, Michael J. Mueller, Robert C. Hagarty and G.A. (Drew) Fitch
Defendants
COUNSEL:
• Michael G. Robb for the Plaintiff
Motion in Writing
PERELL, J.
REASONS FOR DECISION
[ 1 ] This is a motion in writing in a proposed class action to discontinue the action against certain defendants (the “Underwriter Defendants”) in this action and in a related proposed class action. Court approval of a discontinuance is required under s. 29 of the Class Proceedings Act, 1992, S.O. 1992, c.6. For the reasons that follow, the motion is granted.
[ 2 ] On May 6, 2011, Robert LeFever and Gail Runnels commenced a proposed class action; namely Lever et al v. Smart Technologies Inc. et al (Court File No.: 12-CV-12447548CP) and on May 6, 2011, Frank Tucci commenced the action now before the Court. Both actions concern the July 2010 initial public offering (“IPO”) of the shares of the defendant Smart Technologies Inc. The defendants in both actions are the same. The plaintiffs in both actions allege that a prospectus and a registration statement contained statements that were materially false and misleading and that failed to disclose material information.
[ 3 ] The Underwriter Defendants are Morgan Stanley Canada Limited, Deutsche Bank Securities Limited, RBC Dominion Securities Limited, Merril Lynch Canada Inc., Credit Suisse Securities (Canada) Inc., and Stifel Nicolaus Canada Inc. (fka Thomas Weisel Partners Canada Inc.), and they were members of the syndicate that underwrote the IPO in Canada.
[ 4 ] There is a parallel class action in the United States, which included Morgan Stanley Canada Limited, Deutsche Bank Securities Limited, and RBC Dominion Securities Limited as defendants. The plaintiff in the U.S. action, however, has now let the underwriters out of the action, which has been dismissed as against them.
[ 5 ] In Canada, the plaintiffs in the Lever action and in the case at bar have entered into a Standstill Agreement dated January 25, 2012 with the Underwriter Defendants.
[ 6 ] The Standstill Agreement provides that: (a) subject to court approval, the plaintiffs agree to discontinue the actions without costs; (b) the discontinuance is not a release or a defence to the actions; (c) the plaintiffs may assert a claim against the Underwriter Defendants if the plaintiffs’ legal counsel makes a good faith determination based on a rigorous analysis of reasonably available financial data from or regarding the vendors that there has been an adverse change with respect to any of the vendor’s financial or operating conditions such that financial recovery from the vendors is materially less likely than it was at the date of the Standstill Agreement and the assertion of the tolled claims against the Underwriter Defendants is in the best interests of the proposed classes; and (d) any and all applicable limitation periods are tolled as of the date of the execution of the Standstill Agreement. The tolling period will expire following a final order of a court disposing of the plaintiffs’ continuing claims in the Actions.
[ 7 ] Because of the Standstill Agreement, the proposed discontinuance would not appear to prejudice the interests of the proposed class. Future claims against the Underwriter Defendants are not precluded. The discontinuance will reduce ongoing litigation expenses and reduce the size of the potential adverse costs award. The Underwriter Defendants would have crossclaims against the remaining defendants for indemnification, and letting the Underwriter Defendants out of the action may increase the pool of insurance proceeds available to the class members, and it will focus the action against the vendors of the shares and their personal defendants and officers, who may be the source of the alleged misrepresentations.
[ 8 ] In all the circumstances, the discontinuances should be approved, and it is not necessary to give notice of the discontinuance.
[ 9 ] Leave should also be granted for the plaintiffs to deliver a Fresh as Amended Statement of Claim in the action at bar.
Perell, J.
Released: April 2, 2012
COURT FILE NO.: 12-CV-447546CP
DATE: April 2, 2012
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Frank Tucci
Plaintiff
‑ and ‑
Smart Technologies Inc., Apax Partners L.P., Apax Partners Europe Managers Ltd., School S.A.R.L., Intel Corporation, Morgan Stanley Canada Limited, Deutsche Bank Securities Limited, RBC Dominion Securities Limited, Merril Lynch Canada Inc., Credit Suisse Securities (Canada) Inc., Stifel Nicolaus Canada Inc. (fka Thomas Weisel Partners Canada Inc.), David A. Martin, Nancy L. Knowlton, Salim Nathoo, Arvind Sodhani, Michael J. Mueller, Robert C. Hagarty and G.A. (Drew) Fitch*
Defendants
REASONS FOR DECISION
Perell, J.
Released: April 2, 2012.