Silver et al. v. IMAX Corporation et al.

[Indexed as: Silver v. IMAX Corp.]

Ontario Reports

Ontario Superior Court of Justice,

Tzimas J.

October 29, 2013

117 O.R. (3d) 616 | 2013 ONSC 6751

Case Summary

Civil procedure — Class proceedings — Class members — Motion judge amending definition of Ontario global class by removing persons who agreed to take part in court-approved settlement of parallel U.S. proceedings — Plaintiffs' motion for leave to appeal that order dismissed in absence of conflicting decisions or doubts over correctness of order.

The case management motion judge in an Ontario class proceeding amended the definition of the Ontario global class by removing all those persons who agreed to take part in a court-approved settlement of parallel U.S. proceedings. The removal from the Ontario global class of those class members was a condition of the settlement, so as to prevent double recovery from both jurisdictions. The plaintiffs brought a motion for leave to appeal that order.

Held, the motion should be dismissed.

The decision to amend the global class did not conflict with a decision by another judge or court in Ontario or elsewhere. There was no doubt about the correctness of the order. The motion judge had jurisdiction to amend the class. She would have erred if she had treated the U.S. settlement as irrelevant to the Ontario litigation. She did not err in holding that it would be contrary to the fundamental principles governing conflict of laws to look behind the U.S. settlement and evaluate it on its merits as a prerequisite to amending the class. The motion judge was the case management motion judge for six years and had acquired a thorough understanding of the competing facts. Her decision to amend the global class was entitled to substantial deference.

Abdula v. Canadian Solar Inc. (2012), 110 O.R. (3d) 256, [2012] O.J. No. 1381, 2012 ONCA 211, 289 O.A.C. 226, 98 B.L.R. (4th) 199, 348 D.L.R. (4th) 597, 214 A.C.W.S. (3d) 1006; Currie v. McDonald's Restaurants of Canada (2005), 2005 3360 (ON CA), 74 O.R. (3d) 321, [2005] O.J. No. 506, 250 D.L.R. (4th) 224, 195 O.A.C. 244, 7 C.P.C. (6th) 60, 137 A.C.W.S. (3d) 250 (C.A.); Fischer v. IG Investment Management Ltd. (2012), 109 O.R. (3d) 498, [2012] O.J. No. 343, 2012 ONCA 47, 287 O.A.C. 148, 15 C.P.C. (7th) 81, 346 D.L.R. (4th) 598, 211 A.C.W.S. (3d) 785 [Leave to appeal to S.C.C. granted [2012] S.C.C.A. No. 135], consd [page617]

Other cases referred to

1250264 Ontario Inc. v. Pet Valu Canada Inc. (2013), 115 O.R. (3d) 653, [2013] O.J. No. 2012, 2013 ONCA 279, 362 D.L.R. (4th) 88, 34 C.P.C. (7th) 53, 305 O.A.C. 329, 226 A.C.W.S. (3d) 651; Bell ExpressVu Limited Partnership v. Morgan, 2008 63136 (ON SCDC), [2008] O.J. No. 4758, 67 C.P.C. (6th) 263, 171 A.C.W.S. (3d) 426 (Div. Ct.); Lefrancois v. Guidant Corp., [2009] O.J. No. 4129 (Div. Ct.); Lloyd v. Economical Mutual Insurance Co., 2008 38364 (ON SC), [2008] O.J. No. 3025, 65 C.C.L.I. (4th) 299, 168 A.C.W.S. (3d) 1070 (S.C.J.); Mignacca v. Merck Frosst Canada Ltd. (2009), 2009 10059 (ON SCDC), 95 O.R. (3d) 269, [2009] O.J. No. 821, 247 O.A.C. 322, 71 C.P.C. (6th) 350, 176 A.C.W.S. (3d) 36 (Div. Ct.); Morrison v. National Australian Bank Ltd., 130 S. Ct. 2869, 177 L. Ed. 2d 535 (2010); Silver v. IMAX Corp., 2009 72334 (ON SC), [2009] O.J. No. 5585, 86 C.P.C. (6th) 273 (S.C.J.); Silver v. IMAX Corp. (2011), 105 O.R. (3d) 212, [2011] O.J. No. 656, 2011 ONSC 1035, 80 B.L.R. (4th) 228 (Div. Ct.); Silver v. IMAX Corp. (2012), 110 O.R. (3d) 425, [2012] O.J. No. 1352, 2012 ONSC 1047, 17 C.P.C. (7th) 24, 213 A.C.W.S. (3d) 24 (S.C.J.); Silver v. IMAX Corp., [2013] O.J. No. 1276, 2013 ONSC 1667, 36 C.P.C. (7th) 254, 227 A.C.W.S. (3d) 23 (S.C.J.)

Statutes referred to

Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 5(1) (d), 12

Securities Act, R.S.O. 1990, c. S.5, s. 138.9 [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 62.02(4), (a), (b)

MOTION for leave to appeal an order amending the definition of the Ontario global class in a class proceeding.

Daniel E.H. Bach and Serge Kalloghlian, for plaintiffs.

Dana M. Peebles, for defendants.

TZIMAS J.: —

I. Introduction

[1] The plaintiffs, Marvin Neil Silver and Cliff Cohen brought a motion for leave to appeal the order of Justice van Rensburg, dated March 19, 2013 [[2013] O.J. No. 1276, 2013 ONSC 1667 (S.C.J.)], to the Divisional Court. That order amended the definition of the Ontario global class by removing all those persons previously within the Ontario global class who accepted to partake in the settlement arising out of the parallel U.S. proceedings, and approved by the U.S. court. The removal from the Ontario global class of all class members who would partake in the U.S. settlement was a condition of that settlement so as to prevent double recovery from both jurisdictions.

[2] The plaintiffs claim that the motion judge erred in her decision to amend the global class in four respects. They also say that the motion judge created a framework for the settlement of [page618] cross-border actions that will impact every cross-border class action that follows. That implication is of such public importance that it ought to be reconsidered by the Divisional Court. Finally, they observe that the standard on a motion for leave to appeal is low such that "important decisions that conflict with other decisions or that are open to serious debate are subject to review".

[3] With respect to the four specific errors, the plaintiffs challenge the judge's jurisdiction to remove those members of the class who accepted the settlement in the parallel U.S. action. Next, they say that the defendants' move to amend the global class in Ontario was nothing more than a procedural manoeuvre to extinguish the class members' claims. As such, it is barred by issue estoppel. In addition, the plaintiffs argue that the motion judge should have evaluated the U.S. settlement to determine if it would be enforceable in Ontario before deciding to amend the class. Finally, the plaintiffs argue that the motion judge misapplied the law as it relates to the recognition of foreign judgments and the preferability of venue, pursuant to s. 5(1)(d) of the Class Proceedings Act, 1992, S.O. 1992, c. 6.

[4] In response, the defendants ("IMAX") oppose the motion. According to IMAX, Justice van Rensburg had to answer a single point of law: In the context of an ongoing parallel class proceeding in Ontario"when should an Ontario Court recognize a U.S. class action Settlement Order"?

[5] Taking into account, not only this particular order, but the overall progression of the Ontario proceedings, IMAX contends that the motion judge was correct to amend the Ontario global class, given the court-approved settlement in the U.S. proceedings. Her Honour came to that conclusion in a thorough and detailed decision that applied the requirements of the Ontario Court of Appeal, as laid out in Currie v. McDonald's Restaurants of Canada[^1] to the specific facts and situation of this case.

[6] IMAX cautions that the challenges put forward by the plaintiffs are nothing more than a repetition of the arguments that were presented at the motion. The motion judge considered those arguments but rejected them in a very deliberate and considered analysis.

[7] IMAX concludes its submissions with the observation that the order of March 19, 2013 "accords with the fundamental principles of settlement, and with the principles of international comity, and is the only resolution which treats the choices made by the strong majority of the Class in this Action -- to accept [page619] their share of the $12 million settlement in the U.S. action, rather than remain indefinitely in this Action to an uncertain result -- with fairness". In the context of this case, IMAX concludes that there was no error of law by the motion judge. Nor is there any conflicting decision by another judge. The motion for leave should therefore be dismissed.

II. Background

[8] Justice van Rensburg's most recent order reflects the culmination of a series of steps and motions over the course of six years, that began with the certification of a global class and has come full circle to the amendment of that class in light of a settlement in the parallel U.S. action. The decisions of this court to certify of the global class in Ontario and the content and timing of the notice of the certified class set the stage and virtually anticipated the eventual need for an amendment to the Ontario global class.

[9] The overriding theme and objective across the six years of litigation has been to create a fair process that would preserve the options of the potential class members open for as long possible and, in any event, until they would be in a position to evaluate those options. Indeed, a hallmark of Justice van Rensburg's decisions was her common sense and fair approach to the issues as they arose. Justice Corbett, in his refusal to grant leave to appeal the certification decision, captured that quality in the following observation:[^2]

The proceedings are and should be complementary, to achieve a proper vindication of the rights of the plaintiffs, fair process for the defendants and plaintiffs, respect for the autonomous jurisdictions involved, and an integrated and efficient resolution of claims. This requires common sense, judicial comity and fair process. It does not require balkanization of class proceedings, but rather sensitive integration of them.

[10] Given this overall approach, the order that is the subject of this motion must be situated and evaluated within its broader context and with the full appreciation of how it fits into the overall scheme of these proceedings.

[11] Actions by the plaintiffs were commenced in Ontario and in the U.S. in 2006 against IMAX for alleged misrepresentations as it related to their financial reporting and the recognition of [page620] revenue for its theatre systems.[^3] Early attempts to settle the litigation were unsuccessful.

[12] In Ontario, the action was certified as a class proceeding in December 2009.[^4] The court certified a global class consisting of

[a]ll persons, other than the Excluded Persons, who acquired securities of IMAX [Corporation] during the Class Period of the TSX and on the NASDAQ, on or after February 17, 2006 and held some or all of those securities at the close of trading on August 9, 2006.

[13] Justice van Rensburg was aware that approximately 85 per cent of the securities acquired by the class members in the Ontario action were purchased on the NASDAQ and, therefore, also fell within what at the time was a proposed class in proceedings that were pending in the United States District Court, Southern District of New York.[^5] Nonetheless, Her Honour certified the global class with the full knowledge and appreciation that the decision to certify might have to be reviewed at a later stage in the litigation to address or respond to probable conflict of laws issues. In doing so, Her Honour did not want to deprive the plaintiffs of certification. But it was with the express warning that the certification had in it a certain "wait and see" element and a strong likelihood that the legal landscape would eventually change.

[14] That caution, in large measure, arose from the plaintiffs' own expert, Professor Borchers, who noted that parallel proceedings could only continue for so long. Eventually, the parties and the court would have to consider the outcome of the "wait and see". That outcome Professor Borchers described as the "day of reckoning". As for the period between certification and the "day of reckoning", Her Honour emphasized the need to ensure that the process was fair, especially to the non-resident class members. That care could be accomplished by "paying careful [page621] attention to the notice and communications with the non-resident class members".[^6]

[15] In the U.S. action, the certification of the proposed class in the U.S. action had a number of false starts with various representative plaintiffs being disqualified. The original first plaintiff, Westchester Capital (who was eventually disqualified as a lead plaintiff), proposed a definition of the class that was the same as the definition of the Ontario class.[^7] As a result of a decision in the U.S. in a different case that excluded purchasers of shares on foreign exchanges from the U.S. securities class action,[^8] the proposed class definition in the U.S. action had to be revised to exclude purchasers of IMAX shares on the TSX, thereby confining the U.S. proposed class to the NASDAQ purchasers.

[16] In April 2011, a new plaintiff"The Merger Fund", was appointed in the U.S. action. It proceeded with settlement negotiations that were restricted only to the U.S. proceeding. On November 2, 2011, the parties to the U.S. action entered into a preliminary settlement agreement for the benefit of the U.S. settlement class.

[17] On January 26, 2012, the parties to the U.S. proceedings signed a formal "Stipulation and Agreement of Settlement" that purported to recover for the U.S. settlement class the sum of US$12 million.

[18] On February 1, 2012, the judge case managing the U.S. action, Justice Buchwald, gave preliminary approval to the proposed settlement and certified the U.S. settlement class for the purposes of the proposed settlement, and directed that the U.S. settlement class be given notice of the settlement and of the intention of the plaintiff to schedule a date for a fairness hearing.

[19] On May 3, 2012, IMAX made a "with prejudice" offer to settle the claims of the TSX class for a sum of US$1.33 million, exclusive of costs. The proposed sum was calculated pro rata to the U.S. action settlement. It also took into account the shorter [page622] class period of the Ontario action and the lower trading volume on the TSX.

[20] Turning back to the proceeding in Ontario, IMAX sought leave to appeal the "certification decision". That motion was dismissed on February 11, 2011. That enabled the parties to proceed with a motion to approve the form, content, timing and dissemination of the notification of the Ontario class proceeding, and the press release as required by s. 138.9 of the Securities Act, R.S.O. 1990, c. S.5.

[21] Although the court was set to hear the "notice motion" in May 2011, various delays meant that the motion did not get underway until the fall of 2011. By then, settlement negotiations were underway in the U.S. proceedings. This resulted in additional submissions over the course of the fall of 2011 and into 2012. The prospect of a U.S. settlement, when previously such was looking very doubtful, put into question the content of the Ontario notice and its relationship or connection to the U.S. notices.

[22] Ultimately, in the decision regarding the notice requirements, Her Honour began with first principles that govern the content of notice -- namely, that the content is to be informed by its purpose. Having regard to the specific facts, Her Honour observed:[^9]

The purpose of notice at this stage in these proceedings is to inform class members that the proceedings have been certified as a class action, to tell them what the action is about, and to permit class members to act on such notice, by taking such steps as they should be afforded to preserve their "litigation autonomy".

At this stage in the Ontario proceedings, there is no need for a class member [to] elect between participation in these proceedings and participation in the U.S. Proceedings. As both experts agreed, there is no impediment to overlap class members belong to the classes in both proceedings at least until reaches judgment. The only decision required of class members at this stage is whether to opt out of these proceedings. The failure to opt out of these proceedings will not have any impact on the class members' ability to participate in the U.S. Proceedings, or indeed to participate in the U.S. settlement if and when it is approved. As Professor Borchers observed, and as we have seen in the proposed notices in the U.S. Proceedings, if and when the U.S. Settlement is approved, class members will receive notice that will make clear that "the day of reckoning" has arrived, information that may be pertinent to their choice, including contact information for counsel in both actions, and that the failure to opt out will preclude their claims, including claims in these proceedings."

(Emphasis added) [page623]

[23] Echoing the cautions reflected in the "certification decision", Her Honour indicated that the Ontario notice should direct the class members to a source of information about the other proceedings, but that such source should not attempt to summarize or evaluate the merits of the U.S. proceedings. Any detailed information about the U.S. proceeding could only confuse the class members and compromise their ability to make the only decision required at that instance -- namely, whether or not to opt out or remain in both the Ontario and the U.S. classes.

[24] By "litigation autonomy", Her Honour was focusing on the need to have a notice that provided the class members with the information they would need to make an informed decision. Her Honour specifically highlighted Justice Sharpe's directions in Currie that "if the right to opt out is to be meaningful, the unnamed plaintiff must know about it and that, in turn, implicates the adequacy of the notice afforded the unnamed plaintiff".[^10] Her Honour did observe that the U.S. notices would have to contain sufficient information for a class member to make an election.

[25] The notice in the Ontario proceedings was published on April 27, 2012. The opting-out notice relating to the proposed U.S. settlement in the U.S. proceeding was published on April 26, 2012.

[26] The. U.S. notice made it clear that if the overlapping class members elected to remain bound by the U.S. settlement their ongoing participation in the Ontario action would be barred. The U.S. notice in effect, described the "day of reckoning" as follows:

If the Canada Order is entered and becomes final, you will not be permitted to recover in both cases and if you do not exclude yourself from the U.S. Action, you will automatically be deemed to be a member of the Class in the U.S. Action, and therefore excluded from the Canadian Class in the Canadian Action. For members of the Canadian Class, a detailed description of the Canadian Action as well as details regarding how to exclude yourself from this action (and thereby participate in the Canadian Action) are contained below.[^11]

In other words, the class members could not remain in both classes and recover from both classes. They would have to choose between the U.S. settlement class and the Ontario global class. [page624]

[27] The distribution of the U.S. notice was very widespread.[^12] In total, 87,934 copies of the notices were sent out to individuals and institutions. That was supplemented with the publication of a summary notice in various newspapers that included Canada's major publications, both English and French, and a website. In the result, seven opt-out letters were received, of which five were from overlapping class members. There was also one objector who was a resident of the U.S. and who raised extensive concerns with reasonableness of the settlement.

[28] Following notification, the U.S. parties proceeded with the fairness hearing to seek the court's final approval of the U.S. settlement. On June 20, 2012, Justice Buchwald concluded that the notice to the members of the class was adequate. Her Honour certified the U.S. class for purposes of the settlement, and approved the settlement and the plan of allocation. Her Honour reserved on the issue of legal costs and expenses. The settlement order and the payment of the $12 million compensation remained conditional upon the global class being amended in the Ontario proceeding to exclude all those who chose to benefit from the U.S. settlement.

[29] The condition of the U.S. order resulted in the motion that is now the subject of this leave application. The materials before Justice van Rensburg were extensive: four motion records from the defendants, a transcript brief, five volumes of records from the plaintiffs, and an expert opinion on cross-border class actions. The motion was argued over two days in July 2012 and resulted in a thorough decision, outlined in 192 paragraphs and 85 footnotes that recognized the U.S. settlement order.

[30] Two paragraphs in particular stand out and exemplify the caution and care with which Her Honour approached the decision:[^13]

The defendants' position on this motion was that this court's amendment of the class should be automatic, provided that the U.S. Court that approved the fairness of the settlement of the claims of overlapping class members had jurisdiction. It should be obvious from my decision that I do not agree with this contention. Once a global class was certified in this jurisdiction, the claims of the overlapping class members came within the protection of this court. While this is not a motion to approve a settlement, the defendants nevertheless had to persuade the court that the certification order originally made should be amended, with the effect of removing from the certified class the overlapping class members who had not opted out of the U.S. settlement. This required the recognition of the U.S. judgment [page625] approving the settlement (under a Currie analysis), and then, the consideration of other factors relevant in particular to the objective of access to justice, in order to determine whether it was the "preferable procedure" to amend the class.

I have concluded that the U.S. Court, in making the U.S. Fairness Decision which approved the U.S. Settlement subject to an order of this court, had jurisdiction and followed a procedure that was fair to absent class members and adequately represented their interests. Having recognized the U.S. Settlement, and considered whether the settlement furthers the objectives of class proceedings, and in particular access to justice, I have determined that it is the preferable procedure to remove such claims from this action, in favour of an order that will permit the U.S. Settlement to be concluded.

[31] Justice van Rensburg was very deliberate in her analysis and her conclusions. Her Honour certified a global class at the outset with the full knowledge of the potential vulnerabilities that lay ahead. She did so, to maximize the litigants' options. In the same vein, Her Honour framed the notice requirements in a way that would put the best information into the class members' hands so that they could exercise their options as they saw fit. The amendment of the global class became the way to make sense and respond to the developments of the U.S. proceeding appropriately, in a way that was fair and that extended to the parties due process. The overriding concern, to use Professor Borchers' phrase was to resolve the developments in this case in a way so that "no class member should get 'two bites at the apple' against any defendant".[^14]

III. Analysis

[32] Leave to appeal may be granted under rule 62.02(4)(a) or (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, where

(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[33] As observed by Justice Corbett in his decision that denied leave to appeal Her Honour's "certification decision",[^15] within each branch of the test the rule is conjunctive. I echo Justice [page626] Corbett's observation that where there is neither "good reason to doubt the correctness" of a decision, nor a "conflicting decision", leave will not be granted to address debatable aspects of the reasons.[^16]

[34] It is important to recognize that rule 62.02(4) is intended to be a "rigorous" screening mechanism that is designed to narrow the number of interlocutory decisions that qualify for appellate review.[^17] The test for granting leave is high. Leave will not be granted where the decision is well-reasoned and the issues raised are not of general importance.[^18]

[35] Furthermore, in the context of class proceedings, where the motion judge has substantial and intimate familiarity with the file, His or Her Honour ought to be accorded substantial deference.[^19]

[36] Section 12 of the Class Proceedings Act, states:[^20]

12. The Court on a motion of a party or class member, may make an order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate.

[37] The Ontario Court of Appeal has interpreted this section to confer broad, discretionary jurisdiction on the motion judge. Chief Justice Winkler, in 1250264 Ontario Inc. v. Pet Valu Canada Inc.,[^21] made it clear that:

A discretionary decision to safeguard the fairness of a class proceeding is entitled to receive significant deference from this court. It may only be set aside if it is based on an error of law, a palpable and overriding error of fact, the consideration of irrelevant factors or omissions of factors that ought to have been considered, or it the decision was unreasonable.

[Citation omitted]

[38] These legal tests translate into the following three questions for consideration on this motion:

(a) Did Her Honour's order to amend the global class conflict with a decision by another judge or court in Ontario or [page627] elsewhere and does that make it desirable for leave to appeal to be granted?

(b) Does it appear to this court that there is good reason to doubt the correctness of Her Honour's order of March 19, 2013 and does the proposed appeal involve matters of such importance that, in this court's opinion, leave to appeal should be granted? and

(c) Did the motion judge make errors of law and palpable errors of fact such that the exercise of Her Honour's broad discretion ought to be reviewed?

Each question is considered separately below.

(a) Does Her Honour's order to amend the global class conflict with a decision by another judge or court in Ontario or elsewhere and does that make it desirable for leave to appeal to be granted?

[39] Justice van Rensburg's decision to amend the global class does not conflict with a decision by another judge or court in Ontario or elsewhere. Her decision was specific to the unique circumstances of these proceedings. Her Honour aimed to respond to developments in the U.S. action and a settlement that had as its only condition, the amendment of the global class so as to remove those Canadian class members who would be benefitting from the U.S. settlement. The reason for the condition was to prevent double recovery by class members in both proceedings. That objective was reasonable and it would not be desirable for leave to appeal to be granted.

(b) Does it appear to this court that there is good reason to doubt the correctness of Her Honour's order of March 19, 2013 and does the proposed appeal involve matters of such importance that, in this court's opinion, leave to appeal should be granted?

[40] The short answer to this question is "no". The plaintiffs suggest that there are four errors of law that put into question Justice van Rensburg's order. Each is reviewed below.

i. Did Justice van Rensburg have the jurisdiction to amend the global class?

[41] The plaintiffs identify three reasons for the judge's lack of jurisdiction. They say that the order created an impermissible opt-in class. They also say that it was impermissible for the [page628] court to extinguish the claims of the NASDAQ purchasers would are members of the global class. Finally, they argue that order created an impermissible merits-based definition of the class.

[42] All of these arguments were before the motion judge and they were considered very extensively. The same cases that were put before this court were before Her Honour but they were expressly distinguished from the facts and issues in dispute in this case. The analysis was thorough and sound. In their leave submissions, the plaintiffs did not identify any errors in Her Honour's analysis and response to their arguments.

[43] Taking a closer look, with respect to the concerns about the creation of an impermissible opt-in class, Her Honour rejected that proposition and explained that the overlapping class members' procedural rights were not compromised. The "litigation autonomy" that Her Honour spoke of in the "notice decision" permeated this analysis as well. Her Honour said [at paras. 73-74]:

The opt out procedure is a cornerstone of our class proceedings regime, and serves to protect class members' litigation autonomy. The presumption is that, by not opting out, the NASDAQ purchasers made a decision to participate in the U.S. Settlement instead of pursuing a remedy on their own or in another civil proceeding, including this action.

In this case the court is not being asked to approve a procedure that would convert this action into an opt in proceeding. The overlapping class members' procedural rights are not being comprised; through the U.S. notice, they were put to an election. If they opted out, they have chosen to remain in the Ontario class. If not, they are eligible to receive the benefits of the U.S. Settlement. They are not being denied the right to possible compensation unless they take some affirmative step; in fact, they gain the right to compensation in the U.S. Proceedings.

In other words, the overlapping class members could accept an immediate compensation via the U.S. action or they could choose to remain in the Ontario action and await an uncertain outcome.

[44] The amendment of the class would facilitate the exercise of a class member's litigation autonomy. It would not take anything away. Nobody would be forcing a class member to exercise his option on the day of reckoning in one way or another. To the contrary, a refusal to amend the class would effectively extinguish the U.S. settlement completely, and therefore, take away the settlement option from the class members who wanted to settle their claim.

[45] As for the criticism that the class was amended on the basis of an impermissible merits-based inquiry, Justice van Rensburg did not engage in any such analysis. The plaintiffs say that the motion judge's decision hinged on the assertion that NASDAQ purchasers did not have a claim on the merits [page629] in the Ontario action because they would be bound by the U.S. settlement.

[46] With respect, that is not what Her Honour Justice concluded. The analysis on the issue of choosing between jurisdictions focused on the litigant's autonomy. If they were to be compensated in one jurisdiction, they would have to give up their claim in the other. If they were convinced of the merits of the Ontario action, they could preserve their rights and opt out of the U.S. settlement. The litigants would be evaluating the merits of one jurisdiction over the other, not the courts.

[47] In short, there was no error by the motion judge on the issue of the court's jurisdiction to amend the class.

ii. Was the motion to amend a procedural move by the defendants and is it precluded by issue estoppel?

[48] If there is one issue that cannot be said to be precluded by issue estoppel it is the possible amendment of the global class in these proceedings. Her Honour couldn't have been more prescient in the cautions that accompanied the certification decision. Her Honour expressly anticipated that future developments in the litigation as they related to the conflict of laws issue might result in an amendment to the global class.

[49] Her Honour addressed this very same argument head on in her "amendment decision". Relying on Mignacca v. Merck Frosst Canada Ltd.,[^22] Her Honour noted that certification orders were interlocutory that could be amended at a later time, as a case might proceed. But Her Honour went further to engage with the facts in this case to conclude that if at the time of the certification motion there had been a pending settlement in the U.S. proceeding that encompassed the NASDAQ traders, that would have been a relevant factor in the decision to certify a global class.

[50] There was no settlement underway in the U.S. action that anyone spoke about or put before the court at the time that the certification motion was argued. Information of a possible settlement in the U.S. action surfaced in the course of the "notice" motion and, more particularly, in the fall of 2011 and into early 2012. The proposed settlement in the U.S. was therefore a new material fact for the court to consider. Against these facts, issue estoppel could not operate to prevent the amendment of the Ontario global class. [page630]

[51] The alternative argument by the plaintiffs that the U.S. settlement was irrelevant to the consideration of issue estoppel is equally unconvincing. The plaintiffs rely on Fischer v. IG Investment Management Ltd.[^23] But the motion judge considered Fischer at some extended length and ultimately distinguished it from the facts of this case. In contrast to Fischer, Her Honour explained [at para. 80] that "the U.S. proceedings provide a vehicle for compensation to affected investors, and share with the Ontario class proceeding the objectives of achieving access to justice, behaviour modification and judicial economy". The existence of an approved settlement in the U.S. proceedings was clearly relevant to the question of whether or not the Ontario action would remain the preferable procedure to resolve the claims of the overlapping class members.[^24]

[52] The motion judge then went further. As with her overall approach to this litigation, Her Honour was cautious to give due consideration to all of the developing facts and nuances of the case given the particular stage of the litigation. At certification, there was "lots" to wait and see. By the time of the amendment motion, the uncertainties had diminished significantly:[^25]

At this stage, there is not only a settlement available in the U.S. Proceedings; that settlement has been approved by the U.S. Court, and overlapping class members have elected to be covered by the settlement because they have not opted out. The question is whether at this stage in the Ontario Action, a class proceeding that includes all members of the overlapping class, or one that is redefined as the defendants propose, would be the "preferable procedure".

(Emphasis added)

[53] In other words, the fact of the U.S. settlement in the progression of the litigation was crucial as it related to the consideration of due process, judicial comity and common sense. These objectives were the overriding goals at certification. Would the fact of the U.S. settlement meet or be responsive to those goals? As a major development in one of the two parallel proceedings, it is difficult to understand how the U.S. settlement could be anything but relevant to this litigation. The motion judge would have erred if she treated the U.S. settlement as irrelevant. It is hard to speak of an error, much less require that an appellate [page631] court be tasked to review the decision, on the view that the very reason for seeking the amendment was irrelevant.

iii. Did Justice van Rensburg apply the wrong legal test to determine whether the settlement should be enforced? Should the court have evaluated the U.S. settlement to determine if it would be enforceable in Ontario before deciding to amend the class?

[54] On the motion before Her Honour, one of the plaintiffs' primary arguments was that the Ontario court look behind the U.S. settlement and evaluate it on its merits before agreeing to its enforcement, and by implication, as a prerequisite to the amendment of the class. Her Honour rejected the proposed approach and concluded that it would be contrary to the fundamental principles governing conflict of laws.

[55] Her Honour would not have had a legal basis to go behind Justice Buchwald's order. Such an analysis would have gone against the case law concerning cross-provincial class actions and would subvert the Supreme Court of Canada's principles of international comity. Her Honour referenced the leading cases on comity to conclude that absent evidence of fraud or a violation of natural justice or of public policy it would not be for the enforcing court to take an interest in the substantive or procedural law of the foreign jurisdiction, in this case, the U.S.[^26] On the facts of this case, there were no allegations of fraud or conduct that was contrary to public policy or natural justice. Absent such allegations, the plaintiffs could not explain how the Ontario court would get around settled and long-standing authorities on conflict of laws to review the U.S. settlement.

[56] Justice van Rensburg applied the principles laid out by Justice Sharpe in Currie, only to conclude that it was appropriate for her to recognize the U.S. settlement. The perspective that seems to have influenced Her Honour the most was captured in the following paragraph:[^27]

I am satisfied that the U.S. Fairness Decision should be recognized in this jurisdiction, as the decision of a court that was made within its jurisdiction, and in circumstances where the order and fairness in the treatment of the claims of overlapping class members in the notice they were given respecting the options available to them, in the process before the U.S. Court, and their representation in the proceedings resulting in court approval of the settlement. [page632]

From the point of view of recognizing the U.S. fairness decision, there was nothing further to be considered.

[57] In light of that conclusion, Her Honour then turned to a preferability analysis. The objective was to determine whether there might be any other impediment to the amendment of the global class. Her Honour explained that she was prepared to accept as a working proposition that if the U.S. settlement were demonstrated to be improvident when compared to the alternative prospect of litigating the claims of the overlapping class members in Ontario, it might be preferable to refuse the amendment of the class and effectively defeat the U.S. settlement. That required Her Honour to consider what a likely outcome in Ontario might look like. Its components included the consideration of

(a) the alleged advantages of litigating the claims under Ontario law;

(b) the discovery evidence which supports the plaintiffs' claims; and

(c) their estimate of the maximum value of the class members' claim.

[58] The plaintiffs contend that a determination of the issues in Ontario would result in a far more substantial award for the class. Her Honour disagreed with that assessment. A substantial part of her decision considered the strengths and weaknesses of the Ontario proceeding. Ultimately, Her Honour concluded that the Ontario legal regime was not demonstrably more advantageous to the overlapping class members' claims.

[59] Her Honour cannot be faulted for that conclusion. The plaintiffs did not advance any evidence to support the contention that the U.S settlement was improvident. Nor did the plaintiffs file any expert evidence to establish that the Ontario liability regime would be more favourable to the overlapping class members than the U.S. liability regime. The only evidence on the subject was that from Professor Borchers, who was inconclusive in his assessment and suggested that the applicable regimes pulled in each direction. Finally, there were no other court determinations in the Ontario proceedings to guarantee a better outcome in the Ontario proceeding.

[60] Against these deficiencies, Her Honour concluded that her refusal to amend the class would deny the defendants the benefit of the U.S. settlement, which a U.S. court found to be fair. Such an outcome would compromise the defendants', and those [page633] wishing to partake in the settlement, their right to access to justice and due process.[^28]

[61] It is possible that aspects of Her Honour's comparative assessment of the Ontario action might be considered overly cautious by a different judge. For example, on the subject of reliance and whether that could be proven by the efficient market theory or otherwise,[^29] others might come to a different, more favourable assessment. However, there is no palpable or overriding error of fact to warrant appellate review. As with every aspect of this litigation, what is palpable in Her Honour's analysis is the concern to give full meaning to the parties' access to justice, due process, respect for judicial comity and common sense.

iv. Did Justice van Rensburg make errors in the application of Currie and in the preferable procedure analysis?

[62] This suggested error appears to be a variation of the third suggested error discussed above. The plaintiffs contend that the court's conclusion that the claims of the NASDAQ traders are presumptively subject to U.S. law was wrong. They seem to suggest that the motion judge ought to have looked behind the U.S. settlement proposal to evaluate it against what a probable outcome in the U.S. might be if the rights were to be determined on the basis of Ontario law. That approach in effect would enable the court to look behind the U.S. fairness hearing and the court's approval of the settlement. In support of that proposition, they reference the Abdula v. Canadian Solar[^30] case to argue that Ontario law could apply in a U.S. action to a person who purchased shares in a Canadian company trading only on the NASDAQ.

[63] But there is something wrong with this contention. Abdula does not stand for the proposition that Ontario law would be imported or applied in a U.S. action. In a more fuller elaboration of this issue, and relying on Currie and Abdula, Her Honour spoke of the reasonable expectations of the overlapping class members to conclude that in parallel proceedings a U.S. court would adjudicate their rights in accordance with the applicable U.S. laws. More significantly, the law does not support the conclusion that an Ontario court would or even [page634] could retry the legal issues before the U.S. court, either under U.S. or Ontario law.

[64] The plaintiffs also take issue with Her Honour's conclusion that there was no compelling reason to conclude that the Ontario legal regime would not result in a more favourable determination of the claims of the overlapping class members. As noted above, it is possible that a different judge might come to a different conclusion over the prospects of the Ontario proceeding. But there is no glaring error in Her Honour's assessment to support a review of that assessment.

(c) Did the motion judge make errors of law and palpable errors of fact such that the exercise of Her Honour's broad discretion ought to be reviewed?

[65] Complementary to rule 62.04 in the context of class proceedings is the requirement that substantial deference be shown to a motions case management judge in the context of class proceedings. If there was one case where this requirement could be supported, this is the one.

[66] Justice van Rensburg was the case management motion judge for six years. Her Honour presided over a full range of motions and wrote extensive decisions, including the "certification decision" and the "notice decision". Over the years, she acquired a thorough understanding of the competing facts. Her Honour studied very closely the various expert views that were put before her. She considered the full body of evidence against the various legal requirements. From the very beginning, Her Honour set the direction and the foundation for a fair process in an incremental and sequential basis so as to preserve the integrity of the administration of justice.

[67] Against that backdrop, Her Honour earned the right to be shown substantial deference for her decision to amend the global class. The case is important. However, in the absence of a conflicting decision or doubts over the correctness of the order to amend the class, there is no basis for its review by the Divisional Court.

IV. Conclusion

[68] In the result, the motion for leave to appeal is denied. The defendants are entitled to their costs of this motion. If the parties are unable to agree to costs, they are to make submissions as follows: the defendants' submissions are to be made by November 15, 2013; the plaintiffs may respond by November 29, 2013; and, if necessary, the defendants may reply by December 6, 2013.

Motion dismissed.

[^1]: (2005), 2005 3360 (ON CA), 74 O.R. (3d) 321, [2005] O.J. No. 506 (C.A.).

[^2]: Silver v. IMAX Corp. (2011), 2011 ONSC 1035, 105 O.R. (3d) 212, [2011] O.J. No. 656 (Div. Ct.), at para. 65.

[^3]: The factual details relating to the allegations are outlined in Justice van Rensburg's "certification decision", Silver v. IMAX Corp., 2009 72334 (ON SC), [2009] O.J. No. 5585, 86 C.P.C. (6th) 273 (S.C.J.), and they are updated in Silver v. IMAX Corp. (2012), 2012 ONSC 1047, 110 O.R. (3d) 425, [2012] O.J. No. 1352 (S.C.J.), the "notice decision". A synopsis of the facts is also outlined by Justice Corbett in His Honour's decision, Silver v. IMAX Corp., supra, dismissing the motion for leave to appeal the certification.

[^4]: The "certification decision", supra, note 3.

[^5]: Silver v. IMAX Corp., notice decision, supra, note 3, para. 2.

[^6]: Supra, note 3"certification decision", at para. 161.

[^7]: For the purposes of this decision, it is not necessary to review the procedural history of the U.S. action in any detail. However, it is necessary to be aware that there was an extensive history. Justice van Rensburg provided that history in some detail in her certification decision, supra, note 3, at endnote 4. Her Honour updated the history in the "notice decision", and the "amendment decision", [2013] O.J. No. 1276, 2013 ONSC 1667 (S.C.J.) that is the subject of this motion.

[^8]: Morrison v. National Australian Bank Ltd., 130 S. Ct. 2869, 177 L, Ed. 2d 535 ù decision of the U.S. Supreme Court (2010).

[^9]: Notice decision, supra, note 3, at paras. 94-95.

[^10]: Supra, at note 1, para. 28.

[^11]: As quoted by Justice van Rensburg in Her Honour's decision of March 19, 2013, at para. 42.

[^12]: Supra, the "amendment decision", note 7, at paras. 44 and 46.

[^13]: Supra, the "amendment decision", note 7, at paras. 188 and 189.

[^14]: Affidavit of Professor Borchers of May 31, 2011, at para. 9.

[^15]: Supra, note 2, at para. 3.

[^16]: Supra, note 2, at para. 5.

[^17]: Lloyd v. Economical Mutual Insurance Co., 2008 38364 (ON SC), [2008] O.J. No. 3025, 65 C.C.L.I. (4th) 299 (S.C.J.), at para. 29.

[^18]: Bell ExpressVu Limited Partnership v. Morgan, 2008 63136 (ON SCDC), [2008] O.J. No. 4758, 67 C.P.C. (6th) 263 (Div. Ct.).

[^19]: Lefrancois v. Guidant Corp., [2009] O.J. No. 4129 (Div. Ct.), at paras. 16-17.

[^20]: S.O. 1992, c. 6, s. 12.

[^21]: (2013), 2013 ONCA 279, 115 O.R. (3d) 653, [2013] O.J. No. 2012 (C.A.), at para. 40.

[^22]: (2009), 2009 10059 (ON SCDC), 95 O.R. (3d) 269, [2009] O.J. No. 821 (Div. Ct.), at para. 39.

[^23]: (2012), 109 O.R. (3d) 498, [2012] O.J. No. 343, 2012 ONCA 47, leave to appeal to the Supreme Court of Canada granted at [2012] S.C.C.A. No. 135.

[^24]: Supra, note 7, at para. 80.

[^25]: Supra, note 7, at para. 82.

[^26]: Supra, at note 7, paras. 86-88.

[^27]: Supra, at note 7, para. 130.

[^28]: Supra, the "amendment decision", note 7, at paras. 166 and 167.

[^29]: Supra, the "amendment decision, note 7, at para. 147.

[^30]: Abdula v. Canadian Solar Inc. (2012), 110 O.R. (3d) 256, [2012] O.J. No. 1381, 2012 ONCA 211.