Mancinelli et al. v. Barrick Gold Corporation et al.
The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v. Barrick Gold Corporation et al.
Lee v. Barrick Gold Corporation et al.
[Indexed as: Mancinelli v. Barrick Gold Corp.]
Ontario Reports
Ontario Superior Court of Justice,
Belobaba J.
December 11, 2014
124 O.R. (3d) 145 | 2014 ONSC 6516
Case Summary
Civil procedure — Class proceedings — Carriage — Three class actions brought in Ontario for misrepresentation at common law and under Part XXIII.1 of the Securities Act relating to development and operation of mining project — Carriage awarded to legal group representing plaintiffs in two of those actions — Those two actions advancing three genuinely triable claims while third action advanced only one claim — Successful legal group having achieved superior level of readiness and preparation — Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1.
Three class actions were brought in Ontario for damages for misrepresentation at common law and under Part XXIII.1 of the Securities Act arising out of the development and operation of a mining project in Chile. KMG acted for the plaintiffs in one of those actions, and RGG acted for the plaintiffs in the other two actions. KMG and RGG brought a carriage motion under the Class Proceedings Act, 1992, S.O. 1992, c. 6.
Held, carriage should be awarded to RGG.
The RGG actions advanced three genuinely triable legal claims, while the KMG action focused on only one claim. At this stage of the proceeding, no one could predict which of the three main claims would ultimately prevail at trial or have the most effect as a settlement lever. It was in the best interests of the class that the proposed class proceeding not be limited to one claim when three were genuinely available. Moreover, RGG had achieved a level of readiness and overall preparation that was genuinely and objectively superior to that of KMG. It was therefore in the best interests of the class, on that point alone, that carriage be awarded to RGG.
Locking v. Armtec Infrastructure Inc., [2013] O.J. No. 531, 2013 ONSC 331, 46 C.P.C. (7th) 427, 303 O.A.C. 299, 225 A.C.W.S. (3d) 614 (Div. Ct.); Setterington v. Merck Frosst Canada Ltd., [2006] O.J. No. 376, [2006] O.T.C. 97, 26 C.P.C. (6th) 173, 145 A.C.W.S. (3d) 566 (S.C.J.), consd
Other cases referred to
Cannon v. Funds for Canada Foundation, [2012] O.J. No. 168, 2012 ONSC 399, 13 C.P.C. (7th) 250, [2012] 3 C.T.C. 132 (S.C.J.); Carom v. Bre-X Minerals Ltd. (2000), 51 O.R. (3d) 236, [2000] O.J. No. 4014, 196 D.L.R. (4th) 344, 138 O.A.C. 55, 11 B.L.R. (3d) 1, 1 C.P.C. (5th) 62, 103 A.C.W.S. (3d) 17, 2000 16886 (C.A.), revg (1999), 1999 19916 (ON SCDC), 46 O.R. (3d) 315, [1999] O.J. No. 5114, 6 B.L.R. (3d) 82, 1 C.P.C. (5th) 82 (Div. Ct.), affg (1999), 1999 14794 (ON SCDC), 44 O.R. (3d) 173, [1999] O.J. No. 1662, 98 O.T.C. 1, 46 B.L.R. (2d) 247, 35 C.P.C. (4th) 43, 88 A.C.W.S. (3d) 542 (S.C.J.); McKenna v. Gammon Gold Inc., [2011] O.J. No. 4995, 2011 ONSC 6630; Pro-Sys Consultants Ltd. v. Microsoft Corp., [2013] 3 S.C.R. 477, [2013] S.C.J. No. 57, 2013 SCC 57; Sharma v. Timminco Ltd. (2009), 2009 58974 (ON SC), 99 O.R. (3d) 260, [2009] O.J. No. 4511 (S.C.J.); Silver v. Imax Corp., [2009] O.J. No. 5585, 86 C.P.C. (6th) 273, 2009 72334 (S.C.J.); Simmonds v. Armtec Infrastructure Inc., [2012] O.J. No. 277, 2012 ONSC 44; Smith v. Sino-Forest Corp., [2012] O.J. No. 88, 2012 ONSC 24; Tiboni 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.), affg 2008 37911 (ON SC), [2008] O.J. No. 2996, 295 D.L.R. (4th) 32, 60 C.P.C. (6th) 65, 168 A.C.W.S. (3d) 36 (S.C.J.); Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., [2000] O.J. No. 4594, [2000] O.T.C. 877, 4 C.P.C. (5th) 169, 101 A.C.W.S. (3d) 472 (S.C.J.); Wilson v. LG Chem Ltd., [2014] O.J. No. 1388, 2014 ONSC 1875
Statutes referred to
Class Proceedings Act, 1992, S.O. 1992, c. 6 [as am.]
Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1 [as am.], ss. 138.3 [as am.], 138.7 [as am.]
MOTION to determine the carriage of a class proceeding.
Kirk Baert, Celeste Poltak and Michael Robb, for plaintiffs in the Labourers' Pension Fund action CV-14-502778-CP.
Joel Rochon, Peter Jervis, Suzanne Chiodo, Steven Klein and Aroosha Sadaghianloo, for plaintiffs in the DALI Pension Fund and Lee actions CV-14-511677-CP and CV-14-502316-CP.
Kent Thomson and Luis Sarabia, for defendants.
[1] BELOBABA J.: — In this carriage motion, two groups of leading class action firms are competing for carriage of a proposed multi-billion dollar class action against the defendant gold mining company and the four named executives.
[2] In one corner is the Koskie Minsky Group ("KMG"), consisting of Koskie Minsky, Siskinds, Sutts Strosberg, and Groia and Company. In the other is the Rochon Genova Group ("RGG"), consisting of Rochon Genova, the Merchant Law Group and Rosen Naster. Each group submits that it would be in the best interests of the proposed class, fair to the defendants and consistent with the policy objectives of the Class Proceedings Act, 1992 if carriage is granted to them and the actions brought by the other group are stayed.
[3] For the reasons set out below, carriage is awarded to RGG. This was not a difficult decision. On the two significant differentiating factors, theory of the case and state of preparation, RGG and the DALI action clearly and decisively came out ahead. The DALI and Lee actions are consolidated and may proceed. The Labourers action is stayed.
Background
[4] In April and May 2013 and over the several months that followed, Barrick Gold publicly disclosed that mining operations at its Pascua-Lama mining project (the "mining project") in Chile had been suspended by orders of the local court and the environmental regulator. The company's share prices dropped dramatically. And, as is often the case when share prices plummet following a "corrective disclosure", class action lawyers, as well as disappointed investors, began probing for evidence of misrepresentation in previous corporate disclosures that might provide grounds for a class proceeding.
[5] In short order, numerous proposed class actions were filed in Canada and the U.S. Three such actions remain active in Ontario: the Lee action commenced on April 15, 2014 by the Merchant Law Group, the Labourers action commenced on April 24, 2014 by KMG, and the DALI action commenced on September 5, 2014 by Rochon Genova. RGG intends to consolidate the Lee and DALI actions if granted carriage.
[6] The contrast in the scope and content of the competing actions is significant. Both are grounded in the common law and Part XXIII.1 of the Securities Act, and allege negligent misrepresentations relating to the development and operation of the mining project. The KMG action, however, focuses only on alleged misrepresentations about environmental compliance. The RGG DALI action alleges misrepresentations in three related areas: environmental compliance, the capital expenditure or "Capex" budget, and the defendant's financial statements. The RGG action also includes claims of conspiracy and fraudulent concealment. The class period covers just over four years from May 2009 to November 2013.
[7] Both the KMG and RGG actions seek damages in the billions of dollars. If the proceeding is certified, it will be one of the largest securities class actions in Canada.
The Applicable Law
[8] The applicable law is not in dispute. In deciding carriage of competing class proceedings, the court's objective is to make the selection that is in the best interests of the class, while being fair to the defendants and consistent with the objectives of the Class Proceedings Act, 1992. The objectives of a class proceeding are access to justice, behaviour modification and judicial economy for the parties and for the administration of justice.
[9] Courts have generally considered seven non-exhaustive factors in determining which action should proceed: (1) the nature and scope of the causes of action advanced; (2) the theories advanced by counsel as being supportive of the claims advanced; (3) the state of each class action, including preparation; (4) the number, size and extent of involvement of the proposed representative plaintiffs; (5) the relative priority of the commencement of the class actions; (6) the resources and experience of counsel; and (7) the presence of any conflicts of interest.
[10] As I advised counsel during the course of the hearing, if the factors just listed proved insufficient in generating a measurable and objective difference between the competing groups of law firms, I would have added a further differentiating factor: the price that counsel would charge the class for their legal services.
[11] As it turned out, however, it was not necessary to institute a "reverse auction" because the conventional factors listed above proved more than sufficient in finding that RGG was the better choice.
[12] The applicable case law also makes two further points that are particularly relevant here: the first is that although it is correct to say that a carriage motion will decide which law firm will represent the plaintiff, the task of the court is not to choose between the competing firms according to their relative resources and expertise; rather, it is to determine which of the competing actions is more or most likely to advance the interests of the class; and, the second is that it is inappropriate on a carriage motion for the court to embark upon an analysis as to which claim or claims are most likely to succeed.
Neutral Factors
[13] There was little to no dispute about the proposition that the following factors provided no differentiating value of any significance and were basically neutral:
(i) The representative plaintiffs...
(ii) The relative priority of the commencement of the class actions...
(iii) The resources and experience of counsel...
(iv) Conflicts of interest...
(v) Funding arrangements...
Determinative Factors
[14] This carriage motion turns on two points of comparison: the causes of action or claims being advanced, and the state of preparation.
(1) The claims being advanced
[15] As already noted, the KMG action is advancing a single claim that focuses on the environmental violations...
[16] RGG in the DALI action is advancing three claims:
(i) misrepresentations relating to the environmental violations...
(ii) misrepresentations relating to overall costs and completion time estimates...
(iii) misrepresentations in the defendant's financial statements...
[17] The RGG action is also alleging conspiracy and fraudulent concealment.
[18] KMG argues that by focusing only on the environmental misrepresentations, the Labourers action will make for a simpler and more streamlined litigation...
[19] RGG responds by noting that no one can predict at this stage of the proceeding which claim or claims are more likely to succeed...
[20] In my view, the Capex and accounting claims are not "kitchen sink" type claims...
[21] The conspiracy claim also has evidentiary support...
[22] As for fraudulent concealment...
[23] I note that RGG has provided a detailed analysis...
[24] At bottom, the KMG submission is about likelihood of success...
[25] But the case law is clear that a carriage motion judge is in no position to decide which claim or claims are more likely to succeed...
[26] I pause here to expand upon the point just made...
[27] In my view, Winkler J. got it right...
[28] This important proposition... was recently affirmed by the Divisional Court in Locking v. Armtec Infrastructure.
[29] But then...
[30] With respect, this proposition is a clear departure...
[31] If the concern is that there is "no other way to properly distinguish..."
[32] But for the Divisional Court's decision in Locking...
[33] However, I am bound by the decision in Locking...
[34] The first two situations do not apply...
[35] The third suggested situation does apply...
[36] Put simply, RGG decided not to put all its eggs in the environmental violations basket...
[37] The "cause of action/claims advanced" factor clearly favours RGG.
(2) The state of preparation
[38] In my view, this is the single most important determinant...
[39] Let me explain.
[40] I begin by acknowledging that KMG has more than enough expertise...
[41] What KMG has done is this...
[42] RGG, on the other hand, is demonstrably more prepared...
[43] RGG achieved this demonstrably superior understanding...
[44] They travelled to Chile and met with numerous legal and governmental officials...
[45] The same superior level of understanding is found in RGG's discussion of the Capex claim and the accounting claim...
[46] KMG minimized and even ridiculed these efforts...
[47] In my view, KMG's criticism is unfounded...
Conclusion
[48] RGG has more than enough expertise and experience to assume carriage of this class proceeding...
[49] RGG has measurably and objectively differentiated itself as the better choice.
[50] I therefore have no difficulty concluding that it is in the best interests of the putative class that RGG be granted carriage.
Disposition
[51] Carriage of the proposed class action is granted to the plaintiffs in the DALI action. RGG is appointed class counsel. The DALI and Lee actions are consolidated and the Labourers action is stayed.
[52] RGG and KMG are directed to take all necessary steps to permanently stay or dismiss any parallel Canadian proceeding that they or their local agents have commenced...
[53] I make no order as to costs, which is the usual course in carriage motions.
Order accordingly.
End of Document