Swisscanto v. BlackBerry, 2016 ONSC 534
COURT FILE NO.: CV-13-495413-CP
DATE: 2016-01-26
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Swisscanto Fondsleitung AG, Plaintiff / Moving Party
AND:
BlackBerry Limited, Thorsten Heins and Brian Bidulka / Defendants / Responding Parties
BEFORE: Justice Edward P. Belobaba
COUNSEL: Michael G. Robb, Paul J. Bates and S. Sajjad Nematollahi for the Plaintiff
Andrew Gray, James C. Tory, and James Gotowiec for the Defendants
HEARD: January 22, 2016
Proceedings under the Class Proceedings Act, 1992
certification decision
[1] The plaintiff seeks to certify a securities class action against BlackBerry and its former CEO and CFO for alleged misrepresentations in the company’s financial statements relating to revenue recognition in the sale of the BB10 smartphone. The background facts were set out in the decision granting leave under Part XXIII.1 of the Securities Act[^1] and will not be repeated here.[^2]
[2] The leave motion was hard fought. However, the defendants, to their credit, are not opposing certification under the Class Proceedings Act,[^3] except with respect to class definition. This is the only point in dispute. The plaintiff seeks to certify a “global class” that would include not only the shareholders that purchased shares on the TSX but also those that purchased shares on Nasdaq. The defendants, on the other hand, point to the decision of the Court of Appeal in Kaynes v BP[^4] and its focus on comity, and submit that the class should be restricted to TSX purchasers because a parallel Nasdaq action was dismissed in U.S. federal court.[^5]
[3] Counsel for the defendants were initially prepared to argue the carve out of the Nasdaq purchasers on the basis of s. 5(1)(d) of the CPA and the preferability requirement. However, during the course of the certification hearing, counsel for the defendants advised that they would prefer to bring a forum non conveniens motion so that the “global class” issue could be addressed more directly and on a proper record.
[4] The “global class” issue was therefore adjourned under s. 5(4) of the CPA to allow both sides time to file and respond to the forum non conveniens motion. Counsel will schedule this motion as soon as they are able to do so. In the meantime, both sides agreed that it would make sense for me to release a short Endorsement certifying the class action, save and apart from the “global class” issue.
[5] I am pleased to do so. As I have already noted, other than the “global class” issue, the motion for certification is not opposed and is easily granted.
[6] The pleadings disclose both a statutory claim and a common law cause of action for negligent misrepresentation. There is an identifiable class of two or more persons that would be represented by the plaintiff. I am satisfied on the record before me that there is some basis in fact for the existence and commonality of the proposed common issues – set out in the Appendix.[^6] A class action is the preferable procedure. And the plaintiff, Swisscanto, is a suitable representative plaintiff with a workable litigation plan.
[7] In sum, the requirements set out in s. 5(1)(a) to (e) of the CPA are satisfied.
Disposition
[8] The motion for certification, with the qualification already discussed, is granted. The certified common issues are set out in the Appendix. The order under s. 8 of the CPA should be taken out after the forum non conveniens motion has been decided and the class definition finalized.
[9] The parties have agreed that the costs owing to date on the leave and certification motions should be awarded at this point. The plaintiff should therefore forward a brief costs submission within 14 days and the defendants within 14 days thereafter. The defendants will understand that if they intend to argue that the plaintiff’s costs request (on the leave motion in particular) is excessive or otherwise unreasonable, they would be wise to submit a certified copy of their own costs outline.
[10] My thanks to counsel on both sides for their continuing assistance.
Belobaba J.
Date: January 26, 2016
Appendix: Certified Common Issues
Relating to the claims of secondary market purchasers under Part XXIII.1 of the OSA
- Did some or all of the following documents released by BlackBerry (collectively, the “Impugned Documents,” each being an “Impugned Document”):
(a) BlackBerry’s MD&A for the three months and fiscal year ended March 2, 2013, released and filed on SEDAR on March 28, 2013;
(b) BlackBerry’s Audited Financial Statements for the fiscal year ended March 2, 2013, released and filed on SEDAR on March 28, 2013;
(c) BlackBerry’s MD&A for the three months ended June 1, 2013, released and filed on SEDAR on June 28, 2013;
(d) BlackBerry’s Interim Financial Statements for the three months ended June 1, 2013, released and filed on SEDAR on June 28, 2013
contain a misrepresentation within the meaning of the OSA?
If the answer to 1 is yes, are the Defendants, or any of them, liable under section 138.3 of the OSA or the equivalent provisions of the Securities Legislation?
If the answer to 2 is yes, do the liability limits set out in section 138.7(1) of the OSA and the equivalent provisions of the Securities Legislation limit the liability of some or all of the Defendants? If so, what are the limits of each such Defendant’s liability?
If the answer to 2 is yes, what are the per share damages?
Relating to the common law negligent misrepresentation claims
Did the Impugned Documents, or any of them, contain the Representation?
Was the Representation a misrepresentation at law?
Did the Defendants, or any of them, make the Representation? If so, who made the Representation, when and how?
Did the Defendants, or any of them, owe the Class Members a duty of care? If so, which Defendants owed what duty, and to whom?
If the answer to 8 is yes, did the Defendants, or any of them, breach their duty of care? If so, which Defendants breached that duty, and how?
Relating to other matters
Can some or all of the damages of the Class be calculated in the aggregate pursuant to section 24 of the CPA;
Is BlackBerry vicariously liable or otherwise responsible for the acts of Heins, Bidulka and/or of its other officers, directors and employees?
Should the Defendants pay the costs of administering and distributing the recovery? If so, which Defendants should pay, and how much?
If the Court determines that the Defendants are liable to the Class, and if the Court considers that the participation of the Class Members is required to determine individual issues:
(a) are any directions necessary;
(b) should any special procedural steps be authorized;
(c) should any special rules relating to the admission of evidence and means of proof be made; and
(d) what directions, procedural steps, or evidentiary rules ought to be given or authorized?
[^1]: Securities Act, R.S.O. 1990, c. S.5. [^2]: See Swisscanto v. BlackBerry, 2015 ONSC 6434 (the leave motion). [^3]: Class Proceedings Act, 1992, S.O. 1992, c. 6. [^4]: Kaynes v BP plc, 2014 ONCA 580. [^5]: Pearlstein v. BlackBerry Limited et al., Consolidated Amended Class Action Complaint dated May 27, 2014 (U.S. District Court, Southern District of New York, File No. 1:13-CV-7060-TPG). [^6]: The plaintiff initially proposed 14 common issues. During the hearing, however, the plaintiff agreed to delete Former Issue No. 10 because it asked how class members could demonstrate reliance and damages. The answer is obvious: “individual proof.” There was no need to certify an obvious question and answer and counsel for the plaintiff agreed. Also, as the Supreme Court of Canada explained in CIBC v Green, 2015 SCC 60, at paras. 124 to 128, the common law claim of negligent misrepresentation can be the subject of common issues (when the leave motion has been granted) provided the proposed issues relate not to reliance or damages (which require individualized proof and thus lack commonality) but to the intent or conduct of the defendant – such as duty of care, breach of a duty of care etc. This explains why common issues 5 to 9 have been certified and also why their certification was not opposed by the defendants.