SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Dominik Konjevic and Coventry Connections Inc., Plaintiffs (Respondents)
AND:
Uber Technologies, Inc., Uber Canada Inc., Uber B.V. and Rasier Operations B.V., Defendants (Moving Parties)
BEFORE: Dambrot J.
COUNSEL: Neil Finkelstein and Awanish Sinha, for the Defendants (Moving Parties)
Kirk Baert and Celeste Poltak, for the Plaintiffs (Respondents)
HEARD: In writing
ENDORSEMENT
Introduction
1The moving parties (collectively “Uber”) brought a motion to disqualify Sutts, Strosberg LLP as counsel of record for the respondents in their proposed class action against Uber and a companion proposed class action commenced by Coventry Connections Inc. against the same defendants (CV-16-552498-CP). In an order dated September 19, 2016, Belobaba J. dismissed the motion. The moving parties seek leave to appeal to the Divisional Court.
Test for Leave to Appeal
2The test for granting leave to appeal under Rule 62.02(4) is well settled. It is recognized that leave should not easily be granted and that the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met before leave may be granted.
3Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 1992 CanLII 7405 (ON SC), 7 O.R. (3d) 542 (Div. Ct.).
4Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., 2003 CanLII 40868 (ON SC), [2003] O.J. No. 3442 (S.C.J. per Then J.); Ash v. Lloyd’s Corp. (1992), 1992 CanLII 7652 (ON SC), 8 O.R.(3d) 282 (Gen. Div. per Farley J.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 CanLII 2749 (ON SC), 57 O.R. (2d) 569 (H.C.J. per Catzman J.); Greslik v. Ontario Legal Aid Plan (1988), 1988 CanLII 4842 (ON SCDC), 65 O.R. (2d) 110 (Div. Ct.).
Background
5Nicholas Cartel joined Goodmans as an associate in its competition and business law group on March 30, 2015, at a time when Goodmans litigators were defending Uber in a high-profile injunction application brought by the City of Toronto. The matter was heard on June 1 and 2, 2015, and Uber prevailed.
6On February 22, 2016, Cartel joined Sutts Strosberg, a Windsor-based law firm, to open and staff their new Toronto office. When Cartel joined Sutts, Strosberg, the class action had already been filed by the Windsor office of the firm, and another application brought on behalf of taxi drivers was about to be filed. In that application, Uber was represented by Goodmans, and the taxi drivers by Sutts Strosberg. It was abandoned on May 6, 2016.
7Before he was hired, Cartel told his new law firm that he had worked in the competition group at Goodmans, had no involvement in the Toronto application, and had acquired no confidential information. Nonetheless, he was not permitted to become involved in any Uber-related litigation while at Sutts Strosberg, and had no access to Uber-related files.
8Two weeks after being hired by Sutts, Strosberg, Cartel was asked by the Windsor office to commission two affidavits for the taxi driver application. He did so on March 11, 2016.
9When Goodmans discovered that Cartel had commissioned the two affidavits, it alleged a disqualifying conflict of interest and demanded that Sutts, Strosberg withdraw as legal counsel. Sutts, Strosberg took the position that there was no basis for an allegation of conflict of interest. There was no risk of confidential disclosure because Cartel had no confidential information to disclose, would not be working on any Uber-related matter and was effectively shut out from accessing any Uber-related files. Nevertheless, Sutts, Strosberg immediately set up a “full screen”. It confirmed that none of the lawyers involved in the Uber matters had discussed either the taxi driver application or the class action with Cartel, and ensured that all Uber-related paper files, which were physically in the Windsor office, were kept under lock in the firm’s administrator’s office. Access to these files was limited to the two or three Windsor lawyers who were working on the matters.
10Despite this, Goodmans filed a removal motion, which died when the application was abandoned. However the class action continued, and McCarthy Tetrault, Uber’s counsel on the class action, brought their own removal application. In essence, the complaint was that Sutts, Strosberg should have installed the full screen on February 22, when Cartel joined the firm, and not a month later when they received the Goodmans letter.
11On the motion before Belobaba J., there was no dispute that the governing authorities were the decision of the Supreme Court in McDonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 S.C.R. 1235 and the decision of the Ontario Court of Appeal in Chapters Inc. v. Davies, Ward & Beck LLP (2001), 2001 CanLII 24189 (ON CA), 52 O.R. (3d) 566.
12After noting that removal motions are very fact-specific, and that a removal order is discretionary, the motion judge analyzed the circumstances in accordance with the approach set out in McDonald Estate. He concluded, first, that although the Toronto application and the class action were sufficiently related to make it reasonably possible for Cartel to have acquired some relevant confidential information, in fact no information that could be relevant was imparted to him; and second, even if Cartel did acquire some potentially prejudicial confidential information, the risk that such information was or could have been conveyed to Sutts, Strosberg during the thirty day period before the full screen was established was minimal to non-existent.
13The motion judge acknowledged that the Windsor office ought not to have asked Cartel to commission the two affidavits, but concluded that the error was de minimus. He dismissed the motion.
Analysis
14Uber seeks leave to appeal on both branches of Rule 62.04(4). I will deal with each argument in turn.
Rule 62.02(4)(a)
15To repeat, under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere and that it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted. Uber says that the motion judge’s decision conflicts with McDonald Estate. The argument on this branch of the test can be peremptorily discarded. The obvious purpose of Rule 62.03(4)(a) is to enable the Divisional Court to resolve conflicts in the law amongst “lower” courts, or occasionally among panels of the Divisional Court. If the decision of the motion judge conflicts with a decision of the Supreme Court, there is nothing to resolve. The decision of the Supreme Court prevails. The motion judge would have erred. The alleged error might ground resort to 62.02(4)(b), but not 62.02(4)(a). I turn to Rule 62.02(4)(b).
Rule 62.02(4)(b)
16Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. In my view, Uber fails both parts of this branch of the Rule.
17With respect to the correctness part of the rule, Uber argues that the motion judge:
reversed the onus at the first stage of the test; and
misapprehended the second stage of the test.
18With respect to the allegation that the motion judge reversed the onus at the first stage of the test, Uber correctly notes that once it is established that the initial retainer is sufficiently related to the retainer at issue, it is presumed that confidential information was imparted, and the responding law firm bears the onus of rebutting the presumption. Uber argues that the motion judge failed to shift the onus, instead requiring them to prove the precise information that Cartel obtained and its relationship to this action. This argument fails.
19The motion judge explicitly allocated the onus to the responding law firm, but found, on the evidence presented to him, that no information was in fact imparted that could be relevant. In reaching this conclusion, he canvassed the uncontroverted evidence adduced by the respondent in support of its position. Only then did he mention the failure of Uber to adduce meaningful evidence to support the contrary position. Needless to say, the shifting of the onus to the respondent does not free the moving party of the practical necessity of answering the respondent’s evidence, or risk losing the point.
20With respect to the allegation that the motion judge misapprehended the second stage of the test, I have read the argument with care. It amounts to little more than a re-argument of the case. It certainly raises no basis to imagine that the motion judge misapprehended the law. While some of his conclusions, viewed in isolation and divorced from their context, may differ from conclusions in other cases that arose in different contexts, this is hardly surprising in a fact specific, discretionary exercise.
21As is apparent, the moving party has failed to convince me that there is reason to doubt the correctness of the order in question.
22With respect to the importance of the matter, I see none. The moving party would have it that the decision of the motion judge is sharply at odds with the established test for disqualification and that it would be unfair for class counsel to obtain an advantage from confidential information obtained from one of Uber’s former counsel. I do not agree. I see neither sharp divergence from established case law nor any risk to Uber.
Disposition
23The respondents have filed a cost outline, in which they seek $17,813 in costs. They point out, among other things, that this application has caused needless delay in the proceedings, that the moving parties made only highly generalized and theoretical assertions in support of the motion and that the matter is of importance only to the parties, and not of importance to the public. The moving parties assert that only $7,500 in costs should be awarded. I am satisfied that $15,000 is an appropriate award of costs.
24Accordingly the motion for leave to appeal is refused, and costs are awarded to the respondent fixed in the amount of $15,000, all-inclusive and payable forthwith.
M. DAMBROT J.
Date: December 14, 2016