CITATION: Paniccia v. MDC Partners Inc., 2017 ONSC 7298

COURT FILE NO.: 16-CV-564034-00CP

DATE: 2017-12-06

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERTO PANICCIA Plaintiff

– and –

MDC PARTNERS INC., MILES S. NADAL, MICHAEL C. SABATINO, DAVID DOFT Defendants

Andrew J. Morganti and Eli Karp for the Plaintiff

Peter F.C. Howard and Samaneh Hosseini for the Defendants MDC Partners Inc. and David Doft

Shane D’Souza for the Defendant Miles S. Nadal

Lara Jackson and Stephanie Voudouris for the Defendant Michael C. Sabatino

Proceedings under the Class Proceedings Act, 1992

HEARD: November 21, 2017

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] The Defendant MDC Partners Inc.’s (MDC’s) shares traded on the Toronto Stock Exchange (“TSX”) and on the U.S.’s NASDAQ National Market, where 98.2% of the trading occurred. On April 27, 2015, the Plaintiff, Roberto Paniccia, who is a resident of Ontario, purchased 245 MDC shares on NASDAQ.

[2] In July 2015, in the U.S., the North Collier Fire Control and Rescue District Firefighter Pension Plan (“Pension Plan”) sued MDC, Miles S. Nadal, MDC’s Chief Executive Officer, Michael C. Sabatino, its Chief Accountant Officer, and David Doft, its Chief Financial Officer. Relying on SEC Rule 10b-5 of the Securities Exchange Act of 1934,[^1] the Pension Plan sued MDC and its officers for misrepresentation in the American secondary market; i.e. on NASDAQ. Mr. Paniccia was a putative class member of this proposed U.S. class action.

[3] On August 7, 2015, pursuant to the Class Proceedings Act, 1992,[^2] Mr. Paniccia commenced a global class action in Ontario for both a statutory misrepresentation claim under Part XXIII.1 of Ontario’s Securities Act[^3] and also a common law negligent misrepresentation claim. Initially, Mr. Paniccia brought his claim on behalf of all purchasers on the TSX and NASDAQ.

[4] Subsequently, Mr. Paniccia amended his proposed class definition to comprise the class to be Canadian purchasers on the TSX and NASDAQ. Thus, he abandoned a comprehensive global class action.

[5] In two motions, the Defendants seek an order restricting the Class Members of Mr. Paniccia’s action just to the Canadians who purchased on the TSX. The Defendants do not dispute that the court in Ontario has jurisdiction simpliciter over the claims of the putative Class Members who purchased on either market. The Defendants submit, however, that the Ontario court is forum non conveniens for Canadians who purchased on NASDAQ.

[6] In addition, in what might be described as an argument based on choice of law, the Defendants MDC and Mr. Doft submit that an Ontario court should not be engaged in adjudicating the claims of the NASDAQ purchasers that must be adjudicated in accordance with American law.

[7] For the reasons that follow, I dismiss the Defendants’ motions.

B. Evidentiary Background

[8] Messrs. Nadal and Sabatino supported their motion with an affidavit from Mitchell Gendel of New York City, New York. Mr. Gendel is the General Counsel and Corporate Secretary of MDC. Mr. Gendel was not cross-examined, but he responded to written interrogatories submitted by Mr. Paniccia pursuant to Rule 35 of the Rules of Civil Procedure.

[9] Messrs. Nadal and Sabatino retained John C. Coffee Jr., of the Town of Maplewood, New Jersey, U.S.A. to provide an expert opinion. Professor Coffee is the Adolf A. Berle Professor of Law and the Director of the Center on Corporate Governance at Columbia University Law School. He specializes in securities regulation, corporate governance, and class action practice, and has testified about these topics before Congressional Committees in the U.S. and also on several occasions in Ontario court proceedings. Mr. Paniccia served written questions on Professor Coffee pursuant to Rule 35 of the Rules of Civil Procedure.

[10] Mr. Paniccia responded to the Defendants’ motions with affidavits from: (a) Nigel Watts who is a law clerk at Morganti Legal, Mr. Paniccia’s lawyer of record and proposed Class Counsel; and, (b) Adam C. Pritchard of Ann Arbor, Michigan.

[11] Professor Pritchard is the Frances and George Skestos Professor of Law at the University of Michigan Law School in Ann Arbor, where he teaches corporate law and securities regulation. Professor Pritchard’s research includes doctrinal, empirical, and theoretical analysis of securities class actions including a comparison between Canadian and U.S. securities class actions.[^4] He has given expert testimony in several securities class actions in Ontario.

[12] Mr. Paniccia moved to have paragraphs 4, 11, 28-29, 32-33, 41 and 54-55 of Professor Coffee’s opinion struck on the grounds that his evidence was inadmissible. Mr. Paniccia submitted that these paragraphs of Professor Coffee’s report (the “Coffee Report”) were contrary to: (a) rule 4.06 (2); (b) Chopik v. Mitsubishi Paper Mills Ltd.[^5], where the Court ruled that affidavit evidence that included legal submissions and argument and inflammatory rhetoric made for the purpose of prejudicing another party, was inadmissible, and (c) Conn v. Darcel,[^6] where the Court ruled that evidence speculating about future developments was inadmissible. Mr. Paniccia contended that the Coffee Report was offensive because it speculated as to what might happen to the Ontario legal regime if the Class is certified and the speculation was inconsistent with Silver v. Imax[^7] and Abdula v. Canadian Solar,[^8] which were certified in 2009 and 2015 respectively.

[13] In part, because Mr. Paniccia led evidence and provided argument in response to the Coffee Report, and, in part, because Mr. Paniccia’s submissions go more to the weight than the admissibility of the evidence, and, in part, because Professor Coffee’s opinion is less significant now that Mr. Paniccia is no longer bringing a global class action, and, in part, because I do not agree that the evidence and argument was as objectionable as Mr. Paniccia would have it, I shall not strike the impugned paragraphs of the Coffee Report.

C. Factual and Procedural Background

[14] MDC is a federally incorporated Canadian company with its registered office in Toronto, Ontario but with its head office and investor relations group in the State of New York. It is engaged worldwide in marketing, communications, and providing public relations services.

[15] Up until November 11, 2015, when the listing on the TSX was voluntarily delisted, MDC’s Class A subordinate shares were listed on both the TSX and NASDAQ. In the period between October 28, 2013 and April 27, 2015, 98.2% of the trading of the shares occurred on NASDAQ. A presently unknown number of shareholders reside in Canada and they hold between 0.8% and 2.6% of MDC’s shares.

[16] On April 27, 2015, through his TD Waterhouse brokerage accountant, Mr. Paniccia purchased 245 shares of MDC on NASDAQ.

[17] In July 2015, the North Collier Fire Control and Rescue District Firefighter Pension Plan, a substantial shareholder of MDC’s shares, commenced a proposed class action against MDC and Messrs. Nadal, Sabatino, and Doft in the United States District Court for the Southern District of New York on behalf of purchasers of MDC’s shares on NASDAQ.

[18] The Pension Plan relied on Rule 10b-5 of the Securities Exchange Act of 1934, which states:

Employment of Manipulative and Deceptive Tactics

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c)To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

[19] Under U.S. law, a claim for secondary market misrepresentation on a U.S. exchange falls within the exclusive jurisdiction of the U.S. District Court. Section 27(a) of the Securities Exchange Act of 1934, provides that:

The district courts of the United States shall have exclusive jurisdiction of violations of this title or the rules and regulations thereunder, and of all suits in equity and actions at law to enforce any liability or duty created by this title or the rules and regulations thereunder.

[20] Meanwhile in Canada, on August 7, 2015, Mr. Paniccia issued a Statement of Claim against MDC and Messrs. Nadal, Sabatino, and Doft in the Ontario Superior Court of Justice. The action was then designed to be a global class action brought on behalf of the following class:

All persons [other than "Excluded Persons"] who acquired MDC shares from October 28, 2013 to and including April 27, 2015 and who held some or all of those shares at the close of trade on April 27, 2015 [the "Class Period"].

[21] On September 30, 2016, the U.S. action was dismissed before certification and with prejudice by Judge Richard J. Sullivan of the United States District Court – Southern District of New York.[^9]

[22] Meanwhile in the U.S., the U.S. Securities and Exchange Commission (“SEC”) brought an enforcement action against MDC and earlier this year, in 2017, MDC paid $7 million (USD) in civil penalties.

[23] On February 22, 2017, the appeal from Judge Sullivan’s decision was voluntarily dismissed.

[24] Meanwhile in Canada, in April and June 2017, the Defendants brought motions to limit the proposed class to purchasers of MDC’s shares on the TSX. In response to the motion, Mr. Paniccia amended his Statement of Claim to bring his action on behalf of the following class of Canadian purchasers:

All persons and other entities residing in Canada, or formed or registered under the provincial or federal laws of Canada, other than Excluded Persons, who acquired MDC's Common Stock on any domestic or foreign stock exchange or through an over-the-counter transaction during the Class Period [October 28, 2013 to and including April 27, 2015] and who held some or all of those securities at the close of trading on April 27, 2015.

[25] The size of the putative class is in dispute, but it is likely to include over 100 Canadians that purchased MDC’s securities listed on the TSX and NASDAQ.

D. The Experts’ Evidence

[26] Professor Coffee was retained to opine on the potential impact of Mr. Paniccia’s action if it were to be certified as a global class action that included individuals who purchased their shares on U.S. stock exchanges. Professor Coffee’s analysis focussed on: (l) the impact of Mr. Paniccia’s action on international comity and how an action in Ontario that included purchasers of MDC's stock on U.S. exchanges would frustrate U.S. policies with respect to the trading of securities in the U.S.; and (2) the impact on Canadian class members in Mr. Paniccia’s class action if the action were global, in which case the Canadians’ claims would be submerged within a much larger class that primarily consisted of persons who had purchased their MDC stock on U.S. exchanges.

[27] After Professor Coffee delivered his report, as noted above, Mr. Paniccia withdrew from advancing a global class action, and thus some of Professor Coffee’s opinion is overstated or must be adjusted to focus just on the circumstance of Canadians who purchased on NASDAQ suing in Canada and not in the U.S. where they purchased their shares. As already noted above, as reconstituted, Mr. Paniccia’s proposed class action is not a global class action.

[28] Much of Professor Coffee’s evidence compared and contrasted SEC Rule 10b-5, which authorizes a statutory cause of action for misrepresentations in the secondary market[^10] and s.138.1 of the Ontario Securities Act. He opined that Canada had made different policy decisions and that American law was more favorable to corporate defendants than the corresponding provisions in Canadian law which were more favourable to investors. He identified ten aspects of American law that were more favourable to defendants than Canadian law; namely:

• First, with respect to secondary market trading, U.S. law requires the plaintiff to allege and prove scienter—namely, an intent to defraud.[^11] Thus, U.S. law imposes a considerably higher obligation on the plaintiff than does s. 138.1 of the Ontario Securities Act.

• Second, under the Private Securities Litigation Reform Act of 1995, the plaintiff must “plead with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind” and must specify in its complaint “each statement alleged to have been misleading, the reason or reasons why the statement was misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” Under this U.S. legislation, the defendant is entitled to a dismissal of the action if the plaintiff cannot satisfy either of these two pleading burdens.

• Third, the plaintiff in the U.S. must prove "loss causation"; i.e., that the decline in the issuer's stock price could only have been caused by the corrective disclosure of the original misstatement or omission.[^12] This places the burden on the plaintiff to prove loss causation. The U.S. case law requires the plaintiff to prove loss causation with a very high rate of statistical confidence.

• Fourth, in the U.S., the private cause of action permissible under Rule 10b-5 applies only to the "maker" of the statement, which could be a corporate director or officer, but not aiders and abetters, even if they are directors or officers.[^13]

• Fifth, a plaintiff in the U.S. may not generally sue with respect to "forward-looking statements," at least when those statements are accompanied by "meaningful cautionary statements."

• Sixth, control over the class action is presumptively given to the investor with the largest stake in the action. (Thus, it was inconceivable that Mr. Paniccia, holding only 245 shares in MDC, could to be named lead plaintiff in an action in the U.S.)

• Seventh, reliance is a necessary element of a claim for securities fraud in the U.S., but the need to prove reliance is relaxed if the subject securities traded in an efficient market.[^14] This doctrine—known in the "fraud on the market" doctrine—requires the trial court to make findings about the "efficiency" of the market, including how swiftly the issuer's stock price responds to new information.

• Eighth, a plaintiff in the U.S. who acquired his shares outside the U.S. may not sue in a U.S. court under Rule 10b-5. The statutory cause of action under the Securities Exchange Act applies only to the purchase or sale of a security listed on an American stock exchange and the purchase or sale of any other security in the U.S.[^15]

• Ninth, U.S. law does not permit the award of damages for securities fraud when the stock drop is temporary and the market price later recovers.

• Tenth, the U.S.'s system does not require constant updating of all material information.[^16] Thus, a defendant need not disclose all material facts on a constant, ongoing basis but may wait until a duty to disclose arises.

[29] In comparing and contrasting the securities law regimes, Professor Coffee disavowed suggesting what policy choices were better; rather, he submitted that care should be taken by both nations to avoid exacerbating frictions between them. He suggested that each jurisdiction should respect the choices that each sovereign nation was entitled to make. He submitted that permitting a Canadian purchaser on an American stock exchange to sue in Canadian courts would permit the purchaser to bypass U.S. law and undermine the core policies of U.S. securities law and this permission would offend basic notions of comity.

[30] Professor Coffee submitted that one of the core policies of U.S. securities law is that U.S. courts have exclusive jurisdiction over trading on American stock exchange. This exclusive jurisdiction enables the U.S. to regulate its own stock markets and to make its own decisions about the balance between protecting investors and protecting corporations from abusive meritless actions. Professor Coffee stated that it would be an offence to comity for a Canadian court to permit a plaintiff who purchased shares in the U.S. to get two chances, “two bites at the apple” to make a claim against the corporation trading in the U.S. He stated that allowing a plaintiff in Canada to challenge conduct and trading in the U.S. permits parties who traded in the U.S. to "bypass" the U.S.'s restrictions on securities litigation.

[31] Professor Coffee submitted that the offence of international comity was extreme in the immediate case where: (a) MDC is overwhelmingly traded in the U.S., (b) MDC is owned by relatively few Canadian residents, (c) MDC is headquartered in the U.S., meaning that if there were fraudulent conduct, it most likely occurred in the U.S. and not in Canada, and (d) a U.S. court has already dismissed a parallel action.

[32] Professor Coffee also submitted that global securities class actions where a Canadian court would include as class members not only Canadian and non-Canadian purchasers on Canadian exchanges but also Canadian and non-Canadian purchasers on foreign stock exchanges would be detrimental to the Canadians who participated in the global class action. He also submitted that global class actions were unfair to defendants and that, over the long term, global class actions would be detrimental to the Canadian judicial system.

[33] Professor Pritchard stated that the exclusive jurisdiction of the American courts over American stock exchanges has a more limited effect than suggested by Professor Coffee. Professor Pritchard explained that foreign investors are entitled to enforce in the U.S. other rights and remedies that may exist at law or in equity, including claims based on foreign law. He noted that until a class action is certified, individuals who are potential members of that class cannot be bound by the issues determined in that litigation, and thus in the case at bar, because the parallel American action had not been certified, there was nothing to preclude Mr. Paniccia from advancing his claims in Ontario and doing so would not nullify or circumvent the decision of the U.S. court.

E. Discussion and Analysis

1. Introduction

[34] The Defendants raise a forum non conveniens argument that this court should not assume the jurisdiction simpliciter it has, and rather the Defendants submit that the court should decline to include as putative Class Members the Canadians who purchased shares on NASDAQ.

[35] The Defendants MDC and Mr. Doft raise an additional argument, which may be described as a choice of law argument. The essence of MDC’s and Mr. Doft’s choice of law argument is that because of the choice of law, an Ontario court should not be engaged in adjudicating the claims of the Canadian NASDAQ purchasers whose claims must be governed exclusively by American law.

[36] In the discussion that follows, I shall address the forum non conveniens argument first and then address the choice of law argument.

2. The Forum Non Conveniens Argument

(a) The Doctrine of Forum Non Conveniens

[37] If a domestic Canadian court has jurisdiction simpliciter, the action against the foreign defendant may proceed, but subject to the court’s discretion to stay the proceedings on the basis of the doctrine of forum non conveniens. The objectives in determining the appropriate forum are to ensure fairness to the parties and to provide an efficient process for resolving their dispute.[^17] Before staying its own proceedings on the grounds of forum non conveniens, the Ontario court must be satisfied that there is another jurisdiction connected with the matter in which justice can be done between the parties at substantially less inconvenience and expense.[^18]

[38] In Kaynes v. BP, plc No. 1,[^19] the facts of which are described below, Justice Sharpe explained at para. 35 the nature of the forum non conveniens analysis as follows:

35. It is well-established that if the plaintiff succeeds in demonstrating that Ontario has jurisdiction, the court has the discretion to decline to exercise that jurisdiction under the forum non conveniens doctrine as was explained in Van Breda,[^20] at paras. 103-5. The defendant bears the burden "to show why the court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiff". To succeed in discharging that burden, "[t]he defendant must identify another forum that has an appropriate connection under the conflicts rules and that should be allowed to dispose of the action" and "must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate." The doctrine "tempers the consequences of a strict application of the rules governing the assumption of jurisdiction" and "requires a court to go beyond a strict application of the test governing the recognition and assumption of jurisdiction." The forum non conveniens doctrine is a "flexible concept" which "cannot be understood as a set of well-defined rules, but rather as an attitude of respect and deference to other states": Van Breda, at para. 74. Forum non conveniens recognizes that there is "a residual power to decline to exercise its jurisdiction in appropriate, but limited, circumstances in order to assure fairness to the parties and the efficient resolution of the dispute": Van Breda, at para. 104.

[39] Courts have developed a list of factors that may be considered in determining the most appropriate forum for an action; including: (a) the location of the majority of the parties; (b) the location of the key witnesses and evidence; (c) contractual provisions that specify applicable law or accord jurisdiction; (d) the avoidance of multiplicity of proceedings; (e) the applicable law and its weight in comparison to the factual questions to be decided; (f) geographical factors suggesting the natural forum; (g) juridical advantage; i.e., whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage in the domestic court; and (h) the existence of a judgment in the competing forum.[^21]

[40] The discretionary factors are not exhaustive, and the weight to be given any factor is a matter of the exercise of the court’s discretion, which is guided by three principles; namely: (1) the threshold for displacing the plaintiff’s choice is high and the existence of a more appropriate forum must be clearly demonstrated; (2) the court should consider and balance the efficiency and convenience of a particular forum with the fairness and justice of that choice to the parties; and (3) because a forum non conveniens motion is brought early in the proceeding, the court should adopt a cautious approach to fact-finding particularly with respect to matters that are at the heart of the lawsuit; the assessment of the factors should be based on the plaintiff’s claim if it has a reasonable basis in the record.[^22]

[41] As Justice Sharpe noted in Kaynes v. BP, plc No. 1, the flexible forum non conveniens doctrine espouses an attitude of respect and deference to other states. The principle of comity underlies the forum non conveniens analysis and compels a domestic court to engage in a contextual analysis and to give respect to the courts and legal systems of other jurisdictions that have assumed or could assume jurisdiction over a matter without leaning too instinctively in favour of the domestic court.[^23]

[42] Comity thus plays a very important role in the forum non conveniens analysis. In Morguard Investments Ltd. v. De Savoye,[^24] Justice La Forest adopted the definition of comity expressed in Hilton v. Guyot:[^25] “[T]he recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.” In Tolofson v. Jensen,[^26] Justice La Forest stated:

36. On the international plane, the relevant underlying reality is the territorial limits of law under the international legal order. The underlying postulate of public international law is that generally each state has jurisdiction to make and apply law within its territorial limit. Absent a breach of some overriding norm, other states as a matter of "comity" will ordinarily respect such actions and are hesitant to interfere with what another state chooses to do within those limits. Moreover, to accommodate the movement of people, wealth and skills across state lines, a by-product of modern civilization, they will in great measure recognize the determination of legal issues in other states. And to promote the same values, they will open their national forums for the resolution of specific legal disputes arising in other jurisdictions consistent with the interests and internal values of the forum state. These are the realities that must be reflected and accommodated in private international law.

[43] The doctrine of comity is of particular importance viewed from the perspective of the contemporary global transaction of business. In Chevron Corp. v. Yaiguaje,[^27] Justice Gascon stated:

75. …. [T]the doctrine of comity (to which the principles of order and fairness attach) "must be permitted to evolve concomitantly with international business relations, cross-border transactions, as well as mobility": Beals v. Saldanha, 2003 SCC 72 para. 27. Cross-border transactions and interactions continue to multiply. As they do, comity requires an increasing willingness on the part of courts to recognize the acts of other states. This is essential to allow individuals and companies to conduct international business without worrying that their participation in such relationships will jeopardize or negate their legal rights.

[44] In the forum non conveniens analysis, juridical advantage is a problematic factor because: (a) assessing the merits of rival jurisdictions is inconsistent with the principles of comity; (b) juridical advantage is a difficult factor to measure; and (c) because, as Justice Sopinka observed in Amchem Products Inv. v. British Columbia (Workers’ Compensation Board,[^28] if a party seeks out a jurisdiction simply to gain a juridical advantage rather than by reason of a real and substantial connection of the case to the jurisdiction, that is ordinarily condemned as forum shopping. While the loss of a juridical advantage to a party remains a relevant consideration in the forum non conveniens analysis, it is a concept that should be applied with some caution, having regard to the principle of comity and an attitude of respect for the courts and legal systems of other countries, many of which have the same basic values as Canadian courts.[^29] Thus, juridical advantage typically does not weigh too heavily in the contemporary forum non conveniens analysis.[^30]

[45] As a factor, juridical advantage is inconsistent with comity because it encourages a debate about which jurisdictions’ approach to the law is advantageous or disadvantageous and the domestic court may view disadvantage as a sign of inferiority in the rival jurisdiction and to favour its own jurisdiction as superior. As a practical matter, juridical advantage is difficult to measure because any loss of advantage to the plaintiff in the forum of his or her choice must be weighed as against the loss of advantage, if any, to the defendant in the rival jurisdiction. Often the juridical advantage factor disappears, because the law of both jurisdictions is the same. However, a genuine juridical advantage treats the laws of the rival jurisdictions as different and hence subject to comparative analysis.

(b) Is Ontario Forum Conveniens?

[46] As noted above, courts have developed a list of factors that may be considered in determining the most appropriate forum for an action; including: (a) the location of the majority of the parties; (b) the location of the key witnesses and evidence; (c) contractual provisions that specify applicable law or accord jurisdiction; (d) the avoidance of multiplicity of proceedings; (e) the applicable law and its weight in comparison to the factual questions to be decided; (f) geographical factors suggesting the natural forum; (g) juridical advantage; i.e., whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage in the domestic court; and (h) the existence of a judgment in the competing forum.[^31]

[47] The above factors are relevant to answering four primary questions that underlie the objective of providing a just and efficient process (less inconvenience and expense) for resolving the parties’ dispute.

• The first question is: which court is the more appropriate court to decide the issues of fact? This first question is imbedded in the following factors: location of the parties, location of the witnesses and evidence, the avoidance of a multiplicity of proceedings, and geographical factors.

• The second question is: which court is the more appropriate court to decide the issues of law? This second question is imbedded in the following factors: location of the parties, the applicable law and its weight in comparison to the factual questions to be decided, geographical factors, and juridical advantage.

• The third question is: based on the principle of comity between jurisdictions, which court is the more appropriate court to decide the issues of fact and law? The third question is imbedded in the following factors: location of the parties, the applicable law and its weight in comparison to the factual questions to be decided, juridical advantage; geographical factors, and the existence of a judgment.

• The fourth question is: based on access to and the administration of justice, which court is the more appropriate court to decide the issues of fact and law and to provide a remedy. The fourth question is imbedded in the following factors: location of the parties, contractual provisions, the avoidance of multiplicity of proceedings, juridical advantage; geographical factors, and, the existence of a judgment.

[48] In the circumstances of the immediate case, considering the non-exhaustive list of factors and the underlying questions, in my opinion, Ontario is forum conveniens for the Canadian putative Class Members who purchased their shares on NASDAQ. In the circumstances of the immediate case, I am not satisfied that there is another jurisdiction connected with the matter in which justice can be done between these parties at substantially less inconvenience and expense.

[49] Beginning with the underlying question of which court is more appropriate to decide the issues of fact, while the U.S. court would be the more appropriate court to decide the issues of fact, practically speaking, the Defendants in the case at bar cannot rely on this factor to make Ontario forum non conveniens, because the Defendants have not challenged the appropriateness of the Ontario court to decide the claims of the putative Class Members who purchased on the TSX. While the U.S. is the place where the Defendants carry on business, where the alleged misconduct occurred, where key witnesses are located, and where evidence is to be found, the Defendants accept that it is appropriate for a court in Ontario to try the claims of the purchasers on the TSX, and it follows that the Defendants must accept that Canadians who purchased on NASDAQ can also have the issues of fact appropriately tried in Ontario.

[50] Turning to the second underlying question, in the immediate case, the U.S. court would be the more appropriate court to decide the issues of law - if the applicable law is the Securities Exchange Act of 1934, and conversely, the Ontario court would be the more appropriate court to decide the law if the applicable law is exclusively Ontario’s Securities Act along with a common law tort claim, which is how Mr. Paniccia has pled his claim. If Mr. Paniccia’s choice of law prevails, then it follows that the Ontario court is the more appropriate court to decide the issues of law. However, in its choice of law argument, discussed below, the Defendant MDC submits that even if the case were tried in Ontario, American statutory law would apply to the claims of the class members that purchased on NASDAQ. MDC, thus, submits that the U.S. court is the more appropriate court to decide the legal issues in the case at bar.

[51] For the purposes of a forum conveniens analysis, I disagree with MDC’s submission. The statutory cause of action under Part XXIII.1 of the Ontario Securities Act for secondary market trading has a long-arm jurisdiction when Ontario has a real and substantial connection to the foreign defendant.[^32] The case law establishes that where the corporation’s securities trade both in Ontario’s secondary market and also in a foreign stock market, Part XXIII.1 of the Ontario Securities Act applies to the trades in Ontario and the statute also applies extra-territorially.[^33] Thus, insofar as Mr. Paniccia’s statutory claim is concerned, Ontario would become the more appropriate forum, and insofar as Mr. Paniccia is advancing a common law misrepresentation claim, Ontario is the more appropriate forum to decide the legal issues. Thus, in the context of a forum conveniens analysis, I conclude that, the Ontario court is the more appropriate court to decide the issues of law.

[52] Turning to the factors and the forum conveniens question, based on the principles of comity, in the circumstances of the immediate case, where the overwhelming trading in MDC’s shares occurred on NASDAQ, the U.S. court is the more appropriate court to decide the issues of fact and law. Just as it would be more appropriate for a Canadian court to decide a case where a substantial (it need not be a preponderance, as in the immediate case) of trading took place in Canada, from a comity perspective, it would be more appropriate for a U.S. court to decide the claims of purchasers on NASDAQ, and from a comity perspective, this deference is augmented by the circumstance that the American statutes assert an exclusive jurisdiction. That said, the comity concerns in the immediate case are substantially attenuated for one general reason and one specific reason.

[53] The general reason is that while Canadian law confines its regulation of the primary market in securities by a place of trading rule,[^34] as already noted above, Canadian law accepts that where there is jurisdiction simpliciter, Canadian securities law can apply extra-territorially to secondary market trading; i.e., the case law accepts an intrusion on comity in appropriate cases.

[54] From Professor Coffee’s evidence and from the academic literature that MDC referred me to,[^35] I understand that the extra-territorial reach of Ontario’s Securities Act with respect to trading in the secondary market is inconsistent with the approach taken by provincial securities statutes with respect to misrepresentations made in trading documents in the primary market and that this approach to the secondary market may not be consistent with prevailing international standards that connect jurisdiction to the place where the securities are traded. And, I understand that the extra-territorial reach of Ontario’s Securities Act may arguably be a contravention of principles of comity between sovereign nations and not a desirable way to administer global marketplaces, but the existing case law, including the legal sagas of Kaynes v. BP plc and Abdula v. Canadian Solar Inc., which are discussed below, have decided that this Canadian intrusion on comity is accepted when some of the defendant’s securities are traded on a Canadian stock market.

[55] The specific reason in the immediate case is that since Mr. Paniccia has redefined his class to exclude non-Canadian purchasers, much of Professor Coffee’s comity-based concerns dissipate. The Canadian court need not be concerned about any American and non-American purchasers who purchased on NASDAQ circumventing the policy decisions of the U.S. legislators and regulators by coming to Canada to take shelter under the long embracing arm of Ontario’s Securities Act.

[56] Thus, I conclude that from a comity perspective while the U.S. court would be the more appropriate court to decide the issues of fact and law, this circumstance does not weigh heavily in the forum non conveniens analysis of the case at bar.

[57] Turning to the fourth question, which is based on access to and the administration of justice, in my opinion, the circumstances of the case at bar are neutral as to which court is the more appropriate court to decide the issues of fact and law and to provide a remedy, if any. As will often be the case in global or partial-global class actions, there will be no avoiding of a multiplicity of proceedings, and this is true in the case at bar. There has already been a determination in a proposed U.S. proceeding, but the Pension Plan’s case against MDC was not certified, and the U.S. court decided only the application of American law to the Pension Plan’s case. The U.S. court undoubtedly established a precedent that would be useful to a Canadian court if it were applying American law, but Mr. Paniccia is advancing his case based on Canadian law. With respect to the administration of justice, there is an aroma of forum shopping, but as already noted above, the case law accepts that where there is trading in an Ontario stock market, the secondary market provisions of Part XXIII.1 of Ontario’s Securities Act apply to the trading in both the domestic and foreign stock markets. Thus, putting the comity concerns aside, and recalling that Mr. Paniccia is no longer asking that a Canadian court apply Canadian law for the benefit of foreigners who traded outside of Canada, there is little objectionable from an access to or administration of justice perspective about a Canadian court adjudicating the claims of Canadians relying on a Canadian statute that applies extra-territorially.

[58] Before turning to the case law, this forum non conveniens analysis indicates to me that the Defendants have failed to show that compared to Ontario, the U.S. is a jurisdiction in which justice can be done between Mr. Paniccia, the putative Class Members, and the Defendants at substantially less inconvenience and expense.

[59] Turning to the case law, two preliminary observations are necessary.

[60] The first preliminary observation is to note that in the context of proposed class actions, the case law reveals that forum non conveniens problems arise in two ways; i.e., first, as an aspect of a jurisdiction motion, where the defendant moves to have the action stayed; and second, as an aspect of a certification motion, where the defendant resists certification by arguing that it would be preferable for the putative class members to advance their claims in the court of another jurisdiction and, therefore, the proposed class action does not satisfy the criteria for certification, especially the preferable procedure criterion.

[61] The second preliminary observation is to note that be it as an aspect of a conventional jurisdiction motion or be it as an aspect of a certification motion, the problems associated with global class actions manifest themselves in very different ways depending on the composition of the class members and the nature of their claims and on whether there are parallel proceedings. A forum non conveniens analysis is a very fact specific analysis and global class actions are not monolithic.

[62] Thus, insofar as there are global aspects in the case at bar, from a factual perspective, the case at bar is not like:

• Ramdath v. George Brown College of Applied Arts & Technology,[^36] where the class was comprised of 41 Canadian students and 78 international students who had breach of contract and misrepresentation claims against an Ontario community college.

• Silver v. Imax Corp.,[^37] where 15% of IMAX’s shares traded on the TSX and 85% traded on NASDAQ, and where the class of a Canadian class action was comprised of the share purchasers on either market notwithstanding that there was an overlapping class action in the United States and it was unclear what the choice of law would be in Canada for the class members who purchased shares on NASDAQ.

• Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc.,[^38] where almost 100% of the trading occurred on Ontario stock exchanges and a global class, excepting purchasers from Quebec, was certified.

• Das v. George Weston Limited,[^39] where the class was comprised of 3,650 garment workers in Bangladesh who had been injured or killed when the building in which they worked collapsed and who sued a Canadian company that purchased goods from their employer but which company otherwise did not have a presence in Bangladesh.

• Airia Brands Inc. v. Air Canada,[^40] where the class was comprised of Canadian and non-Canadian purchasers of air freight shipping services of goods to and from Canada from the defendant group of airlines that were alleged to have conspired to fix prices.

• Berg v. Canadian Hockey League,[^41] where the class was comprised of the past and present Canadian and American players of 18 Ontario, 1 Michigan, and 1 Pennsylvania hockey club that were alleged to have breached the respective employment statutes of Ontario, Michigan, and Pennsylvania.

[63] While the legal principles in all these cases remain relevant to the case at bar, the factual orientation in the immediate case focuses on Canadians seeking to have Canadian law apply to their claims and the case at bar does not involve any foreigners coming to Canada and seeking to have a Canadian court apply Canadian and or foreign law(s) to resolve their claims that originated in a foreign land.

[64] As a matter of case law, the major debate between the parties centered on the two forum conveniens decisions of the Ontario Court of Appeal in Kaynes v. BP plc (No. 1),[^42] where the Court stayed an action having decided that Ontario was forum non conveniens for a partially global class action for misrepresentations in the secondary market, and Kaynes v. B.P. plc (No. 2),[^43] where the same panel of the Court reconsidered the matter, decided that Ontario was forum conveniens, and lifted the stay.

[65] In Kaynes v. BP, plc, No. 1 and No. 2, BP’s securities traded on the TSX, the London Stock Exchange, the Frankfurt Stock Exchange, and the New York Stock Exchange (“NYSE”), which is where Mr. Kaynes purchased BP’s securities. Mr. Kaynes brought a proposed class action against BP pursuant to Part XXIII.1 of Ontario’s Securities Act for secondary market misrepresentations. Meanwhile, in the U.S., relying on the Securities Exchange Act of 1934, another investor was suing BP on behalf of purchasers on the NYSE.

[66] Similar to the circumstances of the case at bar, in Kaynes v. BP, plc, No. 1, BP brought a motion to stay the proposed class action in Ontario with respect to the putative Canadian class members who had purchased their securities on the NYSE. BP did not challenge the jurisdiction of the court with respect to purchasers on the TSX. BP argued, however, that the Ontario court did not have jurisdiction or, alternatively, on the basis of the doctrine of forum non conveniens, it argued that the Ontario court should not assume jurisdiction with respect to purchasers on foreign stock exchanges.

[67] In Kaynes v. BP, plc, No. 1, in the court of first instance, Justice Conway held that the Ontario court had jurisdiction simpliciter with respect to not only the putative class members who had purchased their securities on the TSX but also for purchasers on the NYSE, and she held that the court was a convenient forum to adjudicate these claims. The Court of Appeal, however, held that the U.S. court, which asserted an exclusive jurisdiction, was the forum conveniens and the Ontario court forum non conveniens, and thus the Court of Appeal stayed the Ontario action with respect to the NYSE-based claims.

[68] A close reading of both Kaynes v. BP plc, No. 1 and Kaynes v. BP plc No. 2 reveals that in deciding that Ontario was forum non conveniens, the Court of Appeal reasoned that the U.S. court had asserted exclusive jurisdiction over claims brought by purchasers of securities on U.S. stock markets and, therefore, these claims should be adjudicated in the U.S., especially in circumstances where the majority of BP’s securities traded in the U.S. and where BP was taking the position that U.S. law should be applied to decide the claims of purchasers on the NYSE. In these circumstances, Mr. Justice Sharpe for the Court of Appeal reasoned that comity concerns favoured the U.S. adjudicating the claims of purchasers on its own stock exchanges.

[69] In Justice Sharpe’s view, the claim of exclusive jurisdiction was a factor that, in keeping with the principle of comity, the Ontario court was obliged to consider, and this factor was particularly important because Mr. Kaynes’ claim rested to a significant degree upon the disclosure obligations imposed by U.S. securities law. The Court of Appeal reasoned that to use BP's negligible trading on the TSX to be a toehold for bringing purchasers on the NYSE under the jurisdiction of an Ontario court would be both opportunistic and an example of the tail wagging the dog. Purchasers on the NSYE would have reasonably expected that their claims would be adjudicated in the U.S. and the prevailing international standard tied jurisdiction to the place where the securities were traded.[^44]

[70] Because of the decision in Kaynes v. BP plc, No. 1, Mr. Kaynes was forced to adjudicate his misrepresentation claim in the U.S., but in the course of doing so, the circumstances changed from what the Ontario Court of Appeal had anticipated. The changed circumstances were twofold. First, BP reversed its position and asserted that Ontario law did apply to Mr. Kaynes’ claims on behalf of Canadians that purchased on both the TSX and the NYSE. Second, the lead plaintiff in the U.S. class proceeding refused to include a claim based on Ontario’s Securities Act to proceed in the U.S. Mr. Kaynes had wished to have the Texas court apply Part XXIII.1 of Ontario’s Securities Act, but Judge Ellison refused to permit such a claim to go forward in Texas. And for good measure, Judge Ellison said that if Ontario law applied, Mr. Kaynes’ claim was statute-barred.[^45] The changed circumstances led the Ontario Court of Appeal to decide that it was in the interests of justice to lift the stay and to allow Mr. Kaynes to bring a claim under Ontario’s Securities Act on behalf of the Canadians who had purchased on the NYSE. In the changed circumstances, Ontario was not only the convenient forum, it was the only forum for these claims to be adjudicated.

[71] It may be seen that the circumstances of the case at bar move close to the circumstances of Kaynes v. BP plc, No. 2. I say close to, because unlike Kaynes v. BP plc, No. 2, the Defendants in the case at bar have not changed course and they do not agree with the Plaintiff that the claims of Canadian residents that purchased on NASDAQ are governed by Ontario law. However, the Defendants in the case at bar are confronted with the circumstances that: (a) they have conceded that the Ontario court has jurisdiction simpliciter; (b) they have conceded that the Ontario court is a convenient court to try the factual issues associated with the claims of the Canadians who purchased on the TSX; (c) the case law establishes that when there is the perch of trading in Ontario, the Ontario Securities Act has the reach to apply Ontario law for purchasers on foreign stock exchanges; (d) Mr. Paniccia is seeking only to bring more Canadians on board his proposed Ontario class action and thus the impact on comity is attenuated. Thus, upon a close reading, the Kaynes v. BP plc saga supports the conclusion that the Defendants have not demonstrated that compared to Ontario, the U.S. is a jurisdiction in which justice can be done between Mr. Paniccia, the putative Class Members and the Defendants at substantially less inconvenience and expense.

[72] In considering the case law, the next cases to consider are: Abdula v. Canadian Solar Inc.,[^46] Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP, [^47] and Yip v. HSBC Holdings plc.[^48]

[73] Abdula v. Canadian Solar Inc.[^49] is another secondary market misrepresentation case. In the Abdula case, the defendant Canadian Solar, a federally incorporated Canadian company, mainly carried on its activities in China. Canadian Solar’s shares traded on NASDAQ and Canadians comprised approximately 4% of the shareholders.

[74] To understand this case, it is helpful to note that before the certification motion, in a decision upheld by the Court of Appeal, Justice Taylor held that the Ontario court had jurisdiction simpliciter for a corporate oppression remedy claim and also for common law and statutory misrepresentation claims with respect to the trading of Canadian Solar’s shares in the secondary market. The Court of Appeal agreed with Justice Taylor’s conclusion that the statutory action under Ontario’s Securities Act could have extra-territorial application with respect to an issuer corporation that had a real and substantial connection to Ontario as was the situation of Canadian Solar.

[75] After the jurisdiction motion, a certification motion followed. In a decision for which the Divisional Court refused leave to appeal, Justice Taylor certified a global class action against Canadian Solar on behalf of purchasers of Canadian Solar’s securities which were traded on NASDAQ but not on any Canadian exchange. The class members thus included Canadian and non-Canadian purchasers from around the world.

[76] The Ontario action in Abdula v. Canadian Solar Inc. was a genuinely global class action and it was the only available action for the class members since a parallel action in the United States was dismissed by the United States Court of Appeal for the Second Circuit. At first blush, the Abdula case in Canada appears to support Mr. Paniccia’s argument that the Ontario court is forum conveniens to decide the claims of Canadians who purchased on a foreign stock exchange.

[77] Thus, in its factum MDC makes a very fulsome argument to distinguish or diminish the authority of the Abdula case. I agree with MDC that Abdula v. Canadian Solar Inc. is factually distinguishable, but more importantly, apart from its holding that Part XXIII.1 of the Ontario Securities Act can apply extra-territorially, there is no forum conveniens or choice of law argument that was made in the Abdula case, and, thus Abdula v. Canadian Solar Inc. never addresses the issues of the immediate case. The Abdula case is not helpful or is neutral to the outcome of the case at bar.

[78] Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP,[^50] is also distinguishable. In the Excalibur case, the class was comprised of 2 Canadian investors and 55 non-Canadian investors that had claims against an Ontario accounting firm that had provided a financial statement opinion for a private placement of the securities of an American company that carried on business in China. A majority of the Court of Appeal and a dissenting judge in the Divisional Court held that I erred in refusing to certify the class action by concluding that Ontario did not have a real and substantial connection to the matter; i.e., it wanted for jurisdiction simpliciter.[^51] Since I am bound by the majority’s decision, Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP,[^52] is distinguishable because it does not address the issues in the immediate case. In any event, freed from the jurisprudential restraints of stare decisis, I regard Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP as factually and analytically distinguishable from the case at bar. Put somewhat differently, the outcome of the forum non conveniens analysis is different in the immediate case than that analysis I rightly or wrongly did in the Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP case. As already described above, in the case at bar there is a real and substantial connection to Ontario both from the perspective of jurisdiction simpliciter and from the perspective of the factors of a forum non conveniens analysis.

[79] Yip v. HSBC Holdings plc,[^53] is a case that is pertinent to the analysis of the immediate case; however, the case is distinguishable. In the Yip case, which is another misrepresentation in the secondary market action, the defendant HSBC Holdings’ shares did not trade on any Canadian stock market and there was no jurisdiction simpliciter with respect to the action against HSBC Holdings, which did not carry on business in Canada. Further, the long arm of Ontario’s Securities Act, while it could apply extra-territorially, was not long enough to reach HSBC Holdings. Moreover, even if there was jurisdiction simpliciter, under a conventional forum conveniens analysis, Ontario was forum non conveniens.

[80] Before turning to the MDC’s choice of law argument, to summarize, applying the principles of a conventional forum non conveniens analysis, the Defendants have failed to show that compared to Ontario, the U.S. is a jurisdiction in which justice can be done between Mr. Paniccia, the putative Class Members, and the Defendants at substantially less inconvenience and expense and this conclusion is not disturbed and is rather supported by a review of the case law.

3. The Choice of Law Argument

[81] Where litigation involves a foreign element, foreign parties, foreign law, events in a foreign land, the court deciding the dispute must decide whether to apply domestic or foreign law. A domestic court will apply its domestic law for both procedural and substantive law matters, unless the parties make an issue of the choice of law. The choice of law question does not arise unless one of the parties raises the issue; if neither party makes an allegation about the choice of law, the domestic court resolves the dispute using domestic law, the lex fori; It is presumed that the foreign law is the same as the domestic law unless the content of foreign law is proven as a factual matter.[^54]

[82] If a choice of law issue is raised, the domestic court undertakes a rules-based process based on the pleadings to determine what law to apply. The choice of law rule will have an operative ingredient known as a connecting factor that will determine or designate the choice of law for the particular type of dispute. There are several different types of connecting factors such as the residence of the parties, the domicile of the parties, where the plaintiff’s claim is actionable (actionability); or the place where the wrongdoing occurred (lex loci delicti commissi or lex loci). Based on the connecting factor, the choice of law rule for the particular type of dispute might designate the lex fori (the law of the domestic court) or it might designate the law of a foreign jurisdiction.[^55]

[83] In cases involving a foreign element, the choice of law issue is a conflicts of law issue that is different and discrete from the conflicts of law issues associated with jurisdiction simpliciter, forum non conveniens, and the enforcement of foreign judgments in a domestic court. In a case involving a foreign element, the court must not only decide whether it has jurisdiction simpliciter and, if so, whether under the doctrine of forum non conveniens, it should exercise that jurisdiction but the court must also decide what law to apply if it assumes jurisdiction. The court must make a choice of law decision which is a mixed fact and law issue based in part on proof of foreign law and based on choice of law rules.

[84] Thus, for example, and to turn to MDC’s choice of law argument, the Defendants will plead that in accordance with the choice of law rules, for the Canadian Class Members who purchased on NASDAQ, the governing law must be American law. MDC and Mr. Doft then argue that since Mr. Paniccia’s claim on behalf of Canadian purchasers who purchased on NASDAQ will be governed by American law, the Ontario court should not take on the case and should leave the case to be decided by the American courts, who are in the preferred place to decide how their own law should apply.

[85] Mr. Paniccia raises several counterarguments. He counters that it is premature to make a choice of law argument because the Defendants have not yet pleaded their defence. Further, he asserts that it is not a given that a Canadian court would apply American law to his claim on behalf of purchasers on NASDAQ. And, he adds that if this claim was advanced in the U.S., an American court would also apply Canadian law and it is preferable that a Canadian court, rather than an American court, determine the operation of Canadian law.

[86] While I do not disagree with Mr. Paniccia’s counterargument that asserts that an American court could apply Canadian law, I regard this argument as irrelevant to the problem I must address in the immediate case, which is deciding what is the choice of law rule or rules in Ontario that mandates the choice of law by an Ontario court.

[87] I do disagree with Mr. Paniccia’s counterargument that it is premature to decide the choice of law issue at this juncture, and I disagree with his argument that it is not a given that an Ontario court would apply American law to the claims of Canadian purchasers on NASDAQ, which argument is just another way of saying that it is premature to decide the choice of law point now. In the immediate case, the pleading of foreign law appears to be inevitable and no purpose would be served by ducking deciding the issue now.

[88] In deciding the choice of law issue, I begin by noting that there are several discrete choice of law problems in a global or partial-global proposed securities misrepresentation class action about trading in a domestic and foreign stock exchange, but for the purpose of the motions before the court, I need decide only what choice of law applies to Canadian purchasers on NASDAQ. I thus do not need to decide the choice of law for the circumstances of a comprehensive global class action where non-Canadian purchasers on NASDAQ are included as putative class members. In the case at bar, the question I need to answer is what is the choice of law rule for Canadian purchasers on a foreign stock exchange where the Ontario court has jurisdiction simpliciter to decide a secondary market misrepresentation case under Part XXIII.1 of Ontario’s Securities Act and where the purchaser advances a common law tort claim.

[89] The answer to that question has already been noted above in the discussion of the doctrine of forum non conveniens. The statutory cause of action under Part XXIII.1 of the Ontario Securities Act for secondary market trading does not have a place of trading qualification, and thus the Ontario court has a long-arm jurisdiction under Part XXIII.1 when Ontario has a real and substantial connection to the defendant. The case law establishes that where the corporation’s securities trade both in Ontario’s secondary market and also in a foreign stock market, Part XXIII.1 of the Ontario Securities Act applies to the trades in Ontario and the statute also applies extra-territorially, at least for Canadians.[^56]

[90] Since when it applies, Part XXIII.1 of Ontario’s Securities Act, applies extra-territorially, an Ontario court is obliged to apply Ontario law to an appropriate extra-territorial claim. Further, the case law holds that the statutory tort under the Ontario Securities Act for misrepresentations in the secondary market for securities occurs in the place where the negligent misrepresentation was received and relied upon; i.e., in Ontario.[^57] Further still, insofar as Mr. Paniccia relies on a common law tort claim, the case law establishes that a tort occurs in the jurisdiction substantially affected by the defendant’s activities or its consequences or where the important elements of the tort occurred.[^58] The case law holds that the torts of fraudulent or negligent misrepresentation occur where the misinformation is received or acted upon.[^59] Thus under the lex loci choice of law rule, domestic Ontario law governs the statutory and common law misrepresentation claims in the case at bar.

[91] MDC argues that the extra-territorial application of Part XXIII.1 of Ontario’s Securities Act has only been considered as a matter of statutory interpretation and not as a matter determining what should be the choice of law for a claim where a choice needs to be made between the domestic law and a rival foreign law that regulates trading in the secondary market. It submits that when a choice of law analysis is actually made, then the appropriate choice of law rule is the same rule that applies to trading in the primary market, which is to say that a placing of trading rule applies to determine which jurisdiction’s securities law applies. And MDC argues that a place of trading rule makes sense from a policy perspective because the domestic court can and should have no juridical interest in regulating the trades of a person who chooses to trade in a different jurisdiction which has its own comprehensive scheme of securities regulation.

[92] I disagree with MDC’s argument. While it is true that the cases about the extra-territorial reach of Part XXIII.1 of Ontario’s Securities Act were cases of statutory interpretation, the context of the cases was that the defendant’s shares traded outside Ontario and the court was determining the extra-territorial reach of the statute. It would have been inconsistent for the courts deciding the cases and it would be an example of juridical irony for a court then or now to conclude on the one hand that Part XXIII.1 of Ontario’s Securities Act can apply extra-territorially but to conclude on the other hand that the choice of law rule mandates that Part XXIII.1 does not apply with respect to the defendant’s shares that traded outside of Ontario.

[93] Further, from a policy perspective, while it may be good policy to have a place of trading rule for trading in the primary market, it does not necessarily follow that it remains good policy to have a place of trading rule apply to a regime of continuous disclosure, which regime animates the regulation of trading in the secondary market. And, it is not true that a domestic court should automatically stop being interested in regulating the trades of a corporation over whom there is jurisdiction simpliciter when that corporation crosses the border to trade.

[94] I conclude that the choice of law in the immediate case is Ontario law and it therefore follows that MDC’s choice of law argument fails. Further, even if I am wrong that Part XXIII.1 of Ontario’s Securities Act is the choice of law for the Canadian purchasers on NASDAQ, then the Defendants still fail in demonstrating that Ontario is forum non conveniens. And if I am wrong and the trial court were to apply American law rather than Part XXIII.1 of Ontario’s Securities Act, Professor Coffee’s and the Defendants’ comity concerns are further attenuated because the Ontario court will be applying American law, and it is unlikely that the court will permit a circumvention of the law and policy decisions of the American jurisdiction.

[95] Moreover, this analysis reveals that in any event, the questions of whether the domestic court should exercise its extra-territorial jurisdiction and for whom the domestic court should exercise that extra-territorial jurisdiction are matters best dealt with pursuant to the court’s forum non conveniens discretionary jurisdiction or through the discretionary criteria of the Class Proceedings Act, 1992 rather than through a strict choice of law rule that dictates what law should apply. It is in the context of a forum non conveniens analysis or a preferable procedure analysis that the domestic court is in a better position to weigh the reasonable expectations of all of the parties as a factor in determining whether the court should exercise its extra-territorial jurisdiction.

[96] MDC’s choice of law argument misses the target. This can be demonstrated by the immediate case and returning it to its initial global infrastructure, which would have yielded a stratified class of domestic and foreign purchasers from around the world on two stock exchanges. Had Mr. Paniccia not reduced the membership of his putative class to Canadians but persisted in a global class action, there would have been a substantially different forum conveniens analysis, and I might have concluded that Ontario was not the convenient forum for determining the issues of fact, law, policy, and remedy regardless of whether American or Canadian law applied to the stratified class members’ claims.

[97] I, therefore, conclude that notwithstanding MDC’s choice of law argument, the law for Canadian purchasers who purchased MDC’s shares on NASDAQ is Part XXIII.1 of Ontario’s Securities Act and whether Ontario should exercise that jurisdiction is a matter for a forum conveniens analysis. It follows from this conclusion that the analysis for the case at bar has come full circle, and MDC is left only with an unsuccessful forum non conveniens argument to disturb this court adjudicating the claims of the Canadians who purchased MDC’s shares in accordance with Part XXIII.1 of Ontario’s Securities Act.

F. Conclusion

[98] For the above reasons, the Defendants’ motions are dismissed. If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Mr. Paniccia’s submissions within 20 days from the release of these Reasons for Decision followed by the Defendants’ submissions within a further 20 days.

Perell, J.

Released: December 6, 2017

CITATION: Paniccia v. MDC Partners Inc., 2017 ONSC 7298

COURT FILE NO.: 16-CV-564034-00CP

DATE: 2017-12-06

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERTO PANICCIA Plaintiff+

– and –

MDC PARTNERS INC., MILES S. NADAL, MICHAEL C. SABATINO, DAVID DOFT Defendants

REASONS FOR DECISION

PERELL J.

Released: December 6, 2017

[^1]: 15 U.S.C. 78aa.

[^2]: S.O. 1992, c. 6.

[^3]: R.S.O. 1990, c. S.5.

[^4]: A.C. Pritchard, “Securities Class Actions Move North: A Doctrinal and Empirical Analysis of Securities Class Actions in Canada” (2010), 47 Alberta Law Rev. 881 (with Janis P. Sarra).

[^5]: Chopik v. Mitsubishi Paper Mills Ltd., [2002] O.J. No. 2780 (S.C.J.).

[^6]: 2013 ONSC 5080.

[^7]: Silver v. Imax Corp., 2009 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.), leave to appeal ref’d 2011 ONSC 1035 (Div. Ct.).

[^8]: Abdula v. Canadian Solar Inc., 2015 ONSC 53.

[^9]: North Collier Fire Control and Rescue District Firefighter Pension Plan v. MDC Partners, Inc., et al., 5-cv-6034 (RJS) (S.D.N.Y.).

[^10]: Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148 (2008).

[^11]: A plaintiff in a U.S. court must plead and prove scienter, namely an intent to deceive, manipulate or defraud: Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976).

[^12]: Dura Pharmaceuticals v. Broudo, 544 U.S. 336 (2005).

[^13]: Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011); Central Bank of Denver N.A. v. First Intrastate Bank of Denver N.A., 511 U.S. 164 (1994); Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., supra.

[^14]: Basic Inc. v. Levinson, 482 U.S. 224 (1988).

[^15]: Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010); RJR Nabisco v. European Cmty., 136 S. Ct. 2090, 2106 (2016).

[^16]: Basic Inc. v. Levinson, supra.

[^17]: Club Resorts Ltd. v. Van Breda, 2012 SCC 17 at para. 109; Bouzari v. Bahremani, 2015 ONCA 275 at para. 47.

[^18]: Bonaventure Systems Inc. v. Royal Bank (1986), 1986 2550 (ON SC), 57 O.R. (2d) 270 (Div. Ct.); Frymer v. Brettschneider (1994), 1994 1685 (ON CA), 19 O.R. (3d) 60 (C.A.), aff’g (1992), 1992 7410 (ON SC), 10 O.R. (3d) 157 (Gen. Div.); Breeden v. Black, 2012 SCC 19 at para. 23; Goldhar v. Haaretz.com, 2016 ONCA 515 at para. 49, leave to appeal granted [2016] S.C.C.A. No. 388.

[^19]: 2014 ONCA 580 at para. 35, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452.

[^20]: Club Resorts Ltd. v. Van Breda, supra.

[^21]: Muscutt v. Courcelles (2002), 2002 44957 (ON CA), 60 O.R. (3d) 20 (C.A.) at paras. 41-42; Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (C.A.); Precious Metal Capital Corp. v. Smith, [2008] O.J. No. 1236 (S.C.J.), aff’d (2008), 2008 ONCA 577, 92 O.R. (3d) 701 (C.A.); Amtim Capital Inc. v. Appliance Recycling Centers of America, 2012 ONCA 664.

[^22]: Antares Shipping Corp. v. Capricorn (The), 1976 5 (SCC), [1977] 2 S.C.R. 422; Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), 1993 124 (SCC), [1993] 1 S.C.R. 897; Hunt v. T&N plc, 1993 43 (SCC), [1993] 4 S.C.R. 289; Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (C.A.); Silvestri v. Hardy, 2009 ONCA 40 at para. 7; Orthoarm Inc. v. American Orthodontics Corp., 2015 ONSC 1880; Industrial Avante Monterrey, S.A. de C.V. v. 1147048 Ontario Ltd., 2016 ONSC 6004.

[^23]: Kaynes v. BP, plc No. 1, 2014 ONCA 580 at paras. 35-54, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452; Prince v. ACE Aviation Holdings Inc., 2014 ONCA 285 at para. 63, leave to appeal refused [2014] S.C.C.A. No. 273.

[^24]: 1990 29 (SCC), [1990] 3 S.C.R. 1077 at p. 1096.

[^25]: 159 U.S. 113 (1895) at pp. 163-64.

[^26]: 1994 44 (SCC), [1994] 3 S.C.R. 1022 at para. 36.

[^27]: 2015 SCC 42 at para. 75.

[^28]: 1993 124 (SCC), [1993] 1 S.C.R. 897 at pp. 919-920.

[^29]: Bouzari v. Bahremani, 2015 ONCA 275 at para. 46; Prince v. ACE Aviation Holdings Inc., 2014 ONCA 285 at para. 64, leave to appeal refused [2014] S.C.C.A. No. 273.

[^30]: Breedan v. Black, 2012 SCC 19 at paras. 26-27; Amchem Products Inc. v. British Columbia (Workers' Compensation Board), 1993 124 (SCC), [1993] 1 S.C.R. 897 at p. 933.

[^31]: Muscutt v. Courcelles (2002), 2002 44957 (ON CA), 60 O.R. (3d) 20 (C.A.) at paras. 41-42; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp., supra; Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (Ont. C.A.); Precious Metal Capital Corp. v. Smith, [2008] O.J. No. 1236 (S.C.J.), aff’d (2008), 2008 ONCA 577, 92 O.R. (3d) 701 (C.A.); Amtim Capital Inc. v. Appliance Recycling Centers of America, 2012 ONCA 664.

[^32]: Yip v. HSBC Holdings plc, 2017 ONSC 5332.

[^33]: Kaynes v. BP, plc No. 1, 2013 ONSC 5802, 2014 ONCA 580, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452, 2016 ONCA 601, leave to appeal to S.C.C. dismissed 2017 1347, Kaynes v. B.P. plc (No. 2), 2016 ONCA 601, leave to appeal to S.C.C. ref’d 2017 1347; Silver v. IMAX Corp., 2009 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.), leave to appeal refused 2011 ONSC 1035 (Div. Ct.); Yip v. HSBC Holdings plc, supra.

[^34]: Pearson v. Boliden Ltd., 2002 BCCA 624 leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 29; Coulson v. Citigroup Global Markets Canada Inc., 2010 ONSC 1596, aff’d 2012 ONCA 108.

[^35]: David Johnston, Kathleen Rockwell & Christie Ford, Canadian Securities Regulation, (5th ed.) (Toronto: LexisNexis Canada, 2014); Tanya J. Monestier, “Is Canada the New Shangri-La of Global Securities Class Actions” (2012) 32 Nw. J. Intl. L. & Bus. 305; P. Anisman and G. Watson, “Some Comparisons Between Class Actions in Canada and the U.S.: Securities Class Actions, Certification and Costs" (2006), 3 Can. Class Action Rev. 527; Castel, Jean-Gabriel & Janet Walker, Canadian Conflict of Laws (6th ed.) (Toronto: LexisNexis Canada, 2005); Rabel, Ernst. The Conflict of Laws: A Comparative Study, vol. 1, (2nd ed.) (Ann Arbour: University of Michigan Law School, 1958).

[^36]: 2010 ONSC 2019.

[^37]: 2009 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.), leave to appeal refused 2011 ONSC 1035 (Div. Ct.).

[^38]: 2012 ONSC 5288.

[^39]: 2017 ONSC 4129.

[^40]: 2017 ONCA 792.

[^41]: 2017 ONSC 2608.

[^42]: 2014 ONCA 580, rev’g 2013 ONSC 5802, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452.

[^43]: 2016 ONCA 601, leave to appeal to S.C.C. ref’d (2017), [2014] S.C.C.A. No. 452.

[^44]: Kaynes v. BP plc No. 1, 2014 ONCA 580 at paras. 35-54, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452.

[^45]: For a further discussion of these aspects of Kaynes v. BP plc, No. 2, see Kaynes v. BP plc, 2017 ONSC 5172.

[^46]: 2011 ONSC 5105 aff’d, 2012 ONCA 211, leave to appeal refused, [2012] S.C.C.A. No. 246 and 2015 ONSC 53, leave to appeal ref’d 2015 ONSC 4322 (Div. Ct.).

[^47]: 2016 ONCA 916, rev’g 2015 ONSC 1634 (Div. Ct.), which had aff’d 2014 ONSC 4118, leave to appeal to the S.C.C. ref’d [2017] S.C.C.A. No. 54.

[^48]: 2017 ONSC 5332.

[^49]: 2011 ONSC 5105 aff’d, 2012 ONCA 211, leave to appeal refused, [2012] S.C.C.A. No. 246 and 2015 ONSC 53, leave to appeal ref’d 2015 ONSC 4322 (Div. Ct.).

[^50]: 2016 ONCA 916, rev’g 2015 ONSC 1634 (Div. Ct.), which had aff’d 2014 ONSC 4118, leave to appeal to the S.C.C. ref’d [2017] S.C.C.A. No. 54.

[^51]: I am bound by the authority of the majority’s decision, although I personally agree with the majority of the Divisional Court and Justice Blair, the dissenting judge in the Court of Appeal, that I held that the court had jurisdiction simpliciter but concluded that the court was not the preferable court to try a claim that had little factual and legal connection to Ontario apart from the residence of the defendant and one class member.

[^52]: 2016 ONCA 916 rev’g 2015 ONSC 1634 (Div. Ct.), which had aff’d 2014 ONSC 4118, leave to appeal to the S.C.C. ref’d [2017] S.C.C.A. No. 54.

[^53]: 2017 ONSC 5332.

[^54]: Pettkus v. Becker, 1980 22 (SCC), [1980] 2 S.C.R. 834 at pp. 853-54.

[^55]: Das v. George Weston Limited, 2017 ONSC 4129.

[^56]: Kaynes v. BP, plc No. 1, 2013 ONSC 5802, 2014 ONCA 580, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452, 2016 ONCA 601, leave to appeal to S.C.C. dismissed 2017 1347, Kaynes v. B.P. plc (No. 2), 2016 ONCA 601, leave to appeal to S.C.C. ref’d 2017 1347; Silver v. IMAX Corp., 2009 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.), leave to appeal refused 2011 ONSC 1035 (Div. Ct.); Yip v. HSBC Holdings plc, 2017 ONSC 5332.

[^57]: Kaynes v. BP, plc No. 1, 2014 ONCA 580, leave to appeal to S.C.C. refused, [2014] S.C.C.A.

[^58]: Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601; Thorne v. Hudson Estate, 2016 ONSC 5507, aff’d 2017 ONCA 208; Gulevich v. Miller, 2015 ABCA 411; Das v. George Weston Limited, 2017 ONSC 4129.

[^59]: Cannon v. Funds for Canada Foundation, 2010 ONSC 4517 at para. 52; 2249659 Ontario Ltd. v. Siegen, 2013 ONCA 354 at para. 31; Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601; Industrial Avante Monterrey, S.A. de C.V. v. 1147048 Ontario Ltd., 2016 ONSC 6004.