Court File and Parties

COURT FILE NOS.: 16-68872 and 16-69691 MOTION HEARD: 20190418 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ORBCOMM INC. and SKYWAVE MOBILE COMMUNICATIONS, Plaintiffs AND: RANDY TAYLOR PROFESSIONAL CORPORATION, Defendant

BEFORE: Master KAUFMAN

COUNSEL: Renée Zatzman, for the plaintiff Katie Black, for the defendant

HEARD: April 18, 2019

REASONS FOR DECISION

[1] This refusals and undertaking motion concerns two related actions. The first action concerns Orbcomm Inc.’s (“Orbcomm”) acquisition of SkyWave Mobile Communications (SkyWave), an Ottawa-based provider of satellite and satellite-cellular devices. Orbcomm claims damages for breaches of representations and warranties made in the purchase agreement. Essentially, it claims that SkyWave hid the fact that, prior to the acquisition, two of its clients (TransCore and Onyxsat), had given notice or manifested an intentional to reduce their business.

[2] Randy Taylor Professional Corporation is the Shareholders’ representative and the defendant in this action for breach of warranty.

[3] Pui Ling Chan (“Chan”) and Ani Tourian (“Tourian”) are former officers of SkyWave. They commenced an action for defamation arising from statements Orbcomm’s CEO made at a town hall meeting on April 16, 2016. They allege that they were the subject of defamatory statements, namely that they intentionally deleted or destroyed evidence.

[4] Before the hearing of this motion, the parties resolved many of the outstanding issues. These reasons concern the matters the parties did not resolve. I will refer to the charts attached to the Amended Notice of Motion to identify the refusals and undertakings.

APPENDIX “A”

[5] Number 38 (Questions 622-629): The question is too broad as framed. Orbcomm is to confirm that, before November 1, 2014, there were no expressions of concerns made to William Blair from Raymond James regarding access to SkyWave’s clients.

[6] Number 32 (Questions 608-613): In my view, the question is also too broad. To the extent they exist, Orbcomm is to provide any emails sent to Mr. Clement between January 1, 2015 and April 6, 2016 in which he is asked to retrieve Ms. Tourian’s and Mr. Chan’s deleted emails, and anything Mr. Clement provided by way of response.

[7] Number 33 (Question 613): The question asks, in essence, for evidence that Orbcomm did not have of Mr. Chan’s “diverted documents” either on a backup system or in another fashion. Orbcomm answered that Skywave personnel requested a back-up copy of Mr. Chan’s hard drive but that Mr. Chan denied the request. Orbcomm shall provide the name of the person who made the request, to the extent he or she can be identified.

[8] Number 58 (Questions 1091-1097) asks whether Orbcomm would agree that it would have no damages if a certain assumption was made. Orbcomm replied that it does not agree with the defendant’s interpretation of section 2.9 of the Agreement. That answer is not responsive. Orbcomm shall answer the question by a yes or a no.

[9] Numbers 71-72, (Question 1208): I am ordering Orbcomm to produce for the period 2015 and 2016 the quarterly sales reports for customers in Brazil (if there is not quarterly report for a given quarter, then the monthly sales reports for that quarter) with the names of the customers redacted with the exception of Onyxsat. The plaintiff may redact information contained in these sales reports that is irrelevant.

[10] Number 76 (Question 1208) requests an undertaking for any analysis made on the potential economic, geographic and political risks associated with Onyxsat. Orbcomm answered that there is no analysis conducted on these risks that has not already been produced. The defendants point to a Securities and Exchange Commission (SEC) filing which states, at p. 833, that the economic, political and other conditions in Brazil could have a material adverse effect on Orbcomm’s business. If there is an analysis done in support of that statement, Orbcomm is to produce it.

APPENDIX B

[11] The following undertakings and refusals relate to the defamation action.

[12] Number 5 (Questions 517-530) requests the evidence is being relied upon for the proposition that the “contracts were solid”. Orbcomm responded that it relies on the representation in s. 2.9 of the Arrangement Agreement. Orbcomm is to confirm that it does not rely on any additional oral or written representations.

[13] Number 9 (Question 605) asks for the evidence Mr. Eisenberg had when he wrote a particular email. Orbcomm’s position is that Mr. Eisenberg answered at Q. 644 that he did not know what information he had at that time. Orbcomm is to confirm that this is the answer.

[14] Number 25 (Question 903-905) concerns a town Hall meeting where the alleged defamatory statements were made. In the transcript of that meeting, Mr. Eisenberg states that former management had hired a lawyer. Ms. Black asked for an undertaking to advise what evidence Mr. Eisenberg had to support this statement. Ms. Zatzman points out that the plaintiff does not plead that this statement is defamatory. Accordingly, she argues that the refusal was proper because questions surrounding that statement are irrelevant to the allegations made.

[15] At paragraphs 29 and 31 of the Fresh as Amended Statement of Claim in the defamation action, the plaintiffs allege that Mr. Eisenberg falsely and intentionally accused “former management” of misleading Orbcomm with respect to future business prospects with two customers and “deleting all the emails” containing information about Skywave’s relationship with these customers.

[16] In the transcript of the Hall Town meeting, Mr. Eisenberg addresses employees about the company’s financial results and the lower bonuses employees could expect to receive that year. He explains that former management made representations about sales volumes which were “high” but they turned out to be “low”. He then states that they company started an investigation and it learned that “someone deleted all the e-mails”. It is in this context that an unidentified “speaker” asks if there was going to be a fraud investigation. Mr. Eisenberg answers that he hoped not, but that “one of the “ex-people in management […] hired their own lawyer, so, you know, maybe they’re nervous about that”.

[17] While the statement about “hiring a lawyer” was not pleaded as a defamatory statement, that statement is directly related to the allegations, contained in the Fresh as Amended Statement of Claim, that the plaintiffs made misleading representations and deleted emails.

[18] As the defendants plead at paragraph 11 of their Statement of Defence, the words complained of in a defamation action must be taken in context and in their entirety. This allows the court to determine whether other parts of the alleged defamatory speech qualify or alter the alleged defamatory meaning of the portion complained of: Foulidis v. Ford, 2012 ONSC 7189, per Macdonald J. (Ont. S.C.J.), affd 2014 ONCA 530. Context is important in this case because Mr. Eisenberg also explicitly states that he wants to be really careful in the way he portrays things, that “it probably wasn’t fraudulent”, that he doesn’t “have any data” and that he’s not “really accusing anyone”. Understanding the basis for Mr. Eisenberg’s statement that former management hired a lawyer is therefore relevant to the context in which the complained words were spoken.

[19] In addition, the defendants plead defences that can be defeated by malice, namely qualified privilege and fair comment. Whether or not Mr. Eisenberg had any basis to state that former management had hired a lawyer because they were “perhaps worried about [fraud]” goes to the issue of malice, which could be established by showing that the defendant spoke in knowing or reckless disregard for the truth: Hill v. Church of Scientology of Toronto, [1995] S.C.J. No. 64, [1995] 2 S.C.R. 1130 at para. 145, per Cory J. (S.C.C.). Because the statement about hiring a lawyer is so closely related to the allegations made, and because advising the plaintiff about the source of that statement is not an onerous undertaking to fulfil, I order that it be answered.

[20] Numbers 26 – 31: these were requests to identify specific documents that will be relied upon at trial. It is common for parties to agree to identify the documents upon which they intend to rely before trial. When Mr. Chan was discovered, counsel for Orbcomm had agreed that documents relied upon in the defamation action could be identified 60 days before trial. Counsel for Mr. Chan asks that Orbcomm identify the documents it will rely upon at trial 60 days before mediation. The basis for that request is that such early identification will increase the parties’ ability to fully addressing each other’s arguments at mediation and promote settlement.

[21] I will not make this order because these actions are nowhere close to being set down, and any trial is unlikely to occur for at least another two years. The defendants have produced over 100,000 documents and ordering to review them all in advance of mediation would be extraordinarily time consuming. It is in both parties’ interests to file fulsome mediation briefs and to present their case in the most favourable light by identifying, to the best of their ability, the evidence that supports their position. Numbers 26-31 may be answered 60 days before trial, which is what counsel for Mr. Chan has agreed to do as well.

Disclosure of instruction letter

[22] Finally, Ms. Black seeks disclosure of the instruction letter provided to Mr. Carlucci, the expert Orbcomm retained to draft an economic loss report. When Mr. Carlucci was examined, he confirmed that he was provided an instruction letter which contained “certain parameters that [he] was not able to provide any opinion on insight to, just because [he] is not a lawyer”. Ms. Black requests a copy of this instructing letter to satisfy herself that Mr. Carlucci was not able to provide an opinion on these unidentified parameters.

[23] In Moore v. Getahun, 2015 ONCA 55, the Ontario Court of Appeal confirmed that litigation privilege protects notes and records of any consultations between experts and counsel. A party seeking production of records between counsel and an expert must show reasonable grounds to suspect that counsel communicated with an expert witness in a manner likely to interfere with the expert witness’s duties of independence and objectivity.

[24] More recently, in Maxrelco Immeubles Inc. v. Jim Pattison Industries Ltd, 2017 ONSC 5836, Justice O’Bonsawin held that instruction letters are covered by litigation privilege, and should not be disclosed absent a reasonable suspicion that counsel improperly influenced the reports. Justice Sheard reached the same conclusion in Scaffidi-Argentina v. Tega Homes Developments Inc., 2017 ONSC 6530, at para 21.

[25] There is no suggestion that counsel improperly influenced the reports here. Mr. Carlucci lists at section 1.2 of his report the assumptions he made in accordance with the instructions he received from counsel. His report therefore complies with Rule 53.03(2.1)3. Orbcomm’s objection to producing the instruction letter on the ground of litigation privilege is upheld.

[26] All of the undertakings ordered above must be answered within 60 days of these reasons.

Continued discovery of Mr. Eisenberg

[27] Mr. Eisenberg was examined for discovery for a full day and answered approximately 1200 questions. Ms. Black requests leave to exceed the seven hour of examination in Rule 31.05.1. Ms. Zatzman opposes the request and argues that it is a fishing expedition.

[28] If the parties cannot come to an agreement on this issue, Ms. Black may make further representations, not to exceed 10 double spaced pages (not including attachments), addressing the following factors:

i) Which topics have not been explored and why; ii) Why these topics cannot be adequately explored through written interrogatories; iii) If these topics require oral examination, whether the examination can occur by videoconference; and iv) an estimate of the time required.

[29] These representations may be delivered after Orbcomm has answered the undertakings (both ordered and agreed upon). Ms. Zatzman will have 20 days to respond to Ms. Black’s further representations, her response will also be limited to 10 pages.

Costs

[30] This motion is allowed in part. Both parties requested costs of this motion. If the parties cannot agree, they may send a costs outline and written representations on costs, (which are not to exceed 10 double spaced pages) within 30 days of these reasons.

Master Kaufman Date: April 26, 2019