COURT FILE NO.: CV-15-536174
DATE: 2019/01/24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOSEPH S. MANCINELLI, CARMEN PRINCIPATO, DOUGLAS SERROUL, LUIGI CARROZZI, MANUEL BASTOS and JACK OLIVEIRA in their capacity as THE TRUSTEES OF THE LABOURERS’ PENSION FUND OF CENTRAL AND EASTERN CANADA, and CHRISTOPHER STAINES
Plaintiffs
– and –
ROYAL BANK OF CANADA, RBC CAPITAL MARKETS LLC, BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., BANK OF AMERICA CANADA, BANK OF AMERICA NATIONAL ASSOCIATION, THE BANK OF TOKYO MITSUBISHI UFJ LTD., BANK OF TOKYO-MITSUBISHI UFJ (CANADA), BARCLAYS BANK PLC, BARCLAYS CAPITAL INC., BARCLAYS CAPITAL CANADA INC., BNP PARIBAS GROUP, BNP PARIBAS NORTH AMERICA INC., BNP PARIBAS (CANADA), BNP PARIBAS, CITIGROUP, INC., CITIBANK, N.A., CITIBANK CANADA, CITIGROUP GLOBAL MARKETS CANADA INC., CREDIT SUISSE GROUP AG, CREDIT SUISSE SECURITIES (USA) LLC, CREDIT SUISSE AG, CREDIT SUISSE SECURITIES (CANADA), INC., DEUTSCHE BANK AG, THE GOLDMAN SACHS GROUP, INC., GOLDMAN, SACHS & CO., GOLDMAN SACHS CANADA INC., HSBC HOLDINGS PLC, HSBC BANK PLC, HSBC NORTH AMERICA HOLDINGS INC., HSBC BANK USA, N.A., HSBC BANK CANADA, JPMORGAN CHASE & CO., J.P.MORGAN BANK CANADA, J.P.MORGAN CANADA, JPMORGAN CHASE BANK NATIONAL ASSOCIATION, MORGAN STANLEY, MORGAN STANLEY CANADA LIMITED, ROYAL BANK OF SCOTLAND GROUP PLC, RBS SECURITIES, INC., ROYAL BANK OF SCOTLAND N.V., ROYAL BANK OF SCOTLAND PLC, SOCIÉTÉ GÉNÉRALE S.A., SOCIÉTÉ GÉNÉRALE (CANADA), SOCIÉTÉ GÉNÉRALE, STANDARD CHARTERED PLC, UBS AG, UBS SECURITIES LLC and UBS BANK (CANADA)
Defendants
Louis Sokolov for the Plaintiffs
Matthew Milne-Smith for the Defendants Morgan Stanley Canada Limited and Morgan Stanley Canada Limited
Robert Carson for the Royal Bank of Canada and RBC Capital Markets LLC
Caroline Humphrey for the Defendants Credit Suisse Group AG, Credit Suisse Securities (USA) LLC, Credit Suisse AG and Credit Suisse Securities (Canada) Inc.
Samantha Gordon for the Defendants Royal Bank of Scotland Group PLC, RBS Securities Inc., Royal Bank of Scotland N.V. and Royal Bank of Scotland PLC
Pierre N. Gemson for the Defendant Deutsche Bank AG
Ben Kates for the Defendants Toronto Dominion Bank, TD Bank, N.A., TD Group Holdings, LLC, TD Bank USA, N.A. and TD Securities Limited
Proceeding under the Class Proceedings Act, 1992
HEARD: January 24, 2019
PERELL, J.
REASONS FOR DECISION
[1] The Plaintiffs, Joseph S. Mancinelli, Carmen Principato, Douglas Serroul, Luigi Carrozzi, Manuel Bastos and Jack Oliveira, in their capacity as The Trustees of the Labourers’ Pension Fund of Central and Eastern Canada, and Christopher Staines, sue 18 groups of financial institutions.
[2] Pursuant to the Class Proceedings Act, 1992,[^1] the Plaintiffs bring a motion for an order approving a settlement reached with the Defendants Morgan Stanley Canada Limited and Morgan Stanley Canada Limited (“Morgan Stanley”).
[3] The Plaintiffs sue: (1) Royal Bank of Canada, RBC Capital Markets LLC; (2) Bank of America Corporation, Bank of America, N.A., Bank of America Canada, Bank of America National Association; (3) The Bank of Tokyo Mitsubishi UFJ Ltd., Bank of Tokyo-Mitsubishi UFJ (Canada); (4) Barclays Bank PLC, Barclays Capital Inc., Barclays Capital Canada Inc.; (5) BNP Paribas, BNP Paribas (Canada), BNP Paribas Group, BNP Paribas North America Inc.; (6) Citibank, N.A., Citibank Canada, Citigroup Global Markets Canada Inc., Citigroup, Inc.; (7) Credit Suisse Group AG, Credit Suisse Securities (USA) LLC, Credit Suisse AG, Credit Suisse Securities (Canada), Inc.; (8) Deutsche Bank AG; (9) The Goldman Sachs Group, Inc., Goldman, Sachs & Co., Goldman Sachs Canada Inc.; (10) HSBC Holdings PLC, HSBC Bank PLC, HSBC North America Holdings Inc., HSBC Bank USA, N.A., HSBC Bank Canada; (11) J.P. Morgan Canada, JPMorgan Chase Bank National Association, JPMorgan Chase & Co., J.P. Morgan Bank Canada; (12) Morgan Stanley, Morgan Stanley Canada Limited; (13) Royal Bank of Scotland Group PLC, RBS Securities, Inc., Royal Bank of Scotland N.V., Royal Bank of Scotland PLC; (14) Société Générale S.A., Société Générale (Canada), Société Générale; (15) Standard Chartered PLC; (16) UBS AG, UBS Securities LLC and UBS Bank (Canada); (17) Bank of Montreal, BMO Financial Corp., BMO Harris Bank N.A., BMO Capital Markets Limited; and (18) Toronto Dominion Bank, TD Bank, N.A., TD Group Holdings, LLC, TD Bank USA, N.A. and TD Securities Limited.
[4] In their proposed class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6, the Plaintiffs allege that the Defendants conspired with each other to fix prices in the futures exchange market (“FX Market”). It is alleged that through the use of multiple chat rooms with names such as “The Cartel,” “The Bandits’ Club,” and “The Mafia,” the Defendants communicated directly with each other to coordinate their: (i) fixing of spot prices; (ii) control and manipulation of FX benchmark rates; and (iii) exchange of key confidential customer information to trigger client stop loss orders and limit orders.
[5] The Plaintiffs allege that the Defendants’ conspiracy impacted all manners of FX instruments, including those trading both over-the-counter and on exchanges.
[6] The Plaintiffs, through Mr. Staines, commenced an action by way of Statement of Claim, which was issued on September 11, 2015. The Statement of Claim pleads several causes of action against the Defendants, including a statutory right of action for contraventions of Part VI of the Competition Act[^2]; namely civil conspiracy, and unjust enrichment.
[7] The Class Counsel team is made up of lawyers from Sotos LLP, Siskinds LLP, Koskie Minsky LLP and Camp Fiorante Matthews Mogerman LLP.
[8] Similar litigation has been commenced in Québec. Class Counsel in the Ontario action is working cooperatively with the law firm of Siskinds Desmeules s.e.n.c.r.l (“Siskinds Québec”), counsel to the plaintiff in the Québec action (Court File No. 200-06-000189-152), to prosecute the Québec action.
[9] Class Counsel and Siskinds Québec are working together and have agreed to pursue the litigation on a national basis with carriage in Ontario.
[10] The hearing of the motion for certification is scheduled for June 10-15, 2019.
[11] The Plaintiffs have reached court approved settlements with twelve groups of Defendants: (1) UBS AG, UBS Securities LLC and UBS Bank (Canada); (2) BNP Paribas Group, BNP Paribas North America Inc., BNP Paribas (Canada), and BNP Paribas; (3) Bank of America Corporation, Bank of America, N.A., Bank of America Canada and Bank of America National Association; (4) The Goldman Sachs Group, Inc., Goldman, Sachs & Co., and Goldman Sachs Canada Inc.; (5) JPMorgan Chase & Co., J.P. Morgan Bank Canada, J.P. Morgan Canada, and JPMorgan Chase Bank National Association; (6) Citigroup, Inc., Citibank, N.A., Citibank Canada, and Citigroup Global Markets Canada Inc; (7) Barclays Bank PLC, Barclays Capital Inc., and Barclays Capital Canada Inc. (“Barclays”); (8) HSBC Holdings PLC, HSBC Bank PLC, HSBC North America Holdings Inc., HSBC Bank USA, N.A., and HSBC Bank Canada (“HSBC”); (9) Royal Bank of Scotland Group PLC, RBS Securities, Inc., Royal Bank of Scotland N.V., and Royal Bank of Scotland PLC (“RBS”); (10) Standard Chartered PLC; (11) The Bank of Tokyo Mitsubishi UFJ Ltd. and Bank of Tokyo-Mitsubishi UFJ (Canada) (“Bank of Tokyo”); and (12) Société Générale S.A., Société Générale (Canada) and Société Générale (Société Générale).[^3]
[12] The chart below describes the settlements:
| Defendants | Settlement Amount | Settlement Agreement Date | Settlement Approval Date |
|---|---|---|---|
| UBS AG, UBS Securities LLC and UBS Bank (Canada) | $4,950,000 | May 20, 2016 | November 9, 2016 |
| BNP Paribas Group, BNP Paribas North America Inc., BNP Paribas (Canada), and BNP Paribas | $4,500,000 | July 27, 2016 | November 9, 2016 |
| Bank of America Corporation, Bank of America, N.A., Bank of America Canada, and Bank of America National Association | $6,500,000 | July 29, 2016 | November 9, 2016 |
| The Goldman Sachs Group, Inc., Goldman, Sachs & Co., and Goldman Sachs Canada Inc. | $6,750,000 | October 14, 2016 | April 13, 2017 |
| JPMorgan Chase & Co., J.P. Morgan Bank Canada, J.P. Morgan Canada, and JPMorgan Chase Bank National Association | $11,500,000 | November 28, 2016 | April 13, 2017 |
| Citigroup Inc., Citibank, N.A., Citibank Canada, and Citigroup Global Markets Canada Inc. | $21,000,000 | November 29, 2016 | April 13, 2017 |
| Barclays Bank PLC, Barclays Capital Inc., Barclays Capital Canada Inc. | $19,677,205.88 | April 13, 2017 | September 18, 2017 |
| HSBC Holdings PLC, HSBC Bank PLC, HSBC North America Holdings Inc., HSBC Bank USA, N.A., HSBC Bank Canada | $15,500,000 | May 24, 2017 | September 18, 2017 |
| Royal Bank of Scotland Group PLC, RBS Securities, Inc., Royal Bank of Scotland N.V., Royal Bank of Scotland PLC | $13,220,000 | May 29, 2017 | September 18, 2017 |
| Standard Chartered PLC | $900,000 | May 29, 2017 | September 18, 2017 |
| The Bank of Tokyo Mitsubishi UFJ Ltd., Bank of Tokyo-Mitsubishi UFJ (Canada) | $450,000 | June 30, 2017 | September 18, 2017 |
| Société Générale S.A., Société Générale (Canada), Société Générale | $1,800,000 | July 4, 2017 | September 18, 2017 |
[13] The Plaintiffs have now reached a settlement with Morgan Stanley. The action against Morgan Stanley has been certified as a class action for settlement purposes.[^4]
[14] The Settlement Agreement is conditional upon approval of the Ontario and Québec courts. A motion for settlement approval in the Québec Proceeding is scheduled for February 8, 2019.
[15] The settlement requires Morgan Stanley to pay USD$2.3 million for the benefit of the settlement class and to provide cooperation in the prosecution of the case against the remaining Defendants. The settlement also provides for a dismissal of the action against Morgan Stanley Canada Limited.
[16] In order to assist the court in assessing the Plaintiffs’ calculation of damages, the Plaintiffs retained Professor Ilias Tsiakas, Finance Professor at the University of Guelph and an expert in foreign exchange markets, to provide an estimate on the range of potential damages suffered by members of the putative class.
[17] Professor Tsiakas has estimated a range of total damages between $155 million to $619.9 million during 2008 and 2013 (i.e., the period that was the subject of regulatory findings) and between $270 million to $1,080 million for the entire class period. Morgan Stanley holds 0.51% of the Canadian FX market (liability range between $1.4 million to $5.5 million) and 2.88% of the global FX market.
[18] The parties to the settlement seek an order barring any claim for contribution or indemnity against Morgan Stanley. The proposed bar order provides that if the Court ultimately determines that a right of contribution and indemnity exists between co-conspirators, the Plaintiffs and settlement classes shall restrict their joint and several claims against the non-Settling Defendant. Should the Court determine that no such right exists, the settlement Class Members will be entitled to advance the entirety of their claims subject only to a reduction for the value of the settlement payments received.
[19] The Morgan Stanley settlement is in line with the previously approved settlements in this class proceeding.
[20] Class Counsel recommend the settlements as fair, reasonable, and in the best interests of the class.
[21] The Representative Plaintiffs recommend the settlements.
[22] Notice of the proposed settlement was given in accordance with the order of this Court. There are no objectors to the settlement.
[23] Section 29(2) of the Class Proceedings Act, 1992, provides that a settlement of a class proceeding is not binding unless approved by the court. To approve a settlement of a class proceeding, the court must find that, in all the circumstances, the settlement is fair, reasonable, and in the best interests of the class.[^5]
[24] In determining whether a settlement is reasonable and in the best interests of the class, the following factors may be considered: (a) the likelihood of recovery or likelihood of success; (b) the amount and nature of discovery, evidence or investigation; (c) the proposed settlement terms and conditions; (d) the recommendation and experience of counsel; (e) the future expense and likely duration of the litigation; (f) the number of objectors and nature of objections; (g) the presence of good faith, arm’s-length bargaining and the absence of collusion; (h) the information conveying to the court the dynamics of, and the positions taken by, the parties during the negotiations; and (i) the nature of communications by counsel and the representative plaintiff with class members during the litigation.[^6]
[25] In determining whether to approve a settlement, the court, without making findings of fact on the merits of the litigation, examines the fairness and reasonableness of the proposed settlement and whether it is in the best interests of the class as a whole having regard to the claims and defences in the litigation and any objections raised to the settlement.[^7] An objective and rational assessment of the pros and cons of the settlement is required.[^8]
[26] The case law establishes that a settlement must fall within a zone of reasonableness. Reasonableness allows for a range of possible resolutions and is an objective standard that allows for variation depending upon the subject-matter of the litigation and the nature of the damages for which the settlement is to provide compensation.[^9] A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally.[^10]
[27] I regard the settlement as fair, reasonable, and in the best interests of the Class Members based on the information available at this juncture of the proceedings. Having reviewed the motion record and having regard to the various factors used to determine whether to approve a settlement, I am satisfied that the settlement should be approved.
[28] Class Counsel proposes that the settlement funds (less a 10% holdback which is to be maintained in trust by Class Counsel for future fees and disbursements and to fund the ongoing litigation, including any adverse costs awards made in this case) be subject to the same Distribution Protocol that has been previously approved by this Court. I have already determined that the Protocol was fair, reasonable and in the best interests of the class.[^11] The previously approved Distribution Protocol shall apply to this settlement.
[29] Order accordingly.
Perell, J.
Released: January 24, 2019
COURT FILE NO.: CV-15-536174
DATE: 2019/01/24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOSEPH S. MANCINELLI, CARMEN PRINCIPATO, DOUGLAS SERROUL, LUIGI CARROZZI, MANUEL BASTOS and JACK OLIVEIRA in their capacity as THE TRUSTEES OF THE LABOURERS’ PENSION FUND OF CENTRAL AND EASTERN CANADA, and CHRISTOPHER STAINES
Plaintiffs
– and –
ROYAL BANK OF CANADA, RBC CAPITAL MARKETS LLC, BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., BANK OF AMERICA CANADA, BANK OF AMERICA NATIONAL ASSOCIATION, THE BANK OF TOKYO MITSUBISHI UFJ LTD., BANK OF TOKYO-MITSUBISHI UFJ (CANADA), BARCLAYS BANK PLC, BARCLAYS CAPITAL INC., BARCLAYS CAPITAL CANADA INC., BNP PARIBAS GROUP, BNP PARIBAS NORTH AMERICA INC., BNP PARIBAS (CANADA), BNP PARIBAS, CITIGROUP, INC., CITIBANK, N.A., CITIBANK CANADA, CITIGROUP GLOBAL MARKETS CANADA INC., CREDIT SUISSE GROUP AG, CREDIT SUISSE SECURITIES (USA) LLC, CREDIT SUISSE AG, CREDIT SUISSE SECURITIES (CANADA), INC., DEUTSCHE BANK AG, THE GOLDMAN SACHS GROUP, INC., GOLDMAN, SACHS & CO., GOLDMAN SACHS CANADA INC., HSBC HOLDINGS PLC, HSBC BANK PLC, HSBC NORTH AMERICA HOLDINGS INC., HSBC BANK USA, N.A., HSBC BANK CANADA, JPMORGAN CHASE & CO., J.P.MORGAN BANK CANADA, J.P.MORGAN CANADA, JPMORGAN CHASE BANK NATIONAL ASSOCIATION, MORGAN STANLEY, MORGAN STANLEY CANADA LIMITED, ROYAL BANK OF SCOTLAND GROUP PLC, RBS SECURITIES, INC., ROYAL BANK OF SCOTLAND N.V., ROYAL BANK OF SCOTLAND PLC, SOCIÉTÉ GÉNÉRALE S.A., SOCIÉTÉ GÉNÉRALE (CANADA), SOCIÉTÉ GÉNÉRALE, STANDARD CHARTERED PLC, UBS AG, UBS SECURITIES LLC and UBS BANK (CANADA)
Defendants
REASONS FOR DECISION
PERELL J.
Released: January 24, 2019
[^1]: S.O. 1992, c. 6.
[^2]: R.S.C. 1985, c. C-34.
[^3]: See: Staines v. Royal Bank of Canada, 2016 ONSC 5270; Mancinelli v. Royal Bank of Canada, 2016 ONSC 6953; Mancinelli v. Royal Bank of Canada, 2016 ONSC 7857; Mancinelli v. Royal Bank of Canada, 2017 ONSC 2324; Mancinelli v. Royal Bank of Canada, 2017 ONSC 3910; Mancinelli v. Royal Bank of Canada, 2017 ONSC 4219; Mancinelli v. Royal Bank of Canada, 2017 ONSC 5503.
[^4]: Mancinelli v. Royal Bank of Canada, 2018 ONSC 6129.
[^5]: Kidd v. Canada Life Assurance Company, 2013 ONSC 1868; Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 at para. 43 (S.C.J.); Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 at para. 57 (S.C.J.).
[^6]: Kidd v. Canada Life Assurance Company, 2013 ONSC 1868; Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 at para. 45 (S.C.J.); Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 at para. 59 (S.C.J.); Corless v. KPMG LLP, [2008] O.J. No. 3092 at para. 38 (S.C.J.).
[^7]: Baxter v. Canada (Attorney General) (2006), 2006 CanLII 41673 (ON SC), 83 O.R. (3d) 481 at para. 10 (S.C.J.).
[^8]: Al-Harazi v. Quizno’s Canada Restaurant Corp. (2007), 49 C.P.C. (6th) 191 at para. 23 (Ont. S.C.J.).
[^9]: Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 CanLII 14855 (ON SC), 40 O.R. (3d) 429 (Gen. Div.); Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 at para. 70 (S.C.J.).
[^10]: McCarthy v. Canadian Red Cross Society (2007), 158 ACWS (3d) 12 at para. 17 (Ont. S.C.J.); Fraser v. Falconbridge Ltd., [2002] O.J. No. 2383 at para. 13 (S.C.J.).
[^11]: Mancinelli v. Royal Bank of Canada, 2018 ONSC 4192, para. 52, Plaintiffs' Book of Authorities, Tab 5.