COURT FILE NO.: CV-15-541082-00CP COURT FILE NO.: CV-15-540567-00CP DATE: 2019/12/05 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

JOYCE KOWALYSHYN, ROBERT MORTON, SEB INVESTMENT MANAGEMENT AB, SEB ASSET MANAGEMENT S.A. and LORRAINE O’BRIEN Plaintiff s - and - VALEANT PHARMACEUTICALS INTERNATIONAL, INC., J. MICHAEL PEARSON, ROBERT L. ROSIELLO, HOWARD B. SCHILLER, LAIZER D. KORNWASSER, KATE STEVENSON, NORMA PROVENCIO, THEO MELAS-KYRIAZI and PRICEWATERHOUSECOOPERS LLP Defendant s

AND BETWEEN:

MISUZU SUKENAGA Plaintiff - and – VALEANT PHARMACEUTICALS INTERNATIONAL, INC., J. MICHAEL PEARSON, HOWARD B. SCHILLER, ROBERT L. ROSIELLO, and PRICEWATERHOUSECOOPERS LLP Defendants

Proceedings under the Class Proceedings Act, 1992

Jonathan Ptak, and Demi Cartwright for the Plaintiffs in the Kowalyshyn et al action and in the Sukenaga action. Sarah Armstrong and Vern Toppings for the Defendant PricewaterhouseCoopers LLP Allan Coleman for the Defendant Valeant Pharmaceuticals International, Inc., and its Directors and Officers Adam Nickerson for the Defendant J. Michael Pearson Katherine Rusk for the Defendant Howard B. Schiller

HEARD: December 5, 2019

PERELL, J.

REASONS FOR DECISION

A. Introduction

[ 1 ] There are two proposed (uncertified) class action under the Class Proceedings Act, 1992 [1] against Valeant Pharmaceuticals International Inc. (“Valeant”)

a. In one of these actions Joyce Kowalyshyn and others sue Valeant, J. Micheal Pearson, Robert L. Rosiello, Howard B. Schiller, Laizer D. Kornwasser, Kate Stevenson, Norma Provencio, Theo Melas-Kyriazi and PriceWaterhouseCoopers LLP (“PwC”). b. In the second of these actions, Misuzu Sukenaga sues Valeant, Mr. Pearson, Mr. Schiller, Mr. Rosiello, and PwC.

[ 2 ] There is a parallel class action proceeding in Québec, Catucci and Aubin v. Valeant International Pharmaceuticals Inc. et al. (Court File No. 500-06-000783-163).

[ 3 ] By Order dated November 12, 2019, the Québec Superior Court approved a settlement with respect to the claim against PwC. Pursuant to that settlement, PwC has agreed to pay $30 million.

[ 4 ] It is a term of the settlement agreement that: (a) the Ontario Superior Court approve a dismissal of the Kowalyshyn action and the Sukenaga action as against PwC with prejudice and without costs; and (b) the Statements of Claim in the Kowalyshyn action and the Sukenaga action be amended and then the actions be discontinued as against the non-settling Defendants without prejudice and without costs.

[ 5 ] Pursuant to section 29 of the Class Proceedings Act, 1992, the Plaintiffs in Kowalyshin action and the Sukenaga action move for the Orders required to implement the settlement with PwC. As appears, the main consequence of the requested Orders is that the Ontario class proceedings will be discontinued in favour of the proceedings in Québec.

[ 6 ] For the reasons that follow, I grant the requested Orders.

B. Facts

[ 7 ] From October to December 2015, three overlapping proposed class proceedings were commenced in Ontario against Valeant Pharmaceuticals International, Inc. and other Defendants; namely:

a. On October 27, 2015, Misuzu Sukenaga v. Valeant Pharmaceuticals International, Inc. et al. (Court File No. CV-15-540567-00CP) was commenced; b. On November 23, 2015, Joyce Kowalyshyn, Robert Morton, SEB Investment Management AB, and SEB Asset Management S.A. v. Valeant Pharmaceuticals International. Inc. et al. (Court File No. CV-15-541082-00CP) was commenced; and c. On December 30, 2015 Lorraine O'Brien v, Valeant Pharmaceuticals International Inc. et al. (Court File No. CV-15-543678-00CP) was commenced.

[ 8 ] Meanwhile in Québec, even faster off the mark, on October 26, 2015, the action styled Catucci and Aubin v. Valeant International Pharmaceuticals Inc. et al. was commenced in the Québec Superior Court.

[ 9 ] In Ontario, there was a carriage motion, and on June 10, 2016, carriage was awarded to Class Counsel in the Kowalyshyn Action. The court was advised that the Sukenega action would be discontinued, although that is only occurring now.

[ 10 ] Following the order granting carriage to the plaintiff in the Kowalyshyn Action, counsel in the Kowalyshyn, O'Brien and Sukenega Actions entered into a consortium to work together to advance the Catucci Action in Québec.

[ 11 ] By Order dated September 15, 2016, the Kowalyshyn and O'Brien Actions were consolidated and temporarily stayed pending further order of this Court or the determination of the motion for authorization as a class action and for authorization under s. 225.4 of the Québec Securities Act in the Catucci Action.

[ 12 ] On August 28, 2017, the Catucci Action was authorized as a class action and authorized under s. 225.4 of the Québec Securities Act by order of the Québec Superior Court dated August 29, 2017.

[ 13 ] On April 6, 2018, the Québec Superior Court approved the contents and the manner of dissemination of the Authorization Notice in the Catucci Action, which permitted Class Members to opt out of the Catucci Action. The opt out deadline was June 19, 2018. Since that time, the parties in the Catucci Action have engaged in documentary discoveries and have set a timetable for oral discoveries and other steps leading to trial. To date, the discoveries have included examinations for discovery of the Plaintiffs, as well as extensive documentary production by the Defendants. The Defendants have produced approximately one million documents. Examinations for discovery of the Defendants are scheduled to begin in January 2020.

[ 14 ] On July 25, 2019, the Plaintiffs signed a settlement agreement with PwC. As noted above, the PwC settlement provides, among other things, for a payment by PwC of $30 million in satisfaction of all the claims asserted against it in the Catucci Action and the other class proceedings brought against it across Canada. The class definition was amended in the Catucci Action for the purposes of the settlement with PwC.

[ 15 ] Also, as noted above, one of the terms of the PwC settlement requires dismissals of the Actions with prejudice as against PwC and for the Plaintiffs to seek orders amending the Statements of Claim and discontinuing the Actions without prejudice as against the other defendants, all without costs.

[ 16 ] Wide notice of the hearing to approve the PwC settlement was provided, including notice by:

a. By Class Counsel posting the long form notice on their websites and by delivering a copy of the notice electronically to all individuals and entities who have contacted Class Counsel about this action and all individuals and entities who request it; b. By Class Counsel placing the short form notice online in abbreviated form with a URL leading to more information on the websites listed in Schedule “A” to the Notice of Dissemination of Notice for a period of 60 days; c. By publishing the short form notice, modified as necessary, once through Canada NewsWire in English and French; d. By publishing the short form notice once in French in a weekday tablet (online) edition of La Presse+; e. By publishing the notice on the Québec Class Action Registry; f. By publishing the short form notice once in English in the national print edition of The Globe and Mail, Report on Business section and in English in the national print edition of The National Post, Financial Post section; and g. By requiring the Administrator to send the Long-Form Notice to certain Brokers and requesting them to send the Notice to all persons or entities for whose benefit the Broker purchased or otherwise acquired Valeant Securities outside the United States during the period of February 27, 2012 to February 27, 2013 and October 27, 2015 to November 12, 2015.

[ 17 ] In summary, the Notice of the PwC Settlement advised Class Members that:

a. The plaintiffs will be bring motions for leave to dismiss the Ontario actions as against PwC with prejudice and without costs and for leave to discontinue the Ontario actions as against the non-settling defendants, without costs; b. Since the Ontario Actions are different in some ways from the Catucci Action by naming certain additional defendants and by having a class period that is longer in certain respects; the rights of putative Class Members in the Ontario Actions could be impacted because limitation periods would no longer be suspended in respect of the wider class period and the additional defendant, and, therefore, putative Class Members may wish to take steps to protect their rights.

[ 18 ] In the Québec settlement approval motion, no Class Members objected to the dismissal of the Ontario actions against PwC or the discontinuances as against the other Defendants.

[ 19 ] By Order dated November 12, 2019, Justice Kalichman of the Québec Superior Court approved the settlement agreement with PwC.

C. Discussion and Analysis

[ 20 ] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, or settlement of a class action. Section 29 states:

Discontinuance, abandonment and settlement

29. (1) A proceeding commenced under this Act and a proceeding certified as a class proceeding under this Act may be discontinued or abandoned only with the approval of the court, on such terms as the court considers appropriate.

Settlement without court approval not binding

(2) A settlement of a class proceeding is not binding unless approved by the court.

Effect of settlement

(3) A settlement of a class proceeding that is approved by the court binds all class members.

Notice: dismissal, discontinuance, abandonment or settlement

(4) In dismissing a proceeding for delay or in approving a discontinuance, abandonment or settlement, the court shall consider whether notice should be given under section 19 and whether any notice should include,

(a) an account of the conduct of the proceeding; (b) a statement of the result of the proceeding; and (c) a description of any plan for distributing settlement funds.

[ 21 ] In the immediate case, the Plaintiffs in the Ontario actions request a discontinuance and a dismissal with prejudice, which is akin to an abandonment. Before giving approval of discontinuance or an abandonment, the court must be satisfied that the interests of the putative class members will not be prejudiced. [2]

[ 22 ] A motion for discontinuance or abandonment should be carefully scrutinized, and the court should consider, among other things: whether the proceeding was commenced for an improper purpose, whether, if necessary, there is a viable replacement party so that putative class members are not prejudiced, or whether the defendant will be prejudiced. [3]

[ 23 ] The policy rationales for requiring court approval for the discontinuance or abandonment of a proposed class action include: (1) deterring plaintiffs and class counsel from abusing the class action procedure by bringing a meritless class proceeding (a so-called strike suit) to extract a payment as the price of discontinuing the class proceeding; and (2) providing an opportunity to ameliorate any adverse effect of the discontinuance or abandonment on class members who might be prejudiced by the discontinuance.

[ 24 ] In the immediate case, having regard to the notices that have already been given in the Québec proceedings, the putative Class Members in Ontario will not be prejudiced. They may participate in the PwC settlement, and, in addition, viewed nationally, a multiplicity of proceedings will have been avoided because the Québec Superior Court is admirably managing a national class action that is active and well advanced as compared to the snoozing Ontario proceedings.

[ 25 ] I say that the putative Class Members will not be prejudiced because:

a. The putative Class Members in the Ontario actions are Class Members in the Québec action and are entitled to submit claims for compensation in the PwC settlement; b. With respect to future claims against the non-settling Defendants, The few putative Class Members who are not class members of the Québec action (because of the modest difference in class period) received broad notice of the discontinuances and dismissals and how the discontinuances would affect their rights and they will receive additional notice if these orders are granted by Class Counsel contacting all individuals and entities who have contacted Class Counsel and also posting a notice on Class Counsel's websites.

[ 26 ] In the circumstances of the immediate case, I am satisfied that it is appropriate to make the orders requested.

D. Conclusion

[ 27 ] Order accordingly.

Perell, J.

Released: December 5, 2019

[1] S.O. 1992, c.6. [2] Gradja v. Barrick Gold Corp., 2019 ONSC 4869; Cappelli v. Nobilis Health Corp. 2019 ONSC 4521; Castrillo v. Workplace Safety and Insurance Board, 2018 ONSC 4421; Frank v. Farlie, Turner & Co., LLC, 2011 ONSC 7137; Durling v. Sunrise Propane Energy Group Inc., [2009] O.J. No. 5969 at paras. 14-29 (S.C.J.); Sollen v. Pfizer, 2008 ONCA 803, [2008] O.J. No. 4787 (C.A.), aff’g, [2008] O.J. No. 866 (S.C.J.); Coleman v. Bayer Inc., [2004] O.J. No. 1974 at paras. 30-39 (S.C.J.) and [2004] O.J. No. 2775 (S.C.J.). [3] Logan v. Canada (Minister of Health), [2003] O.J. No. 418 (S.C.J.), aff’d (2004), 71 O.R. (3d) 451 (C.A.).