COURT FILE NO.: CV-20-00633971-00CP
DATE: 20210408
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CHANEL LAM
Plaintiff
- and -
CANADA GOOSE HOLDINGS INC.
Defendant
Albert Pelletier for the Plaintiff
Proceeding under the Class Proceedings Act, 1992
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
[1] This is a motion for Orders:
a. to discontinue the action without costs, pursuant to section 29 (1) of the Class Proceedings Act, 1992;[^1]
b. to remove Kim Spencer McPhee Barristers P.C. (f/k/a Morganti & Co., P.C.) as counsel of record for the Plaintiff in this putative class proceeding, without costs, pursuant to Rule 15.04 of the Rules of Civil Procedure.
[2] On January 8, 2020, Chanel Lam commenced a proposed class action against Canada Goose Holdings Inc. for alleged misrepresentations about how it sourced the down and fur used in its clothing products.
[3] Canada Goose is a responsible issuer, as defined by the Ontario Securities Act,[^2] with its head office in Toronto. Ms. Lam alleges that there were omissions of material facts in Canada Goose’s financial statements between June 19, 2018 and August 1, 2019 with respect to an investigation by the Federal Trade Commission about how it sourced its raw materials and about how it marketed its clothing products.
[4] Ms. Lam advanced a common law negligence claim and also statutory claims pursuant to Parts XXIII and XXIII.1 of the Ontario Securities Act.
[5] Ms. Lam proposed two classes of claimants; namely:
a. Primary Market Subclass: all persons who acquired Canada Goose subordinate voting shares pursuant to any of the Prospectuses and who are Canadian residents or acquired such shares in Canada; and
b. Secondary Market Subclass: all persons who, during the Class Period, acquired Canada Goose subordinate voting shares:
i. on the TSX or any other secondary market trading venue in Canada; or
ii. on any secondary market trading venue outside of Canada but are Canadian residents;
and who held some or all of those subordinate voting shares as of August 1, 2019 or later.
[6] Excluded Persons are defined in the Claim as:
(i) Canada Goose and its subsidiaries, affiliates, officers, directors, senior employees, legal representatives, heirs, predecessors, successors and assigns, including Bain Capital LP;
(ii) any senior level employee of any insurance company providing directors and officers’ insurance to defend this proceeding; and
(iii) any licensee employed by the Defendant’s law firms defending this proceeding.
[7] Ms. Lam’s Statement of Claim was amended on February 25, 2020.
[8] Pursuant to a contingent fee retainer agreement dated September 27, 2019, Ms. Lam retained Andrew Morganti then of the firm Morganti & Co., P.C. and now of the firm Kim Spencer McPhee Barristers P.C. to advance the claim against Canada Goose.
[9] Ms. Lam worked in the pet supply industry, and she retained Mr. Morganti and his firm because she was interested in the ethical sourcing of supplies.
[10] After the action was commenced and the Statement of Claim amended, Morganti & Co., P.C. communicated with Ms. Lam to keep her apprised of the Canadian and parallel US Proceeding in the US Federal District Court for the Southern District of New York.
[11] However, during the second half of 2020, Morganti & Co., P.C.’s and then Kim Spencer McPhee Barristers P.C.’s attempts to contact Ms. Lam were unsuccessful. She was no longer providing the firm with instructions.
[12] Morganti & Co., P.C. had invested approximately $5,000, in disbursements and allocated over $100,000 worth of legal time on the file, and Kim Spencer McPhee Barristers P.C. estimates that an additional $50,000 more of billable time would be required to finance a standard Part XXIII.1 claim up to the s. 138.8 leave motion.
[13] Mr. Morganti has attempted to recruit a replacement representative plaintiff, but his efforts have been unsuccessful.
[14] In these circumstances, Kim Spencer McPhee Barristers P.C. wishes leave to discontinue the class action and also leave to get off the record as Ms. Lam’s lawyer of record.
[15] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, dismissal or settlement of a class action. Section 29 states:
Discontinuance, abandonment, and settlement
- (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.
[16] 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]
[17] A class proceeding requires both an actively interested and engaged representative plaintiff and also an engaged Class Counsel prepared to take on the risks of class proceedings litigation. The immediate class action was the initiative of Ms. Lam, and she is no longer interested in providing instruction to Class Counsel. The putative class members have not shown any interest in assuming the role of plaintiff. Class Counsel is not prepared and cannot go forward without an engaged representative plaintiff.
[18] In the circumstances of the immediate case it is appropriate to grant leave for the discontinuance of the class action and next to remove Kim Spencer McPhee Barristers P.C. as lawyers of record of Ms. Lam’s remaining individual action.
[19] I have reviewed the proposed notice to the class members of the discontinuance of the action, and it is adequate to preserve the legal rights of the Class Members pending the recommencement of the running of the limitation period.
[20] The defendant consents or does not oppose the relief requested.
[21] In these circumstances, it is appropriate to grant the leave requested with the discontinuance taking effect on July 1, 2021.
[22] Order to go as requested. I have signed the Order, which conforms to the form of Order required by Rule 15.04 (5).
Perell, J.
Released: April 8, 2021
COURT FILE NO.: CV-20-00633971-00CP
DATE: 20210408
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CHANEL LAM
Plaintiff
- and -
CANADA GOOSE HOLDINGS INC.
Defendant
REASONS FOR DECISION
PERELL J.
Released: April 8, 2021
[^1]: S.O. 1992, c. 6 [^2]: R.S.O. 1990, c. S.5. [^3]: Logan v. Canada (Minister of Health), [2003] O.J. No. 418 (S.C.J.), aff’d (2004), 2004 CanLII 184 (ON CA), 71 O.R. (3d) 451 (C.A.).