Longair v. Akumin Inc. et al, 2022 ONSC 2571

Court File and Parties

Court File No.: CV-21-674081-00CP Date: 2022-04-27 Ontario Superior Court of Justice

BETWEEN:

Victor Kennedy, Plaintiff – and – Akumin Inc., Riadh Zine, Mohammad Saleem and Thomas Davies, Defendants Proceeding under the Class Proceedings Act, 1992

AND BETWEEN:

Terry Longair, Plaintiff – and – Akumin Inc., Riad Zine-El-Abidine, Mohammad Saleem, Thomas Davies, Stan Dunford, Murray Lee, James Webb and Ernst & Young LLP, Defendants Proceeding under the Class Proceedings Act, 2002

Counsel: Peter Jervis, Joel Rochon, and Eli Karp, for Victor Kennedy Eliot N. Kolers, for Akumin Inc., Riadh Zine, Mohammad Saleem and Thomas Davies (in Kennedy action) Paul Guy, Dimitri Lascaris, Serge Kalloghian, Garth Myers and Ashley Seely, for Terry Longair Eliot N. Kolers, for Akumin Inc., Riad Zine-El-Abidine, Mohammad Saleem, Thomas Davies, Stan Dunford, Murray Lee, and James Webb (in Longair action) John Fabello, for Ernst & Young LLP (in Longair action)

Heard: March 31, 2022

Before: J.T. Akbarali J.

Overview

1This carriage motion between two rival proposed class actions is brought pursuant to the amended Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”). The actions are Kennedy v. Akumin Inc., et al. (the “Kennedy action”) and Longair v. Akumin Inc., et al. (the “Longair action”).

2For the reasons that follow, I conclude that the Longair action will best advance the goals of access to justice and behaviour modification and overall will advance the claims of the class members in an efficient and cost-effective manner. Accordingly, I grant the Longair action carriage, and I stay the Kennedy action.

Legal Principles Applicable to Carriage Motions

3The CPA was recently amended to add s. 13.1, a provision that addresses carriage motions. Section 13.1 provides:

Carriage motions

13.1 (1) In this section,

“carriage motion” means a motion for an order under this section.

Stay of other proceedings

(2) Where two or more proceedings under this Act involve the same or similar subject matter and some or all of the same class members, the court may, on the motion of a representative plaintiff in one of the proceedings, order that one or more of the proceedings be stayed.

Timing

(3) A carriage motion shall be made no later than 60 days after the day on which the first of the proceedings was commenced, and shall be heard as soon as is practicable.

Considerations

(4) On a carriage motion, the court shall determine which proceeding would best advance the claims of the class members in an efficient and cost-effective manner, and shall, for the purpose, consider,

(a) each representative plaintiff’s theory of its case, including the amount of work performed to date to develop and support the theory;

(b) the relative likelihood of success in each proceeding, both on the motion for certification and as a class proceeding;

(c) the expertise and experience of, and results previously achieved by, each solicitor in class proceedings litigation or in the substantive areas of law at issue; and

(d) the funding of each proceeding, including the resources of the solicitor and any applicable third-party funding agreements as defined in section 33.1, and the sufficiency of such funding in the circumstances. .

Decision final

(5) The decision of the court on a carriage motion is final and not subject to appeal.

4Although s. 13.1 has received very little treatment thus far, I have the benefit of Perell J.’s reasons in Blackford-Hall v. Simply Group, 2021 ONSC 8502 / Bonnick v. Crown Crest Capital Management Corp., 2021 ONSC 8503 (“Simply Group”).

5While concluding that the many factors identified at the common law for courts to consider on carriage motions remain relevant to the four statutory factors, Perell J. considered s. 13.1 to be a significant and substantial change in the law, in particular because of its focus on efficiency and the chances of success of the theory of the case at certification and at the common issues trial. He wrote, “a focus on ‘productivity,’ dare I say it, heralds a ‘culture change’ of the introduction of proportionality as a factor on a carriage motion in the evaluation of rival proposed class actions”: Simply Group, at paras. 7-8.

6Perell J. concluded that s. 13.1(4) directs the court to examine the access to justice goals of the class members measured against efficiency (i.e., the amount of resources dedicated to the project), productivity (the results over time), and proportionality: Simply Group, at para. 9.

7I agree with Perell J. that s. 13.1(4) directs the court to consider “what is precisely necessary for access to justice to the class members and their particular circumstances and to discourage case theories or the parts of case theories that may be a waste of resources or that may be a drag on the proceeding or that are not worth the trouble or effort needed to achieve access to justice”: Simply Group, at para. 10.

8I agree that s. 13.1 demands a case-by-case analysis of efficiency, productivity, and proportionality and the needs of Class Members, as distinct from the wants of class counsel: Simply Group, at para. 12.

9Against this backdrop, I turn to analyze the two proposed class actions.

Background to the Actions

10In the second half of 2021, the corporate defendant, Akumin Inc., announced that certain of its previously issued financial statements contained material errors requiring restatements. The timeline of the announcements is relevant.

11On August 15, 2021, Akumin announced in a press release that its Q2 2021 interim financial statements would be delayed. Akumin disclosed that potential additional credit losses with respect to prior years had been identified and required additional analysis.

12On October 12, 2021, Akumin issued a press release in which it identified prior period financial statement errors that required restatement. Akumin referred to “identified issues in the recording of write-offs and cash collections on acquired accounts receivable balances impacting current and prior periods.” In addition, it indicated that “estimates of historical implicit price concessions and expected collection rates were not reflective of the actual cash collections which were occurring”. As a result, it determined that a material change to historical implicit price concessions recorded as at January 1, 2019, December 31, 2019 and December 31, 2020 was required. This change necessitated a restatement of Akumin’s annual financial statements for the period ending December 31, 2020 and December 31, 2019, and its interim financial statements for the period ended March 31, 2021 (or Q1 2021), together with the related management’s discussion and analysis (“MD&A”). Akumin indicated that the restated filings would also account for certain adjustments of the tax impact of these changes, previously uncorrected in material misstatements, and other items impacted by the correction of the error. It advised that the changes in the restated filings would result in an accounts receivable balance as at Q2 2021 of between $65-$70 million, as compared to the previously reported Q1 2021 accounts receivable balance of $95.9 million.

13In the same press release, Akumin disclosed that, in connection with its acquisition of Alliance HealthCare Services Inc. on September 1, 2021, Akumin identified certain differences in recording the capitalization, as opposed to the repair and maintenance expense, of components that are replaced when equipment is repaired. Akumin disclosed its intention to reflect any further adjustments resulting from the review of the accounting treatment of these components prior to filing its restated filings. Akumin indicated that any adjustments related to this review would be reflected as an adjustment to the net book value of property and equipment and additional repairs and maintenance costs which are included in operating expenses.

14On November 15, 2021, Akumin filed its restated financial statements and accompanying MD&A for the years ended December 31, 2019, and December 31, 2020, and for Q1 2021.

15The Kennedy action and the Longair action each seek to advance a securities class action arising out of the events described above on behalf of Akumin’s security holders. The proposed class proceedings each assert liability for misrepresentation in the secondary market, and as such, must obtain leave to proceed pursuant to Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5. In addition, both claims assert causes of action in negligent misrepresentation, negligence simpliciter, and claims under s. 130.1 of the Securities Act, for misrepresentation in offering memoranda.

16In evaluating the relative likelihood of success of each proposed proceeding, I also consider the relative likelihood of success of each proposed proceeding on the motion for leave.

Analysis

17The parties submit, and I agree, that in this case, the controlling factors on this motion are each representative plaintiff’s theory of its case, including the amount of work performed to date to develop and support the theory, and the relative likelihood of success in each proceeding.

18Both sets of proposed class counsel have the necessary expertise and experience to prosecute the action. Each has a track record of obtaining good results for the class members in other class actions. Each has experience in class actions generally, and securities class actions in particular.

19Both sets of proposed class counsel have indicated that they will obtain third party funding if successful on the carriage motion, and until such time as third party funding is in place, they have indemnified the representative plaintiff for costs and are funding disbursements. There is no dispute that both sets of counsel are in a position to make good on the indemnity they have given to the representative plaintiff.

20There are three fundamental differences between the Kennedy action and the Longair action.

21First, each claim proposes a different class period. The Kennedy action proposes a class period that begins on March 31, 2020, the date on which the 2019 annual financial statements were filed, and ending on October 12, 2021, the date on which Akumin released a press release announcing it would file restated financial statements. The Longair action proposes a longer class period, commencing on May 15, 2019, the date Akumin’s Q1 2019 interim financial statements were filed, and ending on November 15, 2021, the date on which its restated financial statements and MD&A were filed.

22Second, the misrepresentations in the claims diverge, although the extent to which they diverge is in dispute. Counsel in the Kennedy action claim they have alleged one overarching misrepresentation, that Akumin’s restated financial statements issued during the restatement period misrepresented that they complied with accounting principles and were reliable. The Kennedy counsel claim the Longair action alleges 506 distinct misrepresentations. For their part, counsel in the Longair action state that they have alleged five categories of misrepresentation. Moreover, they dispute the suggestion that the Kennedy action alleges only one misrepresentation; they argue that the Kennedy pleading is unclear as to what misrepresentations are being alleged, but there is more than one in any event.

23Finally, each claim names different defendants. Both claims name the company, the CEO, the CFO and a director, Mr. Davies, who chaired Akumin’s audit committee. The Longair action adds as defendants three additional directors, and Ernst & Young LLP (“E&Y”), Akumin’s auditor.

24Not surprisingly, counsel in each action claims that their theory and approach to the litigation is superior to the other, and more likely to succeed.

Competing Theories: Class Period and Misrepresentations

25The Longair class period is nearly a year longer than the Kennedy class period. It begins about ten months earlier than the Kennedy class period, and ends about a month afterwards.

26The chosen start date for the Longair class period is based on the fact that Akumin’s restated financial statements and MD&A identify restated line items beginning in Q1 2019, and in particular, corrections to (i) total revenue, and (ii) net income (loss) and comprehensive income (loss) for the period. Conversely, the Kennedy class period commences with the date on which the first restated financial statement — the YE 2019 financial statement — was filed.

27The divergence between the parties’ positions relates to the import that each places on the corrections to the Q1, Q2 and Q3 2019 financial results.

28The Kennedy counsel argue that the individual corrections of financial statement line items do not amount to misrepresentations at law. Akumin’s own press releases identify the two critical issues that led to restatement of the financial statements: (i) accounts receivable, and (ii) property and equipment. The individual corrections of line items that Longair relies on in Q1-Q3 2019 do not relate to these issues, and the interim financial statements were not restated. The Kennedy counsel argue that there is nothing to suggest that these line items were material. Moreover, they argue that unjustifiably expanding the class period to include these allegations of misrepresentation will complicate the proceeding, increase cost, and cause delay. With regard to the leave motion in particular, leave must be granted for each misrepresentation individually, and leave will not be granted where the materiality of the misrepresentation is not established: Cappelli v. Nobilis Health Corp., 2019 ONSC 2266 at paras. 145-146.

29The restated consolidated financial statements for YE 2019 discuss the restatement of the financial statements. In a note to the financial statements, the same errors that were disclosed in the October 15, 2021 press release are addressed:

a. First, with respect to accounts receivable, the note indicates that in Q2 2021 Akumin identified issues in the recording of write-offs and cash collections on its accounts receivable and acquired accounts receivable balances impacting current and prior periods. Management more accurately estimated its historical implicit price concessions, which impacted the net realizable value of accounts receivable. The analysis resulted in a reduction in accounts receivable, a reduction in goodwill, and reduction of net revenue. b. Second, management identified costs associated with certain replacement components on equipment when repaired that were capitalized and recorded in property and equipment, when they should have been expensed as repairs and maintenance. This analysis resulted in a reduction to the carrying value of property and equipment, and the associated amounts of accumulated depreciation, as well as an increase in repairs and maintenance costs and decreases in depreciation expense and loss on disposal of property and equipment. The impact of these errors was a decrease of property and equipment, an increase in the cost of operations, a decrease in depreciation expense, and a decrease to the loss on disposal of property and equipment.

30The restated financial statements do not mention the correction to the line items in Q1-Q3 2019 specifically, although, as I note above, they do make reference to the impact on revenue of the corrections to accounts receivable. The Q1-Q3 2019 line item corrections include corrections to revenue.

31The Longair counsel argue that a larger class period should be preferred unless the case theory supporting it is fatally flawed or toxic, on the theory that if the claims advanced by Longair but not by Kennedy are ultimately unsuccessful, it is better that be proven in the litigation and not prejudged on a carriage motion: Rogers v. Aphria Inc., 2019 ONSC 3698, at paras. 96, 101. I note that Aphria was decided before s. 13.1 of the CPA came into force. Counsel state that it remains applicable. They argue that access to justice is advanced through a longer class period. In their view, the Kennedy class period leaves out reasonable claims, and as such, is inferior.

32The Longair counsel also argue that they have consulted extensively with experts in selecting which misrepresentations to pursue. There is limited expert evidence before me on this motion, but Longair counsel have placed before me an affidavit from one proposed expert, Paul Regan, who has been a certified public accountant for over 50 years. Mr. Regan offers the opinion that Akumin restated certain of its Q1-Q3 interim financial statements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) by correcting material errors within those statements, and that it was not necessary under the applicable accounting guidelines to restate the interim financial statements as a whole.

33No one objected to Mr. Regan being qualified as an expert witness, and I accept him as such. He meets the threshold criteria set out in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182, at paras. 19 and 23:

a. His evidence is relevant to the issues on this motion, in that it addresses the corrections of the line items in Q1-Q3 2019, and the import of the fact that the interim financial statements for these periods were not restated in their entirety; b. The evidence Mr. Regan offers is necessary because it is outside of my expertise as a layperson; c. There is no exclusionary rule that applies; d. Mr. Regan is a properly qualified expert. His affidavit indicates that he has been a certified public accountant continuously since 1970, during which time he has supervised and participated in audits. His experience as an auditor includes acting as engagement or concurring partner in over 100 audits, and supervising the audit of a public company with more than 100 subsidiaries operating throughout the world. Mr. Regan has provided expert evidence in more than 750 litigation matters, on standards such as U.S. Generally Accepted Accounting Principles, U.S. Securities and Exchange Commission financial reporting requirements, U.S. Generally Accepted Auditing Standards, Public Company Accounting Oversight Board Standards, International Financial Reporting Standards, and Canadian Generally Accepted Accounting Principles, among others. He has testified in more than 125 trials and arbitrations.

34In addition to meeting the threshold requirements, the benefits of admitting Mr. Regan’s evidence outweigh its potential risks. His evidence on this motion is on a discrete issue and is helpful and necessary. I thus accept Mr. Regan’s evidence that Akumin corrected material errors (for purposes of the relevant accounting standards) in Q1-Q3 2019, and that it was not required to restate the interim financial statements in their entirety in order to restate those particular line items.

35Longair counsel argue that the materiality (for purposes of securities law) of the errors in Akumin’s Q1-Q3 financial statements are apparent on their face. By way of example, the restated MD&A specifies that the total revenue for Q1-Q3 2019 was reduced by over 10%, from approximately $170.4 million to $152.4 million. The impact of this turned what had previously been reported as net income of $7,737,000 for Q1-Q3 2019 into a net loss of $9,446,000, a negative adjustment of 222%.

36The individual line items at issue are not corrected in the restated 2019 YE annual financial statements. They are not mentioned in the press releases leading up to the restatement. They are only disclosed in the MD&A.

37It is this same difference in approach that leads to much of the difference in the misrepresentations each claim alleges.

38Against Akumin and the individual defendants, the Kennedy counsel claim they plead a single misrepresentation: that Akumin’s financial statements misrepresented that they complied with accounting principles and were reliable. The Kennedy counsel argue that the foundation of this misrepresentation is ss. 155 and 156 of the Ontario Business Corporation Act, which require public issuers such as Akumin to prepare and file financial statements that comply with accounting principles. They argue that the restatement of Akumin’s financial statements establishes a prima facie basis for materiality of the misrepresentations as well as the defendants’ breaches of the duty of care.

39That position is not entirely consistent with the statement of claim in the Kennedy action. For example, the prayer for relief in the statement of claim seeks a declaration that the restated filings contained misrepresentations. Misrepresentation is used in the plural throughout the claim. Paragraph 4 of the claim indicates that the financial statements contained misrepresentations “as a result of the overstatement of [Akumin’s] revenue, accounts receivable and the value of its assets.” It also alleges that the financial statements were prepared in violation of applicable accounting principles and standards and failed to fairly present Akumin’s financial position and the results of its operations, and were not accurate and reliable. The claim also references alleged weaknesses in Akumin’s Internal Control over Financial Reporting (“ICFR”) and Disclosure Controls & Procedures (“DC&P”).

40The claim proceeds to outline interrelated misrepresentations including (i) misrepresentations about Akumin’s revenues, accounts receivable and the value of its assets; (ii) misrepresentations about the efficacy of Akumin’s internal controls (that is, ICFR and DC&P); (iii) misrepresentations that Akumin’s financial statements complied with accounting principles and were reliable; and (iv) false certifications of annual and interim filings. However, when pleading a claim for negligent misrepresentation at common law, the Kennedy action identifies a single misrepresentation: that the restated filings were prepared in accordance with applicable accounting principles, properly reflected Akumin’s results of operations and were reliable.

41A fair reading of the Kennedy pleading thus indicates that there is not a single misrepresentation at issue in the statutory claim, but rather, a series of misrepresentations which overlap to a great extent with the misrepresentations pleaded in the Longair action, except that they do not include the misrepresentations alleged to have occurred in Q1-Q3 2019, and do not extend to misrepresentations about Akumin’s shareholder equity.

42The Longair action asserts five categories of misrepresentation:

a. Misrepresentations about Akumin’s accounts receivables and revenue; b. Misrepresentations about Akumin’s property and equipment; c. Misrepresentations about Akumin’s shareholders’ equity; d. Misrepresentations about Akumin’s compliance with applicable financial accounting standards, including: (i) Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 270, Interim Reporting; (ii) generally accepted accounting principles, (iii) International Accounting Standard 34, Interim Financial Reporting; and (iv) International Financial Reporting Standards (“IFRS”). e. Misrepresentations about the design and effectiveness of Akumin’s ICFR and DC&P.

43The misrepresentations alleged by each claim thus largely overlap. Longair’s claim includes alleged misrepresentations about shareholder equity which are not included in the Kennedy claim, and it alleges the misrepresentations over a longer period of time.

44The Kennedy counsel argue that the Longair action is inferior in that it continues until the release of the restated financial statements and MD&A. Really, that is the only consistent position the Longair action can take, because it was not until the release of the restated MD&A that the market was made aware of the corrections to the Q1-Q3 2019 interim financial statements. However, the Kennedy counsel point out that Akumin’s share price actually rose on the release of the interim financial statements, and only dropped in the days following. They argue that this is an indication that the Q1-Q3 2019 errors were not material for purposes of securities law.

45Akumin’s share price dropped on its October 12, 2021 press release. The increase in share price after the disclosure of the restated financial statements, followed by a drop over the next days, does not lead me to conclude that the alleged Q1-Q3 2019 corrections cannot be material. It is possible that, had the correct financial information been disclosed in Q1-Q3 2019, the market would have found it material to Akumin’s share price. Moreover, it is also possible that Longair will be able to establish that the downward trend in Akumin’s share price in the days following the release of the restated financial statements was related to those statements.

46In my view, it cannot be said that the additional aspects of the Longair claim against Akumin and the individual defendants, or the Longair theory of correction, are based on a flawed or toxic theory, nor that advancing that theory would unduly delay or complicate the proceeding. Rather, the broader theory advanced in Longair is more consistent with the goals of access to justice by capturing more viable claims. Moreover, because the Longair action subsumes the Kennedy action, it is likely to be at least as successful as the Kennedy action.

Competing Theories: Defendants

47In addition to the claims made against Akumin and the individual directors and officers, the Longair action also alleges that E&Y made misrepresentations in its audit report in respect of Akumin’s 2019 YE financial statements and 2020 YE financial statements. Among others, these alleged misrepresentations include E&Y’s stated opinion that the financial statements presented fairly, in all material respects, the financial position of the company as at December 31, 2019 and December 31, 2020, that they conducted the audit in accordance with Canadian generally accepted auditing standards and auditing standards generally accepted in the United States (in 2019), and in accordance with the standards of the Public Company Accounting Oversight Board (in 2020). The Longair action alleges that Akumin’s 2019 and 2020 annual financial statements did not present Akumin’s financial position in accordance with IFRS or US GAAP, and the auditor had no reasonable basis to opine that it did.

48The Longair counsel argue that adding the auditor does not markedly increase the scope of the issues. Rather, the individual directors and officers can be expected to plead a due diligence defence, and argue that they relied on the auditor. Thus, the conduct of the audit will be relevant in any event.

49While Longair’s addition of E&Y to the action is the most significant difference between the defendants in the action, Longair has also added three additional directors as defendants. Longair counsel argues that by adding these additional defendants, the class will benefit from increased liability limits under the Ontario Securities Act, and the number of witnesses who will be available for discovery. They argue that the additional director defendants do not expand the issues, so there is no added complexity or delay caused by their inclusion.

50The Kennedy counsel argue that the claims against E&Y are speculative. They argue that the Longair claim fails to support the allegations against E&Y with any specific pleading. Moreover, they note that no common law claims are pleaded against E&Y, but only the statutory claim under Part XXIII.1 of the Securities Act, which is subject to leave and strict liability limits. They argue that the claim against E&Y creates disproportionate complexities that outweigh any value to be gained by its addition.

51With respect to the individual directors, Dunford, Lee and Webb, the Kennedy counsel argue that there is no pleading to substantiate personal liability on the part of the directors. They argue these claims are a distraction, increase the costs, delay, and complexity of the proceeding, while adding no tangible value.

52The claims made in the Longair action against the additional directors do not expand the issues in the case. The alleged liability of the additional directors requires no further development of the claim than already exists through the inclusion of the individual defendants who are named in both the Longair and Kennedy actions. There is a basis for the alleged liability of the additional directors in s. 138.3(1) of the Securities Act, which provides for liability whenever a responsible issuer releases a document containing a misrepresentation. By statute, the right of action is available against “each director of the responsible issuer at the time the document was released.”

53Longair’s claim against E&Y is solely based on s. 138.3(1) of the Securities Act, and arises out of E&Y’s pleaded role as “expert”. The claim alleges that E&Y made the misrepresentations noted above because (i) it did not conduct its audits in accordance with the appropriate auditing standards; (ii) it did not plan and perform its audits to obtain reasonable assurance about whether the financial statements were free of material misstatement; (iii) it did not perform procedures to assess applicable risks or perform procedures to respond to those risks; and (iv) it did not evaluate the accounting principles used and significant estimates made by management or the overall presentation of the financial statements.

54The Longair affiant indicates that the decision to include these misrepresentations in the claim was reached after consultation with an expert, but there is no expert evidence supporting the pursuit of these alleged misrepresentations. The evidence about consultation with experts is included to demonstrate the efforts the Longair counsel have taken to develop their claim, not to prove the truth of the theory behind the claims.

55I have some concerns about the claim against the auditor. The Longair claim does not plead a robust set of facts supporting the liability of E&Y. However, nor is it devoid of particulars. It identifies specific errors which it alleges led E&Y to make misrepresentations in its audit report, and identifies those misrepresentations. The record before me does not establish a strong basis to conclude that the additional complexity that comes with the claim against E&Y justifies the potential upside to the class of adding it. Nor does it provide enough evidence to allow me to reach conclusions on the likelihood of success with respect to the claim against the auditor.

Work Performed to Date to Support the Case Theory

56Both sets of counsel have undertaken work to develop and support their theory of the case. The evidence before me suggests that the Longair counsel have undertaken more work than have the Kennedy counsel to date. Both teams have reviewed the public disclosure and undertaken research. Both have consulted experts, although the Longair counsel have consulted more experts than have the Kennedy counsel. The Longair team has retained a private investigator who is in the process of identifying witnesses, and they have spoken to at least one potential witness.

57The greater scope of work undertaken by the Longair team is a factor that weighs in its favour on this motion.

Conclusion

58While there are factors in favour of each action, a choice must be made. In evaluating the actions as they exist, I conclude that the Longair action better advances the goals of the CPA, and in particular, behaviour modification, by its inclusion of more defendants, and access to justice, by its longer proposed class period, enabling it to capture claims that would be left out of the Kennedy action.

59While I have reservations about the theory behind the claim against E&Y, given that these actions are at an early stage, I conclude that the risk that the claim against E&Y will disproportionately complicate the litigation is outweighed by the risk that viable and proportionate claims held by class members would not be raised in the Kennedy action.

60Moreover, given that leave will be required for the claim against E&Y to proceed, any disproportionate complexity that arises if the theory behind E&Y’s liability turns out to be bad can be expected to last only until the leave motion.

61Accordingly, I award carriage to the Longair counsel. The Kennedy action is stayed.

62As is typical, neither representative plaintiff seeks costs and none are ordered.

J.T. Akbarali J.