Court File and Parties
COURT FILE NO.: CV-21-00670632-00CP DATE: 20230613 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: BLUEMOON CAPITAL LTD., Plaintiff - and - CERIDIAN HCM HOLDING INC., LIFEWORKS INC., LIFEWORKS (CANADA) LTD., JAMIE TRUE, DAVID OSSIP, ARTHUR GITJAN, GNANESHWAR RAO and BRENT BICKETT, Defendants
Proceeding under the Class Proceedings Act, 1992
Counsel: Eli S. Lederman, Brian Kolenda, and David Salter for the Plaintiff
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
[1] Pursuant to s. 29 of the Class Proceedings Act, 1992, the Plaintiff Bluemoon Capital Ltd. moves for an Order approving the discontinuance of this action on a with-prejudice and without-costs basis, with the discontinuance to come into effect sixty days from the release of the Order.
[2] The background facts to the motion are as follows:
Prior to the action now before the court being commenced, Bluemoon Capital brought an application (Court File No. CV-20-00651820-00CL) seeking equitable relief in the nature of a Norwich Order against the corporate defendants to the action now before the court.
In the Norwich application, Bluemoon Capital was seeking the information necessary to evaluate potential statutory causes of action under the Securities Act. In other words, Bluemoon Capital was suspicious but uncertain whether or not there had been a violation of the Securities Act, and who was implicated in the misconduct. It needed more information to determine the merits and the risks of proceeding with a claim.
On July 28, 2021, Justice Pattillo heard the Norwich application, and he reserved judgment.
On October 21, 2021, Bluemoon Capital Ltd. commenced a proposed class action. It alleged that Ceridian HCM Holding Inc., Lifeworks Inc., Lifeworks Canada (Ltd.), Jamie True, David Ossip, Arthur Gitjan, Gnaneshwar Rao, and Brent Bickett were liable for secondary market misrepresentation pursuant to s. 138.3 of the Securities Act, and primary market misrepresentations pursuant to s. 130 of the Act.
On November 2, 2021, I was appointed as case management judge for the proposed class action.
On November 12, 2021, Bluemoon Capital’s counsel advised me and the Defendants that the Notice of Motion for leave pursuant to Part XXIII.1 of the Securities Act had been served. This step was taken to preserve the secondary market misrepresentation claim from the lapsing because of a limitation period. Counsel also advised me and the Defendants that Bluemoon Capital intended to take no further steps in the action until a decision on the Norwich Application was released.
On January 19, 2022, Justice Pattillo released his decision. He declined to grant the relief sought in the Norwich Application, holding, among other things, that Bluemoon Capital would have difficulty in advancing its Securities Act claims: Bluemoon v. Ceridian, 2022 ONSC 301.
Bluemoon Capital appealed Justice Pattillo’s decision.
On October 6, 2022, at a case management conference, I adjourned Bluemoon Capital’s leave motion sine die with the direction that it be brought back on after the appeal process had run its course. I granted the Defendants’ requests to bring a pleadings motion under Rule 21 and scheduled the motions for March 31, 2023.
On December 14, 2022, the Court of Appeal dismissed the Plaintiff’s appeal from Justice Pattillo’s decision. The Court noted that Justice Pattillo had determined that Bluemoon Capital had failed to persuade him that it had a valid, bona fide or reasonable claim in relation to Securities Act claims: Bluemoon Capital Ltd. v. Ceridian HCM Holding Inc., 2022 ONCA 868.
On March 15, 2023, Bluemoon Capital’s counsel informed me that the parties had agreed that Bluemoon Capital would seek the Court’s approval to discontinue the action on a without-costs basis, on consent of the Defendants.
[3] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, dismissal or settlement of a proceeding commenced under the Act. 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.
[4] 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: Green v. The Hospital for Sick Children, 2021 ONSC 8237; Batten v. Boehringer Ingelheim, 2021 ONSC 6606; Johnson v. North American Palladium Ltd, 2021 ONSC 3346; Bardoul v. Novartis Pharmaceuticals Canada Inc., 2021 ONSC 2261; Winter v. C.R. Bard, 2020 ONSC 3532; Naylor v. Coloplast Canada Corporation, 2016 ONSC 1294; Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2012 ONSC 5288; Frank v. Farlie, Turner & Co, LLC, 2011 ONSC 7137; Hudson v Austin, 2010 ONSC 2789; Sollen v. Pfizer, 2008 ONCA 803, [2008] O.J. No 4787 (C.A.), aff'g 2008 ONSC 8618, [2008] O.J. No. 866 (S.C.J.); Logan v. Canada (Minister of Health), [2003] O.J. No. 418 (S.C.J.), aff’d (2004), 2004 ONCA 184, 71 O.R. (3d) 451 (C.A.).
[5] The fundamental concern on a motion for court approval of a discontinuance is that the interests of putative Class Members will not be prejudiced or that any prejudice is mitigated: Johnson v. North American Palladium Ltd., 2021 ONSC 3346.
[6] I am satisfied that the test for the approval of a discontinuance is satisfied in the circumstances of the immediate case. This action was commenced for the proper purpose of preserving Bluemoon Capital’s right of action against the Defendants while Justice Pattillo’s decision was under reserve. A good-faith determination by the putative Representative Plaintiff that an action is no longer viable is a justification for an Order for discontinuance: Thompson v. Bell Mobility Inc., 2019 ONSC 7144 and the Court may also assess whether the chances of success in the litigation are remote: Parker v. Pfizer Canada Inc., 2017 ONSC 2418, which appears to be the situation in the immediate case.
[7] In the immediate case, after Justice Pattillo’s decision denying the Norwich Application, and the Court of Appeal’s confirmation of that decision, Bluemoon Capital is unable to evaluate the strength of its Securities Act claims, but Justice Pattillo’s view was that the prospects of success are bleak.
[8] In Thompson v. Bell Mobility Inc., 2019 ONSC 7144, I concluded that the putative class members, who were “oblivious of the action even having been started,” could not be said to be prejudiced by a discontinuance. The immediate case is similar, because Bluemoon Capital has taken no steps to publicize the claim and there was no media coverage or publication of the action. Its lawyers have not sought to contact potential class members, and no members of the putative class have sought to contact with counsel at any time.
[9] The Defendants consent to the discontinuance and obviously are not prejudiced by this outcome.
[10] In all these circumstances, it is appropriate to approve a discontinuance.
[11] In the immediate case, Bluemoon Capital proposes that the discontinuance be suspended for sixty days in order to continue the suspension of the running of the limitation periods for a commensurate period of time. That approach has been used in other cases, where there is some prospect that a putative Class Member will take up the cause individually or for the class if he or she is given notice of the pending discontinuance. In granting a discontinuance, the court will consider whether notice of the discontinuance ought to be given to the putative class members. The matter of notice is to be resolved based on the facts of the particular case: Smith v. Crown Life Insurance Company, 2002 ONSC 79681, [2002] O.J. No. 5539 at para. 31; Chopik v. Mitsubishi Paper Mills Ltd., [2003] O.J. No. 192 (S.C.J.) at para 19.
[12] In the immediate case, like some others, no purpose would be served by giving notice: Thompson v. Bell Mobility Inc., 2019 ONSC 7144, and in the immediate case, no purpose would be served by suspending the operation of the discontinuance.
[13] Order accordingly.
Perell, J. Released: June 13, 2023