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Tuesday, 03 January 2012 09:56

Tipping toward the plaintiffs

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ustice Paul Perell cracked open a hornets’ nest last July when he delivered a decision from the Ontario Superior Court ordering a group of corporate defendants to file their defence in a proposed class action, even though the case hadn’t yet been certified.
The judge’s order in Pennyfeather v. Timminco Ltd. — a shareholder lawsuit — ignited a wave of commentary among class action practitioners, bloggers, and Twitterers. “This decision represents a marked departure from the prevailing procedure in class actions,” said an article co-written by Bennett Jones LLP defence litigator Robert Staley. Mary Jane Stitt, a partner at Blake Cassels & Graydon LLP, was more blunt. Defendants, she told the Globe and Mail, are now “being asked to fight the battle before you even know whether you’ll have to go to war.”
Although Perell’s ruling actually reflects the wording of Ontario’s class action statute, it undercuts a 15-year, unwritten custom in which defendants typically wait until a case is certified before filing their defence. Perhaps the noisy reaction to it was less aimed at the decision itself, and more an expression of years of built-up frustration among the defence bar — a sense that the certification game is becoming increasingly stacked against them, and that courts are offering advice, re-interpreting conventions, and otherwise ushering plaintiffs through the certification gates.
Perhaps Perell’s ruling was simply the last straw. “There’s been a real surge in the common-law provinces in a liberalization in the courts’ approach to certification,” says Adrian Lang, a class action litigator with Stikeman Elliott LLP. “I’d like to think as a defendant that we will start to see a bit of retrenching. . . . We certainly can’t get more liberal than we are right now.”
Certification may be simply a procedural matter, but the stakes are high for both sides. Corporate defendants say a certified class action creates lousy optics: an impression in the public’s mind that the company has committed a wrong, even though the merits of the claim have yet to be judged. For plaintiffs, certification can be a tool to apply pressure against a defendant to settle before the case goes to trial.
Lang and her colleagues in the defence bar say in the early years, Canadian courts outside Quebec took a more cautious approach to certifying cases, following the introduction of class action legislation in Ontario and British Columbia in the 1990s. Individual preliminary motions were routinely accepted from defendants in advance of
certification. And statements of defence were commonly withheld with the courts’ approval until after certification, a custom that emerged from Ontario (now Chief) Justice Warren Winkler’s 1996 decision in Mangan v. Inco Ltd. that judges had wide discretion to allow such delays by defendants.
Laila Brabander, assistant vice president and specialty claims manager for Chubb Insurance Co. of Canada, who manages litigation against corporate defendants insured by Chubb, says there’s been a “noticeable change” in the courts’ approach in recent years. “There’s no question that the pendulum has swung, and recent decisions likely suggest that certification is easier,” she says.
In 2005, for example, in the national residential schools class action Baxter v. Canada, Winkler again influenced the system by ruling that certification motions should be heard promptly, and should not be delayed by other motions. That led to an increasing reluctance by other judges to entertain a series of technical challenges by defendants.
Elsewhere there have been examples of judges helping plaintiff lawyers draft more sustainable pleadings, as Perell did before he certified the overtime labour class action McCracken v. Canadian National Railway Co. in 2010.
There are also cases — as in Smith v. Inco, recently overturned by the Ontario Court of Appeal — of judges actively rewriting common issues during a trial. “There’s a perception that the practice of some judges assisting plaintiffs in improving their pleadings is unfair to defendants,” says Sonia Bjorkquist, a class action litigator at Osler Hoskin & Harcourt LLP. “I wonder about whether it’s tipping the balance in favour of plaintiffs.”
Other lawyers say judges are behaving properly. After all, the purpose of class actions is to extend justice to large groups of people who otherwise might not receive it. Why toss out a proposed lawsuit with the correct germ of an idea, simply because it hasn’t been pleaded correctly by the plaintiff’s counsel? “In the CNR case, the plaintiff lawyers didn’t describe the common issues exactly the way they should have to get certified, so Justice Perell modified them. He was doing his job,” says Kirk Baert, a plaintiffs’ litigator at Koskie Minsky LLP in Toronto. “To me it’s not logical, in a claim of half-a-billion dollars, to say, ‘You lose certification because of the way you worded your claim.’ That’s not the purpose of the justice system, to have a series of trap doors people can fall into. Cases should be decided on their real merit, and sometimes there are pleadings problems.”
The trouble is that judicial re-working of plaintiff pleadings has become so common
that defendants now have trouble knowing what precisely to defend, says Lang. “It makes litigating prior to certification a challenge, because you’re dealing with a constantly moving target.”
Meanwhile in competition class actions, “every province in this country, I would argue, has more recently become overwhelmingly plaintiff-friendly,” says Katherine Kay, a competition law specialist with Stikeman Elliott LLP. The B.C., Quebec, and Ontario courts have since 2009 certified a series of price-fixing cases — including Pro-Sys Consultants Ltd. v. Infineon Technologies AG in the B.C. Court of Appeal — despite difficulties in showing how harm was passed down through a distribution chain to indirect purchasers. Two similar cases in B.C. produced different rulings — Pro-Sys Consultants Ltd. v. Microsoft Corp. and Sun-Rype Products Ltd. v. Archer Daniels Midland Co. — that were granted leave to appeal to the Supreme Court of Canada
on Dec. 1, 2011.
Kay says certification has become almost a foregone conclusion in the competition area, not solely because the courts favour plaintiffs, but because in light of the complexity of these cases — and the conflicting expert evidence — courts are passing the buck to trial judges rather than scrutinizing whether a proposed class action meets the certification test. As a result, a series of “messy” cases, as Kay puts it, with “unbounded and inappropriate” common issues and class definitions, are winding up at trial. “The only time you have to resolve the issue of whether or not it’s an appropriate case to be treated as a class action, the only kick you get at that can is on certification,” she says. “So I would argue it’s an abdication — that’s a strong word, I appreciate that — but it’s an abdication of the court’s responsibility to duck these issues on certification and say, ‘You know what, we’re not up to dealing with them, so lets certify it and leave it to the trial judge.’
“The courts have made a policy decision, I would argue, that class actions are good, and we’re not going to subject them to the kind of scrutiny that we do other cases.”
The access to justice that class actions offer large groups of citizens, defence lawyers say, is likely what’s motivating judges to ease the way for plaintiffs in many certification proceedings. That, and the desire to streamline lengthy, expensive, and drawn-out pretrial procedures, may be the impetus behind Perell’s ruling on the early filing of statements of defence. “I don’t see that as a particularly pro-plaintiff decision,” says Baert. “I’d say it’s intended to make it easier for judges doing these cases to have a grip on what’s in dispute, earlier in the case.”
In his decision, Perell argues that the early delivery of a statement of defence “could be a fresh step that could foreclose any subsequent attack by the defendant for any pleadings’ irregularities.” But defence lawyers warn that Perell’s desire to streamline class actions, if adopted by other courts, could have the opposite effect. Rather than making the pre-certification phase more efficient, it could force defendants to file numerous technical and substantive preliminary motions at the very start of the pre-certification process, before their defence-filing deadline. “We’ll have to see how it unfolds,” says Bjorkquist. “Allowing defendants to attack dubious claims or sloppy pleadings, or over-broad pleadings before engaging in the costly certification process, could actually improve the system. On the other hand it may also threaten access to justice, because requiring defendants to bring a variety of motions will simply delay certification. Think about it — you bring a motion, you lose, you appeal, etc.”
What’s more certain, says Bjorkquist, is that filing an early defence will mean more defence amendments in response to ongoing plaintiff amendments, and therefore higher costs for defendants, as the case proceeds through certification. More importantly, she says: “Is it fair that defendants are forced to plead earlier, and disclose positions or strategy before determining whether the plaintiff has met their burden under the legislation, as to whether the proposed class action should succeed at all?”
Of course it’s fair, says Baert. “In all other types of litigation, no matter how complex, defendants file defences at the beginning, within the time limits and the rules. They manage to do so without the sky falling, or the world coming to an end.” Baert also calls complaints about a plaintiff-friendly trend in the courts “a lot of smoke.”
“I certainly don’t think it’s remotely plausible to argue that judges in this country are bending over backwards to help plaintiffs,” he says. “You only have to look at, where do most judges who handle complex litigation come from — the corporate law side. Is it likely there’s this cadre of extremely liberal judges who are looking to completely open the floodgates of class action litigation by bailing out incompetent plaintiffs counsel? Seems unlikely to me.”
Illustration: Sara Tyson
Illustration: Sara Tyson
Justice Paul Perell cracked open a hornets’ nest last July when he delivered a decision from the Ontario Superior Court ordering a group of corporate defendants to file their defence in a proposed class action, even though the case hadn’t yet been certified.
Tuesday, 03 January 2012 09:33

What is predictive coding and can it help me?

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In large civil litigation and regulatory cases, the discovery process is becoming increasingly automated, scientific, and objective. This is evident by the increasing use of “predictive coding.”
Predictive coding are the new e-discovery buzzwords. Articles about the benefits of predictive coding have appeared in Forbes magazine and The New York Times. In mid-2011, one company announced a patent for the technology, sparking a war of words in the e-discovery press.
Let’s start with what predictive coding is not. It is not the “eyes on every document” approach of traditional linear review, where a lawyer starts with the first document and looks at every collected document until every document is reviewed. That approach works well when there is a small amount of documents or in circumstances that require human eyes on every page. However, that approach becomes unwieldy and expensive when hundreds of thousands or millions of pages require review.
Predictive coding remains poorly understood because it is not just a technology but also a project management technique. Predictive coding is a series of computer search and sampling technologies, coupled with a new approach to searching for and reviewing potentially responsive documents. Properly combining all of these elements permits expedited, cost-effective, and highly accurate document review. Lawyers who use predictive coding need to understand how to combine these elements. It’s not necessarily the technologies that are indefensible — just certain uses of them. Judges need to learn to recognize when their use has been or will be ineffective.
Predictive coding has been described as lawyer-driven, computer-assisted document review. At its most basic, it is a form of automated document review; but strictly understanding it this way is to misapprehend the role predictive coding technology plays in searching for and retrieving potentially relevant documents. Predictive coding groups and organizes potentially relevant documents in a way that permits human reviewers to maximize their review time and look at potentially related matters together. I prefer to think of predictive coding not as review technologies, but as search retrieval and information organization technologies applied to the discovery review process.
Usually when predictive coding is described, lawyers who are intimately familiar with the case specify relevant criteria within small sets of data that define the crux of the issues. Lawyers generally do this through keywords or key concepts, but this can also be accomplished by reviewing a small set of documents to “train” the computer on the key issues.
Through an iterative search process, computer algorithms retrieve a set of documents based on the criteria input by the lawyers. The reviewing lawyers may determine that some results are not relevant and request that the algorithm pass through another search iteration, or as many iterations as desired. As the computer learns to distinguish what is relevant, each iteration produces a smaller relevant subset, and a larger set of irrelevant documents that can be used to verify the integrity of the results, by confirming the absence of any relevant material through techniques such as sampling. The extent of the end use of the relevant set depends on the risk threshold of the clients and lawyers.
Different predictive coding tools use different algorithms and computing techniques to obtain the smaller set of documents, but the effect of the technology is generally the same: a weighted ranking of documents according to likely relevance as established by the lawyer.
Predictive coding is generally defined by these characteristics:
• it leverages small samples of documents (input criteria) to find other relevant documents;
• it reduces the number of non-relevant documents that lawyers must review, thereby reducing the overall amount of lawyer time spent reviewing documents; and
• unlike straight manual review of documents by lawyers, the results generated by predictive coding algorithms can be validated through statistics.
The use of predictive coding for document review raises at least two legal issues. First, does the use of this technology meet counsel’s obligation to conduct a reasonable and defensible search for responsive documents under applicable discovery rules? Second, can counsel safeguard a client’s solicitor-client privilege when a privileged document is disclosed? To date, although some judges in the United States have spoken positively of predictive coding, its use has not yet been tested through a defensibility motion.
Arguably, the use of technologies, including predictive coding, is encouraged within the Sedona Canada Principles. In particular, Principle 7 states that “[a] party may satisfy its obligation to preserve, collect, review, and produce electronically stored information in good faith by using electronic tools and processes such as data sampling, searching, or by using selection criteria to collect potentially relevant information.”
Perfection is not required in the e-discovery process or in document review. The operative standard is reasonableness, which requires that counsel implement a document review system (regardless of whether predictive coding is used) that relies on reasonable steps to make disclosure of relevant documents and prevent disclosure of privileged ones. Manual review of documents will not always meet this standard; neither will predictive coding.
Some of the very traits that appear to make predictive coding unreasonable actually make it reasonable. For example, it makes document review more efficient by exposing the human reviewer only to those documents that have been algorithmically identified based on the specifications input by the lawyer, but in a more powerful way than just by keyword. Assuming lawyers input criteria correctly, predictive coding makes it more likely that responsive documents will be produced. Second, the iterative nature of predictive coding refines relevant subsets for review in a way that can be validated statistically, both for opposing counsel and the courts. The key to validating predictive coding is to establish metrics that surpass standards that previously prevailed under past document review paradigms. Fortunately, models for these metrics already exist.
As to the second legal issue, it’s true the computer might get the privilege call on a document wrong; however, so too might humans. Arguably, humans are less likely to get it wrong if they are looking at an overall smaller set of documents. Remember too, that predictive coding techniques help the quality check process by identifying inconsistently tagged records, allowing for a final cross-check of privilege records prior to production.
In large civil litigation and regulatory cases, the discovery process is becoming increasingly automated, scientific, and objective. This is evident by the increasing use of “predictive coding.”
Monday, 14 November 2011 08:00

Getting insurers to the table

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Illustration: Jeremy Bruneel
Illustration: Jeremy Bruneel
Insurance companies are most welcome parties in almost any lawsuit. But it’s not always easy to get them to the table. That’s why two recent court rulings on insurance companies’ duty to defend in lawsuits over property damage are good news both for construction companies and for those who want to sue them. “It brings another player to the litigation,” says André Legrand, a partner in the Montreal office of Norton Rose OR LLP, referring to a Quebec Superior Court judgment that compels Intact Insurance Co. to defend a company that supplied bricks for an allegedly defective construction project. “You have another party here with financial exposure at the very least in terms of defence costs.”
Monday, 14 November 2011 08:00

It takes a team to uncover a fraud

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Illustration: Enrico Varrasso
Illustration: Enrico Varrasso
An allegation of fraud within a company used to be handled something like this: a mid-level supervisor would go off like a gunslinger on his own to nail the bad apple that breached the company’s trust.
Monday, 03 October 2011 09:00

You need a break today

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Illustration: Sara Tyson
Illustration: Sara Tyson
When Pascale Daigneault married her law partner Carl Fleck 20 years ago, the couple left its two-lawyer southwestern Ontario personal injury practice to go off on a honeymoon. It didn’t occur to them at the time that this would be their last real holiday for many years. “It can be quite time consuming to look after your practice,” says Daigneault of Fleck & Daigneault in Point Edward, Ont. She makes it clear that this is something of an understatement by pointing out that you can easily find yourself going into your office six or seven days a week.
Monday, 03 October 2011 09:00

Common law couples — til death do they part

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Illustration: Anson Liaw
Illustration: Anson Liaw
In most provinces, if common law couples want the same estate rights as married couples, they had better, as Beyoncé so succinctly belts out, put a ring on it. Those once-entrenched distinctions, however, are slowly being rewritten as governments amend legislation and courts hand down new decisions granting common law couples greater access to property and other assets. “For the most part, common law spouses do not have the same financial or property rights as legally married spouses and, generally, are not considered ‘spouses’ for the purposes of an intestate division of an estate,” says Tamzin Gillis, an associate with McInnes Cooper in Charlottetown.
Monday, 05 September 2011 09:00

Getting the word out

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Illustration: Dushan Milic
Illustration: Dushan Milic
Over the years, Canada has earned its reputation as a destination for international arbitration. Canada was the first country to adopt and implement the United Nations’ UNCITRAL Model Law implementation statutes 25 years ago as well as the first to sign on to the New York Convention, an international treaty covering foreign arbitration awards. The country has also prospered as a place to carry out commercial arbitration due to its proximity to the United States, its bilingual and multicultural status, reputation for fairness and neutrality, common and civil law systems, and a court system supportive of arbitration.
b_150_0_16777215_00___images_stories_01-CANADIANLawyer_2011_September_e-discovery.jpgE-discovery expertise rests on two major skills: choosing the right e-discovery tools and using them appropriately within the data to meet the case team’s needs.
Monday, 01 August 2011 16:48

All over the map

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Illusration: Jason Schneider
Illusration: Jason Schneider
A snapshot of cases from coast to coast tells the tale: when it comes to spousal support, the courts are all over the map for those in which the payor’s income exceeds $350,000. And so, some family law lawyers say it’s time for the Supreme Court of Canada to dust off the Brownie camera and develop that final picture. Toronto family law lawyer Will Abbott is one who thinks the scattered approach needs settling. “The Supreme Court doesn’t hear family law cases very often, but this is a situation where one should go.”
Monday, 01 August 2011 12:01

On hiatus

Written by
Photo: Nick Devlin
Photo: Nick Devlin
Chima Nkemdirim is a big fan of the arts. But he didn’t choose the art that decorates his friend’s office. “This one here is kind of neat,” he says, motioning behind him as he takes a seat to have his photo taken. “We call it The Giant Lego Thing.” If the statement is intended to deflect blame for the strangeness that greets the eyes there, it is done politely. “That one over there by the desk I’m not so sure about,” he adds, pointing across the room. “It’s kind of creepy.”
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