Two groups of Bay Street law firms are battling for the right to represent the plaintiffs in a multi-billion-dollar securities class action against Barrick Gold Corporation.
In what’s believed to be the first carriage matter to reach the Ontario Court of Appeal, the court awarded the case to a group of firms led by Rochon Genova LLP instead of another group of law firms led by Koskie Minsky LLP. If it’s certified, the Barrick Gold case will be one of the largest securities class actions in Canada.
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“The Class Proceedings Act was proclaimed and enforced in 1992 and since then, the Court of Appeal has never addressed the issue of carriage,” says Jay Strosberg, partner at Sutts Strosberg LLP, which is part of the Koskie Minsky group.
In Mancinelli v. Barrick Gold Corporation, the Court of Appeal said the lower court judge was correct to give carriage to Rochon Genova, which presented a broader claim than Koskie Minsky and had done “more extensive preparation” on the file.
Koskie Minsky had argued its claim was more “workable” than Rochon Genova’s and that “less is more” when it comes to the scope of an action. But in choosing Rochon Genova’s action, the court said the term “workability” is not found anywhere in the authorities.
“While some cases have given preference to ‘lean’ actions over more comprehensive ones, I would reject any firm rule that ‘less is more’ or, indeed, that ‘more is better,’” said appeal court Justice George Strathy, who wrote on behalf of the court. “The ultimate question is whether the proposed strategy is reasonable and defensible.”
Joel Rochon, partner at Rochon Genova, says Strathy carefully reviewed the factors to be considered. “He has also taken pains to emphasize that the list of factors is not exhaustive and there may be other factors to be considered depending on the unique circumstances of the case.”
Meanwhile, Paul Pape, who represented Koskie Minsky, said his clients are considering an appeal to the Supreme Court of Canada.
“I am unable to comment on the reasons as the Koskie Minsky group is considering an application for leave to appeal to the Supreme Court of Canada,” Pape said in an e-mail to Legal Feeds.
To Strosberg, this case was a missed chance for the Court of Appeal to clarify a confusing and inconsistent area of the law. Rather than highlighting the important factors to consider when it comes to awarding carriage, the Court of Appeal simply deferred to the lower court judges’ opinion on which factors were important in this case, Strosberg adds.
“We now have close to a 20-part test on a carriage motion. That test, at best, is applied inconsistently,” Strosberg continues. “From the perspective of a class action plaintiffs’ lawyer, preparing for these cases has become somewhat of a moving target in that you have so many factors but...there is no one test that’s consistently applied.
“The Court of Appeal had an opportunity to establish a coherent framework to resolving carriage disputes and in my view, it did not do so,” Strosberg adds.
Koskie Minsky argued that in its attempt to win carriage, Rochon Genova disclosed its preliminary expert reports against the interest of the class. According to Strosberg, the court of appeal should have weighed in on this issue. He says disclosing an expert report so early in the case is “a tactical mistake” that prejudices the class.
“What happens is you’ve effectively given the defendants a draft expert report, which they’re not entitled to see,” he says. “You have to understand that a carriage motion is a very early procedural motion that has nothing to do with the defendants.”
Strosberg says in every single carriage dispute going forward, plaintiffs’ counsel will be forced to reveal their draft expert report in an attempt to show the extent of their preparation.
But Rochon says preliminary expert reports provide an important glimpse into a considerable preparation. It shows the court that “you’re on top of this and you’ve done your homework,” he says.
“My view is that this is an important yardstick to apply when considering which firm should get carriage,” Rochon adds. “It may not be appropriate in every case but in a significant, complex securities case such as this, the degree of preparation and understanding the overall case was at the heart of the carriage decision.”
In this dispute, Koskie Minsky said the court shouldn’t award Rochon Genova the case because of the history of judicial criticism of the Merchant Law Group, one of the members of the Rochon consortium. The Merchant Law Group has gotten a lot of flak from the courts for its fee-sharing arrangements.
“The appellants’ position with respect to Merchant is hypocritical, Rochon says, given that members of the Koskie consortium had their own history of co-counsel agreements with Merchant,” Strathy said.
“The motion judge was clearly aware of these duties and of Merchant’s history and I am not prepared to say that he erred in the exercise of his discretion in awarding carriage to Rochon in spite of Merchant’s participation in that consortium,” Strathy also said.