What's Next: The Plaintiff's Perspective - New Ruling Allows Massive U.S. Support for Class Action Litigants in Canada
In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to Won Kim, name partner at Toronto’s Kim Orr Barristers P.C., beneficiary of an October 29 ruling by the Ontario Supreme Court that permits U.S. plaintiffs’ firms a more direct collaborative role with Canadian firms in class actions brought in Canada.
The court’s decision allows Milberg LLP to provide Kim Orr with investigative support and document review in a $520 million stock-drop suit against mining company Timminco Limited. Milberg’s Michael Spencer and Arthur Miller will provide strategic advice.
What does this ruling mean for U.S. law firms and how will it affect class actions in Canada?
Won Kim: U.S. law firms can participate in Canadian actions through the provision of resources, both legal expertise and financial resources. U.S. lawyers may also seek to be called in Canada and act as counsel of record. However, when considering the involvement of U.S. firms, courts will not approve a relationship in which Canadian lawyers act as puppets for their U.S. counterparts.
While Canada is a largely untapped area for American lawyers, it is important to remember that the real winners are the injured shareholders. As a result of this ruling, plaintiffs will have access to previously unavailable expertise and unparalleled resources. In our case, Michael Spencer is recognized as one of the top securities lawyers in North America, with decades litigating some of the largest shareholder cases. Arthur Miller is a preeminent legal scholar and civil procedure expert. (He has authored or co-authored numerous articles and more than 40 books, including Federal Practice and Procedure and Civil Procedure, and served as a member and reporter on the Advisory Committee on Civil Rules of the Judicial Conference of the United States.) The value these two elite lawyers bring to the case cannot be overstated.
Do you foresee an avalanche of U.S. firms driving future cases? Will there be significant forum-shopping?
Won Kim: Many thought the litigation floodgates would open in Canada when Bill 198 was initially announced. [The 2003 Bill 198 regulates securities issued in the province.] That fear was unwarranted. Instead, law firms started to form mutually beneficial strategic alliances. Kim Orr’s relationship with Milberg has been many years in the works. We’ve been seeking the right case on which to work together and we believe that Timminco is that case.
How will the losers pay provision in force in Canada affect the strategy of U.S. firms that may be seeing Canada as a new frontier?
Won Kim: Many firms typically indemnify representative plaintiffs to whom the losers pay provision applies. The cases we are working on with Milberg have been carefully vetted. These cases involve financial institutions and allegations of serious wrongdoing. On the whole, Canadian firms have been very responsible in commencing well-researched actions and avoiding strike suits. Given the amount of resources being invested by the leading Canadian firms, the loser pay regime will not be a deterrent to serious U.S. firms.
What do you foresee businesses doing (or what should they be doing) to manage what could be a whole new area of exposure for them? Will businesses change their strategies in Canada?
Won Kim: Canadian shareholders have long faced an uphill battle when litigating against determined, deep-pocketed opponents. Historically, defendants have employed both Canadian and U.S. counsel to defend actions in Canada. We see many of the premier U.S. defense firms in court every day we are there.
Things have now changed and the playing field has been leveled. Businesses should recognize that it is no longer sufficient to wage a war of attrition when litigating claims in Canada. While our firm has always been committed to take our cases as deep as necessary, we have often been engaged in a David-and-Goliath struggle with defendants who tried to bury us under an avalanche of documents.
Finding the needle in the haystack will be much easier with the assistance of Milberg and its team of investigators, forensic accountants, and forensic analysts.
Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog.