Litigation Brief

What notice of termination is owed to employees during a takeover?

In a recent decision, the Honourable Mr. Justice Verhoeven of the Supreme Court of British Columbia considered the sufficiency of an employer’s notice of termination of employment within the context of a takeover.  In Kerfoot v. Weyerhaeuser Company Limited, 2012 BCSC 640, the Court was asked to award damages for wrongful dismissal to two employees – primarily damages related to a loss of their pensions.  The plaintiffs were successful and received awards of approximately $10,000 and $80,000.  In addition, there are several other potential plaintiffs in a similar position to the plaintiffs in the Kerfoot action.

Court of Appeal dismisses Baines defamation appeal

On March 9, 2012, the Court of Appeal dismissed the appeal of David Baines and others from a judgment finding Mr. Baines (a newspaper columnist) and the other appellants (members of the paper's editorial staff, the paper's publisher and its proprietor) liable for defaming the Hon. Edward M. Lawson, a former member of the Senate.  

A Cautionary Tale Highlights the Importance of Ensuring Accurate E-mail and Online Communications

On March 1, 2012, the B.C. Supreme Court awarded a plaintiff damages of $20,000 for defamatory statements made in e-mails and other communications.

That decision, Tjelta v. Wang, 2012 BCSC 299, is a good illustration of the importance of ensuring accurate e-mail and online communications.  The case is also a good update on the law of defamation in British Columbia.

Generally speaking, a plaintiff in a defamation action is required to prove three things: (i) that the impugned words were defamatory (i.e., that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person), (ii) that the words in fact referred to the plaintiff, and (iii) that the words were published (i.e., communicated to at least one person other than the plaintiff).

Helpful for plaintiffs is the fact that falsity and damage are presumed in defamation actions.  Also helpful to plaintiffs is that they are not required to prove that a defendant intended to do harm or was careless (i.e., defamation is a “strict liability” tort).  Where a plaintiff establishes the necessary elements, the onus or burden then shifts to the defendant to prove a valid defence to escape liability.

The Tjelta v. Wang case involved allegations of defamation in a series of emails and letters following a failed business relationship (a financing) to the plaintiff’s friends, family members, neighbours, business associates and other investors.

Supreme Court of Canada Allows Compensatory and Punitive Damages for a Misleading Contest

On February 28^, 2012, the Supreme Court of Canada awarded compensatory and punitive damages to a contest entrant for misleading claims in a contest mail-out.

The decision in Jean-Marc Richard v. Time Inc. and Time Consumer Marketing Inc., 2012 SCC 8 is interesting not only that a contest case made it to the Supreme Court, but in that our highest court also allowed punitive damages in this advertising case.  The Supreme Court also had very interesting comments in this Quebec Consumer Protection Act, R.S.Q., c. P-40.1 case regarding the importance of the “general impression” test for evaluating advertising, which is also found under the misleading advertising provisions of the federal Competition Act, R.S.C. 1985, C. c-34. 

In this case, the plaintiff received an “Official Sweepstakes Notification” that suggested he won USD $833,337.  The prize notification letter included conditional clauses which began “If you have and return the Grand Prize winning entry in time” and information that the recipient would qualify for a $100,000 bonus prize if the entry was validated within five days.  The mailing also included the official rules in small print and an offer to subscribe to Time magazine.  The rules provided that a winning number had been pre-selected by computer and that the holder of the number could receive the grand prize only if the reply coupon was returned by the deadline (otherwise the prize winner would be selected by random draw from all eligible entries with odds of winning of about 1 in 120 million).

Federal Court of Appeals Rules in Competition Act Limitation Period Case

On February 13, 2012, the Federal Court of Appeal released an important limitations period judgment in Garford Pty Ltd. v. Dywidag Systems International.

In this case, the Australian company Garford commenced an action against Dywidag Systems International and several individual defendants seeking damages for alleged infringement of some of Garford’s Canadian patents and based on alleged violations of section 45 (criminal conspiracy agreements) of the Competition Act, R.S.C. 1985, c. C-34.

In a lower court decision, the Federal Court granted the defendants summary judgment dismissing Garford’s claim on the basis that it was limitation barred under the Competition Act.

Section 36 of the Competition Act contains specific limitation periods that require, among other things, claims to be brought within two years of the relevant conduct (“two years from … the day on which the conduct was engaged in”).

Garford appealed, and the Federal Court dismissed its appeal.  The Court of Appeal held that it could find no error in the lower court’s application of the law or factual findings and was “in substantial agreement with [its] reasoning with respect to the limitation period.”

Ontario Court of Appeal Confirms that Announcements by Enforcement Agencies May be Defamatory

In TPG Technology Consulting Ltd. v. Canada (Industry Canada), 2012 ONCA 87, the Ontario Court of Appeal, recently held that statements made by an enforcement agency, in this case the Competition Bureau, in relation to a criminal investigation, can be defamatory.

This decision is interesting for the Court’s analysis of Canadian defamation law, including the test to strike out a defamation claim, as well as its discussion of the distinction between statements that merely describe an accused being charged or investigated compared to those that suggest an accused is guilty of an offence.

Can I personally sue for defamation if a group to which I belong is slurred?

Wilson v. Switlo is a recent decision of the B.C. Supreme Court addressing a great many aspects of the law relating to "defamation". This post is the sixth in a series reviewing the claims, defences, and issues raised in the decision.

As we saw in an earlier post in this series, a person can be found liable for defamation even if the party bringing the lawsuit (the "plaintiff") is not individually named in the offending statement.  The key question is whether, in the circumstances, it is more likely than not that the words that the plaintiff complains of would be reasonably understood to be defamatory of that plaintiff. 

In addition, where the words refer to a group rather than individual plaintiffs, members of that group can establish a claim for defamation if they can show that they have been individually defamed.  This requires that the offending statement be reasonably understood to refer to each of the plaintiffs.

Suing John Doe’s: What to do when you want to sue someone, but you don’t know his or her identity.

There are often times when an individual or business seeks to start a lawsuit against a party whose identity is unknown.  Defamation claims against individuals who post online anonymously are one example of such claims; hit-and-run cases against unidentified drivers are another example.  There are a number of ways to address this problem.

One way to address this problem is to start the lawsuit by referring to the unidentified defendants as “John Does.”  Then, either through some early applications requiring third parties to disclose information or through the discovery process involving other defendants, the identity of the defendants may be discovered.  Once the identity of the party becomes known, the Notice of Claim can be amended to include those names.

Another way to address this problem is to bring an application for what is called an “equitable bill of discovery.”  It is a much older and rarely used mechanism in today’s courts, but was recently discussed by the Supreme Court of British Columbia in Dhindsa (Re), 2012 BCSC 217.

Can I sue for defamation if I was not expressly mentioned by name?

Wilson v. Switlo is a recent decision of the B.C. Supreme Court addressing a great many aspects of the law relating to "defamation". This post is the fifth in a series reviewing the claims, defences, and issues raised in the decision.

As we saw in an earlier post in this series, to succeed in a claim of defamation, the party bringing the lawsuit (the "plaintiff") needs to prove, among other things, that the allegedly defamatory words referred to the plaintiff, and not someone else.

In Wilson v. Switlo, some of the letters that the plaintiffs said were defamatory did not specifically name all the plaintiffs.  The Court observed that a defamatory publication can refer to someone even if they are not individually named, citing the earlier decision of Manno v. Henry, 2008 BCSC 738.

Alberta Court of Queen’s Bench Issues Important Decision on Costs for Competition Law Private Actions Under Section 36 of the Competition Act

On February 7, 2012, the Alberta Court of Queen’s Bench issued an important decision on the award of costs in private competition law civil actions under section 36 of the Competition Act.  This case is the first decision reported regarding a party's right to claim costs under section 36 of the Competition Act.

In 321665 Alberta Ltd. v. ExxonMobil Canada Ltd., 2012 ABQB 76, the Alberta Court of Queen’s Bench interpreted the plaintiff’s right in a successful upstream cartel case to recover costs in the action under section 36 of the Competition Act.

Section 36 of the Competition Act is the operative provision for commencing competition law private actions in Canada, which provides that private plaintiffs may sue for, among other things, violations of the criminal provisions of the Act (e.g., conspiracy agreements, bid-rigging, criminal misleading advertising) and recover actual loss or damage suffered, “together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under [section 36]”.

To date, however, it has not been clear what the scope of a plaintiff’s right was to recover the costs of bringing a private action under section 36.

Can you be held liable for defaming an elected official?

Wilson v. Switlo is a recent decision of the B.C. Supreme Court addressing a great many aspects of the law relating to "defamation".  This post is the fourth in a series reviewing the claims, defences, and issues raised in the decision.

As we saw in an earlier post in this series, the words complained of in Wilson v. Switlo were allegations of fraud and corruption against the plaintiffs in their capacity as holders of public office, namely as members of the Kitamaat Village Council, the elected band council of the Haisla First Nation.  The Court found that those allegations were defamatory, because they would tend to lower a person’s reputation in the estimation of ordinary, reasonable members of society generally, or to expose a person to hatred, contempt or ridicule.

But what about freedom of expression?  Aren’t members of the public entitled to criticize elected officials?

What is an example of defamatory words?

Wilson v. Switlo is a recent decision of the B.C. Supreme Court addressing a great many aspects of the law relating to "defamation". This post is the third in a series reviewing the claims, defences, and issues raised in the decision.

To succeed in a claim of defamation, the party bringing the lawsuit (the "plaintiff") needs to prove three things:

1. that the party being sued (the "defendant") "published" the words complained of, where "publishing" means communicating the words to a third party, whether orally, in writing, or in some other fashion (e.g. standing and pointing out to passers-by a defamatory sign written by someone else);
2. that the words complained of referred to the plaintiff, and not someone else; and
3. that the words complained of are, in fact, defamatory.

As we saw in the first post in this series, words are defamatory when they tend to lower a person’s reputation in the estimation of ordinary, reasonable members of society generally, or to expose a person to hatred, contempt or ridicule. 

Does an employee have to continue working, if they have been given notice that they will be terminated?

The B.C. Court of Appeal has overturned a trial decision that had held an employee was not entitled to damages for wrongful dismissal, where the employee had refused to work during a period of "working notice" of termination offered to him by his employer.

In Giza v. Sechelt School Bus Service, 2012 BCCA 18, the plaintiff/ appellant was a 61 year-old bus driver who had been employed by the respondent for five years.  In the fall of 2009, the appellant and his boss had gotten into some disagreements over the bus route and timing and the respondent decided to terminate the appellant’s employment.

The respondent provided the appellant with five weeks working notice – the amount required by the Employment Standards Act.  Upon receiving the letter, the appellant left work permanently.

The trial judge held that five weeks notice was not reasonable notice of termination of the appellant’s employment; however, the trial judge found that as the appellant refused to work during the working notice period offered, he had repudiated his employment contract – i.e., quit – and was not entitled to damages for wrongful dismissal.

The Court of Appeal’s unanimous judgment held that the appellant’s failure to work during the notice period offered did not cause him to lose his entitlement to reasonable notice of termination of his employment.  The Court concluded, at paragraph 41, that:

In Hadcock v. Georgia Pacific Securities Corp., 2006 BCCA 536, 64 B.C.L.R. (4th) 308 at para. 48 this Court, relying on the Supreme Court of Canada’s decision in Guarantee Co. of North America v. Garden Capital Corp., [1999] 3 S.C.R. 423, explained that although repudiation ends the ongoing rights and obligations of parties under a contract, it does not affect rights and obligations that have accrued.  In the present case, the appellant’s right to damages in lieu of reasonable notice had accrued when he was given inadequate notice.  His repudiation did not take away that right and it did not take away the right of the respondent to the appellant’s services during the period of notice given.

The Court of Appeal went on to hold that six months notice was reasonable in the circumstances, and then reduced this damages award to five months by reason of the appellant’s failure to work during the notice period offered by the respondent. 

To read the full decision, click here.

Realtysellers Lawsuit Against CREA and TREB Survives Motion to Dismiss

A claim against two major real estate boards and their executives for breaching terms of an earlier settlement agreement, common law and Competition Act conspiracy and certain economic torts survived a motion to dismiss last week.  The reasons for judgment provide insight into the sufficiency of pleadings in cases involving allegations of anti-competitive conspiracies against businesses and their executives.

Last Friday, Mr. Justice Kenneth L. Campbell of the Ontario Superior Court of Justice dismissed a motion by the defendants in Dale v. The Toronto Real Estate Board to dismiss Realtysellers (Ontario) Limited’s (“Realtysellers”) action against The Canadian Real Estate Board (“CREA”), The Toronto Real Estate Board (“TREB”) and 47 other defendants (for a copy of the decision see: Dale v. The Toronto Real Estate Board).

Hakemi & Company Law Corporation Adds Further Depth to its Litigation Practice

We are pleased to announce that Jessica Forman has joined Hakemi & Company Law Corporation as an articled student.  She is admitted to practice in California, where she has represented clients in a variety of litigation matters, and at all stages of litigation, from pre-dispute negotiations, through trials, and appeals.

She has provided civil litigation advice to clients in a variety of industries, including representing a large construction company, an international airline and a non-profit housing rights organization. Her criminal litigation experience includes advising clients in criminal matters relating to securities issues as well as insurance disputes, legal malpractice issues, fraud and negligence.  She has appeared before United States Federal courts as well as California state courts.

Prior to her legal practice, she worked for several years in Washington D.C. as a legislative assistant to a member of Congress.  She is a graduate of the University of Southern California Gould School of Law in Los Angeles and earned her undergraduate degree from Emory University in Atlanta, Georgia.

For more information about Jessica and her experience see: Jessica Forman

Ontario Securities Commission Recognizes Alpha as a Stock Exchange

The Wall Street Journal reported earlier today that the Ontario Securities Commission (“OSC”) has approved Alpha (Alpha Trading Systems Limited Partnership and Alpha Exchange Inc.), Canada’s largest alternative trading platform to the TSX, as a stock exchange (see: Ontario Securities Regulator Allows Alpha to be Exchange).

The OSC’s Recognition Order sets out the terms and conditions of Alpha’s recognition as an exchange and the review process to be followed for the rules, policies and other similar instruments of Alpha Exchange.

The TMX, which owns and operates the TSX, is currently subject to a Cdn. $3.8 billion friendly bid by Maple Group, which requires, in addition to Provincial securities regulatory approvals in Ontario, Quebec, Alberta and British Columbia, clearance by the federal Competition Bureau.  Alpha’s shareholders include a number of the Maple Group consortium’s investors including CIBC, Dejardins, National Bank and Scotia.

Last week the Commissioner of Competition expressed “serious concerns” about the Maple/TMX transaction, which is currently subject to a second stage review by the Bureau (see: Commissioner of Competition Addresses Current Enforcement Priorities in Two Wide-ranging Talks in Vancouver).

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For the OSC’s Notice of Approval and Recognition Order see:

Recognition of Alpha Trading Systems Limited Partnership and Alpha Exchange Inc. as an Exchange

 

Canadian Supreme Court Grants Leave in Pro-Sys/Microsoft and Sun-Rype Indirect Purchaser Competition/Antitrust Class Actions

Earlier today the Supreme Court of Canada, per Justices LeBel, Fish and Cromwell, granted leave to appeal in the Pro-Sys Consultants Ltd. v. Microsoft Corporation and Sun-Rype Products Ltd. v. Archer Daniels Midland Company cases.

These cases relate to conflicting indirect purchaser class action certification decisions in British Columbia (two companion decisions of the British Columbia Court of Appeal) and Quebec (a recent decision of the Quebec Court of Appeal).

(See: Quebec Court of Appeal rejects B.C. Court of Appeal passing-on defence decisions in Pro-Sys and Sun-Rype and British Columbia Court of Appeal allows Microsoft appeal in Pro-Sys v. Microsoft - creates de facto passing-on defence).

The central issue to be decided by the Supreme Court will be the ability of “indirect purchasers”, that is purchasers further down the supply chain than "direct purchasers" of products, to proceed with claims against defendants in price-fixing class actions.

Presently, based on conflicting appellate decisions in British Columbia and Quebec, there is uncertainty as to indirect purchasers’ ability to proceed with such claims as well as the status of the related “passing-on defence” in Canada (which originated in the United States in the context of indirect purchaser class action litigation).

For the British Columbia Court of Appeal’s judgments in the Pro-Sys and Sun-Rype cases see:

Pro-Sys Consultants Ltd. v. Microsoft Corporation (B.C.C.A.)

Sun-Rype Products Ltd. v. Archer Daniels MIdland Company, et al. (B.C.C.A.)

For the procedural history of these cases before the Supreme Court see:

Pro-Sys Consultants Ltd., et al. v. Microsoft Corporation, et al. (docket 34282)

 

Quebec Court of Appeal Rejects BC Court of Appeal Passing-on Defence Decisions in Pro-Sys and Sun-Rype

Earlier this month, the Quebec Court of Appeal unanimously overturned the earlier 2008 Quebec Superior Court decision in Option Consommateurs v. Infineon Technologies AG, which had denied a motion to commence class action proceedings.

The decision in this case, which follows U.S. proceedings and guilty pleas in relation to a price-fixing conspiracy for the supply of dynamic random access memory (“DRAM”), is significant in expressly allowing indirect class action plaintiffs to proceed despite two earlier British Columbia Court of Appeal decisions that created a de facto passing-on defence (see: British Columbia Court of Appeal Allows Microsoft Appeal in Pro-Sys v. Microsoft - Creates de facto Passing-on Defence).  (for the earlier BC judgments in Pro-Sys and Sun-Rype see: Pro-Sys Consultants Ltd. v. Microsoft Corporation and Sun-Rype Products v. Archer Daniels Midland Company).

In these two earlier British Columbia decisions, the Court of Appeal set aside the plaintiffs’ earlier certification decisions largely based on the risk that allowing indirect purchaser plaintiffs to proceed may lead to double recovery.  In this regard, Mr. Justice Lowry held:

“… in the absence of the passing-on defence, a defendant would be liable for both the whole of the charge passed on (liability to the direct purchasers) and for all or any portion of the charge passed on (liability to the indirect purchasers) … [that] would result in double recovery … which our law does not permit.”

In the recent Quebec Court of Appeal decision in DRAMs, a unanimous Court rejected the holdings in Pro-Sys and Sun-Rype, adopting instead the dissenting opinion of Donald J.A. in Sun-Rype to allow the DRAMs plaintiffs to proceed.

The Quebec Court of Appeal held, in reasons delivered by Kasirer J.A., that rather than automatically resulting in double recovery, allowing the indirect plaintiff purchasers to proceed in this case would instead mean they would be required to prove indirect harm suffered in a hearing on the merits:

“I disagree with the motions judge that the rules relating to passing-on are a bar to authorizing the class action here.  The appellant’s allegations of injury are not defeated by either the double recovery argument or the complexity argument raised by the respondents in connection with passing-on of the loss to indirect acquirers of DRAM.

I draw my views in large part from the dissenting opinion of Donald J.A. in Sun-Rype to conclude that it would be premature to dismiss the motion under article 1003(b) C.C.P. based on the claim for losses by members of the class who are indirect purchasers.  To my mind, the respondents do not face an unfair risk of double recovery given that the motion alleges a single, aggregate loss notwithstanding the mix of direct and indirect purchasers in the class.  In addition, the complexity not to be underestimated – is an evidentiary concern that can be properly attended to as part of the burden of proof resting on the appellants when the case is considered on the merits.

The facts of this case invite us to consider the use of the theory of passing-on not as a shield to protect the wrongdoers but as a sword to allow the indirect purchasers to make plain their losses.  The respondents are not invoking passing-on of the overcharge by direct purchasers as a defence to the claim against them; instead, the indirect purchasers are arguing that, as a matter of fact, those losses moved down the chain, in whole or in part, and justify, aggressively rather than defensively, a claim by them against the respondents for price fixing. … As the trial judge noted in [Sun-Rype], ‘it is a mistake to equate pass-through as a defence at law with pass-through as a factual occurrence.’”

The Quebec Court of Appeal in essence held in this decision that allowing indirect purchasers to proceed will not necessarily lead to double recovery and, rather than assuming this result, they should be permitted to argue their indirect damages at trial (despite the difficulty and complexity of doing so, which the court acknowledged).

This case now means that the status of the passing-on defence in Canada is now more unsettled than ever, with conflicting decisions by two Canadian appellate courts.

This Quebec Court of Appeal decision is also leading to more speculation of how the Supreme Court of Canada will rule in relation to leave applications made to Canada's highest court in Sun-Rype and Pro-Sys.

 

Supreme Court of Canada Denies Leave in U.S. Steel Investment Canada Case

On November 24, 2011, the Supreme Court of Canada denied leave in United States Steel Corporation et al. v. Attorney General of Canada (FC) (Civil) (By Leave) (34389).  See: Supreme Court of Canada Judgements.  See also: National Post - Supreme Court Won't Hear U.S. Steel Appeal.

To appeal a decision of a court of appeal in a civil case to the Supreme Court, the party wishing to appeal must first obtain leave (i.e., permission) to do so.  Under the Supreme Court Act, an application for leave to appeal may be granted if the Supreme Court finds that the case: (i) raises an issue of public importance and (ii) should be decided by the Supreme Court.  Any case must raise an issue that goes beyond the immediate interests of the parties.

The Supreme Court does not issue reasons for its decisions to allow or dismiss applications for leave to appeal.  Judgments on applications for leave to appeal are also generally final (under the Supreme Court of Canada Rules, an application for leave to appeal will not be reconsidered unless there are exceedingly rare circumstances in the case that warrant consideration).

This U.S. Steel case relates to the federal government’s lawsuit against U.S. Steel in relation to the performance of undertakings U.S. Steel provided in its 2007 acquisition of Hamilton-based Stelco Inc.  The Federal Court had previously allowed the government’s lawsuit to proceed.

Where an investor fails to comply with the Investment Canada Act (e.g., fails to file an application for review or notification, fails to comply with undertakings or completes a reviewable investment without the requisite approval) a number of penalties may be imposed.  These include divestiture of assets, the revocation (or suspension) of voting rights and financial penalties of up to Cdn. $10,000 per day that an investor is in contravention of the Investment Canada Act (being sought by the government in this case).

For the Supreme Court of Canada’s leave decision see:

Supreme Court of Canada Judgements

For more about the Investment Canada Act see:

Investment Canada

 

New Blog – Canadian Advertising & Marketing Law

We are pleased to announce the launch of our new Canadian advertising and marketing law blog: Canadian Advertising & Marketing Law. 

Our new blog will include news and developments in Canadian advertising and marketing law by Steve Szentesi, who works as associate counsel with Hakemi & Company Law Corporation, key resources and links and overviews of advertising law, the new anti-spam legislation (Bill C-28), comparative advertising, promotional contest law, misleading advertising, packaging and labeling laws and telemarketing.