Supreme Court decision corporate-friendly but deterrent remains

Corporations can take some comfort from the Supreme Court of Canada’s recent decision on investor class action lawsuits that the protections built into the Securities Act for them are going to be strictly upheld by the courts, Toronto class-action lawyer Margaret Waddell tells Lawyers Weekly.

Earlier this month, the top court ruled in Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 that shareholders of the Canadian Imperial Bank of Commerce and IMAX can proceed with separate class actions for misrepresentation against those companies based on the cause of action created by Ontario’s Securities Act, the article notes. The court dismissed, as time-barred, a third similar investor class action against Celestica.

Splintered decision

Waddell, a partner at Paliare Roland Rosenberg Rothstein LLP and counsel for the intervener, Canadian Foundation for Advancement of Investor Rights, says in the article that the court’s lengthy splintered decision, with shifting majorities, is, on balance, corporate-friendly.

“Those policy objectives seem to have paramountcy in the majority’s analysis that although the door was opened up to bringing class actions by removing the ‘reliance’ [requirement] from the misrepresentation test, all of the protections that were built in remain there for the defendants, and there’s going to be very few of these cases that are going to make it through leave and certification, absent a strong factual record of some real corporate wrongdoing.”

However, Waddell says she believes the court’s judgment has not “profoundly affected” the deterrent effect the statutory cause of action has on companies.

“It is still going to weigh heavily on corporate conduct, that they know that if they misbehave they are at risk of class actions being brought,” she explains.