According to a January 27, 2010 article in the Vancouver Sun (here), the number of filings and the procedural developments (including the rulings in the IMAX case) are "a wake up call for publicly traded companies." Law firms are "advising their clients to revisit their compliance and corporate-governance procedures to protect against similar suits." One lawyer quoted in the article says that he is also advising his clients to review their corporate insurance, as well.He goes on to state that "We’ve seen over the years there are a lot of problems in terms of clients don’t really have the type of coverage they need." Yet, as for the question of whether there may be a flood of litigation, one plaintiffs’ attorney quoted in the article sounds a note of caution.The attorney, Dimitri Lascaris, who is one of the lead attorneys in the IMAX case, notes that that the Canadian system still provides for adverse costs, and even the liberalized standard under the new Ontario law are time consuming and expensive.
On January 27, 2010, NERA Economic Consulting released its updated annual review of Canadian securities class litigation entitled "Trends in Canadian Securities Class Actions: 2009 Update" (here).
The report presents an interesting study of the evolution of class action litigation in a jurisdiction outside the U. According to the report, there were eight new securities class action lawsuits filed in 2009, which is fewer that the ten filed in 2008 "but still greater than filings in previous years." With the addition of the eight new cases, there are now 23 pending securities class actions, representing more than $14.7 billion in claims.
Most of these cases were filed in the last three years although some of the pending cases were filed almost 10 years ago.
Though the number of new filings is noteworthy, the more significant developments may be the class certifications in three cases and the ruling allowing the IMAX securities class action plaintiffs leave to proceed under the new Ontario securities laws.
(My prior detailed discussion of the rulings in the IMAX case can be found here.).
The NERA report comments that these rulings "may ultimately prove to be an inflection point" for securities class action litigation in Canada.
Though there were significant new filings in 2009, one noteworthy feature of the cases that were filed is the "absence in Canada of class actions filings relating to the credit crisis." This absence may be due in part to the relatively smaller impact of the credit crisis in Canada compared to the U. and the negotiated billion restructuring of the Canadian Asset Backed Commercial Paper market, which may have preempted further litigation. 2009 settlements averaged 13.7% of the amount of claimed damages.
Six cases settled in 2009 for a total of approximately million, for an average of approximately .5 million and a median of approximately million (which is roughly comparable to the median settlement of U. Cases with cross-border litigation counterparts in the U. tended to settle for larger amounts both in terms of absolute dollars and as a percentage of claimed damages.
The panel will be moderated by my friend Dave Williams from Chubb (Canada) and planned speakers include a number of prominent players in the area in Canada, including Dimitri Lascaris. The Securities Litigation Watch blog has a post about the NERA study here.