Mi Casa Es Su Casa: Van Breda as the House Rule for Global Securities Class Actions in Ontario

• Author: Samantha Greer
• Pages: 125-164

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MI CASA ES SU CASA:

VAN BREDA

AS THE HOUSE RULE FOR GLOBAL

SECURITIES CLASS ACTIONS IN

ONTARIO

Samantha Greer

Abstract: Since enacting Par t XXIII.1 of its Securities Act nearly

a decade ago,Ontario has become a hotspot for shareholder

classes seeking damages for misrepresentations made in the

secondary securities market. While US courts have all but

closed their doors to securities class actions with promin-

ent foreign aspects, Ontario courts have continued to widen

theirs, as Kaynes v BP set the threshold for f‌inding a real and

substantial connection to the adjudicative forum at an all-

time low. Prior academic commentary has proposed that On-

tario courts invoke the test for jurisdiction set out in Club

Resorts Ltd v Van Breda, but there remains lively debate as

to which connections are suff‌iciently real and substantial to

ground jurisdiction over a secondary market misrepresen-

tation class action with signif‌icant cross-border elements.

In contributing to this discourse, this paper comprises the

f‌irst comprehensive quantitative assessment of the jurisdic-

tional determinations made in Ontario class actions involv-

ing statutory cla ims for secondary market misrepresent ation.

The author found that although no bright-line test or consist-

ent analytical framework for assuming jurisdiction emerged

in the jurispr udence, Ontario courts have tended to rely more

heavily on certain connecting factors than others. Moreover,

each of these favoured factors maps onto one of Van Breda’s

four presumptive connecting factors, and so Van Breda has

the potential to add much-needed form to the substance of

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the jurisdictional precedent that has developed in Ontario.

Moreover, implementation of the Van Breda framework as

tailored to the secu rities class action context would optima lly

balance protection of global shareholders with preservation

of comity and fairness to issuers.

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MI CASA ES SU CASA:

VAN BREDA

AS THE HOUSE RULE FOR GLOBAL

SECURITIES CLASS ACTIONS IN

ONTARIO

Samantha Greer*

A. INTRODUCTION

There has been a noticeable surge in the number of securities class ac-

tions initiated in Canada in recent years.1 This is due in no small part

to the enactment of Part XXIII.1 of the Ontario Securities Act,2 which

introduced a statutory cause of action for misrepresentations made in

the secondary securities market (section 138.3) and thereby eliminated

the need to prove reliance in common law tort claims against fraudulent

issuers.3 Given the increasingly global nature of the securities industry,

questions of jurisdiction in secondary market misrepresentation claims,

particularly those brought under the newly enacted section 138.3 of the

OSA, are becoming a per sistent issue in securities cl ass actions.4 Further-

more, the reverberations of the 2010 US Supreme Court decision in Mor-

rison v National Australia Bank are sti ll felt today as Morrison’s br ight-l ine,

exchange-based te st for jurisdict ion over secondary ma rket misrepresen-

tation class actions has left many would-be plaintiff shareholders shut

* Associate , Ropes & Gray LLP, London, United Kingdom. I am grat eful to

H Michael Ros enberg and Patrick Kwak for their tre mendously helpful com-

ments and revie w. The views and opinion s expressed in th is paper are my own.

1 See Internat ional Institutional Tort Recover y Association Ltd & Inst itutional

Protection Ser vices Ltd, “F3: Secur ities Class Actions arou nd the World after

Morrison” (2011) 16 Pensions 115 at 120 [IITRA & IPS]; Tanya Monestier, “Is

Canada t he New Shangri-La of Global Sec urities Class Action s?” (2012) 32

Northwestern Journ al of International Law & Bu siness 305 at 306–7.

2 RSO 1990, c S.5 [OSA].

3 See IITRA & IPS, ab ove note 1 at 120; OSA, above note 2, s 138.3; Natalya

Shnitser, “A Free Pass for Foreign Fir ms? An Assessment of SEC and Pr ivate

Enforcement again st Foreign Issuers” (2010) 119 Yale Law Journal 1638 at 1692.

4 See Monestier, above note 1 at 308 –9.

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