U.s. Protective Orders in Canadian Class Actions

• Author: Rebecca Case and Andrew Flavelle Martin
• Pages: 49-64

49

U.S. Protective Orders in

Canadian Class Actions

Rebecca Case and Andrew Flavelle Martin*

A. INTRODUCTION

Class actions arising from the same facts on both sides of the 49th par-

allel continue to flourish. As these cases mature, there are numerous

procedural and interjurisdictional issues that arise. The differences in

procedural discovery rights between Canada and the U.S. give rise to

some of these issues. This article evaluates some recent decisions that

examine the effect the presence of a U.S. protective order has on a paral-

lel Canadian class action, and what strategies have been employed with

respect to the use of information protected in the U.S. in a Canadian

class action.1

There are no discovery rights permitted prior to a certification motion

in Ontario and, frequently, at the certification stage, the defendants will

not have filed a statement of defence. Discovery rights engage once the

action has been certified and the pleadings are closed.2 A certification

motion is a procedural motion, one that does not engage in an analysis

of the merits of the case; however, there must be some basis in fact for

the allegations in the proceeding.3 As discovery has not yet commenced,

* Ms. Case is an associate in the class action group at Lerners LLP in Toronto.

Mr. Martin was a summer student at Lerners LLP in Toronto, and is cur-

rently completing his J.D. at the University of Toronto. Special thanks to Jason

Reynar for his research on this topic while completing his articles at Lerners

LLP in Toronto.

1 Although the term Canadian class action is used, this paper focuses on the law

in Ontario.

2 See for example, Irving Paper v. Atofina Chemicals Inc., [2008] O.J. No. 1487

(S.C.J.) at para. 6 [Irving Paper]; the Rules of Civil Procedure, R.R.O. 1990, Reg.

194 [Rules of Civil Procedure]; and the Class Proceedings Act, 1992, S.O. 1992,

c. 6 [Class Proceedings Act or CPA].

3 LeFrancois v. Guidant Corp., [2008] O.J. No. 1397 at para. 27 (S.C.J.); Hollick

v. Toronto (City), [2001] 3 S.C.R. 158 at paras. 16 and 24–25; Class Proceedings

Act, ibid., s. 5(1).

50 THE CANADIAN CLASS ACTION REVIEW

this leaves plaintiffs’ counsel without a right to information from the

defendants, aside from that which is publicly available. This can be—or

be perceived to be—insufficient to meet the test for certification.

In the U.S., discovery is frequently permitted prior to certification by

way of a case management order.4 Greater information that can be useful

in the pursuit of certification in Ontario may therefore be available in a

parallel proceeding in the U.S. However, this information is frequently

subject to a protective order. U.S. protective orders, frequently entered

into in proceedings in the U.S. on consent, typically restrict the sharing

of information on the grounds that it is confidential or sensitive business

information and limit its use to the action in which it is produced, or as

required by law. In this respect, the U.S. protective orders can be seen as

hybrids of the implied or deemed undertaking rule and the law respect-

ing confidentiality and/or sealing orders in Ontario.

If access to the protected information is desired, how then can plain-

tiffs’ counsel obtain the material covered by the U.S. protective order

pre-certification, and how might defendants’ counsel respond? One

approach may be to attempt to arrange for a parallel confidentiality order

or a consent agreement to seek an extension of the deemed undertaking

rule to cover materials in the pre-certification stage. Another approach

may be to seek modification of the U.S. protective order itself. Whichever

approach is attempted, different challenges can arise. Further challenges

can arise if plaintiffs’ counsel seeks to retain an expert witness who

was also retained in the parallel U.S. proceedings; can defense counsel

object by characterizing this as an attempt to circumvent the U.S. protec-

tive order through the guise of the expert? The feasibility of these two

approaches, and whether the use of an expert from the parallel proceed-

ing does in fact constitute a third approach, are examined in more detail

below. Once certification is granted the question then becomes, how can

the defendants maintain the protected status of the information? The

difference in law pre- and post-certification suggests that if the plaintiffs

desire the information and if the defendants are concerned about the

information’s protected status, then the parties should work towards a

mutually acceptable confidentiality order.

4 Advice received from a counsel in the U.S.