Carriage Motions: Insights and Obstacles For Defendants

The service of a statement of claim in intended class action proceedings often puts defendants in the spotlight of what can be a protracted and frustrating roller coaster. When a defendant is served with two or more class actions claims relating to the same or similar causes of action, the spotlight turns to the plaintiffs' counsel who must “duke it out” to assume carriage of the matter. The Divisional Court’s recent upholding of Belobaba J.’s carriage order in Mancinelli v. Barrick Gold Corporation reflects an application of the principles governing carriage motions. The decision reflects how a carriage motion can give rise to both insight and obstacles for defendants.

In Barrick, carriage of a class action against Barrick Gold Corporation and four of its executives was awarded to a consortium led by Rochon Genova (“RGG”), and staying a competing action led by Koskie Minsky (“KMG”). The competing actions arose from Barrick’s disclosure on April 10, 2013 that construction had been suspended at its mine in Chile, and the subsequent shut down of the project due to environmental violations. Belobaba J. held, and the Divisional Court agreed, that the two factors in the non-exhaustive list of considerations on a carriage motion favouring RGG were the claims they were advancing, and their level of preparation.

Claims Advanced

The KMG action was advancing what it termed a “leaner and meaner” case. This plaintiff group put forward a single claim based on the defendant’s misrepresentations about environmental violations. The RGG action advanced four distinct claims including (1) misrepresentations relating to environmental violations; (2) misrepresentations relating to overall costs and completion time estimates; (3) misrepresentations in financial statements; and (iv) conspiracy and fraudulent concealment. The Divisional Court agreed with Belobaba J.’s conclusion that RGG’s multiple claims were viable and supported by the evidence to date. The courts were not persuaded by KMG’s submission that a “focused” claim would be more likely to obtain certification.

Level of Preparation

The Divisional Court agreed with Belobaba J.’s conclusion that the RGG action was in a more advanced state of preparation. The Divisional Court found that Belobaba J.’s findings reflected “a sustained and in-depth pattern of research and preparation” by RGG, and this would further the interests of the class.

Implications for Defendants

The “claims advanced” factor on a carriage motion can provide an important preview for defendants into the case each plaintiff group will advance. In order to demonstrate that the action being advanced is in the best interests of the class, each plaintiff group must put its best foot forward to demonstrate why its action is viable, and likely to be certified. This gives defence counsel a preview of what each plaintiff group will argue on the ultimate certification motion. While a carriage motion is not a determination of which action is most likely to succeed, defence counsel may be able to hone in on strengths and weaknesses in each action based on the questions of the judge during the hearing of the motion, or through the judge’s reasons.

The relevance of the “state of preparation” factor can operate less favorably for defendants. For obvious reasons, it encourages plaintiffs’ counsel to do a significant amount of work, not only to build their case, but to show the court that their case is more advanced. This motivates plaintiff groups to get their action to an advanced stage early in the game, which may involve the delivery of significant amounts of evidence and expert reports. A defendant, on the other hand, does not even know which action it will ultimately respond to, which can make preparation while a carriage motion is pending problematic.

What defendants can do is seek an undertaking – as Barrick did in this case – that both counsel groups will take all necessary steps to permanently stay or dismiss any parallel Canadian proceeding, and will not facilitate the commencement of any other parallel Canadian proceeding. It was confirmed by the Divisional Court that the undertaking given by KMG and RGG in this case included law firms outside Ontario. This facilitates some certainty for defendants, at least as far as the counsel groups in the carriage motion are concerned. With this undertaking, the carriage motion effectively determines which action is proceeding and in what jurisdiction, such that the defendants can focus on responding to the certification motion when carriage is determined.