Silver v. IMAX – You Can’t Have Your Cake and Eat it Too
In the latest instalment of Canada’s first global securities class action, Justice van Rensburg ordered that the class definition be amended to exclude all of those individuals who did not opt out of a settlement agreement in parallel US proceedings.
Silver v. IMAX has involved several new considerations in securities class actions, as discussed in our previous blog postings Considering Notice in the Unusual Circumstances of Silver v. IMAX and The Unusual Circumstances of Silver v. IMAX - When The Representative Plaintiff From a Parallel Proceeding Moves to Participate. The Canadian class definition included all individuals who had purchased shares of IMAX on the NASDAQ and TSX, irrespective of where they live. The US proceeding included only those individuals that had purchased on the NASDAQ. While the proceedings were not co-extensive, there are individuals who purchased shares on the NASDAQ during the time period covered by both proceedings who were members of both the Canadian and US proceedings.
In the latest decision, 2013 ONSC 1667, Justice van Rensburg ruled on a motion brought by the defendants to amend the class definition in the Canadian proceeding. The amendment was required as a condition of the settlement in the US proceedings. If the amendment was not approved, then the US settlement would not proceed. Broadly, Justice van Rensburg’s decision deals with the Court’s authority to amend the class definition, and the relevant criteria for recognition of a US settlement approval and for amendment of the class definition.
Justice van Rensburg reviewed the history of settlement discussions, the US settlement approval and the information that had been provided to overlapping class members. The overlapping class members had been advised in the Canadian Notice of the proceeding that they were not excluded from the US proceedings if they chose to remain in the Canadian class. The same class members were advised in the US Notice that a settlement had been reached in the US proceedings and if they wished to partake in the settlement that they would not be able to recover under the Canadian proceedings. Canadian class counsel provided input into the form of both Notices and their contact information was provided in both notices.
The US Court approved the settlement and there was no evidence that there was anything unfair about the settlement or its approval. Ultimately, only one individual objected to the US settlement and only 7 individuals opted out of the US proceedings.
As a result, the overlapping class members of the Canadian class action that had accepted payment under the US settlement were to be excluded from the Canadian class. In essence, Justice van Rensburg held that individuals were given fair process to exercise a choice. They were permitted to choose whether they wanted to accept the certainty of what was being offered in the US Settlement or whether they wanted to continue pursuit of potentially larger recovery in the Canadian proceedings. They were not permitted to bank what was on offer in the US settlement and hedge their bets by still participating in the Canadian class proceedings.
Further commentary on this decision from members of our Class Actions Group is available in Cross-border class action big picture emerges in Imax case and Class action decision clarifies rules on overlapping plaintiffs.
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