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 Legal Post blog has movedHello readers, Our Legal Post blog has moved to a new home, over here: http://business.financialpost.com/category/legal-post/There will be no more updates at this location, so please change your bookmarks to the address above.We hope to see you soon!
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 Litigation concerns central to disclosure at hearings into Torys lawyersDon't kid yourself. The fight over solicitor-client privilege under way at the hearings into Torys lawyers Beth DeMerchant and Darren Sukonick is as much about litigation eavesdropping as it is about their alleged conflict of interest.An underlying concern raised by lawyers at the hearings today is that the disclosures could provide valuable ammunition in other litigation under way in the state of Illinois and Ontario, where Torys and former Hollinger executives still face lawsuits.Law Society prosecutor Paul Stern kicked off the privilege storm earlier this week, when he told the panel hearing the case involving six charges against each of the lawyers that the hearings would have to be held behind closed doors because much of the information needed to fight the case was subject to solicitor-client privilege.The panel hearing the case was uncomfortable with that prospect and a movement arose to obtain waivers from the affected third party clients. The panel requested lawyers for the third parties to attend the hearings to see if a solution could be worked out that would keep the hearings open to the public. That smoked out the concerns about ongoing and possible future litigation. A letter filed by Torys lawyer Ron Foerster of Borden Ladner refer to a claim by Hollinger Inc. against Torys, which is being dealt with through a confidential mediation process. Torys was earlier part of a $30-million settlement along with KPMG involving with sister company Hollinger International. Speculation is rampant that Torys has also settled with Inc. Mr. Foerster wrote to Mr. Stern that "there has been no express waiver of privilege by Hollinger Inc." in its litigation with Torys.There was also discussion about litigation in Illinois, which is stayed pending the outcome of the criminal appeals by Lord Conrad Black and others convicted of fraud in the U.S. over transactions at the heart of the discipline charges. A decision on an appeal of the honest-services convictions is expected by the end of June. The concern is that lawyers in the Illinois suit will use disclosures to advance their case there once the U.S. Supreme Court rules.It was also pointed out that a simple publication would be unwieldy beyond the Ontario borders and that caused Mr. Black's representative, Todd White, who works with Mr. Black's lawyer Eddie Greenspan, to quip that a "publication ban doesn't work."Jim Middlemiss
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 Lawyers work to keep hearings into Torys lawyers open to publicA move to close a discipline hearing into two lawyers who used to represent Conrad Black and his related companies is turning into a "waiver bandwagon," as key companies indicate a willingness to forgo their right to solicitor-client privilege over critical legal documents that would allow the hearings to be held in public."We want an open hearing," stressed Phil Campbell, who represents Beth DeMerchant, at the Law Society of Upper Canada hearing. "There's been a recent flurry of activity in the direction of waiver," he told the three-member discipline panel on Thursday.Ms. DeMerchant and Darren Sukonick are accused of professional misconduct between 2000 and 2003. They are alleged to have acted in a conflict of interest when on behalf of Torys they represented Lord Black and other clients including Hollinger International Inc., and a number of related companies and individuals.The two lawyers are accused of preferring the economic interests of some of their clients over others in transactions such as the sale of Hollinger newspaper assets to Canwest Global Communications Corp. in 2001.On Tuesday, in his opening statement, law society prosecutor Paul Stern advised the discipline panel that the hearings would have to be held behind closed doors because much of the information needed to fight the case was subject to solicitor-client privilege.The three-member panel hearing the charges urged the lawyers to find a way to continue the hearing in public and requested that lawyers for the companies and individuals whose confidential information was involved to attend the hearings to find a resolution.On Thursday, Mr. Stern reiterated his concern that "there is very little room to move on the privilege material" and that waivers were the best option for continuing the hearings in public.Lawyer Paul Henderson, one of the three persons hearing the charges, stressed that the panel wanted the proceeding as "open as possible."Mr. Campbell reported on the extensive efforts he had made to reach counsel and seek a waiver of the privilege from Torys' former clients.He said based on discussion with lawyers, of the six charges that Mr. Sukonick and Ms. DeMerchant faced, it looks like at least five would be able to go forward in public starting as early as next week.Megan Keegan, a lawyer for Hollinger Inc., told the panel that her client was willing to provide a "limited waiver" pertaining to the documents involved in the charges.Julia Schatz, a lawyer for Hollinger International, indicated she would be reviewing the material and speaking to her client.A lawyer for Jack Boultbee, a former Hollinger executive, advised the panel that Mr. Boultbee wasn't a client of Torys with regards to the matters before the law society, so there was no issue of privilege.The receiver of Ravelston Corp. indicated to counsel that the company was impecunious. Talks also continued with a British Columbia lawyer for a limited partnership that was involved in a loan at the centre of one of the charges the two lawyers face and a "finish line" was in site, Mr. Campbell said.One sticking point that remains is former Hollinger executive and general counsel, Peter Atkinson, who wasn't at the hearing, and Lord Black, who indicated in a letter he would not waive privilege. His lawyer Todd White said "this is a very complicated issue," and his firm needed time to speak to Lord Black about the request. One of the charges the Bay Street lawyers face centres on Lord Black's renunciation of his citizenship and the impact that had on the Hollinger companies.The hearings, which are in their 10th day of a scheduled 24 days, resume on Monday, when it is expected that the defence lawyers will open their case. The case is expected to clarify what constitutes a conflict of interest and could impact how subsidiaries of companies handle independent legal advice in sales transactions.Jim Middlemiss
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 Tim Hortons class action a 'sour dough' fightAs Tim Hortons prepares for Friday's annual general meeting at Ryerson University in Toronto, its lawyers are a few blocks away in court Thursday fighting a $1.95-billion class action brought by disgruntled franchise owners.The suit centres on the conversion from a "fresh-baked goods" restaurant to a "microwaved products store," which two franchise holders argue has driven up the fixed costs of a lowly donut -- a Canadian staple -- by 11 cents without increasing sales or making the stores more profitable.Tim Hortons management called the lawsuit, launched in the June, 2008 "frivolous and completely without merit" and "doesn't reflect the opinion of the vast majority of franchisees."Interestingly, the firm hedges its bet slightly in its 2009 annual report about the case adding, "however, there can be no assurance that the outcomes will be favourable to us or that it will not have a material adverse impact on our financial position or liquidity in the event that the ultimate determinations by the court and/or appellate court are not in accordance with our evaluation of this claim." The Thursday motion before Ontario Superior Court Justice George Strathy is preliminary squabbling that will set the stage for how the donut bounces later this December when the case is finally heard.It's shaping up to be a real sour dough fight. The plaintiff's certification record comprises one volume of 412 pages and 24 exhibits, a Timbit compared to the defence, which has a competing summary judgment motion that seeks to dismiss the lawsuit entirely. It's a real apple fritter by comparison, containing eight volumes, including 2,732 pages and 61 exhibits. Let's hope Justice Strathy has a lot of French Crullers to consume. He's going to need it to get through that many documents.The franchise holders' lawyers, Jerome Morse and Lori Stoltz of Adair Morse in Toronto, are taking exception to a move by Tim Hortons lawyer, Peter Howard of Stikeman Elliott in Toronto, to bring the summary judgment motion at the same time that the certification motion will be heard next fall.The summary judgment motion asks the court to dismiss the lawsuit -- which is based on breach of contract and negligence.The franchisees argue that Tim Hortons has cast its summary judgment motion "so broadly" as to require them to argue about the merits of the case, normally considered a no-no at the certification stage. Rather, that's saved for trial.The plaintiffs want the Justice Strathy to hear and rule on the certification, and allow for an appeal period, prior to hearing the summary judgment motion.Tim Hortons lawyer argues that the parties had earlier agreed to the timing of the motions and can't change the litigation batter in the middle of the recipe.Jim Middlemiss
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 Blakes touts spring fashions and garden gurusThe very serious law firm Blake, Cassels & Graydon sent out an invitation Friday. "Celebrate Summer with Blakes," the email's subject line read. The invitation -- which sported a teal border and mauve colour palate -- featured a crisp table setting with fresh flowers on a peachy tablecloth. Chic sunglasses are on the edge of the table. The scene is outdoors. Very country club.Is it securities seminar brunch on a rooftop patio? A tort shindig at high noon after a quick game of croquet? Neither. The invite, which did not go to my male colleague, appears to be for flower-arranging and table-setting lessons. That, and a fashion show. Blakes, take it away: "Join Blakes for a Celebration of Summer with Lynn Spence, noted 'Style Fashionista,' who will be presenting spring and summer fashion, offering a wide variety of casual, business and formal looks that are fashion forward and perfect for so many occasions," the invitation said. "'Garden Guru' Irene Peters will also join us to present a number of clever and sophisticated ways to decorate with floral arrangements, great table settings, spring urns and much more." In an era where law firms are trying to attract, retain and promote women, surely Blakes can do better than staid old garden shows and fashion runways as a means to promote client interaction and do business with women. Carrie Tait
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 BC introduces Clean Energy ActOn April 28, the British Columbia government introduced a new Clean Energy Act. The legislation, which defines 16 energy objectives for B.C., proposes to restructure the province's electricity sector, introduce a Feed-in Tariff, deploy smart meters, establish a smart grid program, modernize the B.C. Utilities Commission, strengthen B.C. Hydro, and re-price the existing Standard Offer Programme. Andrew Lord of Davis LLP has details online. Julius Melnitzer
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 GST refunds in competition casesThe Canada Revenue Agency (CRA) has decided that applications for Advance Ruling Certificates under the merger provisions of the Competition Act are not subject to GST. The Competition Bureau will no longer charge GST and parties who have paid the tax can claim refunds for up to two years from the date of payment. Some law firms, like Cassels Brock & Blackwell, which has more details available online, are reviewing files and contacting clients who may be eligible for a refund. Julius Melnitzer
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 Handy guide to OSC proceedingsEllen Bessner, a securities partner at Cassels, Brock & Blackwell, has written a short but very practical guide for market participants who receive a notice of hearing and statement of allegations from the Ontario Securities Commission. The three-page point-form document deals with the investigation, the hearing, and reviews what is at stake in the proceedings. Julius Melnitzer
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 Court limits Internet anonymity disclosureThe Ontario Divisional Court has ruled that plaintiffs are not automatically entitled to the identity of an anonymous Internet user even though a defendant possesses that information. The decision in Warman v. Wilkins-Fournier holds that defendants must disclose such information only when a claim is legitimate and accords with the public interests involved, including the anonymous user's Charter rights. Wendy Matheson and Natalie Biderman of Torys have more details online. Julius Melnitzer
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 Oakland appears ready to lift ban on cross-dressingAfter 130 years, Oakland's city council appears ready to lift its ban on cross-dressing. After a unanimous vote earlier this week, the councillors for this Californian city will take a final vote on May 18, 2010 to recind an 1879 ordinance which banned dressing in the clothes of the opposite sex. Insidebayarea.com reports that why some believe that the ordinance may have been used to oppress the LGBT community in the past, other point out that women in the police and fire departments may, by their uniforms, be currently breaking the law - so it was time for an update. Mitch Kowalski
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 UK withdraws class action legislationThe U.K.'s Financial Services Act 2010 has received Royal Assent following an expedited passage through Parliament. But the law's collective action provisions, allowing for class actions in the financial institutions sector, were removed before passage, denying consumers an important option in suing financial institutions. The provisions also marked the first time that "opt-out" collective actions would have been allowed in the UK. Herbert Smith has more details on the firm's website.
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 DB pension plan funding and investments changesThe federal government has released draft regulations that propose changes to the defined benefit plan funding provisions and the federal investment rules. The proposed changes will directly affect pension plans registered under the Pension Benefits Standards Act,1985, but also will likely impact most pension plans in Canada. Key changes involve solvency funding rules, new restrictions on contribution holidays, and elimination of the quantitative restrictions on investments in real property and Canadian resource property. Comments may be submitted until May 29, 2010. Louise Greig of Osler, Hoskin & Harcourt has more details online. Julius Melnitzer
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 Mandatory jail for white collar crimeThe Tories have re-introduced Bill C-21, which among other things proposes mandatory jail sentences of at least two years for fraud involving more than $1 million. The legislation also proposes to add additional factors for judges to consider in determining sentence, including victim impact, magnitude, complexity, duration, degree of planning, professional standing of fraudster, and age and means of the victims. Mark Morrison of Blake, Cassels & Graydon has details online. Julius Melnitzer
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 Calgary MP one of 17 lawyers sued in Alberta mortgage schemeThe CBC reports that the BMO is suing Calgary lawyer and Tory MP Devinder Shory of Shory Law Office for alleged negligence in connection with a questionable $70 million mortgage scheme in Alberta. The Bank has made it clear that there are no allegations of fraud against Shory. In an e-mail to the Toronto Star, Ralph Marranca, BMO's director of public relations, said: "We do not allege fraud against [Shory]. We allege that he was negligent in the way he acted as counsel for both [BMO] and the straw buyer in four transactions in which the bank has suffered a loss of approximately $300,000." None of the allegations have been proven in court. Shory, who had not yet been served with the claim and only learned of it through the media, stated that he would defend himself "vigorously" against the accusations and that he had done nothing wrong. Julius Melnitzer
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 Bell whacks Rogers with comparative advertising injunctionThe New Brunswick Court of Queen's Bench has granted Bell Aliant Regional Communications Limited Partnership an injunction restraining Rogers Communication Inc. from advertising the "fastest and most reliable speed" and similar phrases regarding its Internet service. Paul Schabas and Ryder Gilliland of Blake, Cassels & Graydon; and John Townsend, David Hashey and Jade Spalding of Cox & Palmer, representing Bell, successfully argued that Bell's move to fiber-to-the-premises connections in the province raised a serious issue about the validity of Rogers' claims. Edward Babin of Davies Ward Phillips & Vineberg was co-counsel for Rogers with Nadia MacPhee and Michael Brenton of Barry Spalding. Blakes has more details online. Julius Melnitzer
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 Ontario Court certifies OT case against ScotiabankIn a case that will reverberate across Canadian workplaces, the Ontario Superior Court has given the green light to a $300-million overtime lawsuit involving 5,300 Scotiabank sales staff working in retail branches across the country.Bank employee Cindy Fulawka, and five other employees, sued Scotiabank in a class action claiming overtime stemming back to Jan. 1, 2000. The claim covers personal bankers, financial advisors and small business account managers. In his ruling certifying the lawsuit as a class action -- the first stage in the litigation -- Justice George R. Strathy wrote, "I have concluded there is an evidentiary basis in this case of systemic wrongs that give rise to common issues, the resolution of which would advance the claim of every class member. "The systemic wrongs flow from a policy that failed to reflect the realities of the workplace because it put the onus on the employee to obtain prior approval for overtime that they were permitted or required to work."He said the "systemic wrongs included the failure of Scotiabank to establish a system-wide procedure to record overtime, making it all the more difficult for employees to obtain fair compensation for their overtime work."The decision is at odds with a recent Ontario Superior Court overtime class action ruling in a $600-million claim involving the Canadian Imperial Bank of Commerce, setting up a showdown at the Ontario court of Appeal. The cases are simialr in nature.In the CIBC case, Justice Joan Lax ruled that there were no common issues among the employees claiming overtime that could be tried in the case so it was not a candidate for a class action. The CIBC ruling is under appeal and will be argued in March, said lawyer Louis Sokolov, of Sack Goldblatt Mitchell, one of the two law firms representing the plaintiffs in the two cases.Mr. Sokolov said "we expect that the Bank of Nova Scotia will try and appeal this decision. We're fully prepared to meet their arguments and I expect that all these cases will be settled at the Ont. Court of Appeal level if not the Supreme Court of Canada. At this stage it is a very significant decision by a very well respected judge who gave a very reasoned and pragmatic and principled decision. He specifically makes reference to the actual realities of the workplace."Bank spokesman Ann DeRabbie said "we're disappointed with the certification. We'll take some time to review the judges comments and determine our next steps.""We're proud of our long history as a recognized employer of choice. Our human resources policies and practices reflect our core values and include integrity, respect commitment and insight and spirit."There's been a flurry of overtime lawsuits across the country, covering everything from the accounting industry, which involved many of the large accounting firms that quickly settled up with employees and revamped their overtime practices, to cases involving investment bankers, financial advisors and bank tellers. Next up later is a certification hearing in a $250-million overtime lawsuit against Canadian National Railway Co. filed on behalf of 1,000 of the company's employees. That suit alleges "CN misclassified first-line supervisors as management employees in order to escape its obligations to pay overtime under the Canada Labour Code." The claim states "first-line supervisors across Canada are routinely required to work hundreds of hours of overtime annually for which they are not paid." CN denies the employees are entitled to overtime. Certification for that case is expected to be heard later this spring.Mr. Sokolov said the Scotiabank ruling is "not a decision on the merits" and it must still be tried by a judge. However, he said since filing the OT claims against the banks, "employers across the country are looking to their [overtime] practices to see if they are vulnerable."In his ruling, Justice Strathy said "the employees in this case are in a position of vulnerability, as they did not have the protection of a union and they are not members of management." However, they were responsible for the banks sales in areas involving mortgages, credit cards, lines of credit and RRSPs and "they are no doubt encouraged to maximize sales. The nature of their work, which requires that they respond to the unpredictable demands of customers, make the necessity to work overtime a real possibility."The bank argued that the case could not be resolved on a class-wide basis because it's records were kept at the branch level. Justice Strathy disagreed, noting, the bank "cannot point to its own record-keeping failures to defeat certification.While employees were supposed to seek approval before working overtime, Justice Strathy noted that the bank's policy "prevented them from recording and claiming for hours that have not been pre-approved." "The bank had no consistent corporate policy or system applicable to all branches, for the tracking of overtime. It had no system of tracking time in lieu or of ensuring it was cashed out."He ordered that the case go to trial.David O'Connor and Adam Dewar of Roy Elliott O'Connor were also acting for the plaintiffs.Scotiabank was represented by Robert Armstrong, Jeremy Devereux, and Mary Gleason of Ogilvy Renault. Jim Middlemiss
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 Labour boutiques, overtime lawsuits, big banks and appealsNo doubt Ontario Superior Court Justice George Strathy's ruling that certifies the $300-million class action overtime case against Scotiabank won't be well received by Canadian Imperial Bank of Commerce lawyers, Patricia Jackson, Linda Plumpton, Stuart Svonkin of Torys and John C. Field of Hicks Morley.That's because last June, they managed to persuade Justice Joan Lax on a similar set of facts that a $600-million overtime case against CIBC involving its tellers wasn't worthy of certification. They are in the throes of preparing for a March appeal before the Ontario Divisional Court. Now they have to contend with Justice Strathy's ruling, which questions Justice Lax's approach to some fundamental issues. That should be good for the billable hours, but not so sweet for the appeal.It's interesting to note that CIBC used an integrated legal team comprising the litigation talents of Torys with the employment law skills of Hicks Morley. Employment law is becoming a highly specialized area and there's a growing number of boutiques servicing the field as full-service law firms abandon the practice area.The plaintiffs in both cases are represented by class-action litigation firm Roy Elliott O'Connor and lawyers David O'Connor and Adam Dewar, in conjunction with employment law expert Louis Sokolov of the Sack Goldblatt Mitchell, considered a union-side and employee friendly labour boutique.Not so in the Scotiabank case, where Ogilvy Renault lawyers are carrying the ball. Wonder if Scotiabank General Counsel Deborah Alexander will be calling in labour boutique guns for an appeal?On a different note, but same case, you have to laugh at Scotiabank's comments defending its actions in the OT suit. After being resoundly thumped by Justice Strathy over "systemic wrongs" and trying to hide behind their bookkeeping methods to usurp the class suit, the bank steadfastly maintains:"We're proud of our long history as a recognized employer of choice. Our human resources policies and practices reflect our core values and include integrity, respect, commitment and insight and spirit."Integrity, respect, commitment, insight and spirit? Something tells me that Justice Strathy's not buying that line, at least currently, and it's doubtful some of the 5,300 personal bankers seeking overtime buy it either. Maybe Scotiabank's new motto should be, "We pay what we owe," since most class actions that get certified eventually lead to a settlement. But that might amount to paying out a month's worth of bank charges.What's interesting is the contrast between how the accounting industry has responded to OT class action suits, versus the financial world. The giant accounting firms settled with their employees, some before they were sued, and they quickly revamped their OT procedures and policies and moved on. The banks have responded by digging in and as Justice Strathy wrote in the Scotiabank case, "mounted a full-scale evidentiary assault on the plaintiff's case." CIBC responded in kind, filing hundreds of page of affidavits disputing the claims. At least CIBC prevailed at first instance. For what it's worth, according to current regulatory filings, Scotibank's CEO Richard Waugh earned $7.5-million in 2008 and between 2006 and 2008, his five-person management team took home more than $66-million in compensation. At CIBC, which has filed a 2010 MD&A, CEO Gerald McCaughey earned $6.7-million in 2009 and between 2007 and 2009, his five-person management team took home just slightly north of $60-million. Of course, being managers, they don't qualify for overtime under labour laws. Good thing for shareholders. Jim Middlemiss
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