Canada: Court Of Appeal For Ontario Affirms Order Compelling Cross-Border Examination Of Alleged Price-Fixing Chocolatier In U.S. Class Proceedings

In a decision which stands as an example of the practical approach taken by Canadian courts in balancing the rights of cross-border deponents with the principles of sovereignty and comity, the Court of Appeal for Ontario in Treat America Limited v. Leonidas ("Treat America") has confirmed an order compelling the former CEO of a Canadian company to attend at a deposition in Canada to give evidence in a U.S. class action, despite the fact that the same former CEO is the target of a parallel criminal investigation in Canada.  

In dismissing the appeal, Justice Feldman, for the Court, found that it would not infringe the appellant's right against self-incrimination under theCanadian Charter of Rights and Freedoms (the "Charter") nor would it be unduly burdensome for him to give the requested testimony. However, in light of the appellant's submissions, Justice Feldman went on to apply additional protective conditions to the order to ensure that any potential prejudice resulting from the enforcement of the order would be minimized.

BACKGROUND

The class proceedings in Treat America arose out of a criminal investigation by Canada's Commissioner of Competition (the "Commissioner") into an alleged conspiracy to unreasonably enhance the price of chocolate candy in Canada. The investigation became public when the Informations to Obtain sworn in support of certain search warrants obtained and executed by the Commissioner were filed in court and became publicly available. Subsequently, a number of parallel class actions were commenced in several U.S. jurisdictions against Canadian and U.S. chocolate manufacturers. Claims against all but one of the Canadian defendants have been dismissed, but the Canadian criminal investigation is still ongoing.

In order to collect evidence from Canadian witnesses in relation to the alleged price fixing conspiracy, the plaintiffs in the U.S. class proceedings sought, and were granted, a Letter of Request for International Judicial Assistance (the "LOR").  The LOR sought an order from an Ontario court compelling the appellant to appear for a deposition and provide oral testimony under oath in the U.S. class proceedings. The appellant opposed the order, as he was contemporaneously a target of the ongoing criminal investigation being conducted by the Commissioner and the Competition Bureau. Although not a party to the U.S. class proceedings, the Commissioner had been granted intervener status in the litigation, reaching agreements with plaintiffs' counsel and making submissions to the Court with the intention of facilitating the taking of depositions from Canadian witnesses, including those requested under the LOR. Given the Commissioner's involvement in the U.S. Class Proceedings, the appellant argued that the enforcement of the LOR would be contrary to Canadian public policy in respect of his right against self-incrimination, as well as being unduly burdensome on him.

Despite these objections, the order enforcing the LOR was granted by the application judge in Ontario. Crafting an order that would "adequately protect the appellant's immunity rights in respect of his compelled testimony", Justice Campbell of the Ontario Superior Court allowed the order, while appending certain terms and conditions to it; namely, the Commissioner would be required to provide notice to the appellant upon any attempt to seek access to the transcripts, or of any move by another party to make the evidence public prior to trial.

On appeal, the appellant argued that the application judge had erred in concluding that enforcement of the LOR would not breach his Charter rights, and that it would not be unduly burdensome. The crux of the appeal rested on the appellant's concern that by forcing him to testify in the U.S. class proceedings, the Commissioner would have access to the deposition, providing a roadmap of the appellant's defence and prompting the Commissioner to adjust his strategies and position in the ongoing criminal proceedings in Canada.

THE DECISION

The Court of Appeal dismissed the appeal, upholding the application judge's order while appending additional conditions to the LOR. Writing for the Court, Justice Feldman began her analysis by laying out the six-part test for enforcement of an LOR, as set out in Friction Division Products Inc. v. E.I. du Pont de Nemours & Co. (1986), 56 OR (2d) 722 which provides that before giving effect to letters of request (also known as letters rogatory) the evidence must establish that: (1) the evidence sought is relevant; (2) the evidence sought is necessary for trial and will be adduced at trial, if admissible; (3) the evidence is not otherwise obtainable; (4) the order sought is not contrary to public policy; (5) the documents sought are identified with reasonable specificity; and (6) the order sought is not unduly burdensome, having in mind what the relevant witnesses would be required to do, and produce, were the action to be tried in Ontario (para 25) (the "Friction test").  Justice Feldman went on to discuss the relationship of the principles of sovereignty and comity in the context of enforcement of a LOR.

Finding that the appellant's arguments fell under parts (4) and (6) of the Friction test, i.e., that the order sought not be contrary to the public interest and that it not be unduly burdensome, Justice Feldman addressed these arguments in turn.

Enforcement Would Not Breach the Appellant's Charter Rights

Addressing the appellant's first ground of appeal, Justice Feldman determined that the application judge had not erred in concluding that the order to enforce the LOR could be made without breaching the appellant's Charter rights. Enforcement of the LOR would not be contrary to public policy or sovereignty.

Noting, first, that the Supreme Court of Canada has stressed the importance of the "open court principle" requiring a serious risk of danger to the administration of justice to justify restricting the contents of court proceedings, Justice Feldman reviewed the scope of existing protections against self-incrimination as enshrined in section 7 of the Charter. While expressing the Court's concern that the appellant's Charter rights be "scrupulously protected and preserved", Justice Feldman found that existing rules in Canadian constitutional and evidentiary law provided considerable protections to the appellant. These include the "use immunity" rule protecting a person who is compelled to give evidence in a prior proceeding from exposure to the risk of self-incrimination, as derived from section 13 of the Charter, as well as the "implied undertaking" rule, preventing parties from disclosing information obtained during civil discoveries to the authorities, subject to narrowly prescribed exceptions. While a person ordered to give evidence pursuant to a LOR does not have access to the protections of the U.S. Constitution, the appellant had the benefit of all of the protections of the Canadian forum, including the Canada Evidence Act and the Charter.

With respect to the appellant's concern that the Commissioner could obtain compelled evidence not for use in court, but for the purpose of the investigation, Justice Feldman found that it was not necessary for the Court to decide whether Charter protection against self-incrimination may extend to precluding a prosecutor from obtaining access to compelled testimony before charges are laid. In oral argument the Commissioner had agreed not to pursue access to this compelled testimony; this agreement, once guaranteed in a condition to enforcement of the LOR, would be sufficient to dispose of this issue.

Enforcement is Not an Undue Burden on the Appellant

Turning her mind to the appellant's second ground of appeal, Justice Feldman swiftly determined that the terms of the LOR and accompanying protective orders were sufficient to adequately protect the appellant from prejudice, and did not cause an undue burden to the appellant. Justice Feldman found that, as rigorous examination of the record is required at the certification stage in U.S. class proceedings, and as the U.S. litigation incorporated not only class proceedings but also individual cases with no certification barrier, testifying on the merits of the action would not impose an "undue burden" on the appellant. Addressing the appellant's concern that his testimony could be directly or indirectly disclosed to the Commissioner, the Justice noted that the Commissioner had indicated that it would not attend the deposition, nor would it share in the content of the appellant's examination, and had no present intention to seek the deposition transcript.

In order to solidify the appellant's protections from undue disclosure of the examination contents to the Commissioner, Justice Feldman imposed the additional condition to the order requiring that the Commissioner not seek or receive information regarding the contents of the appellant's examination. In addition, the Commissioner is precluded from seeking a court order for access to the appellant's testimony unless the appellant becomes a witness for the prosecution, or is charged, without first obtaining an order from the Ontario Superior Court. With the addition of these protections, Justice Feldman expressed confidence that the Commissioner would not be privy to the content of the appellant's examinations short of its use in public in the U.S. litigation, or until any trial of the appellant in Canada.

CONCLUSION

Having determined that the application judge had not erred in the application of the law, and after imposing the above-noted additional conditions to enforcement of the LOR, the Court of Appeal was satisfied that any potential prejudice to the appellant had been "significantly minimized". Accordingly, the appeal was dismissed.

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