Commercial litigation is shaped by two important realities. First, the combination of the proliferation of documentary evidence and insufficient judicial resources means that cases are becoming more expensive and taking longer to get to trial. Second, commercial litigation is becoming increasingly North American in scope, especially in class actions (with the relatively recent birth of cases alleging global price-fixing conspiracies by multinational companies) and in the securities litigation area (the Hollinger litigation is just one recent example). The consequence is an increased interest by Canadian plaintiffs in seeking the assistance of the U.S. courts to advance their Canadian claims.
The increasingly North American nature of litigation also has its dangers. These include U.S. plaintiffs seeking and obtaining access to Canadian settlement documents which, although privileged according to Canadian law, do not benefit from the same status under U.S. law.
As we litigate more and more in a North American arena, counsel have to be fully aware of the advantages and disadvantages associated with doing so. In this paper I discuss three important cross border procedural developments which counsel should keep in mind when planning the strategy for resolving charges, pursuing a claim or a mounting a defence in a case that transcends Canada's boundaries.
The three developments I discuss in this paper are: (i) the potential for a Canadian plaintiff to sue in a U.S. court under U.S. antitrust law for damages caused to it in Canada, and therefore invoke the favourable regime of treble damages; (ii) the ability of a Canadian plaintiff to appear before a U.S. court and obtain access to the discovery already obtained in parallel U.S. litigation; and (iii) the ability of a U.S. plaintiff to require disclosure of documents that a U.S. defendant or its affiliate exchanged with Canadian regulatory authorities for the purposes of settling charges, even though these documents are subject to privilege and protected from disclosure in Canada.
All three of these developments occurred in the international vitamins conspiracy class actions. By way of background, several eventual defendants entered guilty pleas to conspiracy offences in relation to vitamins, generally first in the U.S. and then in Canada. There were also proceedings before the European Commission which led to certain findings adverse to the defendants. These guilty pleas and findings were relied on by plaintiffs in both Canada and the U.S. to advance civil claims for damages. In the late 1990s, numerous class actions were commenced in the U.S., followed by numerous copycat actions in Canada. The vast majority of the actions in both jurisdictions have settled, but not without first creating jurisprudence on the three issues discussed in this paper.
Canadians Suing in the U.S. Courts for Antitrust Damages Suffered in Canada
The issue of whether a foreigner can sue in a U.S. court for damages for breach of U.S. antitrust law caused to it in the foreign State and therefore take advantage of the U.S. plaintiff-friendly regime of treble damages was recently considered by the U.S. Supreme Court in F. Hoffmann-La Roche Ltd. v. Empagran S.A.1 In Empagran certain foreign plaintiffs (that is, foreign to the U.S.) alleged that the vitamins conspiracy resulted in the raising of vitamin prices in the U.S. and in various foreign countries in violation of U.S. antitrust law. The issue was whether foreign purchasers who were injured by a global price fixing conspiracy could sue under the Foreign Trade Antitrust Improvements Act of 1982 ("FTAIA")2 for damages relating solely to foreign transactions. The FTAIA provides that the Sherman Act3 (a substantive U.S. federal antitrust statute) does not apply to conduct involving trade or commerce with a foreign nation unless the conduct has a direct, substantial and reasonably foreseeable effect on American commerce and has an effect that antitrust law considers harmful (that is, the effect must give rise to a claim under the Sherman Act).
The Court of Appeals held that the U.S. courts have jurisdiction to consider these claims, even if the damages claimed have no connection to the U.S., as long as the conspiracy in question gave rise to a claim by parties who have suffered antitrust injuries in the U.S. If this decision had been upheld (and it was not), for example, a Canadian plaintiff would be able to sue a Canadian company in the U.S. for injuries suffered entirely in Canada as long as the alleged price fixing conspiracy involved some sales in the U.S., however unrelated to the Canadian’s claim, and regardless of whether such conduct violated any law in Canada.
The U.S. Supreme Court concluded that it was not reasonable to apply U.S. antitrust law to conduct that is significantly foreign insofar as that conduct causes foreign harm and that foreign harm alone gives rise to the plaintiff's claim. In other words, where the price-fixing conduct significantly and adversely affects both customers outside and within the U.S., but the adverse foreign effect is independent of any adverse U.S. effect and the plaintiff's claim rests solely on the independent foreign harm, the foreign plaintiff does not have standing to sue in the U.S. for breach of U.S. antitrust law. In reaching this conclusion, the U.S. Supreme Court was sympathetic to briefs filed by foreign governments, including Canada, which argued that the extension of treble damages under U.S. antitrust law to foreign based law suits would unjustifiably impinge on their sovereign right to establish domestic antitrust policy. Canada argued that its ability to determine appropriate remedial measures (only single damages are available in Canada for violations of offences under the Competition Act), as well as its ability to apply immunity programs (which encourage cartel participants to come forward with evidence of wrong-doing in exchange for favourable treatment) would be compromised.
Nevertheless, the U.S. Supreme Court's decision was based on a critical assumption. It was assumed, but not decided, that the anticompetitive conduct at issue independently caused foreign injury. In other words, the conduct’s U.S. effects did not help to bring about the foreign injury claimed by the plaintiffs. Put yet another way, the Court assumed the price fixing conduct caused some U.S. injury and independently caused separate foreign injury. In this regard, the Court noted that the plaintiffs argued in the alternative that the foreign injury was not independent of the U.S. effects. The plaintiffs maintained that because vitamins are fungible and readily transportable, without an adverse U.S. effect, sellers could not have maintained their international price fixing arrangement and the plaintiffs would not have suffered their foreign injury. The plaintiffs argued that this was sufficient to bring the price fixing conduct within the scope of the FTAIA and therefore grant the U.S. court jurisdiction over their claims. Because the Court of Appeals did not address this argument, the U.S. Supreme Court did not resolve it and the case was sent back to the Court of Appeals.
It is a fair conclusion that the U.S. Supreme Court has not ruled out entirely the possibility that a Canadian purchaser could sue in a U.S. court for antitrust damages relating to injury in Canada as long as there is a connection between the Canadian claim and the injury caused in the U.S. Unfortunately, the U.S. Supreme Court did not specify how much of a link must exist to give rise to an antitrust claim in the U.S. courts. The Court of Appeals may provide guidance on this when it renders judgment on the case remitted to it.4
The threat of Canadian plaintiffs being able to sue in the U.S. for treble damages arising from anticompetitive conduct still looms large. It is not difficult to imagine a case where a link exists between Canadian harm arising from anticompetitive conduct and that conduct's effects in the U.S., especially in the context of conspiracy allegations involving multinational organizations, many of which are headquartered in the U.S., and products destined for international commerce. The extent to which Canadians can avail themselves of the U.S. courts to obtain damages for anticompetitive conduct depends entirely on what nexus is required. On that point, we await further guidance from the U.S. courts.
Canadian Plaintiffs Seeking Access to U.S. Discovery
Whether a Canadian plaintiff can obtain an order from a U.S. court allowing it access to discovery obtained in parallel litigation in the U.S. also arose in the vitamins conspiracy class actions. Before the determination of the motions for certification (and, therefore, before the delivery of defences and any entitlement to discovery under Canadian law), the Canadian plaintiffs brought a motion in the U.S. vitamins antitrust litigation under Rule 24(b) of the Federal Rules of Civil Procedure for an order (i) modifying the protective order governing the U.S. litigation to allow Canadian plaintiffs' counsel to access all documents, interrogatory responses, admissions and other discovery papers produced by certain U.S. defendants, (ii) allowing Canadian plaintiffs' counsel to attend depositions and (iii) allowing access to the Verilaw system used in the U.S. for service and scheduling purposes.
Rule 24(b) provides that a person may intervene in a U.S. action if the application is timely and that person's claim or defence has a question of fact or law in common with the action in which he or she seeks to intervene.
In response to the U.S. motion, several of the defendants in the Canadian litigation moved in the Ontario Superior Court of Justice for an order preventing the Canadian plaintiffs from proceeding with their U.S. motion. The Canadian defendants argued that to allow the Canadian plaintiffs to obtain access to U.S. discovery when they had no entitlement at that time to discovery in Ontario and would never have access to the broader discovery available in the U.S., was contrary to the Ontario Rules of Civil Procedure and the Class Proceedings Act.
Mr. Justice Cumming dismissed the defendants' motion for an injunction for four reasons.5 First, he concluded that the plaintiffs were not seeking discovery in the U.S. but only seeking access to the discovery of the U.S. litigants. Second, unlike in Canada where the deemed undertaking rule exists, but for the protective order in the U.S. litigation, there was no restriction on any of the parties to the U.S. litigation sharing any and all U.S. discovery information with the Canadian plaintiffs. Third, allowing the Canadian plaintiffs access to U.S. discovery would save both time and money in the Canadian action and would facilitate the three policy objectives behind class actions (access to justice, judicial efficiency and behavioural modification). Fourth, even though the Canadian plaintiffs might obtain access to the U.S. discovery, it was still within the jurisdiction and discretion of the Canadian court to determine the extent to which the information obtained is admissible in any Canadian proceeding. Justice Cumming concluded that the plaintiffs' request for access to U.S. discovery evidence (which the plaintiffs submitted was necessary to prepare their Canadian case) was a request made through lawful U.S. means, did not violate the rules or procedure of the Ontario court and did not result in unfairness to the Canadian defendants.
The Canadian defendants obtained leave to appeal Justice Cumming's decision. Before the appeal was heard, the Canadian plaintiffs' U.S. motion came before Judge Hogan, the judge assigned to the U.S. litigation. Judge Hogan gave the Canadian plaintiffs intervention status but deferred ruling on their request to modify the protective order, obtain access to Verilaw and attend at the various depositions, until the appeals process in the Ontario court was concluded.6
In granting intervention status, Judge Hogan noted that Rule 24 is interpreted flexibly to allow third parties to intervene for the purpose of contesting protective orders. Judge Hogan concluded that the three criteria for intervention under Rule 24(b) had been met. First, while normally the court must be satisfied that there is an independent basis for its jurisdiction, this requirement does not have to be met when intervention is sought only to modify a protective order. Second, the Canadian plaintiffs had brought their motion in a timely manner, considering that the parties had not yet concluded discovery in the U.S. litigation. Third, given the common questions raised by the U.S. and Canadian vitamins conspiracy actions, together with the antitrust nature of both suits, the commonality requirement was satisfied.
Lastly, Judge Hogan considered whether he should exercise his discretion to decline intervention status on the basis that the intervention would cause undue delay or prejudice. This was a case of first impression, in that no other U.S. court had been asked to consider foreign comity interests in deciding whether a foreign plaintiff should be allowed to intervene to modify a protective order. Judge Hogan concluded that the underlying circumstances in this case did not justify departing from the jurisprudence that confirmed that intervention under Rule 24(b) is the proper procedure for a non-party to seek modification of a protective order. He took comfort from Justice Cumming's reasons in this respect and interpreted them as displaying a permissive attitude towards the Canadian plaintiffs' efforts to gain access to U.S. discovery materials.
In deferring consideration of whether the protective order should be modified, Judge Hogan explained that a decision to modify the protective order would require him to engage in his own evaluation of Canadian procedures and concluded that if a court undertook this inquiry, it was best left until the conclusion of the Canadian appellate process. Judge Hogan considered it inappropriate to rule on issues that were a matter of first impression for both U.S. and Canadian law in circumstances where the appeal from Justice Cumming’s decision could render the outstanding issues moot. Even if the Canadian defendants' appeal was dismissed, Judge Hogan saw a benefit in deferring his decision as the Canadian appellate opinions were likely to provide valuable guidance to the U.S. court.
The Canadian defendants' appeal of Justice Cumming's decision was dismissed, largely for the reasons expressed by Justice Cumming for refusing to grant the injunction.7 In addition, the majority of the Divisional Court concluded that it would be inappropriate for the Court to address the merits of the plaintiffs' U.S. motions in any respect or to provide any guidance to Judge Hogan. In concurring reasons, Mr. Justice Farley defined the relevant question as being whether the Canadian plaintiffs would be accessing U.S. discovery evidence in the passive sense of merely looking at that which had been produced in the ordinary course in the U.S. action, or in the active sense of asking U.S. counsel to pursue avenues which U.S. counsel would not have otherwise pursued for the purpose of assisting the Canadian plaintiffs. If the Canadian plaintiffs were to proceed in the active sense, they would be engaging in discovery before they were entitled to do so under the Ontario Rules of Civil Procedure and in breach of those Rules. Since the plaintiffs were only seeking to relax the protective order so they could review that which had otherwise been discovered in the ordinary course of the U.S. litigation, Justice Farley agreed with the majority that the appeal should be dismissed. The Canadian plaintiffs were only seeking access to discovery material which existed independently of the Canadian actions and the Canadian plaintiffs and their counsel. Justice Farley concluded that this was acceptable.
The Canadian defendants appealed the decision of the Divisional Court to the Ontario Court of Appeal, which dismissed the appeal.8 The Court of Appeal gave brief reasons, to be read in conjunction with Justice Cumming's decision with which the Court substantially agreed. The Court of Appeal stated:
Properly characterized, the respondents are attempting to gather evidence in a foreign jurisdiction in accordance with the rules of that jurisdiction. The appellants challenge that characterization. They submit that the respondents are not "evidence-gathering" but are instead attempting to obtain, prior to certification, discovery of evidence given under compulsion of the United States discovery rules. The fallacy in this demarcation between the permissible and the impermissible is revealed by considering the circumstance if there was no protective order. Then the productions would be freely available and no complaint could be made if the respondents sought them out. Yet, they would have been produced under compulsion. So, compulsion cannot be the hallmark of improper conduct.
Judge Hogan was never asked to consider the second part of the Canadian plaintiffs' motion (that is, to modify the protective order to allow the requested access) as the Canadian class actions settled before the Canadian plaintiffs took any step in this regard.
The same issue arose even more recently in the linerboard antitrust class action litigation. In the U.S., class action litigation was commenced alleging that a number of U.S. manufacturers of linerboard engaged in a conspiracy to raise prices. Certain classes were certified by the U.S. court in 2001. Eventually, the U.S. class action settled through various settlements with different groups of defendants, although opt-out litigation continues. In February 2004, a Canadian company commenced an Ontario class action against the same defendants and made virtually the same allegations as were made in the U.S. action. Certain defendants had also entered guilty pleas in Canada and the U.S.
The Canadian linerboard plaintiff sought leave to intervene in the U.S. class action pursuant to Rule 24(b) for the limited purpose of seeking modification to an existing confidentiality order. In the U.S. linerboard litigation, the confidentiality order provided that the parties could designate as confidential any material produced in the litigation which satisfied certain criteria. Material designated as confidential could only be provided to counsel of record and, absent consent or court order, could only be disclosed by counsel to a select group of individuals.
Judge DuBois (the judge assigned to the U.S. litigation) granted the Canadian plaintiff's motion for leave to intervene and also ordered that the confidentiality order be amended to allow the Canadian plaintiff access to discovery materials in the U.S. litigation in accordance with the confidentiality order.9 In this case, there was no attempt by the Canadian defendants to seek to enjoin the Canadian plaintiff from seeking relief in the U.S. court.
Judge DuBois noted, as Judge Hogan had previously, that the three requirements for intervention under Rule 24(b) are interpreted flexibly when a non-party seeks intervention for the limited purpose of modifying a protective order. Judge DuBois went on to say that the U.S. courts are willing to adopt generous interpretations of Rule 24(b) to facilitate an effective mechanism for third party claims for access to information generated through judicial proceedings.
In concluding that the Canadian plaintiff met the requirements for intervention, Judge DuBois noted that jurisdiction existed based on the court's authority to modify a previously entered protective order, the Canadian plaintiff's motion was filed less than 6 months after the settlement of the U.S. action and the commencement of the collateral litigation in Canada, and the Canadian and U.S. case had common facts or legal issues. Further, the Canadian proceeding was bona fide and there was no question that the Canadian plaintiff was a bona fide litigant. Also, it was important to Judge DuBois that the Canadian plaintiff expressly submitted itself to the personal jurisdiction of the U.S. court for the purpose of enforcing the confidentiality order.
The U.S. defendants' argument before Judge DuBois was that the Canadian plaintiff's reliance on Rule 24(b) was improper. They argued that the Canadian plaintiff should have invoked section 1782(a) which provides that:
The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. By virtue of his appointment, the person appointed has power to administer any necessary oath and take the testimony or statement. The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing. To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.10
The U.S. defendants argued that the Canadian plaintiff moved under Rule 24(b) rather than section 1782(a) in order to avoid an inquiry into Canadian proof-gathering restrictions and policies limiting discovery. The U.S. defendants argued that the Canadian plaintiff was attempting to circumvent Canadian law in two respects. First, the Canadian plaintiff was not entitled to discovery in Canada until after class certification had been decided and, second, the Canadian plaintiff would never be entitled in Canada to all the discovery that the U.S. plaintiffs in the U.S. case had received.
Judge DuBois dismissed the U.S. defendants' arguments. No authority was put before him for the proposition that a litigant before a foreign tribunal cannot invoke Rule 24(b) to access U.S. discovery materials. Further, section 1782(b) specifically provides that it does not preclude a person within the U.S. from voluntarily giving his testimony or statement or producing a document for use in a foreign proceeding. In Judge DuBois' view, this is precisely what the Canadian plaintiff sought; being voluntary production by the U.S. plaintiffs, not the defendants, of the discovery documents and deposition transcripts in their possession. Again, it was only the confidentiality order that prevented the U.S. plaintiffs from providing the Canadian plaintiff with these materials.11
In both the vitamins and linerboard litigation, the Canadian plaintiffs proceeded under Rule 24(b) and were able to do so because the relief requested was effectively the modification of a protective order. The alternative route, as noted, is proceeding under section 1782(a). Section 1782(a) was recently considered by the U.S. Supreme Court in another U.S. antitrust case.12 In this case, Advanced Micro Devices ("AMD") filed an antitrust complaint against Intel with the European Commission, alleging that Intel had violated European competition law. After the European authorities had declined AMD's request to seek documents that Intel had produced in a private antitrust suit in a U.S. federal court, AMD petitioned the U.S. court under section 1782(a) for an order directing Intel to produce the documents. At first instance, the U.S. District Court concluded that section 1782(a) did not authorize the discovery requested by AMD. The Court of Appeals reversed that decision and sent the case back with instructions to rule on the application's merits.
The U.S. Supreme Court considered the issue and concluded that section 1782(a) authorizes, but does not require, a federal district court to provide assistance to a complainant in a European Commission proceeding that leads to a dispositive ruling. A claimant before the European Commission, such as AMD, was found to qualify as an interested person within the meaning of section 1782(a) because of its significant participation rights in the European Commission proceedings. The U.S. Supreme Court clarified that the proceeding for which discovery is sought under section 1782(a) must be within reasonable contemplation, but need not be pending or imminent. Further, section 1782(a) does not impose a foreign discoverability requirement and, therefore, does not limit a court's order to materials discoverable in the foreign jurisdiction if located there.
Whether section 1782(a) assistance was appropriate in this particular case was not resolved by the U.S. Supreme Court. To guide the district court (which would consider the issue), the Court described certain factors as relevant to that determination. First, when a person from whom discovery is sought is a participant in the foreign proceeding, as Intel was in this case, the need for section 1782(a) assistance generally is not as apparent as it normally would be when evidence is sought from a non-participant in the matter arising abroad. This is because a foreign tribunal has jurisdiction over those appearing before it and can itself order them to produce evidence. In contrast, non-participants in foreign proceedings may be outside the foreign tribunal's jurisdiction; thus evidence, available in the U.S., may be unobtainable absent section 1782(a) assistance. Second, a court which receives a section 1782(a) request must consider the nature of the foreign tribunal, the character of the proceedings underway in that tribunal and the receptivity of the foreign government, court or agency to federal court judicial assistance. Third, the grounds that Intel urged in support of categorical limitations on the scope of section 1782(a) may be relevant in determining whether a discovery order should be granted in a particular case. Specifically, the court should consider whether the request conceals an attempt to circumvent foreign proof-gathering limits or other policies of the foreign jurisdiction. In addition, unduly intrusive or burdensome requests may be rejected or refined.
From our limited experience it is clear that both the Canadian and U.S. courts have taken a permissive approach to requests for access to U.S. discovery by Canadian plaintiffs, as long as it is passive access (that is, access to what is already there and would in any event be there in the absence of the foreign plaintiff). Where a protective order is in effect, the seemingly low threshold of Rule 24(b) is available to the Canadian plaintiffs. When a protective order is not in place (which in U.S. antitrust and securities litigation would be the rare case), Rule 24(b) is still available but the Canadian plaintiff has a higher burden, as the relaxed test applicable in cases involving requests to modify protective orders will not apply. If there is no protective order, however, nothing prevents the U.S. plaintiffs from sharing the fruits of their labour with Canadian plaintiffs. In fact, there are many cross border plaintiffs' counsel alliances which facilitate this type of cooperation.13 It is hard to imagine when a Canadian plaintiff would be forced to rely on section 1782(a), which requires the U.S. court to balance the various relevant factors and arguably creates a higher threshold for a foreign plaintiff.
The fact is that not only can Canadian plaintiffs rely heavily on parallel U.S. litigation to frame their claims, their ability to obtain access to the fruits of broad U.S. discovery appears to be conclusive, within the parameters of passive access and as long as they are willing to be bound by any protective order like any party to the U.S. litigation.
U.S. Litigant's Access to Canadian Settlement Materials
The last issue I wish to address is the extent to which a U.S. plaintiff can obtain access to documents and submissions exchanged between U.S. defendants or their affiliates and foreign governmental authorities, including the Canadian Competition Bureau and Department of Justice.
This issue arose in the context of the U.S. vitamins plaintiffs' motion to compel one of the U.S. defendants, Bioproducts, to produce the submissions it had made to the Canadian Competition Bureau in pursuit of a plea agreement and settlement of criminal charges under the Competition Act. How the motion concerning Bioproducts and concerning Canada became separated from the overall motion by the U.S. plaintiffs to compel disclosure of all governmental submissions is long and complicated. For those who are interested, the procedural history is set out in detail in Judge Hogan's decision.14
Canada filed an amicus curiae brief in opposition to the U.S. plaintiffs’ motion to compel Bioproducts to produce the documents relating to the resolution of the Canadian conspiracy charges. At the request of Canada and without objection by the parties, Bioproducts presented the 144 documents at issue for an in-camera review by the Special Master, the judicial official who heard the motion at first instance.
The Special Master concluded that to the extent that a portion of the 144 documents represented attorney-work product, the privilege was waived on voluntary provision of the documents to the Competition Bureau. The Special Master then conducted the required comity analysis, which was described as follows:
Section 442(1)(c) of the Third Restatement of Foreign Relations Law provides: "In deciding whether to issue an order directing production of information located abroad, and in framing such an order, a court or agency in the United States should take into account  the importance to the investigation or litigation of the documents or other information requested;  the degree of specificity of the request;  whether the information originated in the United States;  the availability of alternative means of securing the information; and  the extent to which non-compliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located." Restatement (Third) of Foreign Relations Law of the United States § 442(1)(c) (1987), at 348.
The Special Master considered the entirety of the documents when examining the first four elements of the analysis and concluded that the balance weighed in favour of disclosure. The documents were important to the plaintiffs for the purposes of the first and fourth factors, because the deadline for service of new discovery had closed, Bioproduct’s knowledgeable witnesses had invoked their Fifth Amendment rights and the witness it produced for depositions was unknowledgeable about the defendants’ participation in the conspiracy. Further, many of the participants in the alleged conspiracy avoided keeping contemporaneous records of the activities or had destroyed records, leaving the plaintiffs with no alternative means for obtaining the information.
Regarding the second factor, the Special Master concluded that Bioproduct’s request for documents provided to Canadian law enforcement agencies was as specific as reasonably could be expected, given that Bioproducts did not produce a log of its governmental submissions. The third factor weighed in favour of disclosure because at least some of the documents appeared to have originated in the U.S. and those that originated in Canada were copied to U.S. counsel. In addition, the Special Master noted that the documents were communicated by counsel for a U.S. corporation and concerned an alleged conspiracy affecting the North American market for vitamins.
However, the Special Master concluded that the fifth factor was determinative and he conducted a separate analysis under that factor on each category of document. While he acknowledged that the documents would be protected from disclosure under Canadian law as they were exchanged during settlement negotiations, the question he asked was whether, as Canada had argued, disclosure would substantially reveal Canada’s negotiating positions and therefore negatively affect its ability to negotiate future settlements.
The Special Master concluded that the documents that did not disclose Canada’s negotiating positions or tactics must be produced, even though subject to Canadian settlement privilege and even though some of those documents reflected the position of Bioproducts regarding the terms on which it would provide information, documents and employees for interview by the Canadian authorities. Regarding the documents ordered to be produced, the Special Master concluded that Canada’s interest in non-disclosure was minimal and the balance of the comity analysis weighed in favour of disclosure. This analysis also applied to a chronology which had been prepared. On this document, the Special Master noted that there was no evidence on the document of why it was produced, who produced it, to whom it was submitted or any other indication that would undermine Canada's negotiating position.
The Special Master concluded that the executed plea agreement, and drafts of the plea agreement, agreed statement of facts, indictment, prohibition order, immunity letter and cover letter to the agreed statement of facts, as well as the letters of Bioproducts’ counsel commenting on these drafts and in some instances discussing other matters, were protected from disclosure. The Special Master referred to this decision as a close call. The fact that these documents would reveal Canada’s negotiating positions and potentially interfere with Canada’s power to settle antitrust cases within its borders was determinative. The Special Master emphasized that Canada’s agreement to keep these documents confidential, and the absence of any evidence that they would be disclosed absent an order by the U.S. court, tipped the balance of the comity analysis in favour of non-disclosure. This distinguished Canada from the European Commission, whose claim that the ongoing investigation would be harmed by disclosure was undermined by its admitted rule of allowing access to files and the potential for publication of voluntary submissions.
The executed agreed statement of facts engendered a different result. Since Bioproducts agreed to enter a plea on the understanding that the agreed statement of facts would eventually be published, Bioproducts could not have reasonably believed that the information contained in the agreed statement of facts would remain confidential. The Special Master ordered the executed agreed statement of facts to be produced.
On review, Judge Hogan adopted the Special Master’s recommendations on Bioproducts’ submissions to Canada in their entirety.
This is a troubling decision from a Canadian defendant's perspective; in essence, the U.S. court refused to accept settlement privilege as a complete answer to the request for disclosure. Only documents which disclosed Canada’s negotiating positions and which Canada agreed would be kept confidential were protected from disclosure. Bioproducts' interests were essentially irrelevant.
This decision has taught defence counsel to take precautions when negotiating settlements with governmental authorities, including the Competition Bureau and the Securities Commission. First, defence counsel should limit the exchange of information in document form as much as possible. Documents exchanged for settlement purposes should be created in Canada, focus solely on Canada to the extent possible and be clearly marked "privileged and confidential". Defence counsel should obtain the express agreement of the Canadian authorities that the documents exchanged disclose Canada's negotiating tactics and will be kept confidential. To the extent defence counsel create a document to provide to the authorities for settlement purposes, it should be drafted in a manner that supports the argument that Canada's negotiating ability would be undermined if the document was disclosed. Defence counsel should avoid creating any impression that a document provided to the authorities for settlement purposes is connected to the U.S., including avoiding sending the document to the U.S. While providing no guarantees, following these guidelines will at least assist in limiting the risk that documents exchanged for the purpose of resolving charges in Canada will be ordered to be produced in U.S. litigation.
These procedural developments show the increasing interdependence between Canadian and U.S. litigation and the significant degree to which Canadian plaintiffs can take the benefit of their U.S. counterparts' accomplishments in parallel litigation. Counsel may no longer focus safely on Canadian issues and law when either resolving charges in Canada or dealing with Canadian civil actions where the facts transcend Canada's boundaries. Effectively representing clients' interests in matters with a North American, as opposed to purely Canadian context, requires close cooperation at the very outset between Canadian and American counsel. The issues are numerous, complex and, in many cases, still unresolved. The very first step taken in one jurisdiction (such as a discussion with the authorities) can trigger a series of events with serious, and potentially detrimental, implications for litigation in both jurisdictions. Counsel who proceed without a carefully planned strategy for dealing with cross border issues do so at their clients' peril.
*Partner, Davies Ward Phillips & Vineberg LLP, Toronto.
1542 U.S. 155 (2004).
215 USC s. 6a.
315 USC s.1.
4Oral argument before the Court of Appeals on this issue took place on April 20, 2005 and judgment was reserved.
5VitaPharm Canada Ltd. v. F. Hoffmann-LaRoche Ltd. (2001), 6 C.P.C. (5th) 245 (Ont. S.C.J.).
6In Re Vitamins Antitrust Litigation, MDL No. 1285, U.S. District Court for the District of Columbia, Hogan J., March 19, 2001.
7VitaPharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. (2002), 159 O.A.C. 204 (Div. Ct.).
8VitaPharm Canada Ltd. v. F. Hoffmann-L Roche Ltd. (2003), 30 C.P.C. (5th) 107 (Ont. C.A.).
9In Re Linerboard Antitrust Litigation, MDL No. 1261, U.S. District Court For the Eastern District of Pennsylvania, DuBois J., August 25, 2004.
1028 U.S.C. § 1782(a).
11See also In Re:Baycol Products Litigation, MDL No. 1431 (D. Minn.) where Canadian plaintiffs were permitted to intervene under Rule 24(b) and the protective order was modified to allow the Canadians access to the U.S. discovery.
12Intel Corporation v. Advanced Micro Devices, Inc., 124 S. Ct. 2466 (U.S.S.C.).
13Several recent class action settlements have included motions to approve plaintiffs' counsel's fees which include amounts owing or paid to U.S. plaintiffs' counsel for their assistance.
14In Re Vitamins Antitrust Litigation, MDL No. 1285 (D.C.), Hogan J., December 18, 2002.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.