After an unsuccessful attempt to bring a securities class action
in Ontario on behalf of Canadian security holders of BP, a
plaintiff recently – and again unsuccessfully – sought
to start his class action in Texas. The U.S. court decision is now
the leading case interpreting a section of the Ontario
Securities Act (the "OSA").
On September 25, 2015, the U.S. District Court for the Southern
District of Texas (the "U.S. Court") dismissed the plaintiff's claim, which
alleged the statutory cause of action for secondary market
misrepresentation under the OSA. The U.S. Court held that it had
already appointed lead plaintiffs in an existing class action in
Texas, and that those lead plaintiffs had determined not to pursue
claims under the OSA. The court also held that the plaintiff's
claim was time-barred under the OSA's limitation period, and
could not be saved on the basis that the alleged misrepresentation
The plaintiff's earlier proposed class action in Ontario was
stayed by the Court of Appeal in 2014.
The U.S. Class Action
In 2010, numerous investors commenced putative securities class
actions against BP in the U.S., arising from the April 2010 Deep
Water Horizon oil spill in the Gulf of Mexico. That same year, the
U.S. Court appointed New York and Ohio retirement funds as lead
plaintiffs for a putative class of purchasers of BP American
Depositary Shares and ordinary shares (the "Proposed U.S.
Class"). Those lead plaintiffs are pursuing their claims
against BP under U.S. federal securities laws (the "U.S. Class
Canadians who purchased BP securities over the NYSE are included
in the Proposed U.S. Class.
The Proposed Canadian Class Action
In 2012, a similar claim was brought in Ontario under the
statutory cause of action in s. 138.3 of the OSA. The proposed
class was made up of Canadian residents who acquired securities of
BP anywhere in the world. The vast majority of the proposed class
members acquired their BP securities over the New York Stock
Exchange or London Stock Exchange, with a limited number purchasing
over the Toronto Stock Exchange.
In 2014, the Court of Appeal for Ontario stayed the claims of
Canadians who purchased over the foreign exchanges (including the
proposed representative plaintiff, who had purchased his shares
over the NYSE). The Court held that, although an Ontario court had
jurisdiction over the claims of those foreign exchange purchasers,
it should decline that jurisdiction on the basis that the U.S. and
the U.K. were clearly more appropriate forums for the determination
of those claims.
In March 2015, the Supreme Court of Canada denied leave to
appeal from the decision of the Court of Appeal. Immediately
thereafter, the plaintiff commenced a proposed class action in the
U.S., alleging the statutory cause of action under the OSA. That
claim was brought on behalf of Canadians who purchased BP
securities over the NYSE.
The U.S. Court's Decision
On September 25, 2015, the U.S. Court granted BP's motion
dismissing the plaintiff's proposed class action. The U.S.
Court held that the plaintiff was "not entitled to now assert
a separate class action based on a claim that the lead plaintiffs
determined not to pursue."
The U.S. Court went on to find that the plaintiff's claim
was, in any event, barred by the limitation period under the OSA.
The plaintiff's claim was based on alleged misrepresentations
made in 2007 and 2008, and s. 138.14 of the OSA required that those
claims be brought within three years of the date that the documents
containing the alleged misrepresentations were first released. As
the plaintiff had not even brought his claim in Ontario until 2012,
his claim was statute-barred.
The plaintiff argued that s. 138.3(6) of the OSA provides an
exception to the statutory limitation period. Section 138.3(6)
grants the court discretion to treat multiple misrepresentations
having common subject matter or content as a single
misrepresentation. The plaintiff argued that this gave the court
discretion not to apply the limitation period if BP continued to
make the same representations after 2008, even if the
plaintiff's claim was not based on such representations. The
U.S. Court expressed serious doubt as to whether s. 138.3(6)
granted it discretion to save the plaintiff's claim (finding
"it most likely does not"), but held that even if it did,
it would not exercise its discretion given that the plaintiff was
"unable to provide the Court with a compelling justification
for his delay".
Notably, the U.S. Court's decision may be the most direct
authority on the relatively unique argument that s. 138.3(6) of the
OSA can save a claim that would otherwise be limitation barred by
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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