Cross-Border Class Actions: Pre-Certification Discovery of Documents Subject to Protective Orders in the United States
Class actions alleging anti-competitive conduct in Canada are frequently filed in the wake of similar proceedings in the United States, and plaintiff counsel firms in both countries openly cooperate in the advancement of these cases. An important issue in such cross-border litigation is whether a Canadian plaintiff can seek production from the defendants, prior to certification in Canada, of documents exchanged in the context of the certification motion in the US litigation.
Class actions are bifurcated proceedings: the plaintiff who wants to represent the class must first obtain leave from the court to launch the action as a class action, a process called certification. In Canada, class action legislation does not contemplate a right to discovery prior to certification and, where available with leave of the court, such discovery rights are limited. Conversely, US plaintiffs are granted full discovery at the certification stage, but the information provided on discovery is often subject to protective orders that limit access to and dissemination of sensitive information disclosed by the defendants and third parties.
In a recent decision, the British Columbia Supreme Court refused to make an order granting the plaintiff access to the information filed in parallel US litigation prior to certification of the class action in Canada. In Bryar Law Corporation1, the plaintiff alleges a conspiracy to fix the price of static random access memory devices (SRAM) and seeks to certify a class comprising both direct and indirect purchasers of SRAM in British Columbia. The plaintiff brought a motion before the BC court seeking disclosure by the defendants of the information filed in the California litigation, specifically unredacted expert reports that included information about prices, costs, mark-ups and related materials. The information sought by the plaintiff is subject to protective orders and sealing orders issued by the California court.
The court held that while there is no statutory right to precertification discovery in British Columbia, limited pre-certification discovery may be available, provided that the evidence sought is relevant to the matters at issue in the certification, such as whether common questions exist and predominate and whether the plaintiff's claim is typical of the class. In this case, the court was prepared to assume that the unredacted expert reports filed in the California litigation might be material to the court's findings on issues relevant to the certification application.
However, the court held that it was not appropriate to order pre-certification discovery of the requested documents in the Canadian proceeding. The court found that the protective orders in the California litigation were made after a lengthy process of negotiation to protect the rights of non-parties to the litigation, as well as the parties themselves. Because the exact nature of the information sought and the scope of the protective orders were not known to the court, and because a decision regarding disclosure would affect the interests of the parties and of numerous third parties, the court felt that the application for disclosure should properly be brought before the California court. In addition, in the spirit of judicial comity, the court expressed its reluctance to grant discovery in contravention of a protective order issued by a foreign court.
In support of its decision, the court also referred to the reasons of the Ontario Court in Vitapharm2, which refused to enjoin the plaintiffs from continuing their motion before a US court to gain access to certain materials in the US litigation, pointing out that the US court was in the best position to determine issues of confidentiality. The court also noted that in the Microsoft3 case, the same plaintiff firm was denied disclosure by another BC judge but succeeded in obtaining a very large level of disclosure from the US court hearing similar litigation.
For all these reasons, the court denied the plaintiff's motion and found that the proper course was to bring an application for disclosure before the California court.
McCarthy Tétrault Notes
At the certification stage of a class action, Canadian courts appear to be unwilling to order the defendants to produce materials protected by orders of US courts, but require the plaintiff to seek a variation of such orders before the issuing court. This is a sensible solution that avoids putting the defendants at risk of breaching such orders in complying with the order of a Canadian court.
McCarthy Tétrault represents Hynix Semiconductor Inc. in the SRAM litigation before the BC Supreme Court.
1 Bryar Law Corporation v. Samsung Electronics Co. Ltd., 2010 BCSC 1661.
2 Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd.,  6 C.P.C. (5th) 245 (Sup. Ct.), affirmed (2003), 23 C.P.R. (4th) 454 (Ont. C.A.)
3 Pro-sys Consultants Ltd. v. Microsoft Corp., 2007 BCSC 1663.