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Barrick v. Goldcorp
An Ontario Superior Court judge has determined that a right-of-first-refusal provision in a shareholder agreement is as good as gold. On June 26 Justice Herman Wilton-Siegel dismissed claims by Barrick Gold Corporation against three rival minersXstrata plc, Goldcorp Inc., and New Gold Inc.in a dispute over the acquisition of a majority stake in the El Morro copper and gold project in Chile.
Swiss miner Xstrata, which owned 70 percent of El Morro, agreed in October 2009 to sell the stake to Toronto-based Barrick for $463 million if Vancouver-based New Gold, which owned the other 30 percent, opted not to exercise its right of first refusal over Xstrata's interest within 60 days. News of the El Morro agreement got the attention of Vancouver-based Goldcorp, which swooped in, struck a deal with New Gold, and threw in an extra $50 million.
New Gold claimed the right of first refusal, bought the majority stake, and then immediately sold it to Goldcorp, which had agreed to pay $50 million to New Gold when the stake in El Morro was transferred. Goldcorp further sweetened the deal, committing to a commercial production date for El Morro and improved financing obligations for New Gold under the shareholders agreement in which Goldcorp would ultimately take Xstrata's place. The agreement was publicly disclosed in January 2010.
Barrick immediately launched its claim against New Gold and Goldcorp, looking for $750 million in damages, based on the assertion that the value of the El Morro stake had grown because gold and copper prices were expected to rise, or a declaration that it was entitled to the El Morro interest. Barrick later added Xstrata as a defendant.
Essentially, Barrick claimed that the Goldcorp/New Gold agreement constituted an illegal use of the right of first refusal under Chilean law, which governed both the shareholders agreement and the Xstrata/Barrick conditional sale agreement. Specifically, Barrick claimed that the arrangements between New Gold and Goldcorp breached the restrictions on the transfer of rights and interests under the shareholders agreement.
The court held that Xstrata had not breached its contract with Barrick given that New Gold's exercise of its right of first refusal did not violate the restrictions on transfer in the shareholders agreement and was not prohibited under Chilean law.
For plaintiff Barrick Gold Corporation (Toronto)
Paliare Roland Rosenberg Rothstein:
Litigation: Gordon Capern, Karen Jones, Chris Paliare, Odette Soriano, and associates Tina Lie and Alysha Shore. (They are in Toronto.)
For defendant Goldcorp Inc. (Vancouver)
Osler, Hoskin & Harcourt:
Allan Coleman, Mark Gelowitz, Geoff Hunnisett, and associate Aislinn Reid. (They are in Toronto.)
For defendant New Gold Inc. (Toronto)
Jessica Kimmel, Benjamin Zarnett, and associate Melanie Ouanounou. (They are in Toronto.)
For defendant Xstrata plc (Zug, Switzerland)
Litigation: David Hamer, Junior Sirivar, Harry Underwood, counsel James Farley, and associates Amy Archer, Brendan Brammall, and Jonathan Landry. Research: Brandon Kain. Business law: Richard Miner and associates Arezou Farivar and Sharon Kour. (All are in Toronto except for Farivar, who is in London.)
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Gray Et Al. v. SNC-Lavalin Group Et Al.
Shareholders of SNCLavalin Group Inc., whose assets have plummeted in value, have launched a class action in Ontario Superior Court against the Montreal-based engineering giant. Lawyers for the plaintiffs believe that it is the first class action complaint to allege bribery of officials of a foreign government.
The suit is also one of the largest securities actions by dollar value ever launched in Canada and arises from alleged payments made by SNCLavalin to members, associates, and agents of the Qaddafi regime to secure contracts for infrastructure projects in Libya. The Ontario suit follows a $250 million claim containing similar allegations that was filed in Quebec in March on behalf of investors in that province.
Shares of SNCLavalin dropped more than 20 percent on February 28, wiping out more than $1.5 billion of market value after the company revealed that it had launched an investigation into $35 million of undocumented payments.
Two separate actions in Ontario Superior Court were consolidated on June 29. The action alleges that SNC misrepresented the adequacy of its internal controls and net income during the 2010 fiscal year. It claims that those alleged misrepresentations inflated SNC's share price.
In addition to members of SNC's board of directors, those named include SNCLavalin International chairman Michael Novak and subsidiary vice presidents Charles Azar and Andre Beland, who are in charge of Libyan operations.
The plaintiffs say in their complaint that these officials, as well as former CEO Pierre Duhaime and former controller Stephane Roy, helped executive vice president Riadh Ben Aissa arrange "improper or unlawful payments" to secure contracts in Libya.
According to several Canadian news reports, Duhaime, Roy, and Ben Aissa have lost their jobs with SNCLavalin. Ben Aissa, SNC's former head of construction, is in a Swiss jail on suspicion of corrupting a public official, fraud, and money laundering tied to his dealings in North Africa.
At press time motions for certification of the class action were to be heard in September.
For plaintiffs Brent Gray (Surrey, British Columbia) and Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund
Dimitri Lascaris, Charles Wright, and associate Anthony O'Brien. (Lascaris and Wright are in London, Ontario. O'Brien is in Toronto.)
Joel Rochon and senior counsel John Archibald and Peter Jervis. (They are in Toronto.)
For defendants SNCLavalin Group Inc. (Montreal) et al.
Norton Rose Canada:
James Hodgson and Steve Tenai. (They are in Toronto.) The firm is also representing the company's directors, who have been named as defendants in the suit.
For defendant Michael Novak
Patricia Jackson and associate Andrew Finkelstein. (They are in Toronto.) Novak is the chairman of SNCLavalin International.
For defendant Gilles Laramée
Lax O'Sullivan Scott Lisus:
Clifford Lax Q.C. and Paul Fruitman. (They are in Toronto.) Laramée is CFO and executive vice president of the company.
For defendant Pierre Duhaime
Gowling Lafleur Henderson:
Steven Sofer. (He is in Toronto.) Duhaime is the former CEO of SNCLavalin Group.
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Joanne Martin Et Al. v. Astrazeneca
In a ruling released on May 7, Justice Carolyn Horkins of the Ontario Superior Court denied certification of a proposed national class action involving the antipsychotic medicine Seroquel. In the Canadian action, the plaintiffs made a broad range of allegations against three AstraZeneca companies in relation to the design, manufacture, marketing, and sale of Seroquel, which is used to treat schizophrenia and bipolar disorder.
Plaintiff Joanne Martin, who claimed that she developed side effects after taking Seroquel, filed the suit along with her husband, Don, and Corrine Middleton, who also took the medication. The principal claims were that Seroquel causes serious health risks that were not adequately warned of in the product monograph approved by Health Canada. The plaintiffs also alleged that the defendants conspired to conceal safety information from Health Canada and to promote the medicine for off-label, unapproved uses.
The court found that the plaintiffs failed to meet any of the five criteria for class certification. The 78-page decision marked the first time that the Ontario Superior Court has refused to certify a class action relating to a pharmaceutical product, according to the firms involved in the case. Horkins held that the mere fact that similar issues have been found worthy of certification in other cases in the United States is not a basis to certify the issues in the case before the court.
Seroquel has been the target of multiple class actions. In August the South Carolina attorney general secured a $26 million settlement against AstraZeneca for violating the state's Unfair Trade Practices Act by willfully misleading consumers on the side effects of the drug.
For plaintiffs Joanne Martin, Don Martin, and Corrine Middleton
Kim Orr Barristers:
Megan McPhee and James Orr. (They are in Toronto.) Former associate Ahmad Erfan also worked on the matter.
For respondents AstraZeneca Canada Inc. (Mississauga, Ontario) et al.
Meighan Leon, Frank McLaughlin, Paul Morrison, and associate Elder Marques. Research: Eric Gertner and Brandon Kain. (They are in Toronto.)
Sarah Chesworth. (She is in Toronto.)
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Andersen v. St. Jude Medical
An Ontario court justice on June 26 dismissed the first medical products class action that had gone to a common issues trial in Canada. Justice Joan Lax of the Ontario Superior Court found that St. Jude Medical Inc. exercised a reasonable standard of care in the design and testing of its Silzone-coated (silver-coated) heart valves, which plaintiffs alleged caused various medical complications.
The trial ran over 19 months, with 146 court days of evidence and submissions. The court heard evidence from 40 witnesses, including 23 expert witnesses. Almost 2,300 documents were marked as exhibits, and more than 1,000 excerpts from Canadian and U.S. deposition transcripts were filed.
In 2000 St. Jude Medical voluntarily recalled the unimplanted inventory of its prosthetic heart valves coated with Silzone after a medical trial revealed a small incidence of rejection. Silzone is designed to reduce the incidence of infection.
Class actions were filed against St. Jude Medical later that year in Ontario, British Columbia, and Quebec on behalf of patients who had been implanted with the Silzone-coated heart valves and, in some cases, their families and provincial health insurers.
In 2004 an Ontario judge certified a class action on behalf of most Canadian residents implanted with Silzone-coated heart valves and their family members. (The certification action did not cover residents of British Columbia and Quebec.)
The Ontario class action proceeded to a nonjury common issues trial that started in February 2010 before Lax. The trial was closely monitored by class action lawyers in Canada, in part because it was also the first case to try a novel waiver of tort claim in a negligence class action.
For plaintiff Yvonne Andersen (Alberta)
Peter Kryworuk, Brian Moher, and associates Rebecca Case, Alysia Christiaen, Louise Moher, and Yola Ventresca. (They are in Toronto.)
Sandra Barton, Mark Hines, and Angus McKinnon. (They are in Toronto.)
James Newland. (He is in Toronto.)
For defendants St. Jude Medical Inc. (St. Paul) and St. Jude Medical Canada Inc. (Mississauga, Ontario)
Deputy general counsel James Ladner and senior corporate attorneylegal Elizabeth Porter.
J. David Bickham, Gary Jeffrey, Steven Kohn, and Mary Oppedahl. (They are in San Francisco.)
Blake, Cassels & Graydon:
Jill Lawrie, Robin Linley, Gordon McKee, J.A. Prestage, Tony Wong, and associates Nicole Henderson, Karin McCaig, Marcy McKee, and Robin Reinertson. (They are in Toronto.)