Criminal Investigations and Cross Border Litigation Not A Bar to US Depositions
May 14th, 2014
The Superior Court of Ontario recently granted an application for the enforcement of letters rogatory to take evidence of, and compel the production of documents by, two non- party Ontario residents in a consolidated multidistrict class action in the US. The Court held that the conditions for enforcement were met and, importantly, rejected the arguments of the Respondents to the application that permitting the examinations would violate the respondent’s rights against self-incrimination.
In Neuwirth v. DeCosta,  O.J. No.6363, the Applicants were seeking to enforce letters rogatory issued by the presiding case management judge in the multidistrict US class action alleging price fixing of flexible polyurethane foam (“foam”). As is rather common in this type of litigation, similar class actions have been initiated in Canada. Also, as is common in the competition realm, both the Department of Justice in the US and the Commissioner of Competition in Canada have opened investigations into allegations of price fixing of foam. There was no evidence before the Court that the respondents were targets in these investigations. Two of the respondents – the application in respect of a third respondent was dismissed as he had retired from the company prior to the commencement of the alleged conspiracy – are named in the US complaints as having participated in the conspiracy as well as being named in Statements of Claim issued in Canada in respect of the foam conspiracy.
Dealing with the conditions for enforcement, the Court undertook an analysis of the conditions that must be met as articulated by the Court of Appeal in Re Friction. The Respondents took no position with respect to some of the requirements; rather, significant emphasis was placed on public policy factors with the Respondents arguing that the proposed order circumvents the class proceedings process in Ontario for the following reasons:
- Ontario law does not permit pre-certification discovery;
- the US discovery process would permit Canadian plaintiffs a “roadmap” for the Canadian case; and,
- the US plaintiffs would be permitted greater discovery that would be permitted under Canadian law.
The Court wholeheartedly disagreed with all of these submissions. It was irrelevant that there is no pre-certification discovery; protective orders will remedy the hypothetical mischief of US materials falling into Canadian plaintiff hands; the scope of the discovery can be restricted to the limited issues on which the letters rogatory were based. The Court held that, indeed, it would be contrary to public policy not to grant foreign requests simply as a result of different procedural stages in an action: “failure to give effect to a reasonable request from a foreign court that is not otherwise a violation of Canadian sovereignty would offend public policy…[I]t is obviously in our interest to facilitate cooperation in legal matters as a matter of enlightened self interest.”
It seems clear that in cases such as these, absent compelling arguments in respect of the conditions that must be met for enforcement (here the record appears to have been sparse or silent on most of the requirements) resisting enforcement on the basis on very different pre-trial procedures will not be successful.
The respondents further resisted enforcement arguing that the proposed examination would violate their rights against self-incrimination. While likely not to have impacted the ultimate reasoning of the Court, the Respondents indicated that they were unaware as to whether they were targets of the Canadian inquiry. While one cannot know all of the tactical considerations contemplated by counsel, the respondents could have, pursuant to subsection 10(2) of the Competition Act inquired about the status of the inquiry and in so doing learned as to whether they were targets of the investigation. In any event, it was held that the examinations do not so infringe and that an order could be fashioned to protect their rights under the Charter.
If arguments about self incrimination are not to be successful in these contexts, it becomes ever more important for counsel to ensure that any order issued enforcing letters rogatory should explicitly and in detail articulate all of the protections afforded to potential deponents. In this case, in addition to what is described as a comprehensive US protective order, the proposed order is to contain conditions that the Respondents testify with the protections of s.7 and 13 of the Charter and of the Canada and Ontario Evidence Acts.
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