A "silver" lining to defending multiple, parallel class actions 


April 2013

Class Action Bulletin

Good news for defendants named in multiple, parallel class actions: defendants may be able to reduce the size of an Ontario class by entering into non-global settlements in parallel actions in other jurisdictions, and then moving to have the Ontario court recognize that settlement.

This is the result achieved by the defendants in Silver v Imax.1 Following a settlement in a parallel proceeding in the United States, Justice van Rensburg of the Ontario Superior Court of Justice allowed a motion by the Ontario defendants to redefine the Ontario class. The result: the Ontario class was reduced by 85%.


In 2006 a series of class actions were brought against IMAX Corporation and certain of its executives in the US and Canada. IMAX is a Canadian public company whose shares are dual-listed on the Toronto Stock Exchange (TSX) and on the NASDAQ.

All the actions brought against IMAX sought to recover damages for IMAX's shareholders for alleged material misrepresentations and omissions relating to revenue recognition.

the Ontario action

The Ontario class action asserted common law causes of action and claims for relief under Part XXIII.1 of the Ontario Securities Act.2 This section provides a statutory, civil cause of action against an issuer and others. Under this section, persons who acquired or disposed of the issuer's securities in the secondary market can seek damages for misrepresentations that were made and not publicly corrected that adversely affected the value of those securities.

Class actions are regulated by statute. In Ontario, an action cannot proceed as a class action unless and until it has first been "certified" by the court under the Class Proceedings Act.2 Certification does not test the merits of the claim. Rather, the certification test is "procedural:" it is an assessment of whether the action is appropriately prosecuted as a class action.

Following a hearing, the Silver class action was certified. As part of the certification motion, a plaintiff class was approved by the Ontario court. The Ontario class was global in nature and included anyone who had acquired securities of IMAX from any source,3 irrespective of their country of residence. 

US actions

A number of similar class actions against IMAX were commenced in the US. These lawsuits were eventually consolidated into a single class action. The class in the US action was more limited than the class certified in Ontario. In contrast to the Ontario class, the US class consisted of all persons who purchased securities of IMAX on the NASDAQ, only.4 Persons who purchased IMAX shares on the TSX were not included in the US class action.

the US settlement

Counsel in the US class action negotiated a settlement for the US class members, only. The settlement received all the necessary approvals by the US Court but was subject to one condition: the class definition in the parallel Ontario action had to be amended to remove all those that would be bound by the US settlement.

Accordingly, the defendants in Canada brought a motion to limit the Ontario class definition. Justice van Rensburg allowed the motion.

In reaching her decision, Justice van Rensburg found that the US court had a "real and substantial connection" with the claims of the "overlapping" class members and that the US settlement should be recognized by the Canadian Court.

She then considered the following question: whether, in light of the US settlement, the Ontario action remained the "preferable procedure" for the resolution of claims of Ontario class members whose claims were covered by the US Settlement. Justice van Rensburg found that the answer to this question was "no." She amended the definition of the Ontario class to remove all those who benefitted from the US settlement. This amendment nearly decimated the Ontario class. Following the motion, only 15% of the original "global class" remained in the Ontario action.


The decision in Silver is of assistance to defendants seeking to resolve claims brought against them in parallel class proceedings. The procedure outlined in Silver offers defendants a framework in which to fully and finally settle the claims of some class members, even if those individuals are members of more than one class action. Silver encourages settlement and the full and final resolutions of claims, and is a positive development for defendants.

It will be interesting to see whether, following Silver, plaintiffs' counsel will continue to seek certification of global classes.

by Adrienne Boudreau

1 2013 ONSC 1667.

2 RSO 1990, c S.5.

3 Most class members had acquired their IMAX shares either from the TSX or the NASDAQ.

4 Following the US Supreme Court's decision in Morrison v National Australian Bank Ltd., 130 S. Ct. 2869 (2010) the US class could include only those who purchased IMAX shares on a US exchange.

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013