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CCCA_V4No2_IMAX-FIN.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 4/29/10 4:31 PM Page 34 Feature potential liability and it is critical to get it right, she explains. “For example, if the issuer “over-corrects” the misstate- ment, it could magnify its damages. But if it under-corrects, it could be accused of omitting to reveal the true state of affairs — effectively making a new misstatement or omission with the correction,” she says. 2 Handling the leave stage When everyone read these provisions early on and were doing their best to interpret the legislation, a general consensus was that the leave stage would be the critical bat- tleground, says Nigel Campbell, a partner with Blake, Cassels & Graydon LLP in Toronto. In addition,“it was expected that the threshold in order to obtain leave would be quite severe,that there would be a high threshold of proof,” says Campbell, who defends class action cases across the country. Yet, as Campbell points out, “the court explicitly says in IMAX that their interpretation of the language of the legisla- tion is that it sets “a relatively low threshold.” “A case like IMAX shows how high the stakes in [this type of litigation] can be,” says Campbell.“Not only the [potential] liability,but even through the leave stage.IMAX began in 2006 and here we are in 2010 and not done leave yet,which is under appeal,” he says. “The potential for not only costly, but protracted litigation, which any management will tell you is disruptive and distracting — particularly if it is cross-border with large international ‘class- es,’ — is a big drain on the resources and attention of the corpo- rate counsel department and management,”continues Campbell. “From what I’ve seen,in-house counsel might start revisiting their thinking on many of these cases.If it is quite a low thresh- old that the plaintiff needs to meet,then maybe you don’t want to take all the time and the energy and the resources and fight the leave stage,” he says. “Maybe you want to get right to the merits.Strategic think- ing will begin to vary now depending on the nature of the case,” he says. 3 Disclosing of confidential information “I think the IMAX line of decisions (which now con- sists of three decisions, including a prior procedural rul- ing in which Justice [Katherine] van Rensburg ordered the defendant to make broad documentary disclosure prior to the hearing of the leave motion), turns one of the conventional Nigel Campbell defensive strategies on its head when it comes to securities Partner class actions,” says Laing. Blake, Cassels & Graydon LLP “Together these decisions mean that the automatic BRIAN PIETERS Toronto response of opposing every procedural step isn’t going to 34 CCCA Canadian Corporate Counsel Association SUMMER 2010