Canadian Appeal Court Affirms 'Thanks-But-No Thanks' Approach To Discovery Of U.S. Residents In Canadian Class Action

On April 16, 2018, a Canadian appeal court upheld a prohibition on Canadian plaintiffs from obtaining discovery from a U.S. resident under section 1782 of Title 28 of the United States Code, See Mancinelli v. RBC, 2018 ONSC 1844 (Div. Ct.).

In Mancinelli, the plaintiffs alleged that the defendants conspired to fix prices in the foreign exchange market. Certain currency traders employed by the defendants were alleged to have coordinated their trading strategies and exchanged key confidential information with each other using electronic chatrooms hosted by Bloomberg LP. The plaintiffs commenced a class action in Ontario, Canada. Before moving to certify the class, the plaintiffs sought discovery from Bloomberg in the United States, including production of transcripts of the relevant chatroom conversations. Had Bloomberg been a resident of Ontario, the province's Rules of Civil Procedure would require the plaintiffs to obtain an order from the court authorizing the non-party discovery. But, believing that such an order was unnecessary given that Bloomberg resided in the United States, the plaintiffs moved for and obtained an ex parte order under section 1782. That section permits a U.S. court to order a U.S. resident to provide discovery for use in a foreign proceeding.

Upon learning of the order made against Bloomberg, the defendants moved before Justice Perell, the case management judge in the Ontario class action, See Mancinelli v Royal Bank of Canada, 2017 ONSC 87. They sought an order requiring the plaintiffs to seek and obtain authorization from the Ontario court, before taking any step in furtherance of the section 1782 order against Bloomberg. In other words, the defendants sought the same result that would have resulted had Bloomberg resided in Ontario. That is, prior judicial authorization by the Ontario court before discovery directed to a non-party.

Justice Perell granted the order sought by the defendants. He held that the plaintiffs had circumvented the rules that govern discovery of non-parties in Ontario, and in class actions in particular. Not only had plaintiffs not sought prior judicial approval before seeking discovery from a non-party, they also had sought discovery before certification, when such discovery is not typically permitted in Ontario class actions (in contrast to the situation in the United States). While these findings were sufficient to find for the defendants, Justice Perell also held that the plaintiffs' ex...