In 2010, the U.S. Supreme Court ruled that plaintiff classes in securities class action lawsuits be limited only to investors who purchased shares on a U.S. exchange (Morrison v. National Australia Bank). Since then, plaintiffs’ lawyers have been searching for a new place in which to file lawsuits on behalf of plaintiffs who purchased shares on a non-U.S. exchange. That place is Canada. An Ontario law and a subsequent court decision there make it easier for investors to sue publicly traded companies. Plaintiffs’ lawyers from the United States have begun obtaining licenses to practice in Canada in order to take advantage of these more favorable laws for securities class action plaintiffs.
I understand the Supreme Court’s concern. They are worried that the litigants will overwhelm the court system which is overburdened as it is. Still, I do worry that the Supreme Court decision goes against our broad understanding with jurisdiction. In terms of personal jurisdiction, we look for the defendant’s substantial contacts with the jurisdiction. Undoubtedly, there must be cases where plaintiffs purchase the stock through a United States broker, and the defendant corporation has substantial operations in the United States. Hence, I worry that some valid cases may be dismissed on jurisdictional matters. I can imagine that the plaintiff’s lawyers will be taking that trip up to Canada.