⚖️ Cult of corporate personality

To: Hearsay Readers

Good morning,

Microsoft Word has been lying to you for years. And it’s stopping you from stuffing every possible legal argument into your documents. One US lawyer won’t stand for it though — he filed a brief defending his decision to squeeze about 4 extra lines of text onto each page:

[The argument that my line spacing is too large] ignores the details and techniques of typography and historical practice. Microsoft’s automatic “double” line setting feature was chosen to be more than twice the size of the font (roughly 233%) and is subject to the arbitrary decisions of Microsoft.

Turns out there’s a whole body of US case law arguing about the meaning of double-spaced. It’s cited in the brief if you ever need it.

— Dylan Gibbs

TODAY’S DOCKET

  • Oppression: BCCA says corporation can’t fight for its life

  • Round up: Firm scolded for handling of class action, Globe publishes firm rankings, lawyer handed hefty punishment

  • Down south: Pepsi sued for wrecking the environment with plastic packaging

OPPRESSION

Corporation might get dinged for teaming up with main shareholder

Corporate entity and two men about to fight in a field

If shareholders sue each other, can the corporation pick a side? What if one of the shareholders wants to dissolve the corporation? The BC Court of Appeal says corporations need to maintain independence, even if their existence is threatened.

What happened

Yen and Ghahramani started airG together, but they don’t like each other anymore. Yen sued airG and Ghahramani for oppression. He says Ghahramani improperly kicked him off airG’s board of directors, and he wants airG dissolved.

Ghahramani sued Yen right back. airG piled on and sued Yen too. That really ticked Yen off, so he tried to amend his lawsuit and add another claim — it was oppressive for airG to side with Ghahramani. Yen argued the company should have remained neutral.

Maintaining independence

The BC Supreme Court shut down Yen’s amendment. The Court said airG had every right to defend itself, so there wasn’t a legal basis for the claim.

The Court of Appeal felt differently. Normally, it would be okay for a corporation to defend its own existence. But that’s only if the corporation acts independently. The corporation can’t just be a puppet for one of the shareholders — and that’s what happened with airG.

Ghahramani effectively directed airG’s response to Yen’s lawsuit. That means Yen does have a legal basis to argue airG oppressed him when it spent corporate funds just to back up Ghahramani.

Big picture: The Court’s ruling suggests corporations should think twice before taking an adversarial position in shareholder litigation. If the company’s board is controlled by directors involved in the dispute, the corporation might just have to stay out of it and let the chips fall where they may.

Decision report card:

◻️😐◻️◻️◻️ Factual interest

◻️◻️◻️😃◻️ Legal interest

◻️◻️◻️◻️🇨🇭 Corporate neutrality

HEARSAY ROUNDUP

Canadiana

🤯 A Saskatchewan law firm needs to turn over some of its client files after letting a residential schools class action languish for over 15 years. The judge said the law firm had “a profound misunderstanding of the role of counsel in a class action” and took so long to do anything that many of the people who retained the firm are now deceased.

👎 A BC lawyer is banned from practice for 15 years after facilitating securities fraud. He made false statements to a securities regulator and let funds flow through his trust account when he wasn’t doing any related work.

🍁 The Globe and Mail released a peer-reviewed ranking of Canadian law firms.

🤝 The Quebec Court of Appeal held that individual prosecutors in Quebec can make decisions that require the Attorney General’s consent. The Criminal Code requires the Attorney General’s consent in several scenarios — like laying charges for offences allegedly committed outside of Canada. The Court of Appeal said the AG has delegated that consent to individual prosecutors in Quebec (unlike elsewhere in the Country). One dissenting judge disagreed, so the case is presumably headed to the Supreme Court.

Beyond the border

🥤 New York’s Attorney General is suing PepsiCo for plastic pollution. It’s a novel claim that alleges PepsiCo should be warning its customers about the harm Pepsi packaging causes the environment. The AG’s office collected trash along the Buffalo River last year and found that 75% of the garbage was plastic, and more than 17% of that plastic was produced by PepsiCo.

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