Screening Secondary Market Liability Actions: The Supreme Court Raises The Bar For Plaintiffs

On April 17, 2015, the Supreme Court of Canada (SCC) rendered its opinion in Theratechnologies inc. v. 121851 Canada inc., 2015 SCC 18 (Theratechnologies), its first decision on the Quebec statutory secondary market liability regime adopted in 2007 pursuant to a reform of the Quebec Securities Act (QSA).  Like its sister statutes in other provinces, although the QSA regime facilitates a plaintiff's burden, mostly by presuming that variation in market price is linked to a misinformation or omission, it also imposes an authorization process under which a claimant must establish that its action is brought in good faith and has a reasonable possibility of success.

Adopting a similar approach as the Quebec Court of Appeal, the SCC clarified the test applicable to the authorization of claims pursuant to the QSA by comparing it to the less stringent test applicable to authorization of a class actions in Quebec and by specifying the evidence and the analysis of the evidence