Pandemic set to leave a wake of litigation

As the world looks toward recovery from COVID-19, partner Linda Plumpton says her experience tells her there will be plenty of litigation as a result of the pandemic.

“You look at the tech bubble bursting in the early 2000s, then the Great Recession in 2008, I expect that the COVID trend will be similar, and we're already seeing that play out in a number of areas.” Linda told Canadian Lawyer.

“My own view is that we're really just on the cusp of what will probably be years of litigation to follow.”

The recent winner of the Litigator of the Year award in the inaugural Canadian Law Awards in 2020, Linda comments in the article that litigation had already begun in areas that have been greatly impacted by the pandemic, like nursing homes and M&A, saying “it’s just the tip of the iceberg”.

In addition to these areas, Linda says companies with foreign operations could also see claims having to do with board oversight and director liability.

“I think we will continue to see potentially novel litigation relating to responsibility for parent companies and board members in the oversight of foreign operations,” Linda said.

“That’s been a development in the United States, and it will remain to be seen how it plays out in Canada.”

The Canadian Lawyer article said claims having to do with board oversight and director liability are “generally referred to as Caremark claims after the 1996 U.S. decision in re Caremark International Inc. Derivative Litigation, 698 A.2d 959, which dealt with a ‘board’s responsibility with respect to the organization and monitoring of the enterprise to assure that the corporation functions within the law to achieve its purposes,’ the judge wrote in that case.”

“There’s been some litigation in the U.S. that seems to show an expansion of the duties that might be owed,” Linda said.

“That hasn’t been fully tested in Canada, [nor] the scope of responsibility that Canadian companies might have.”

You can read more about the trend of U.S. Caremark claims and their potential for making their way to Canada in our article “Litigation trends in corporate Canada”.

Read more about our Litigation and Dispute Resolution work on the relevant practice page.