Court of Appeal Decision of the Week

Confidentiality Agreements; Costs at the C.A.

Case: Monster Energy Company v. Craig, 2016 BCCA 484 (CanLII)

Keywords: Wrongful Death; Confidentiality Agreement; Letters Rogatory; Directions on Costs Payable; Monster Energy Company v. Craig, 2016 BCCA 290 (CanLII)

Synopsis:

Mr. Bruce Schechter represents plaintiffs in a wrongful death action against Monster Energy Company (“Monster”) in California. The parties settle the action prior to trial. The terms of settlement include a confidentiality agreement and release entered into by the parties and their attorneys, including Mr. Schechter and his firm, R. Rex Parris Law.

Ms. Craig, a journalist, interviews Mr. Schechter about the wrongful death action. Ms. Craig subsequently publishes an article on a legal news website. The article is entitled “Substantial Dollars for Family in Monster Energy Drink Wrongful Death Suit”. It refers to the wrongful death action and quotes Mr. Schechter as saying to Ms. Craig that “substantial dollars” were paid in relation to the settlement agreement reached in the wrongful death action. Ten days after the article is published, Monster sues Mr. Schechter and the R. Rex Parris Law in California based on the alleged violation of the confidentiality agreement.

The California court issues a letter of request (sometimes referred to as “letters rogatory”) to the Supreme Court of British Columbia seeking Ms. Craig’s evidence through a deposition and cross-examination in B.C.. Ms. Craig files two affidavits, attends a hearing, and confirms both that she interviewed Mr. Schechter and that he used the phrase in issue.

The Chambers Judge concludes Ms. Craig’s evidence is responsive to the letter of request; orders Ms. Craig to attend a deposition but allows Monster to ask her only one question (whether the affidavit is true). Monster appeals this part of the order. The appeal is allowed on July 16, 2016 (Monster Energy Company v. Craig, 2016 BCCA 290 (CanLII)) and the parties seek directions on costs payable.

 Importance:

Citing Catalyst Paper Corp. v. Companhia de Navegação Norsul, 2009 BCCA 16 (CanLII), the Court of Appeal confirmed that, generally speaking, the successful party on an appeal is entitled to costs unless there is some principled basis to depart from the rule. (See para. 8).

Ms. Craig argued a principled basis existed in the case because:

  • She was not a party to the underlying litigation in California;
  • As a professional journalist, she was concerned about the scope of the deposition/its potential intrusion into her work product. (See para. 9).

Monster took the position that, although Ms. Craig is not a party to the underlying litigation, she is a party to the proceedings in British Columbia. Since she opposed the application to protect her personal interests, Monster argued she should also bear the costs incurred by Monster to overcome her opposition. (See para. 10).

For the Court of Appeal, it was appropriate to depart from the usual rule and order that each party bear its own costs. In this case, Ms. Craig neither “initiated nor promoted the proceedings”. Instead, she merely responded to Monster’s request as “a journalist concerned with protecting her work product”. (See para. 11).

The Court of Appeal determined it was “significant” the substantive proceedings in California were between Monster and Mr. Schechter and his firm. Ms. Craig was “caught up in the proceeding” on the basis she has evidence which could assist the foreign court in resolving the underlying dispute. The Court emphasized that, unlike Monster (the plaintiff in that underlying proceeding), Ms. Craig was put to “considerable personal expense” to respond to the letter of request and has no further prospect of recovering costs in the underlying action. (See para. 11).

Counsel for the Appellant: John Shewfelt and Anthony Toljanich (Miller Thomson, Vancouver)

Counsel for the Respondent: Zachary Ansley (Owen Bird Law Corporation, Vancouver)

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Posted: Wednesday, December 07, 2016