An Ontario Superior Court judge has okayed a class-action suit against Arctic Glacier Income Fund by investors who suffered losses after a U.S. antitrust probe of the ice business.
Investors in the fund, which owns Winnipeg-based bagged-ice maker Arctic Glacier Inc., launched the $165-million suit in 2008. The lawsuit came after Arctic Glacier revealed it was facing a U.S. antitrust investigation, causing the fund's value to plummet.
The suit alleges the fund misrepresented itself by telling investors it was "a good corporate citizen." The allegations have not been proven.
Arctic Glacier's U.S. subsidiary pleaded guilty in 2009 to taking part in a "criminal anti-competitive conspiracy" to allocate customers among competitors in Michigan. It also agreed to pay a $9-million (U.S.) fine.
The class-action suit names the fund's trustees (including former Manitoba premier Gary Filmon) and a handful of executives.
Michael Robb, a lawyer for the investors, said the two lead plaintiffs are retail investors from Southwestern Ontario, adding: "They took a hit on it and got peeved and decided they wanted to take some action."
Arctic Glacier could not be reached for comment on Friday.
The case is the second securities class action to get the go-ahead from a judge after new legislation boosted the rights of shareholders to sue in Ontario in 2006.
The first was a case launched by investors in Imax Corp. after the company had to restate its earnings in 2005. (Mr. Robb also acts for the plaintiffs in that case.) The new Ontario rules initially caused concern that companies would face an avalanche of shareholder lawsuits.
This has not materialized, but a steady stream of shareholder grievances have headed to the courts. According to a January report from NERA Economic Consulting, there were 28 outstanding securities class-action cases in Canada.
Mr. Robb, a partner with Siskinds LLP in London, Ont., said the fact that just two cases have made it to this stage and received a judge's green light shows that companies aren't facing frivolous litigation: "That to my mind speaks to itself as to whether the sky is falling on these issuers or not. Certainly it isn't."