ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 05-CV-4340
DATE: 20120627
B E T W E E N:
Khalid Eidoo and Cygnus Electronics Corporation
Plaintiffs
- and -
Infineon Technologies AG, Infineon Technologies Corporation, Infineon Technologies North America Corporation, Hynix Semiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor Manufacturing America, Inc., Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., Samsung Electronics America, Inc., Micron Semiconductor Products, Inc. o/a Crucial Technologies, Mosel Vitelic Corp., Mosel Vitelic Inc. and Elpida Memory, Inc.
Defendants
Proceeding under the Class Proceedings Act , 1992
COUNSEL:
• Jonathan Foreman and Robert Gain for the Plaintiffs
• Alexandra Urbanski for Infineon Technologies AG, Infineon Technologies Corporation, Infineon Technologies North America Corporation
• Julie K. Parla for Hynix Semiconductor Inc. Hynix Semiconductor America Inc. and Hynix Semiconductor Manufacturing America, Inc.
• Cathy Beagan Flood for Samsung Semiconductor, Inc. and Samsung Electronics America, Inc.
• David W. Kent for Micron Semiconductor Products, Inc. o/a Crucial Technologies
• Christopher P. Naudie for Elpida Memory, Inc.
• Susan E. Friedman for Hitachi Ltd., Hitachi America Ltd., Hitachi Canada, Ltd. Hitachi Electronic Devices (USA) and Renesas Electronics Canada, Ltd.
• Justin G. Necpal for Mitsubishi Electronic Corporation, Mitsubishi Electric Sales Canada, Inc and Mitsubishi Electric & Electronics USA, Inc.
• Zohaib Maladwala for Toshiba Canada Limited
HEARING DATE: June 20, 2012
PERELL, J.
REASONS FOR DECISION
[ 1 ] On March 28, 2012, I certified this proposed class action for the purposes of a settlement between the plaintiffs Khalid Eidoo and Cygnus Electronics Corporation and Elpida Memory, Inc. and Elpida Memory (USA) Inc., two of the many defendants to this action. I approved a notice plan to give the Class members notice that the plaintiffs seek to have the settlement approved pursuant to s. 29 of the Class Proceedings Act, 1992, S.O. 1992, c. C.6. See Eidoo v. Infineon Technologies AG 2012 ONSC 1987. The plaintiffs now seek approval of the settlement.
[ 2 ] In this action, Khalid Eidoo and Cygnus Electronics Corporation sue Infineon Technologies AG, Infineon Technologies Corporation, Infineon Technologies North America Corporation, Hynix Semiconductor Inc., Hynix Semiconductor America Inc., Hynix Semiconductor Manufacturing America, Inc. Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., Samsung Electronics America, Inc., Micron Semiconductor Products, Inc. o/a Crucial Technologies, Mosel Vitelic Corp., Mosel Vitelic Inc. and Elpida Memory, Inc. for: (a) breach of Part IV of the Competition Act , R.S.C. 1985, c. C-34; (b) civil conspiracy; and (c) tortious interference with economic interests. The action concerns allegations that the Defendants conspired to fix prices in DRAM (dynamic random access memory) devices.
[ 3 ] There are parallel proceedings in British Columbia and Québec. I am advised that the settlement has been approved in British Columbia and a settlement approval hearing is scheduled in Québec.
[ 4 ] Mr. Eidoo purchased DRAM and DRAM products during the proposed class period. Cygnus Electronics is an Ontario corporation that was a direct purchaser of DRAM and DRAM products during the proposed class period.
[ 5 ] Beginning in the fall of 2010, Mr. Eidoo and Cygnus Electronics began settlement negotiations with Elpida Memory, Inc. and Elpida Memory (USA) Inc. The negotiations were adversarial and at arms-length. The Elpida defendants never admitted liability and indicated that if there was no settlement, they would defend the action on its merits.
[ 6 ] The parties reached an agreement in principle in November 2010, and they signed a settlement agreement dated November 15, 2011. Under the settlement agreement, Elpida agrees to pay $5.75 million plus interest for the benefit of the class members in Ontario, British Columbia, and Québec. The settlement funds are being held in an interest-bearing trust account for the benefit of Settlement Class Members.
[ 7 ] Under the terms of the Settlement Agreement, the Elpida defendants are required to cooperate with the Plaintiffs in pursuing their claims against the Non-Settling Defendants. In a price fixing conspiracy action, a defendant’s co-operation is obviously beneficial to the Plaintiffs. Under the Settlement Agreement, Elpida is required to:
• (a) provide an oral evidentiary proffer relating to the allegations in the Proceedings, including information with respect to dates, locations, subject matter, and participants in any meeting or discussions between competitors relating to the purchase, sale, pricing, discounting, marketing or distributing of DRAM Products in Canada;
• (b) provide electronic transactional data relating to sales of DRAM Products during the Settlement Class Period by Elpida to direct purchasers in Canada and respond to questions from Class Counsel regarding this data;
• (c) produce documents provided by Elpida to the Department of Justice, the Canadian Competition Bureau and to Class Counsel for the U.S. plaintiffs as part of the settlement of the US Direct Action;
• (d) to the extent permissible under the protective order issued in the U.S. Proceedings and subject to privilege and confidentiality, Elpida will provide access to all discovery evidence produced in the U.S. Actions, including transcripts or video depositions of Elpida employees; and,
• (e) make reasonable efforts to make available for testimony at trial, employees of Elpida who would be reasonably necessary to support the submission into evidence of any documents or information produced by Elpida pursuant to the Settlement Agreement.
[ 8 ] As part of the Settlement Agreement, the Parties are seeking an order barring any claim for contribution or indemnity against Elpida. The terms of the bar order are set out in paragraphs 14 to 19 of the draft judgment, which state:
THIS COURT ORDERS that all claims for contribution, indemnity or other claims over, whether asserted, unasserted or asserted in a representative capacity, inclusive of interest, taxes and costs, relating to the Released Claims, which were or could have been brought in the Proceedings, the Ontario Additional Proceeding or otherwise, by any Non-Settling Defendant, any named or unnamed co-conspirators who are not Releasees, or any other Person or party, against a Releasee, or by a Releasee against a Non-Settling Defendant, are barred, prohibited and enjoined in accordance with the terms of this Order (unless such claim is made in respect of a claim by a Person who has validly opted-out of the Ontario Proceeding).
THIS COURT ORDERS that if, in the absence of paragraph 14 above, the Court determines that there is a right of contribution and indemnity or other claim over, whether in equity or in law, by statute or otherwise:
(a) the Ontario Plaintiffs and the Ontario Settlement Class Members shall not be entitled to claim or recover from the Non-Settling Defendants and/or named or unnamed co-conspirators that are not Releasees that portion of any damages (including punitive damages, if any) restitutionary award, disgorgement of profits, interest and costs (including investigative costs claimed pursuant to s. 36 of the Competition Act ) that corresponds to the Proportionate Liability of the Releasees proven at trial or otherwise;
(b) the Ontario Plaintiffs and the Ontario Settlement Class Members shall limit their claims against the Non-Settling Defendants and/or named or unnamed co-conspirators that are not Releasees to, and shall be entitled to recover from the Non-Settling Defendants and/or named or unnamed co-conspirators that are not Releasees, only those claims for damages, costs and interest attributable to the aggregate of the several liability of the Non-Settling Defendants and/or named or unnamed co-conspirators that are not Releasees to the Ontario Plaintiffs and the Ontario Settlement Class Members, if any, and, for greater certainty, the Ontario Settlement Class Members shall be entitled to claim and recover on a joint and several basis as between the Non-Settling Defendants and/or named or unnamed co-conspirators who are not Releasees, to the extent provided by law; and
(c) this Court shall have full authority to determine the Proportionate Liability of the Releasees at the trial or other disposition of the Ontario Proceeding or the Ontario Additional Proceeding, whether or not the Releasees remain in the Ontario Proceeding or appear at the trial or other disposition, and the Proportionate Liability of the Releasees shall be determined as if the Releasees are parties to the Ontario Proceeding and/or Ontario Additional Proceeding and any determination by this Court in respect of the Proportionate Liability of the Releasees shall only apply in the Ontario Proceeding and/or the Ontario Additional Proceeding and shall not be binding on the Releasees in any other proceedings.
THIS COURT ORDERS that if, in the absence of paragraph 14 hereof, the Non-Settling Defendants would not have the right to make claims for contribution and indemnity or other claims over, whether in equity or in law, by statute or otherwise, from or against the Releasees, then nothing in this Order is intended to or shall limit, restrict or affect any arguments which the Non-Settling Defendants may make regarding the reduction of any assessment of damages, restitutionary award, disgorgement of profits or judgment against them in the Ontario Proceeding or the Ontario Additional Proceeding.
THIS COURT ORDERS that a Non-Settling Defendant may, on motion to this Court determined as if the Settling Defendant remained a party to the Ontario Proceeding, and on at least ten (10) days notice to counsel for the Settling Defendant, and not to be brought unless and until the action against the Non-Settling Defendants has been certified and all appeals or times to appeal have been exhausted, seek orders for the following:
(a) documentary discovery and an affidavit of documents in accordance with the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 from the Settling Defendant;
(b) oral discovery of a representative of the Settling Defendant, the transcript of which may be read in at trial;
(c) leave to serve a request to admit on the Settling Defendant in respect of factual matters; and/or
(d) the production of a representative of the Settling Defendant to testify at trial, with such witness to be subject to cross-examination by counsel for the Non-Settling Defendants.
THIS COURT ORDERS that the Settling Defendant retains all rights to oppose such motion(s) brought under paragraph 17. Notwithstanding any provision in this Order, on any motion brought pursuant to paragraph 17, the Court may make such orders as to costs and other terms as it considers appropriate.
THIS COURT ORDERS that a Non-Settling Defendant may effect service of the motion(s) referred to in paragraph 17 above on the Settling Defendant by service on counsel of record for the Settling Defendant in the Ontario Proceeding.
[ 9 ] Under the proposed bar order, the non-settling defendants are barred from claiming contribution and indemnity with respect to the claims released against Elpida Memory, Inc. and Elpida Memory (USA). However, if the Court determines that the non-settling defendants have a right to contribution and indemnity: (a) the Class members may not recover from the Non-Settling Defendants any damages that correspond to the proportionate liability of Elpida Memory, Inc. and Elpida Memory (USA); (b) the Class members may only recover damages from the Non-Settling Defendants attributable to the aggregate of the several liability of the Non-Settling Defendants; (c) the Ontario Court shall have full authority to determine the Proportionate Liability of Elpida Memory, Inc. and Elpida Memory (USA) at the trial or other disposition of the Ontario Proceeding; and (d) the Non-Settling Defendants are at liberty to arguments that any assessment of damages, restitutionary award, or disgorgement of profits should be reduced. Under the proposed bar order, the non-settling defendants may move for orders for discovery from Elpida Memory, Inc. and Elpida Memory (USA), who are entitled to resist the discovery motions.
[ 10 ] Notice of this approval hearing was published. No objections to settlement approval were received by Class Counsel in response to the notice. Many of the Non-Settling Defendants attended the hearing, but none made submissions.
[ 11 ] Class Counsel from across the country, who are very experienced with class action litigation, recommend the settlement. The representative plaintiffs recommend the settlement and consent to the Court approving the settlement. Elpida Memory, Inc. and Elpida Memory (USA) Inc. consent to the approval of the settlement.
[ 12 ] On February 27, 2012, Elpida Memory, Inc. commenced restructuring proceedings in Japan. Elpida Memory, Inc. is restrained from making certain payments and taking certain actions by Order of the Tokyo District Court. A recognition order has not been sought in Canada. Class Counsel submits that it is in the interest of all Class members that the settlement be approved without delay.
[ 13 ] To approve a settlement of a class proceeding, the court must find that in all the circumstances the settlement is fair, reasonable, and in the best interests of those affected by it: Dabbs v. Sun Life Assurance Co. of Canada , [1998] O.J. No. 1598 (Gen. Div.) at para. 9 ; Parsons v. Canadian Red Cross Society , [1999] O.J. No. 3572 (S.C.J.) at paras. 68-73 .
[ 14 ] In determining whether to approve a settlement, the court, without making findings of facts on the merits of the litigation, examines the fairness and reasonableness of the proposed settlement and whether it is in the best interests of the Class as a whole, having regard to the claims and defenses in the litigation and any objections raised to the settlement: Baxter v. Canada (Attorney General) (2006), 83 O.R. (3d) 481 (S.C.J.) at para. 10 .
[ 15 ] When considering the approval of negotiated settlements, the court may consider, among other things: (a) the likelihood of recovery or likelihood of success; (b) the amount and nature of discovery, evidence or investigation; (c) settlement terms and conditions; (d) recommendation and experience of counsel; (e) future expenses and likely duration of litigation and risk; (f) recommendation of neutral parties; (g) if any, the number of objectors and nature of objections; (h) the presence of good faith, arms-length bargaining and the absence of collusion; (i) the degree and nature of communications by counsel and the representative parties with Class Members during the litigation; and (i) information conveying to the court the dynamics of and the positions taken by the parties during the negotiation: Dabbs v. Sun Life Assurance Co. of Canada , 1998 14855 (ON SC) , [1998] O.J. No. 2811, (Gen. Div.), aff'd (1998), 1998 7165 (ON CA) , 41 O.R. (3d) 97 (C.A.), leave to appeal to S.C.C. refused October 22, 1998, [1998] S.C.C.A. No. 372; Parsons v. The Canadian Red Cross Society , [1999] O.J. No. 3572 (S.C.J.) at paras. 71-72 ; Frohlinger v. Nortel Networks Corp. , 2007 696 (ON SC) , [2007] O.J. No. 148 (S.C.J.) at para. 8 ; Kelman v. Goodyear Tire and Rubber Co. , 2005 803 (ON SC) , [2005] O.J. No. 175 (S.C.J.) at paras. 12-13 ; Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. (2005), 2005 8751 (ON SC) , 74 O.R. (3d) 758 (S.C.J.) at para. 117 ; Sutherland v. Boots Pharmaceutical plc , [2002] O.J. No. 1361 (S.C.J.) at para. 10 .
[ 16 ] In my opinion, the settlement is fair, reasonable, and in the best interests of the class as a whole. It provides tangible benefits to class members and a settlement is preferable when compared against the prospect of litigation with an uncertain outcome and duration.
[ 17 ] At the settlement approval hearing, I approved the settlement and signed the settlement approval order.
Perell, J.
Released: June 27, 2012
COURT FILE NO.: 05-CV-4340
DATE: 20120627
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Khalid Eidoo and Cygnus Electronics Corporation
Plaintiff
‑ and ‑
Infineon Technologies AG, Infineon Technologies Corporation, Infineon Technologies North America Corporation, Hynix Semiconductor Inc. Hynix Semiconductor America Inc., Hynix Semiconductor Manufacturing America, Inc. Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., Samsung Electronics America, Inc. Micron Semiconductor Products, Inc. o/a Crucial Technologies, Mosel Vitelic Corp., Mosel Vitelic Inc. and Elpida Memory, Inc.
Defendants
REASONS FOR DECISION
Perell, J.
Released: June 27, 2012.