ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO .: 05-CV-4340CP
COURT FILE NO .: 10-CV-15178CP
DATE: December 20, 2012
BETWEEN:
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. SAMSUNG ELECTRONICS CANADA INC., MICRON TECHNOLOGY, INC. MICRON SEMICONDUCTOR PRODUCTS, INC. o/a CRUCIAL TECHNOLOGIES, MOSEL VITELIC CORP., MOSEL VITELIC INC. and ELPIDA MEMORY, INC.
Defendants
Jonathan J. Foreman and Rob Gain for the Plaintiffs
David Kent for Micron Technology, Inc. and Micron Semiconductor Products, Inc. O/A Crucial Technologies
Eric Hoaken and Emrys Davis for NEC Corporation, NEC Corporation of America, NEC Canada, Renesas Electronics Corporation, and Renesas Electronics America, Inc.
Christine Kibly for Nanya Technology Corporation and Nanya Technology Corporation USA
Eliot Kolers for Infineon Technologies AG, Infineon Technologies Corporation and Infineon Technologies North American Corporation
Julie Parla for Hynix Semiconductor Inc., Hynix Semiconductor America Inc. and Hynix Semiconductor Manufacturing America, Inc.
Will Morrison for Samsung Electronics Co. Ltd., Samsung Semiconductor, Inc., Samsung Electronics America, Inc., and Samsung Electronics Canada Inc.
Susan Friedman for Hitachi Ltd., Hitachi America, Ltd., Hitachi Canada, Ltd., Hitachi Electronic Devices (USA) and Renesas Electronics Canada, Ltd.
Zohaib Maladwals for Toshiba Corporation, Toshiba America Electronics Components Inc. and Toshiba of Canada Limited
Dan Edmondstone for Winbond Electronics Corporation and Winbond Electronics Corporation America
Christopher Naudie for Elpida Memory Inc.
AND BETWEEN:
KHALID EIDOO and CYGNUS ELECTRONICS CORPORATION
Plaintiffs
– and –
HITACHI LTD., HITACHI AMERICA, HITACHI ELECTRONIC DEVICES (USA), HITACHI CANADA LTD., MITSUBISHI ELECTRONIC CORPORATION, MITSUBISHI ELECTRIC SALES CANADA INC., MITSUBISHI ELECTRIC & ELECTRONICS USA, INC., NANYA TECHNOLOGY CORPORATION, NANYA TECHNOLOGY CORPORATION USA, NEC CORPORATION, NEC CORPORATION OF AMERICA, NEC CANADA, RENESAS ELECTRONICS CORPORATION fka NEC ELECTRONICS CORPORATION, RENESAS ELECTRONICS AMERICA, INC. fka NEC ELECTRONICS AMERICA, INC., RENESAS ELECTRIONICS CANADA LTD., TOSHIBA CORPORATION, TOSHIBA AMERICA ELECTRONICS COMPONENTS INC., TOSHIBA OF CANADA LIMITED, WINBOND ELECTRONICS CORPORATION AND WINBOND ELECTRONICS CORPORATION AMERICA
Defendants
HEARD: December 14, 2012 and in writing
Proceedings under the Class Proceedings Act , 1992
REASONS FOR DECISION
PERELL, J.
[1] This is a motion for certification of two actions as class actions under the Class Proceedings Act, 1992 , S.O. 1992 for settlement purposes and for related relief.
[2] In light of a previous partial settlement of one of these actions, which settlement involved the Defendant Elpida Memory Inc., the ancillary relief includes an order that no further opt-out period is necessary and that the opt-out period has expired. The moving parties also seek an order that there be multi-jurisdictional hearings for the fairness hearing to approve the settlements.
[3] For the reasons that follow, I grant this motion.
[4] In the first of the proposed class actions under the Class Proceedings Act, 1992 , 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 Semidconductor 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.
[5] In the second class action, Mr. Eidoo and Cygnus Electronics sue: Hitachi Ltd. Hitachi America, Hitachi Electronic Devices (USA), Hitachi Canada Ltd., Mitsubishi Electronics Corporation, Mitsubishi Electronic Sales Canada Inc., Mitsubishi Electric & Electronics USA, Inc., Nanya Technology Corporation, Nanya Technology Corporation USA, NEC Corporation, NEC Corporation of America, NEC Canada, Renesas Electronics Corporation fka NEC Electronics Corporation, Renesas Electronics America, Inc. fka NEC Electronics American Inc., Renesas Electronics Canada Ltd., Toshiba Corporation, Toshiba America Electronics Components Inc., Toshiba of Canada Limited, Winbond Electronics Corporation and Winbond Electronics Corporation America.
[6] Both actions concern allegations that the Defendants conspired to fix prices in DRAM (dynamic random access memory) devices. The second action is, in effect, a device to add defendants as co-conspirators to the conspiracy alleged in the first class action.
[7] Mr. Eidoo, is an individual who purchased DRAM and DRAM Products during the class period. Cygnus Electronics Corporation is an Ontario corporation carrying on business in the contract electronics manufacturing field. During the Class Period, it was a direct purchaser of DRAM and DRAM Product from several defendants.
[8] There are parallel proceedings in British Columbia and Québec. Class Counsel in the various actions are cooperating in the various proceedings.
[9] On April 4, 2006, at a case conference, the parties agreed to hold the Ontario proceeding in abeyance and to allow the B.C. Action to be advanced.
[10] On November 12, 2009, the British Columbia Court of Appeal ruled in favour of the plaintiff and certified the B.C. Action as a class proceeding.
[11] On June 3, 2010, the Defendants’ application for leave to appeal the Decision of the British Columbia Court of Appeal to the Supreme Court of Canada was dismissed with costs. The subsequent application by certain non-settling defendants for reconsideration of the denial for leave was denied on May 17, 2012.
[12] On November 16, 2011, the Quebec Action was authorized by the Quebec Court of Appeal. The defendants in the Quebec Action have appealed to the Supreme Court of Canada. That appeal was heard on October 17, 2012, with the appeals of Sun-Rype Products Ltd. v. Archer Daniels Midland Company , 2011 BCCA 187 and Pro-Sys Consultants Ltd. v. Microsoft Corporation , 2011 BCCA 186 . The Supreme Court has reserved judgment in all three appeals.
[13] In 2011, the Plaintiffs entered into a settlement agreement with Elpida Memory, Inc. and Elpida Memory (USA), Inc. (the “Elpida Settlement”), and in March 2012, this Court certified this action as a class action for settlement purposes. See Eidoo v. Infineon Technologies AG , 2012 ONSC 1987 .
[14] It is important to note that in its certification order for the Elpida Settlement, the court provided the putative class members with a right to opt-out. The order in the Elpida Settlement provided that if the putative class member did opt out, then he or she could not participate in the Elpida settlement or future settlements. The order further provided that a person who did not opt-out could not opt out of the proceedings in the future. Thus, the Order stated:
THIS COURT ORDERS that any Ontario Settlement Class Member who has validly opted out of the Ontario Proceeding is not bound by the Settlement Agreement and shall no longer participate or have the opportunity in the future to participate in the Ontario Proceeding.
THIS COURT ORDERS that any Ontario Settlement Class Member who has not validly opted out of the Ontario Proceeding is bound by the Settlement Agreement and may not opt out of the Ontario Proceeding in the future.
THIS COURT ORDERS AND DECLARES that, upon the Effective Date, each Ontario Settlement Class Member who has not validly opted out of the Ontario Proceeding shall consent and shall be deemed to have consented to the dismissal as against the Releasees of any Other Actions he, she or it has commenced, without costs and with prejudice.
THIS COURT ORDERS AND DECLARES that, upon the Effective Date, each Other Action commenced in Ontario by any Ontario Settlement Class Member who has not validly opted out of the Ontario Proceeding shall be and is hereby dismissed against the Releasees, without costs and with prejudice.
THIS COURT ORDERS AND DECLARES that this Order, including the Settlement Agreement, is binding upon each Ontario Settlement Class Member who has not validly opted out of the Ontario Proceeding including those persons who are minors or mentally incapable and the requirements of Rules 7.04(1) and 7.08(4) of the Rules of Civil Procedure are dispensed with in respect of the Ontario Proceeding.
[15] In the Elpida Settlement, this court and courts in British Columbia and Quebec jointly approved a single national notice program including a single opt-out period. The deadline for opting out was June 2, 2012. Class Counsel received two opt-out forms from class members at the conclusion of the opt-out period.
[16] After further settlement negotiations, four more groups of Defendants have agreed to settle the claims being made against them; namely: (1) Micron Technology, Inc. and Micron Semiconductor Products, Inc. doing business as Crucial Technologies (collectively “Micron;” (2) NEC Corporation, NEC Corporation of America, NEC Canada, Renesas Electronic Corporation and Renesas Electronics America Inc. (collectively, “NEC”); (3) Nanya Technology Corporation and Nanya Technology Corporation USA (collectively, “Nanya”); and (4) Hitachi, Ltd., Hitachi America, Ltd., Hitachi Electronic Devices (USA), Inc., Hitachi Power Systems Canada Ltd. and Renesas Electronics Canada Ltd. (collectively “Hitachi/Renesas Canada”).
[17] More particularly, on July 24, 2012, the Plaintiffs entered into a formal settlement agreement with Nanya whereby Nanya agreed to pay $325,000 and to provide cooperation in the prosecution of the litigation against the remaining defendants.
[18] On October 16, 2012, the Plaintiffs entered into a formal settlement agreement with Micron whereby Micron agreed to pay $17,500,000 and to provide cooperation in the prosecution of the litigation against the remaining Defendants.
[19] On November 28, 2012, the Plaintiffs entered into a formal settlement agreement with NEC whereby NEC agreed to pay $2,750,000 and to provide cooperation in the prosecution of the litigation against the remaining defendants.
[20] On December 18, 2012, the Plaintiffs entered into a formal settlement agreement with Hitachi/Renesas Canada whereby Hitachi/Renesas Canada agreed to pay $2,750,000 and to provide cooperation in the prosecution of the litigation against the remaining defendants.
[21] The Settlement Agreements all provide that: (a) the Settlement Amounts will be held in an interest-bearing trust account for the benefit of Class Members; (b) the cost of disseminating the notice of certification and settlement approval are to be paid out of the Settlement Amounts; and, (c) that the Opt Out deadline expired on June 2, 2012.
[22] The Settlement Agreements contemplate that no opt-out process will be required in respect of the First Ontario action and that no opt-out process will be required in the Second Ontario Action, unless required by the Ontario Court.
[23] The Plaintiffs submit that no further opt-out process is necessary for the following reasons: (1) the Second Ontario Action is an extension of the first action and simply names a list of additional defendants not originally named; (2) the Notice in connection with the Elpida Settlement referenced the defendants in the Second Ontario Action and stated that the allegations in the two actions were the same and advised that a consolidation of the two Ontario actions was contemplated; (3) the settlement recoveries achieved in the First Ontario Action benefit the class in the Second Ontario Action and vice-a-versa; and (4) there is only a technical division as between the First and Second Ontario Action.
[24] The Settling Defendants have consented to certification, solely for the purpose of giving effect to the Settlement Agreements. There was no opposition to the motion.
[25] On December 3, 2012, the British Columbia Court made an order, amongst other things, certifying the action for settlement purposes as against Nanya, Micron, and NEC approving the notice of settlement approval hearing, and providing for multijurisdictional case management.
[26] The proposed class definition for the Ontario Settlement Class is as follows:
all Persons resident in Canada at the time of purchase and/or at the time of notice who purchased DRAM Products during the Settlement Class Period, except Excluded Persons and Persons who are included in the B.C. Settlement Class and the Quebec Settlement Class; and (ii) all Persons resident in the United States at the time of purchase and/or at the time of notice who purchased DRAM Products in Canada during the Settlement Class Period to the extent that such Persons have actual or potential claims as against the Defendants in respect of DRAM Products that have not been wholly or completely settled or extinguished in the U.S. Settlement or otherwise in respect of the U.S. Proceedings.
[27] The plaintiffs proposes the class proceedings be certified on the following common issue to the Ontario Settlement:
Did the Settling Defendant(s), or any of them, conspire to harm the Settlement Class Members during the Settlement Class Period? If so, what damages, if any, are payable by the Settling Defendants, or any of them to the Settlement Class Members?
[28] Having reviewed the motion record, pursuant to s. 5 (1) of the Class Proceedings Act, 1992, I am satisfied that all of the criteria for certification have been satisfied.
[29] I am also satisfied that the class members have had their opportunity to opt-out of these proceedings, including both actions, and that no further opt out rights are necessary in the first or the second action.
[30] The matter of whether more than one right to opt out should be provided when there are partial or progressive certifications of a class action has been addressed in several cases and has become a common practice. In Nutech Brands Inc. v. Air Canada , [2008] O.J. No. 1065 (S.C.J.) , Justice Leitch reviewed the practice and stated at paragraphs 17-21:
Plaintiff's counsel highlighted the fact that while certification is sought for settlement purposes as against the Lufthansa defendants, the proposal is for class members to be presented with an option to opt out from the proceeding as a whole.
Section 9 of the CPA allows class members to "opt out of the proceeding in the manner and within the time specified in the certification order". That provision does not provide for a right to opt out against a particular defendant or settlement. This issue was considered by Rady J. in Guercio v. Stone Paradise Inc. , (December 2006), London 46460CP/45604CP (Ont. S.C.J.). I agree with her reasoning in that case. Opting out affects a procedural right, not a substantive right - it requires class members to choose the venue in which to pursue their substantive claims.
In the context of a settlement approval, class members have more information than they would have following a contested certification motion. They have the prescribed information required under s. 17 of the CPA, but they also have information about the value of the settlement.
Allowing class members to pick and choose which defendants they will opt in or opt out against presents a number of difficulties, including the potential for delay, confusion and abuse. Opting out against some but not all defendants could result in class members benefiting from the cooperation that a settling defendant is required to provide to the class, while at the same time pursuing an individual action against that defendant.
In Guercio v. Stone Paradise Inc ., supra , Rady J. agreed with following observations of the U.S. District Court:
We believe that the balance struck by Rule 23 would be upset if individuals could choose to participate in a class for the purposes of settlement with some defendants, but to exclude themselves from the settlement with other defendants. Rule 23 requires potential class members to make a trade-off: an individual either decides to remain a class member, bound by any and all judgments rendered in the class action but spared the expense of litigating on her own behalf, or she elects exclusion. If she chooses exclusion, she is required to expend her own resources to bring her claims against the defendants, but she may potentially be rewarded by receiving a larger recovery. Permitting an individual eligible to be a class member to opt out as to some defendants but not as to others would allow her to have the best of both worlds. She could opt to remain in the class action as to defendants against whom her claims were relatively weak, hoping for some recovery at little or no expense to herself, while opting out as to other defendants to pursue relatively stronger claims in the hopes of securing a more lucrative recovery than she would receive as a class member ( Re Del-Val Financial Corp. Securities Litigation , 162 F.R.D. 271 at 275-76 (S.D.N.Y. 1995)).
[31] In Guercio v. Stone Paradise Inc ., supra , which is quoted in Justice Leitch’s judgment, Justice Rady concluded that the right to opt out is not a substantive right but is a procedural right that is properly exercisable once. I would add that the practice of permitting only one opportunity to opt-out in a class proceeding is salutary because it solidifies class size and this facilitates further settlements (but would not establish class size for any defendants who did not participate in the settlement) and conversely permitting a renewed right to opt-out might compromise bar orders and thwart additional settlements.
[32] In the case at bar, the certification notice of the Elpida Settlement was adequate to inform class members that they would not be able opt out of the class proceeding.
[33] Accordingly, in the case at bar, the certification order should contain the following term:
THIS COURT DECLARES that the opt-out period provided pursuant to the order of this Court made on March 27, 2012 in Court File No. CV-05-CV-4340 satisfies the requirement of section 9 of the Class Proceedings Act, 1992, S.O. 1992, c. 6 for the purposes of this action, that no further opt-out period is necessary for the Ontario Actions and that the opt-out period expired on June 2, 2012.
[34] For the motion at bar, the Notices and Plan of Dissemination are similar in form and structure as those that were approved by this Court in connection with the Elpida settlement but will not refer to an opt-out right.
[35] The Plan of Dissemination provides that the Long-Form Notice would be posted online on Class Counsels’ respective websites and the Short-Form Notice would be published in both English and French language newspapers and would be sent by direct mail to the following groups: (a) procurement officers of the federal, provincial and municipal governments; (b) computer dealers throughout Canada who handle commercial grade computer sales; and, (c) any Settlement Class Members who have contacted Class Counsel about the litigation.
[36] I am satisfied that the notice and notice plan should be approved.
[37] According, this motion should be granted. I have signed the Order.
Perell, J.
Released: December 20, 2012