Shah et al. v. LG Chem, Ltd. et al.

[Indexed as: Shah v. LG Chem, Ltd.]

Ontario Reports

Ontario Superior Court of Justice,

Perell J.

April 23, 2015

125 O.R. (3d) 773 | 2015 ONSC 2628

Case Summary

Conflict of laws — Jurisdiction — Plaintiffs bringing proposed class action alleging that defendants conspired to fix price of lithium ion batteries in Canada — Two Japanese defendants moving successfully to stay or dismiss action against them on ground that Ontario court did not have jurisdiction simpliciter — Moving defendants adducing evidence that they did not carry on business in Canada and that it was not reasonably foreseeable that their batteries would reach Ontario through normal channels of trade — Plaintiffs failing to show good arguable case that moving defendants carried on business in Ontario or that they were party to tort of conspiracy in Ontario.

The plaintiffs brought a proposed class action alleging that the defendants conspired to fix the price of lithium ion batteries manufactured and sold in Canada between January 1, 2000 and December 31, 2011. Two Japanese defendants brought a motion to stay or dismiss the action against them on the ground that the Ontario court did not have jurisdiction simpliciter. The defendants filed affidavit evidence that they did not carry on business in Canada and that it was not reasonably foreseeable that their batteries would reach Ontario through normal channels of trade.

Held, the motion should be granted.

As the moving defendants had filed evidence challenging the allegations in the statement of claim that were essential to jurisdiction, the plaintiff had to establish that it had a good arguable case on those allegations. The plaintiffs failed to show that there was a good arguable case that the moving defendants carried on business in Ontario or that they committed the tort of conspiracy to price fix in Ontario.

Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 291 O.A.C. 201, 2012EXP-1452, J.E. 2012-788, EYB 2012-205198, 429 N.R. 217, 343 D.L.R. (4th) 577, 91 C.C.L.T. (3d) 1, 10 R.F.L. (7th) 1, 17 C.P.C. (7th) 223, 212 A.C.W.S. (3d) 712, apld

Moran v. Pyle National (Canada) Ltd., 1973 192 (SCC), [1975] 1 S.C.R. 393, [1973] S.C.J. No. 149, 43 D.L.R. (3d) 239, 1 N.R. 122, [1974] 2 W.W.R. 586; Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., [2002] O.J. No. 298, [2002] O.T.C. 57, 20 C.P.C. (5th) 351, 111 A.C.W.S. (3d) 471 (S.C.J.), consd

Other cases referred to

Beach v. Toronto Real Estate Board, [2010] O.J. No. 2543, 2010 ONSC 30001, 97 C.P.C. (6th) 127, 190 A.C.W.S. (3d) 55 (S.C.J.); British Columbia v. Imperial Tobacco Canada Ltd., [2006] B.C.J. No. 2080, 2006 BCCA 398, 273 D.L.R. (4th) 711, [2006] 11 W.W.R. 191, 232 B.C.A.C. 17, 56 B.C.L.R. (4th) 263, 31 C.P.C. (6th) 243, 152 A.C.W.S. (3d) 837, affg [2005] B.C.J. No. 1400, 2005 BCSC 946, 44 B.C.L.R. (4th) 125, 13 C.P.C. (6th) 272, 147 A.C.W.S. (3d) 417 [Leave to appeal to S.C.C. refused [2006] S.C.C.A. No. 446]; Cloud v. Canada (Attorney General) (2004), 2004 45444 (ON CA), 73 O.R. (3d) 401, [2004] O.J. No. 4924, 247 D.L.R. (4th) 667, 192 O.A.C. 239, 27 C.C.L.T. (3d) 50, [2005] 1 C.N.L.R. 8, 2 C.P.C. (6th) 199, 135 A.C.W.S. (3d) 567 (C.A.); [page774] Ecolab Ltd. v. Greenspace Services Ltd. (1998), 1998 17738 (ON SCDC), 38 O.R. (3d) 145, [1998] O.J. No. 653, 107 O.A.C. 199, 18 C.P.C. (4th) 66, 77 A.C.W.S. (3d) 953 (Div. Ct.); Ernewein v. General Motors of Canada Ltd., [2005] B.C.J. No. 2370, 2005 BCCA 540, 260 D.L.R. (4th) 488, 218 B.C.A.C. 177, 46 B.C.L.R. (4th) 234, 19 C.P.C. (6th) 253, 143 A.C.W.S. (3d) 634 [Leave to appeal to S.C.C. refused [2005] S.C.C.A. No. 545]; Fairhurst v. Anglo American PLC, [2012] B.C.J. No. 1192, 2012 BCCA 257, 323 B.C.A.C. 50, 35 B.C.L.R. (5th) 45, 24 C.P.C. (7th) 179, [2012] 11 W.W.R. 301, 351 D.L.R. (4th) 168, 216 A.C.W.S. (3d) 365; Fanshawe v. Au Optronics, 2012 ONSC 4425; Forsythe v. Westfall (2015), 125 O.R. (3d) 135, [2015] O.J. No. 509, 2015 ONSC 758 (S.C.J.); Griffin v. Dell Canada Inc., 2009 3557 (ON SC), [2009] O.J. No. 418, 72 C.P.C. (6th) 158, 174 A.C.W.S. (3d) 32 (S.C.J.); Hollick v. Toronto (City), [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67, 2001 SCC 68, 205 D.L.R. (4th) 19, 277 N.R. 51, J.E. 2001-1971, 153 O.A.C. 279, 42 C.E.L.R. (N.S.) 26, 13 C.P.C. (5th) 1, 24 M.P.L.R. (3d) 9, REJB 2001-26157, 108 A.C.W.S. (3d) 774; Martin v. Astrazeneca Pharmaceuticals PLC, [2013] O.J. No. 1182, 2013 ONSC 1169 (Div. Ct.), affg [2012] O.J. No. 2033, 2012 ONSC 2744, 27 C.P.C. (7th) 32, 216 A.C.W.S. (3d) 294 (S.C.J.); McCracken v. CNR Co. (2012), 111 O.R. (3d) 745, [2012] O.J. No. 2884, 2012 ONCA 445, 293 O.A.C. 274, 100 C.C.E.L. (3d) 27, 21 C.P.C. (7th) 57, [2012] CLLC Â210-041; New Brunswick v. Rothmans Inc., [2010] N.B.J. No. 367, 2010 NBQB 381, 373 N.B.R. (2d) 157, 79 C.C.L.T. (3d) 128, 3 C.P.C. (7th) 336, 195 A.C.W.S. (3d) 128 [Leave to appeal refused [2011] N.B.J. No. 116 (C.A.) [Leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 221]; Nutreco Canada Inc. v. F. Hoffmann-La Roche Ltd., [2001] B.C.J. No. 1581, 2001 BCSC 1146, 10 C.P.C. (5th) 351, 14 C.P.R. (4th) 43, [2001] B.C.T.C. 1146, 107 A.C.W.S. (3d) 42; Ontario New Home Warranty Program v. General Electric Co. (1998), 1998 14628 (ON SC), 36 O.R. (3d) 787, [1998] O.J. No. 173, 50 O.T.C. 333, 17 C.P.C. (4th) 183, 76 A.C.W.S. (3d) 906 (Gen. Div.); Ontario v. Rothmans Inc. (2013), 115 O.R. (3d) 561, [2013] O.J. No. 2367, 2013 ONCA 353, 305 O.A.C. 261, 363 D.L.R. (4th) 506, 228 A.C.W.S. (3d) 93, affg [2012] O.J. No. 19, 2012 ONSC 22, 28 C.P.C. (7th) 68, 213 A.C.W.S. (3d) 329 (S.C.J.); Option Consommateurs v. Infineon Technologies AG, [2011] Q.J. No. 16769, 2011 QCCA 2116, 2011EXP-3650, J.E. 2011-2021, EYB 2011-198318; Pro-Sys Consultants Ltd. v. Microsoft Corp., [2013] 3 S.C.R. 477, [2013] S.C.J. No. 57, 2013 SCC 57, 2013EXP-3511, J.E. 2013-1905, EYB 2013-228580, 450 N.R. 201, 345 B.C.A.C. 1, 50 B.C.L.R. (5th) 219, 45 C.P.C. (7th) 1, 364 D.L.R. (4th) 573, [2014] 1 W.W.R. 421; Schreiber v. Mulroney (2007), 2007 56529 (ON SC), 88 O.R. (3d) 605, [2007] O.J. No. 4997, 288 D.L.R. (4th) 661, 162 A.C.W.S. (3d) 949 (S.C.J.); Shah v. LG Chem, Ltd. (2015), 124 O.R. (3d) 570, [2015] O.J. No. 518, 2015 ONSC 776 (S.C.J.); Stanway v. Wyeth Canada Inc., [2012] B.C.J. No. 1198, 2012 BCCA 260, 34 B.C.L.R. (5th) 85, [2012] 10 W.W.R. 244, 22 C.P.C. (7th) 231, 323 B.C.A.C. 84, 351 D.L.R. (4th) 107, 216 A.C.W.S. (3d) 293, affg [2011] B.C.J. No. 1494, 2011 BCSC 1057, 10 C.P.C. (7th) 51; Stanway v. Wyeth Pharmaceuticals Inc., [2009] B.C.J. No. 2538, 2009 BCCA 592, 279 B.C.A.C. 158, 314 D.L.R. (4th) 618, 183 A.C.W.S. (3d) 991 [Leave to appeal to S.C.C. refused [2010] S.C.C.A. No. 68]; Sun-Rype Products Ltd. v. Archer Daniels Midland Co., [2013] 3 S.C.R. 545, [2013] S.C.J. No. 58, 2013 SCC 58, 2013EXP-3510, J.E. 2013-1904, EYB 2013-225581, 450 N.R. 287, 345 B.C.A.C. 87, 51 B.C.L.R. (5th) 1, 364 D.L.R. (4th) 626, [2014] 1 W.W.R. 477, 235 A.C.W.S. (3d) 323; Tucows.com Co. v. Lojas Renner S.A. (2011), 106 O.R. (3d) 561, [2011] O.J. No. 3576, 2011 ONCA 548, 18 P.P.S.A.C. (3d) 296, 7 C.P.C. (7th) 35, 281 O.A.C. 379, 87 B.L.R. (4th) 42, 336 D.L.R. (4th) 443, 95 C.P.R. (4th) 49; Williams v. Canon Canada Inc., [2011] O.J. No. 5049, 2011 ONSC 6571 (S.C.J.)

Statutes referred to

Class Proceedings Act, 1992, S.O. 1992, c. 6

Competition Act, R.S.C. 1985, c. C-34, Part IV, ss. 36 [as am.], (1), 45 [as am.], (1), (8), 46 [as am.], (1) [page775]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 104, rule 21.01(1) (b)

MOTION to stay or dismiss an action as against the moving defendants.

Reidar Mogerman, Linda J. Visser and Jean-Marc Leclerc, for plaintiffs.

Eric R. Hoaken and Ian C. Matthews, for NEC Corporation and NEC Tokin Corporation.

PERELL J.: —

A. Introduction

[1] Pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6, the plaintiffs, Khurram Shah and Alpina Holdings Inc., bring a competition law class action. They sue 26 corporations, including two Japanese corporations, NEC Corporation and NEC Tokin Corporation (collectively "NEC"). There are in all 20 foreign defendants. (The plaintiffs also sued the domestic NEC Canada [Inc.], but the action has been discontinued against this corporation.)

[2] The plaintiffs allege that NEC and the other defendants conspired to fix the price of rechargeable lithium ion batteries manufactured and sold in Canada between January 1, 2000 and December 31, 2011. The plaintiffs claim unjust enrichment and damages for civil conspiracy and damages pursuant to s. 36 of the Competition Act, R.S.C. 1985, c. C-34.

[3] The statement of claim alleges that the conspiracy caused damages in Canada because the prices of lithium batteries sold directly or indirectly to the plaintiffs and other proposed class members in Canada were at artificially inflated levels and the proposed class members paid more for lithium ion batteries and products containing lithium ion batteries than they would have in the absence of the conspiracy.

[4] NEC brings this motion to have the action against it stayed or dismissed on the grounds that the court does not have jurisdiction simpliciter against NEC. The other 18 foreign defendants do not challenge the court's jurisdiction.

[5] NEC argues that for the court to have jurisdiction simpliciter, the plaintiffs must show that there is a good arguable case that it carried on business in Ontario or was a party to a conspiracy committed in Ontario, which it submits the plaintiffs have failed to do. NEC submits that its own evidence shows that [page776] there is no factual basis for the allegation that it played a part in a conspiracy to fix prices of lithium ion batteries in Ontario.

[6] For the reasons that follow, I grant NEC's motion.

B. Overview

[7] In their intricate competing lines of argument, the parties agree about some points, disagree on others, and, in several instances, they make counter-arguments that mischaracterize their opponent's argument so the debate is confused and never truly joined. My own reasons for decision agree with some points and disagree with others of one or both parties, and I analyze several matters that the parties failed to consider. In the result, I conclude that based on the admissible evidence, the plaintiffs have not provided any evidence or they have provided insufficient evidence to show a good arguable case against NEC that would justify a court in Ontario assuming jurisdiction over these foreign defendants.

[8] One could speculate from the non-admissible hearsay evidence and from the plaintiffs' plaintive urgings that it is too early to expect them to be able to show a good arguable case, that there is one, but inadmissible evidence and speculation of a good arguable case is not showing a good arguable case, and, in my opinion, notwithstanding a very low evidentiary threshold, the plaintiffs have not shown that this court has jurisdiction simpliciter over NEC.

[9] By way of an outline of my opinion, pursuant to Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, there must be a connecting factor to establish a real and substantial connection between NEC and Ontario. In the circumstances of the case at bar, there are two potential presumptive connecting factors, namely (1) that NEC carried on business in Ontario; or (2) that NEC was a party to a conspiracy to fix the price of lithium ion batteries in Canada.

[10] Based on the pleadings alone, the plaintiffs demonstrated both connecting factors, but pursuant to Ontario v. Rothmans Inc. (2013), 115 O.R. (3d) 561, [2013] O.J. No. 2367, 2013 ONCA 353, affg [2012] O.J. No. 19, 2012 ONSC 22 (S.C.J.), NEC called out the plaintiffs to establish on admissible evidence a good arguable case that (1) NEC carried on business in Ontario; or (2) that NEC was a party to a conspiracy committed in Ontario, but the plaintiffs failed to answer the challenge.

[11] The good arguable case test is a very low threshold evidentiary test, but to be satisfied it requires admissible evidence and not speculation of a good arguable case. Based on the admissible evidence, I conclude that NEC proved that it was not [page777] carrying on business in Ontario. Based on the admissible evidence, I conclude that the plaintiffs have not shown a good arguable case that NEC was a party to a conspiracy to fix prices of lithium ion batteries in Ontario.

[12] This last conclusion is not based on NEC's self-serving denials of being a party to a conspiracy, but rather is based on my conclusions that (1) it was not reasonably foreseeable that the lithium ion batteries manufactured by NEC would made their way through the normal channels of trade to Ontario; and (2) the plaintiffs failed to show a good arguable case that NEC was a party to a conspiracy committed in Ontario. I emphasize the locative adjective phrase "in Ontario".

[13] In my opinion, it was not good enough for the plaintiffs to show a good arguable case that some other defendant's allegedly price-fixed lithium ion batteries were sold in Ontario. In circumstances where NEC's lithium ion batteries were not sold in Canada and where it was not reasonably foreseeable that its lithium ion batteries would make their way through the normal channels of trade to Canada, what would have been good enough to justify the court assuming jurisdiction would have been some evidence that inside or outside Ontario NEC did an act or omission that could have had an effect on the marketplace for lithium ion batteries in Ontario.

[14] Although there were circumstances from which one could speculate that evidence of acts or omissions by NEC in furtherance of a price-fixing conspiracy in Ontario was available to the plaintiffs, the plaintiffs did not pursue those leads or opportunities to provide admissible evidence. For example, they failed to move to compel NEC's witness, Mr. Narita, to answer the questions he refused to answer during his cross-examination. And, notwithstanding leads from the United States' price-fixing proceedings, the plaintiffs did not call witnesses who might have provided admissible evidence of a good arguable case. Rather, the plaintiffs proffered evidence that was inadmissible or inadequate to show a good arguable case against NEC, and therefore NEC's motion should be granted.

[15] These conclusions are not based on elevating the good arguable case test to a premature merits test, which I agree would be contrary to the jurisprudence and particularly inappropriate in the context of a claim for damages from a conspiracy, which is inherently secretive and clandestine. These conclusions, rather, arise from the plaintiffs failing to meet the very low threshold evidentiary test that requires a plaintiff to show something more than allegations of a conspiracy and reliance on a class action in another jurisdiction. [page778]

C. Procedural and Evidentiary Background

[16] On June 26, 2013, the plaintiffs, Khurram Shah and Alpina Holdings Inc., commenced a proposed class action under the Class Proceedings Act, 1992.

[17] In their proposed class action, the plaintiffs allege that the defendants conspired to fix the prices of rechargeable lithium ion batteries manufactured and sold between January 1, 2000 and December 31, 2011.

[18] The plaintiffs claim, among other things, general and special damages for conspiracy and for conduct that is contrary to Part IV of the Competition Act, in the amount of $75 million. The plaintiffs rely on ss. 36, 45 and 46 of the Competition Act, which state:

Recovery of damages

36(1) Any person who has suffered loss or damage as a result of

(a) conduct that is contrary to any provision of Part VI, or

(b) the failure of any person to comply with an order of the Tribunal or another court under this Act,

may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him, together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.

Conspiracies, agreements or arrangements between competitors

45(1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges

(a) to fix, maintain, increase or control the price for the supply of the product;

(b) to allocate sales, territories, customers or markets for the production or supply of the product; or

(c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.

Definitions

(8) The following definitions apply in this section.

"competitor" includes a person who it is reasonable to believe would be likely to compete with respect to a product in the absence of a conspiracy, agreement or arrangement to do anything referred to in paragraphs (1)(a) to (c). [page779]

"price" includes any discount, rebate, allowance, price concession or other advantage in relation to the supply of a product.

Foreign directives

46(1) Any corporation, wherever incorporated, that carries on business in Canada and that implements, in whole or in part in Canada, a directive, instruction, intimation of policy or other communication to the corporation or any person from a person in a country other than Canada who is in a position to direct or influence the policies of the corporation, which communication is for the purpose of giving effect to a conspiracy, combination, agreement or arrangement entered into outside Canada that, if entered into in Canada, would have been in contravention of section 45, is, whether or not any director or officer of the corporation in Canada has knowledge of the conspiracy, combination, agreement or arrangement, guilty of an indictable offence and liable on conviction to a fine in the discretion of the court.

[19] The defendants are LG Chem, Ltd.; LG Chem America, Inc.; Panasonic Corporation; Panasonic Corporation of North America; Panasonic Canada, Inc.; Sanyo Electric Co., Ltd.; Sanyo North America Corporation; Sanyo Energy (U.S.A.) Corporation; Sony Corporation; Sony Energy Devices Corporation; Sony Electronics, Inc.; Sony of Canada Ltd.; Samsung SDI Co., Ltd.; Samsung SDI Co., Ltd.; Samsung SDI America, Inc.; Samsung Electronics Canada Inc.; Hitachi Ltd.; Hitachi Maxell, Ltd.; Maxell Corporation of America; Maxell Canada; GS Yuasa Corporation; NEC Corporation; NEC TOKIN Corporation; NEC Canada [Inc.]; Toshiba Corporation; Toshiba America Electronic Components, Inc.; and Toshiba of Canada Limited.

[20] The plaintiffs' statement of claim does not make any particular allegations against NEC, which is grouped with the other defendants as co-conspirators and as having acting in furtherance of the conspiracy by attending at illicit or clandestine meetings, communicating secretly to discuss and fix prices and volumes of sales of lithium ion batteries, and agreeing to delete or erase correspondence. None of the alleged acts, however, identify specific individuals or companies. The plaintiffs do not give specific dates or locations of any of the illicit meetings they say occurred.

[21] The plaintiffs assert a claim on behalf of persons in Canada who purchased lithium ion batteries or consumer products containing lithium ion batteries, such as notebook computers, cellular phones, smartphones, tablet computers, e-readers, MP3 players, personal digital assistants, handheld global positioning systems and handheld video gaming systems.

[22] There is a parallel class proceeding in the United States on behalf of purchasers residing there. [page780]

[23] On February 21, 2014, the plaintiffs served their certification record. (The certification motion is scheduled for the week of June 1, 2015.)

[24] On September 5, 2014, NEC brought a motion to challenge the court's jurisdiction. In support of their motion, they delivered an affidavit sworn that day by Tashiro Narita, an NEC executive familiar with its lithium ion battery business.

[25] Mr. Narita deposed that NEC did not have direct or indirect sales of lithium ion batteries into Canada. Mr. Narita deposed that NEC does not maintain offices in Canada and does not have any actual presence here.

[26] On October 10, 2014, the plaintiffs delivered their responding motion record for the jurisdiction motion, including an affidavit sworn by Sylvia Flower, a law clerk at Siskinds LLP, lawyers for the plaintiffs. Ms. Flower's affidavit attaches documents from publicly available sources and from the related U.S. proceeding available on a website known as PACER. She attached NEC's 12 registered Canadian patents and seven registered trademarks for lithium ion batteries. NEC did not cross-examine Ms. Flower.

[27] On November 13, 2014, the plaintiffs cross-examined Mr. Narita on his affidavit. During his cross-examination, Mr. Narita refused to answer questions about allegations set out in the complaint in U.S. proceedings alleging that NEC and others had conspired to fix the prices of lithium ion batteries sold in the United States.

[28] The plaintiffs did not bring a motion to compel answers for the refused questions.

[29] On December 17, 2014, the plaintiffs sought leave of the court to file a supplemental affidavit of Sylvia Flower, sworn December 17, 2014. In reasons for decision released February 3, 2015, I denied leave. See Shah v. LG Chem, Ltd. (2015), 124 O.R. (3d) 570, [2015] O.J. No. 518, 2015 ONSC 776 (S.C.J.).

D. Factual Background

1. Allegations in the Canadian proposed class action

[30] Mr. Shah and Alpina Holdings Inc. reside in Ontario.

[31] Between January 1, 2000 and December 31, 2011, Mr. Shah purchased five mobile phones that contained lithium ion batteries and Alpina Holdings purchased various lithium ion batteries and lithium ion battery products.

[32] Between 2000 and the end of 2011, at least some defendants sold lithium ion batteries in Canada: i.e., (a) Samsung had direct sales of mobile phones; (b) Sony had direct sales of [page781] notebook computers and MP3 players; (c) Maxell had direct sales of lithium batteries; and (d) Toshiba had direct sales of notebook computers.

[33] NEC are corporations headquartered in Japan. As noted above, Mr. Narita was NEC's witness for this jurisdiction motion. He resides in Kawaguchi, Japan. He has worked for NEC since April 1997. Between January 1, 2000 and December 31, 2011, he was involved with the batteries business in a senior management position. He is presently the senior expert, in the Energy System Development Division of NEC Corporation and an employee of NEC Energy Devices Ltd.

[34] Between January 1, 2000 and June 30, 2003, Mr. Narita was involved in marketing lithium ion batteries in Europe. He subsequently became a senior manager in NEC TOKIN Corporation's global sales headquarters in Tokyo, with responsibility for the promotion and marketing of lithium ion batteries to NEC TOKIN Corporation's overseas customers. Japan's domestic market was added to Mr. Narita's job responsibilities beginning on October 1, 2004, and his role remained the same until March 31, 2010.

[35] Mr. Narita deposed that on being made aware of the plaintiffs' allegations, NEC preserved potentially relevant documents and conducted an internal investigation into the allegations of a price-fixing conspiracy with the assistance of external legal counsel.

[36] Mr. Narita deposed that between January 1, 2000 and December 31, 2011, NEC was not registered to do business in Canada, did not have an office in Canada and did not have a presence here. During this time, NEC itself did not manufacture, market, sell or distribute lithium ion batteries in or into Canada. Mr. Narita deposed that NEC has no information suggesting it marketed lithium ion batteries in Canada between January 1, 2000 and December 31, 2011. Except for a single transaction made by a now-defunct subsidiary in December 2001, NEC did not, directly or indirectly, make any sales of lithium ion batteries in Canada. Mr. Narita deposed that NEC's market share in Canada between 2000 and 2012 was non-existent.

[37] Mr. Narita testified that (a) between 2000 and 2003, NEC sold lithium ion batteries in Germany to Siemens for use in cellphones; (b) between 2005 and 2007, for a one and one-half year period, it sold lithium ion batteries to Apple for use in the iPod Classic; (c) after 2005, its major customer for lithium ion batteries was Nintendo for Game Boys; and (d) between 2000 and 2012, it sold lithium ion batteries to Motorola. [page782]

[38] Mr. Narita admitted that these "customers were global companies in the sense that they had sales throughout the world" and that the customers would be selling the products discussed "globally and throughout the world". He admitted that it was "theoretically possible" that parties to whom NEC directly or indirectly sold lithium ion batteries could have re-sold those products into Canada between 2000 and 2012. Mr. Narita deposed that NEC has no information or knowledge suggesting that its customers directly or indirectly re-sold NEC lithium ion batteries into Canada. He said that if there actually were re-sales, this was a matter for which NEC had no control.

[39] Under cross-examination, he testified that as person in the senior management position for the marketing of lithium ion batteries, he was never aware of a conspiracy to fix prices as alleged by the plaintiffs. Mr. Narita denies that NEC participated in the alleged conspiracy. He testified that any changes to prices or output of lithium ion batteries were made solely on the basis of NEC's independent business judgment and not on the basis of any interaction or agreement with a competitor. He testified that no proprietary information regarding prices or customers for lithium ion batteries was illegally provided by NEC or by their agents or employees to any competitor.

2. Allegations in the United States proceedings

[40] A similar antitrust claim involving lithium ion batteries is ongoing in the Northern District of California. NEC Corporation and NEC TOKIN are defendants.

[41] The U.S. complaints were informed by documentary production ordered by the U.S. District Court, which ordered a number of defendants to produce the documents they had provided to the grand jury or the U.S. Department of Justice. A sampling of some of the allegations from the U.S. pleadings include:

On October 20, 2000, executives from Samsung and NEC met at a Chuncheon DakGalbi restaurant in Shinjuku, Tokyo. Agenda items included "Business Status and Strategy" . . . lithium ion production status . . . and NEC's . . . plan to increase production to 8 million cells per month by June 2001. . . . The parties further communicated about the overall oversupply.

A document produced in the grand jury investigation dated March 2004, entitled "President Minutes", summarizes LG's agreement to raise prices with Sony and notes that NEC and others would raise prices as well. [page783]

From February 21, 2005 through February 25, 2005, Samsung met with its competitors Sony, Sanyo, Matsushita, GS Soft Energy, NEC TOKIN and Hitachi-Maxell to discuss detailed supply and demand issues. After these meetings, Samsung stated internally that companies are trying to refrain from adding new lines due to declining profitability and recognition of oversupply.

On March 20, 2006, executives from Samsung and NEC met in Chiyoda, Tokyo and discussed NEC's target capacity.

On October 25, 2006, Takanao Matsumoto of Sanyo Energy (USA) Corporation, a division of Sanyo North America Corporation, contacted Katsuo Seki of NEC TOKIN seeking to exchange information regarding Motorola, and Mr. Matusumoto obtained information regarding NEC's intentions with regard to future pricing. Mr. Matsumoto asked that the recipients of his e-mail reporting on the meeting destroy the e-mail immediately.

An undated document entitled "NEC-Tokin Meeting" summarizes a meeting held on December 5, 2008 between LG and NEC TOKIN at an NEC TOKIN meeting room in Tokyo. At the meeting, the companies discussed battery business trend of the digital camera and game devices markets and NEC TOKIN's production capacity and product roadmap.

[42] A number of the defendants, including NEC Corporation and NEC TOKIN, brought motions to dismiss the U.S. complaints. The U.S. District Court dismissed the motions, stating the plaintiffs pleaded a plausible conspiracy. The U.S. Court noted that the complainants had the benefit of crafting their complaints through access to grand jury documents and that two defendants had pleaded guilty to criminal charges stemming from the conspiracy.

[43] NEC Corporation sought to dismiss the claim on the basis there were insufficient allegations made against it. No similar motion was brought by NEC TOKIN. The U.S. District Court denied NEC Corporation's motion, holding that the claim pleaded sufficient conspiracy allegations against multiple members of the NEC corporate family, which alleged the conspiracy was organized at the highest level of the defendant organizations and that the conspiracy was implemented by subsidiaries and distributors within a corporate family.

[44] On the pleadings motion, the U.S. District Court concluded there was sufficient evidence of multiple instances of [page784] NEC engaging in collusive meetings, including direct quotes from documents where the defendants referred only to NEC. The court concluded the complainants' theory that generic references to NEC in the defendants' documents implicated both NEC Corporation and NEC TOKIN was plausible.

E. NEC's Jurisdictional Argument

[45] Relying on Club Resorts Ltd. v. Van Breda, supra, NEC submits there is no connecting factor to establish the real and substantial connection between NEC and Ontario that would justify the court assuming jurisdiction over the plaintiffs' claim against NEC. More precisely, NEC submits that of the four presumptive connecting factors identified in Van Breda, two are not available, and for the other two, namely, (1) carrying on business in Canada and (2) committing the tort of conspiracy to price-fix in Ontario, the plaintiffs did not establish a "good arguable case" to support the presumptive connecting factors.

[46] The presumptive connecting factors can be rebutted, but NEC submits that in the case at bar, the presumptive factors of carrying on business in Ontario and having committed the tort of conspiracy in Ontario simply have not been shown, and, therefore, the plaintiffs' action against NEC should be dismissed or stayed because the Ontario court does not have jurisdiction simpliciter.

[47] In other words, relying on the approach approved by the Court of Appeal in Ontario v. Rothmans Inc., supra, NEC submits that the plaintiffs have not provided any evidence or they have provided insufficient evidence to show a good arguable case against NEC that would justify a court in Ontario assuming jurisdiction over these foreign defendants.

[48] Underlying NEC's argument are the premises that (a) in order to establish a presumptive factor, there is an evidentiary burden on the plaintiffs to show that they have a good arguable case that would justify the court assuming jurisdiction; and (b) for NEC to have committed the tort of conspiracy in Ontario it must have done an act or omission causing damage -- in Ontario.

[49] Moreover, NEC submits that unlike other jurisdictional challenge motions, it advanced evidence to refute the plaintiffs' pleaded allegations that NEC was a party to the alleged conspiracy. In these circumstances, NEC submits that the plaintiffs cannot simply rely on their pleaded allegations; they have to respond with some evidence to show a good arguable case, which is a low evidentiary standard, but one that, nevertheless, must be satisfied for an Ontario court to assume jurisdiction. [page785]

[50] With respect to the allegation that its lithium ion batteries were sold in Canada, NEC submits that, at best, the exhibits to Ms. Flower's affidavit show that certain products that might contain lithium ion batteries -- and not necessarily NEC's batteries -- were sold in Canada between 2000 and 2012. NEC submits that no inference can be drawn from its sales of lithium ion batteries in other parts of the world, because there is no evidence that any Siemens cellphones, Nintendo Game Boys or Motorola products containing lithium ion batteries were sold in Canada between 2000 and 2012 and the Apple iPod Classics with NEC lithium ion batteries, if any, that were sold were only sold for 18 months beginning in 2005.

[51] With respect to the conspiracy claim, NEC submits that, in part, because of the deficiencies in the statement of claim that do not particularize what NEC is alleged to have done, and, in part, because the plaintiffs have not shown that it was reasonably foreseeable that NEC's lithium ion batteries would make their way through the normal channels of trade to Canada, the plaintiffs have failed to show a good arguable case that NEC was a party to a conspiracy committed in Ontario.

F. The Plaintiffs' Argument

[52] The plaintiffs argue that when a conspiracy causes harm in a province, the court in that province can assume jurisdiction over all conspirators, even if some of the conspirators do not have any connection with the province. Thus, the plaintiffs' submit that the Ontario court has jurisdiction simpliciter even if NEC-made lithium ion batteries were not sold in Canada. The plaintiffs argue that this court would have jurisdiction simpliciter against NEC, even if NEC's co-conspirators' batteries were the only ones that were sold in Ontario. On this theory of the case, the plaintiffs submit that there is indisputable evidence that several co-conspirators had direct sales of lithium ion batteries in Canada and, therefore, NEC is jointly liable for the conspiracy tort committed in Ontario.

[53] As a mutually exclusive argument, the plaintiffs argue that the court has jurisdiction because it was reasonably foreseeable that NEC's lithium ion batteries could be sold in Canada. Moreover, the plaintiffs argue that there is evidence that an NEC subsidiary had direct sales in Canada. Additionally, the plaintiffs argue that Mr. Narita admitted that it was "theoretically possible" that the third parties to whom NEC sold lithium ion batteries re-sold those products into Canada, and, thus, it was reasonably foreseeable that NEC's lithium ion batteries would be sold here. [page786]

[54] The plaintiffs argued that they satisfied the good arguable case test for jurisdiction and that NEC was attempting to change the law about jurisdiction simpliciter to introduce a merits-based test at a time when the merits of a plaintiff's claim could not be fairly tested and when it would be unfair to require a plaintiff, who has no rights of discovery to prove his or her case. The plaintiffs submitted that NEC was attempting to change the law and that NEC's articulation of the good arguable case test would lead to the non-salutary change in the law, most particularly disadvantageous in the context of a conspiracy to fix prices, misconduct that is inherently secretive and where the evidence is uniquely within the hands of the conspirators.

[55] In any event, the plaintiffs submitted that NEC's evidence to prove that it was not a participant in the conspiracy was unsuccessful because it was self-serving, unreliable and unattributed hearsay that should be given no weight.

[56] Further, the plaintiffs submitted that contrary to the position of NEC, Mr. Narita's denials were challenged by the U.S. pleadings, which were based on material disclosed to a U.S. grand jury. These materials created a serious debate about whether NEC was involved in the alleged conspiracy and an adverse inference should be drawn by NEC's refusal to answer questions about the allegations contained in the U.S. pleadings.

[57] In short, the plaintiffs submit that they have shown a good arguable case that would justify the Ontario court assuming jurisdiction over NEC.

G. Discussion and Analysis

1. The good arguable case standard

[58] Club Resorts Ltd. v. Van Breda, supra, holds that to establish a real and substantial connection between either the defendant or the subject matter of the claim and the forum, the plaintiff must establish one of four "presumptive connecting factors" or establish a new connecting factor. In the case at bar, as already noted, NEC submits that Ontario courts do not have jurisdiction to determine the conspiracy claim made against it because it submits that there is no connecting factor.

[59] I shall begin my own analysis by first examining the law about the evidentiary burden on a plaintiff to show that there is a factual basis for the court assuming jurisdiction simpliciter.

[60] This law was examined and applied by Justice Conway in her judgment in Ontario v. Rothmans, supra, which was affirmed by the Court of Appeal. This case law establishes the following principles. [page787]

[61] An Ontario court will assume jurisdiction against a foreign defendant only where the plaintiff establishes a "good arguable case" for assuming jurisdiction through either the allegations in the statement of claim or a combination of the allegations in the statement of claim and evidence filed on a jurisdiction motion: Tucows.Com Co. v. Lojas Renner S.A. (2011), 106 O.R. (3d) 561, [2011] O.J. No. 3576, 2011 ONCA 548, at para. 36; Ecolab Ltd. v. Greenspace Services Ltd. (1998), 1998 17738 (ON SCDC), 38 O.R. (3d) 145, [1998] O.J. No. 653 (Div. Ct.), at pp. 149-54 O.R.; Schreiber v. Mulroney (2007), 2007 56529 (ON SC), 88 O.R. (3d) 605, [2007] O.J. No. 4997 (S.C.J.), at para. 18.

[62] If unchallenged, the facts pleaded in the statement of claim are taken as true, and if they are sufficient to establish a good arguable case, the pleadings alone can satisfy the court that it has jurisdiction simpliciter over the claim: British Columbia v. Imperial Tobacco Canada Ltd., [2005] B.C.J. No. 1400, 2005 BCSC 946, at paras. 132-34; Ontario v. Rothmans, supra, at para. 110 (C.A.); Ontario New Home Warranty Program v. General Electric Co. (1998), 1998 14628 (ON SC), 36 O.R. (3d) 787, [1998] O.J. No. 173 (Gen. Div.), at pp. 797-99 O.R.

[63] The good arguable case standard can apply solely to the pleadings, but where a defendant adduces evidence to challenge the allegations in the statement of claim, the plaintiff may respond with affidavit evidence and the good arguable case standard applies to the combination of the pleadings and the evidence adduced by the parties: Ontario v. Rothmans, supra, at paras. 101-102, 110 (C.A.); Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., [2002] O.J. No. 298, [2002] O.T.C. 57 (S.C.J.), at para. 64.

[64] Any allegation of fact that is not put into issue by the defendant is presumed to be true for the purposes of the jurisdiction motion, and the plaintiff is under no obligation to call evidence for any allegation that has not been challenged by the defendant; however, if a foreign defendant files affidavit evidence challenging the allegations in the statement of claim that are essential to jurisdiction, the low evidentiary threshold for the plaintiff to meet is that it has a good arguable case on those allegations: Ontario v. Rothmans, supra, at para. 36 (S.C.J.), at para. 74 (C.A.).

[65] In showing that there is a good arguable case, there is no preliminary obligation on the plaintiff to have pleaded the case with the material facts and particulars for a cause of action that would meet the standard that rule 21.01(1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] requires for pleadings. For the purposes of a jurisdiction motion, it is sufficient if the [page788] statement of claim advances the core elements of a cause of action known to law and appears capable of being amended to cure any pleadings deficiencies such that the claim will have at least some prospect of success: Ontario v. Rothmans, supra, at paras. 82-106 (C.A.).

2. The evidence in the case at bar

[66] For the purposes of this jurisdiction motion, which is brought in the context of a proposed class action, I shall adopt the same approach to the plaintiffs' evidence about a good arguable case as will be applied to the their evidence on the certification motion. In other words, I shall apply the very relaxed some-basis-in-fact standard.

[67] The requirement that where a plaintiff's allegations in his or her statement of claim are jurisdictionally challenged, he or he she must show a good arguable case for the court having jurisdiction simpliciter bears a close resemblance to the requirement that a plaintiff moving for certification of a class action must show some-basis-in-fact for the certification criteria save for the cause of action criterion. On a certification motion, evidence directed at the merits may be admissible if it also bears on the requirements for certification but, in such cases, the issues are not decided on the basis of a balance of probabilities, but rather on that of the much less stringent test of "some-basis-in-fact": Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67, at paras. 16-26; Cloud v. Canada (Attorney General) (2004), 2004 45444 (ON CA), 73 O.R. (3d) 401, [2004] O.J. No. 4924 (C.A.), at para. 50.

[68] The some-basis-in-fact test sets a low evidentiary standard for plaintiffs, and a court should not resolve conflicting facts and evidence at the certification stage or opine on the strengths of the plaintiff's case: Pro-Sys Consultants Ltd. v. Microsoft Corp., [2013] 3 S.C.R. 477, [2013] S.C.J. No. 57, 2013 SCC 57; McCracken v. CNR Co. (2012), 111 O.R. (3d) 745, [2012] O.J. No. 2884, 2012 ONCA 445. The evidence on a motion for certification must meet the usual standards for admissibility: Martin v. Astrazeneca Pharmaceuticals PLC, [2012] O.J. No. 2033, 2012 ONSC 2744 (S.C.J.), affd [2013] O.J. No. 1182, 2013 ONSC 1169 (Div. Ct.); Williams v. Canon Canada Inc., [2011] O.J. No. 5049, 2011 ONSC 6571 (S.C.J.); Ernewein v. General Motors of Canada Ltd., [2005] B.C.J. No. 2370, 2005 BCCA 540, leave to appeal to S.C.C. refused [2005] S.C.C.A. No. 545, but the weighing and testing of the evidence is not meant to be extensive, and if the expert evidence is admissible, the scrutiny of it is modest: Griffin v. Dell Canada Inc., 2009 3557 (ON SC), [2009] O.J. No. 418, 72 C.P.C. (6th) 158 (S.C.J.), at para. 76. In a class proceeding, the close scrutiny of [page789] the evidence of experts should be reserved for the trial judge: Stanway v. Wyeth Canada Inc., [2011] B.C.J. No. 1494, 2011 BCSC 1057, affd [2012] B.C.J. No. 1198, 2012 BCCA 260.

[69] Applying the low threshold some-basis-in-fact approach, in my opinion, the plaintiffs' evidence of a good arguable case is woefully inadmissible and inadequate.

[70] The introduction of the allegations from the U.S. proceedings is in some instances fifth or sixth degree hearsay; i.e., it is Ms. Flower saying what she heard about what a website known as PACER was saying it heard from what a pleading in an U.S. proceeding was saying about what the unattributed author of a document was saying that he or she heard said by a sometimes unattributed speaker about what another sometimes unattributed speaker said was discussed at a meeting where a representative of NEC may or may not have been in attendance.

[71] It is ironic to stay the least that the plaintiffs in their attack on Mr. Narita's evidence submitted that on an interlocutory motion, the inclusion of hearsay evidence on a key point is not proper and direct evidence should be filed: Beach v. Toronto Real Estate Board, [2010] O.J. No. 2543, 2010 ONSC 30001 (S.C.J.), at para. 5. I agree with the proposition, and if Ms. Flower's evidence was proffered as evidence of the plaintiffs' good arguable case, then it is inadmissible and useless.

[72] Ms. Flower's evidence about the rulings made in the U.S. litigation are particularly unhelpful because apart from the degrees of hearsay, rulings on whether the American complainants adequately pleaded a claim in accordance with American pleading standards against NEC, which was not raising a challenge about the American court's jurisdiction simpliciter, tells this court nothing about whether the Canadian plaintiffs in the case at bar have a good arguable case against NEC, which is raising a jurisdictional challenge not a direct pleadings challenge.

[73] These conclusions about the evidence, however, do not end the analysis because the plaintiffs are entitled to show that they have a good arguable case from NEC's evidence, and because, as described above, the plaintiffs have a theory of their good arguable case that does not depend on showing a good arguable case against NEC but rather on showing a good arguable case against NEC's alleged co-conspirators who were undoubtedly manufacturing or selling lithium ion batteries in Ontario.

3. The presumptive factor of carrying on business in Ontario

[74] In the case at bar, NEC challenges the plaintiffs' allegation in the statement of claim that it carried on business in Ontario and NEC led evidence to show that this was not the case. [page790]

[75] In my opinion, the plaintiffs provided no evidence that could establish a good arguable case that NEC carried on business in Ontario, and I, therefore, conclude that this presumptive factor does not apply in the case at bar to ground jurisdiction simpliciter.

[76] The plaintiffs submit that NEC's evidence that establishes that it has no presence in Ontario does not establish that it is not carrying business in Ontario. If this submission means that it is possible for a defendant to carry on business in Ontario without a physical presence in Ontario, I agree. However, the absence of a physical presence in Ontario, or, in these days of the Internet, the absence of a meaningful ethereal presence in Ontario, remains a relevant factor in determining whether the foreign defendant can be taken to be carrying on business in Ontario. In Van Breda, the Supreme Court confirmed that this connecting factor requires some form of actual, not only virtual, presence in the jurisdiction: Club Resorts Ltd. v. Van Breda, supra, at para. 87.

[77] The precise issue in the case at bar is not whether NEC did or did not have a presence in Ontario. The precise issue is whether NEC did business here, and in the case at bar, the evidence establishes that NEC did not do business in Ontario, as it did, say for example, in Germany.

[78] Over the 11 years of the alleged conspiracy to fix prices but for an 18-month period where a third or fourth tier subsidiary did business in Ontario, NEC did not even have an associated company carrying on business in Ontario.

[79] There is no good arguable case that NEC carried on business in Ontario.

4. The presumptive factor of a tort (conspiracy) committed in Ontario

(a) The plaintiffs' four major arguments

[80] With the presumptive factor of carrying on business in Ontario not being shown, the jurisdictional motion comes down to whether the court has jurisdiction simpliciter because the plaintiffs have met the low evidentiary threshold that there is a good arguable case that NEC was a party to the tort of conspiracy committed in Ontario.

[81] NEC challenged the plaintiffs' allegations in the statement of claim that it was a party to a conspiracy to fix prices of lithium ion batteries in Ontario. And, it submits that unlike other jurisdictional cases, it proffered evidence that it was not a party to the alleged conspiracy. Thus, NEC submits that the plaintiffs have not met the evidentiary standard of showing a good arguable case to ground jurisdiction based on the tort of conspiracy being committed in Ontario. [page791]

[82] The parties' submissions require an analysis of what it means to commit the tort of conspiracy in Ontario.

[83] In Ontario v. Rothmans, supra, at para. 37 (C.A.), relying on British Columbia v. Imperial Tobacco Canada Ltd., [2006] B.C.J. No. 2080, 2006 BCCA 398, at para. 43, leave to appeal to S.C.C. refused [2006] S.C.C.A. No. 446, and Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., supra, the Court of Appeal held that a conspiracy occurs in the jurisdiction where the harm is suffered regardless of where the wrongful conduct occurred. Relying on that proposition, I understand the plaintiffs to make four major arguments that they have a good arguable case that NEC was a party to a conspiracy in Ontario notwithstanding that it did not carry on business in Ontario.

[84] I shall give these arguments the following names: (1) the U.S. proceedings argument; (2) the good arguable case test argument; (3) the normal channels of trade argument; and (4) the co-conspirator argument.

(b) The U.S. proceedings argument

[85] The plaintiffs' first argument for a good arguable case is that the materials referred to in Ms. Flower's affidavit about the proceedings in the United States show a serious debate about whether NEC was involved in the alleged conspiracy and an adverse inference should be drawn by NEC's refusal to answer questions about the allegations contained in the U.S. pleadings.

[86] I reject this argument. As I explained above, the proceedings in the United States have no evidentiary value to show that the plaintiffs' have a good arguable case.

[87] Further, in the circumstances of this jurisdiction motion, the fact that NEC's witness refused to answer questions does not establish a good arguable case. Rather, it raises the profound question as to why, if they genuinely believed that Mr. Narita's answers would yield a good arguable case, the plaintiffs did not exercise their right to compel NEC answers by bringing a refusals motion. NEC exposed itself to a probing examination of the merits of its defence and rather than seizing the opportunity to probe, the plaintiffs simply ask the court to draw some generalized adverse inference against NEC that the plaintiffs have shown a good arguable case. I decline to do so.

[88] The court is asked to draw an adverse inference notwithstanding that the plaintiffs did not succeed in discrediting the witness who has denied that NEC was a party to any price-fixing conspiracy anywhere, let alone in Canada where it does not carry on business. However low the good arguable case standard may be, it is not so low that it can be satisfied by the court [page792] drawing an adverse inference after a plaintiff decided not to compel answers to relevant questions that might have actually exposed the alleged conspiracy.

[89] It would appear that the plaintiffs did not pursue a refusals motion or provide something other than sixth degree hearsay because they were confident that they would show a good reasonable case based on their other arguments. In any event, I am not prepared to draw any adverse inference in these circumstances and a good arguable case is not shown by reciting allegations found in pleadings in another jurisdiction's proceedings.

(c) The good arguable case test argument

[90] The thrust of the plaintiffs' good arguable case test argument, which is perhaps better described as a counter-argument, is that on a jurisdiction motion, NEC cannot call out the plaintiffs for something more than the good arguable case standard and the plaintiffs need not do any more than they have already done in showing the merits of their case.

[91] In other words, the plaintiffs submit that in the circumstances of a conspiracy claim, which inherently involves a defendant's secret and clandestine activities, it is both unfair and unreasonable to expect a plaintiff to establish the merits of its case at the outset of the action long before the discovery and disclosure phase of the action.

[92] I reject this argument for three reasons.

[93] First, I do not see that NEC is doing anything more than it is entitled to do under the established jurisprudence. Under the law, NEC is entitled to call out the plaintiffs to show a good arguable case. There is a very low evidentiary standard, but the standard requires some admissible evidence and something more than the fact that the defendant is involved in a class action in the United States, where similar allegations of wrongdoing are alleged.

[94] Although with admissible evidence, it might be relevant to an Ontario court proceeding that NEC did something bad in the United States, it does not automatically follow that an Ontario court has jurisdiction simpliciter over NEC because the plaintiffs allege NEC participated in a conspiracy causing damages in the United States.

[95] Second, it is neither unfair or unreasonable to require a plaintiff to show a good arguable case notwithstanding that a conspiracy is the pleaded wrongdoing. I agree with NEC's argument that there is no jurisdiction simpliciter free pass simply because the tort of conspiracy is involved. I agree with NEC's submission, at para. 27 of its reply factum, that there is no [page793] unfairness in requiring a plaintiff at the outset of his or her conspiracy action to show a good arguable case. NEC states:

27. In every jurisdiction motion -- be it a case where allegations of conspiracy are made or otherwise -- a plaintiff who asks the court to assert jurisdiction over a foreign defendant will not have the benefit of discovery. Jurisdiction is a preliminary motion, and a plaintiff must always be prepared to establish a good arguable case in support of the facts that are essential to jurisdiction without the benefit of discovery. The good arguable case standard is a threshold that is calibrated in recognition of the fact that at the time of a jurisdictional challenge, the proceeding is in its infancy and discovery has not yet taken place. Nevertheless, the good arguable case standard must still operate in a meaningful way to ensure that a foreign defendant will not be required to come to Ontario to respond to allegations that lack real foundation. The fact that the Plaintiffs have chosen to frame their case in conspiracy does not relieve them from satisfying the good arguable case standard.

[96] A review of the case law establishes that plaintiffs have an admirable success rate on jurisdiction motions in conspiracy or competition law cases. See Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., supra; British Columbia v. Imperial Tobacco Canada Ltd., supra; New Brunswick v. Rothmans Inc., [2010] N.B.J. No. 367, 2010 NBQB 381, leave to appeal refused [2011] N.B.J. No. 116 (C.A.), leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 221; Stanway v. Wyeth Canada Inc., [2009] B.C.J. No. 2538, 2009 BCCA 592, leave to appeal to S.C.C. refused [2010] S.C.C.A. No. 68; Fairhurst v. Anglo American PLC, [2012] B.C.J. No. 1192, 2012 BCCA 257; Fanshawe v. Au Optronics, 2012 ONSC 4425; Option Consommateurs v. Infineon Technologies AG, [2011] Q.J. No. 16769, 2011 QCCA 2116; Sun-Rype Products Ltd. v. Archer Daniels Midland Co., [2013] 3 S.C.R. 545, [2013] S.C.J. No. 58, 2013 SCC 58; Ontario v. Rothmans, supra. The success rate for plaintiffs on jurisdiction motions may explain why only NEC Corporation and NEC TOKIN Corporation of 20 foreign corporations bothered to try to challenge the Ontario court's jurisdiction, and the success rate confirms that the good arguable case test does set indeed a low threshold and does not ask a plaintiff to do something impossible at the early stages of an action.

[97] However, plaintiffs are not inevitably successful in showing a good arguable case, and where a defendant makes a jurisdictional challenge, the good arguable case test is a genuine low threshold substantive test; it is not an illusory test. I repeat my conclusion above that in the case at bar, from an evidentiary perspective, the plaintiffs have not satisfied the good arguable case standard.

[98] In repeating this conclusion, it is necessary to add that in reaching my conclusion, I make no finding that NEC has [page794] succeeded in showing that the plaintiffs could not have shown a good arguable case. In this last regard, I also wish to be clear that I agree with the plaintiffs' argument that Mr. Narita's evidence cannot be taken as proving that there could not be a good arguable case against NEC. I simply conclude that the plaintiffs have failed to show a good arguable case. Based on the evidence the plaintiffs proffered and their decision not to bring a refusals motion, the most that can be said is that one can speculate that it might have been possible.

(d) The normal channels of trade argument

[99] In Moran v. Pyle National (Canada) Ltd., 1973 192 (SCC), [1975] 1 S.C.R. 393, [1973] S.C.J. No. 149, the Supreme Court of Canada rejected the "place of acting" test for determining the place of commission of a tort for purposes of determining jurisdiction. In Moran, Pyle National manufactured a defective light bulb in Ontario that caused injury to Moran in Saskatchewan, where Pyle National did not carry on business and where it did not directly sell its products. The Supreme Court held that the tort was committed in Saskatchewan. Dickson J. explained the court's reasoning, at p. 409 S.C.R.:

[W]here a foreign defendant carelessly manufactures a product in a foreign jurisdiction which enters into the normal channels of trade and he knows or ought to know both that as a result of his carelessness a consumer may well be injured and it is reasonably foreseeable that the product would be used or consumed where the plaintiff used or consumed it, then the forum in which the plaintiff suffered damage is entitled to exercise judicial jurisdiction over that foreign defendant. . . . By tendering his products in the market place directly or through normal distributive channels, a manufacturer ought to assume the burden of defending those products wherever they cause harm as long as the forum into which the manufacturer is taken is one that he reasonably ought to have had in his contemplation when he so tendered his goods.

[100] The Moran v. Pyle National (Canada) Ltd. line of reasoning has been applied to conspiracy cases; see Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., supra; British Columbia v. Imperial Tobacco Canada Ltd., supra; and Fairhurst v. Anglo American PLC, supra, and the plaintiffs attempted to apply it in the case at bar.

[101] A review of the cases where a domestic court assumes jurisdiction over a foreign defendant in a conspiracy action about price-fixing a product reveals that typically the plaintiff proffers some evidence that the defendant itself or its agents or its subsidiary or associated corporations sold the defendant's goods or that the defendant ought to have reasonably expected that its goods would reach the domestic marketplace much in the same [page795] way that the Ontario manufacturer in Moran v. Pyle National (Canada) Ltd. could reasonably have expected that its negligently manufactured light bulb would expose it to the jurisdiction of another province's court for a negligence claim.

[102] NEC does not dispute the principle from Moran v. Pyle National (Canada) Ltd.; it disputes that the evidence shows a good arguable case that the principle applies.

[103] NEC does not dispute that a good arguable case can be established against it if it was reasonably foreseeable that its lithium ion batteries would reach Ontario through the normal channels of trade. NEC's point is that based on the admissible evidence on this jurisdiction motion, the plaintiffs have not shown a good arguable case that NEC reasonably ought to have had Ontario in its contemplation when it tendered its goods into the marketplace.

[104] For the reasons expressed earlier in these reasons for decision, in my opinion, based on the evidentiary record for this jurisdiction motion, NEC had no actual knowledge that its lithium ion batteries were entering the Ontario marketplace, and in my opinion, it would not be reasonable to assume that NEC ought to have contemplated that Ontario would have any involvement with its goods.

[105] I conclude that the plaintiffs' normal channels of trade argument fails.

(e) The co-conspirator argument

[106] As noted above, the plaintiffs argue that when a conspiracy causes harm in a province, the court in that province can assume jurisdiction over all conspirators, even if some of the conspirators do not have any connection with the province. Thus, the plaintiffs' submit that the Ontario court has jurisdiction simpliciter, even if no NEC-made lithium ion batteries were sold in Ontario. The plaintiffs argue that this court has jurisdiction simpliciter over NEC, even if NEC's co-conspirators' batteries were the only ones that were sold in Ontario. On this theory of the case, the plaintiffs submit that there is indisputable evidence that several co-conspirators had direct sales of lithium ion batteries in Ontario and, therefore, the plaintiffs submit that NEC is jointly liable for the conspiracy committed in Ontario.

[107] In advancing this argument, the plaintiffs rely on the line of authorities that hold that a conspiracy occurs where the damage is suffered. These authorities include Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., supra; British Columbia v. Imperial Tobacco Canada Ltd., supra; Ontario v. Rothmans, supra; [page796] and Nutreco Canada Inc. v. F. Hoffmann-La Roche Ltd., [2001] B.C.J. No. 1581, 2001 BCSC 1146.

[108] I agree that the plaintiffs have strong authority that the tort of conspiracy is committed in the jurisdiction where the damage from the conspiracy was suffered. However, I do not agree that this line of authority supports the proposition that a domestic court has jurisdiction simpliciter over a foreign co-conspirator who does not have any causal connection with the damage from the conspiracy committed in the domestic court's territory.

[109] In my opinion, in the case at bar, unless the plaintiffs show a good arguable case that NEC did an act or omission (which may be acts or omissions anywhere in the world that caused damage in Ontario), the court has no jurisdiction simpliciter over NEC. Put somewhat differently, the joint liability of the tort of conspiracy committed in Ontario presupposes that each co-conspirator does some an act or omission in furtherance of the conspiracy that causes damage to occur in Ontario.

[110] I will examine some of the case law relied on by the plaintiffs below, but before doing so, I wish to be make it clear that the plaintiffs could or might have been able to show a good arguable case that NEC was a party to a conspiracy to fix the prices of lithium ion batteries being sold in Ontario by some admissible evidence that NEC was or ought to have known that it was a participant in the marketplace for lithium ion batteries in Ontario or by some admissible evidence that NEC had agreed not to participate in the marketplace in Ontario so that others could fix the prices for lithium ion batteries.

[111] In other words, a good arguable case of a conspiracy being committed in Ontario can be based on acts or omissions perpetuated inside or outside of Ontario that cause damage in Ontario; however, a good arguable case of conspiracy cannot be based on acts or omissions that do not contribute to causing the damages that others may be causing in Ontario. In short, what the plaintiffs could have done or might have done in showing a good arguable case, they did not do and, therefore, I have concluded the Ontario court does not have jurisdiction simpliciter.

[112] The plaintiffs' argument that a co-conspirator may be jointly liable in Ontario for the tort of conspiracy because another conspirator fixed prices in Ontario is not supported by the case law relied on by the plaintiffs. As will be seen below, that case law rather illustrates instances where the plaintiff had a good arguable case that the co-conspirator's own acts or omissions were causing damage in Ontario. In those cases, there were acts or omissions by the foreign defendant inside or outside of Ontario that contributed to the damages being suffered in Ontario. [page797]

[113] Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., supra, was a jurisdiction motion in five separate class actions in which the plaintiffs alleged that there was a worldwide price-fixing conspiracy in the marketplace for vitamins, including Ontario's marketplace. There were 26 foreign corporation defendants, and of these, five foreign defendants; namely, BASF, Roche-Switzerland, Lonza, Degussa-Germany and Degussa-U.S challenged the jurisdiction simpliciter of the Ontario Court. Justice Cumming dismissed the jurisdiction motions.

[114] It may have been early days in the law about jurisdictional challenges, but it appears to me that in the Vitapharm case there was more chutzpah than substance to the foreign defendants' arguments that there was no real and substantial connection between them and the Ontario court. Visualize:

BASF pleaded guilty to a price-fixing offence under the Competition Act, and in its guilty plea, it acknowledged the role of its executives in conspiratorial meetings some of which occurred in Ontario, yet BASF had the audacity to say that it had no connection with Ontario for the purpose of civil proceedings.

Lonza entered into a plea agreement in the United States whereby it agreed to plead guilty in respect to a price-fixing conspiracy in the United States "and elsewhere". A defendant in Competition Act proceedings in the Federal Court in Canada fingered Lonza as a co-conspirator to fix prices and to allocate markets in Canada, yet Lonza had the boldness to deny carrying on business in Canada and to assert that it had no connection to Canada.

Roche Switzerland manufactured and sold bulk vitamins to an associated company for distribution in the Canadian market, with total sales during the period of the alleged price-fixing conspiracy being some $382 million, and its executives had admitted in a plea bargain in United States proceedings that they participated in a price-fixing conspiracy in the United States "and elsewhere". And Roche Switzerland had been charged under the Canadian Competition Act, but nevertheless, Roche Switzerland had the boldness to assert that all this was insufficient to support jurisdiction simpliciter in Ontario.

In a plea agreement in the United States, Degussa-Germany agreed to plead guilty to allegations of conspiring through affiliates to fix prices in the United States "and elsewhere". Nevertheless, Degussa-Germany and Degussa-U.S. submitted that they did not carry on business in [page798] Canada. Justice Cumming, however, held that this submission was not supported by the evidentiary record which rather established that these foreign defendants were using a Canadian subsidiary to carry on business. Further, Justice Cumming held that there was a good arguable case that both Degussa-U.S. and Degussa-Germany were participants in price-fixing conspiracies affecting Canada.

[115] At paras. 57-59, 62, 66, 95-96, Justice Cumming stated:

The moving defendants submit that an agreement made outside of Canada to lessen competition or fix prices in the Canadian market is not conduct contrary to s. 45 of the Competition Act such as to give rise to a claim for damages under s. 36 of that Act. I disagree.

In my view, there is a good arguable case that any conspiracy entered into abroad that fixes prices or allocates markets in Canada so as to create losses through artificially higher prices in Canada, gives rise to the tort of civil conspiracy in Canada. It is arguable that a conspiracy that injures Canadians gives rise to liability in Canada, even if the conspiracy was formed abroad.

The moving defendants argue that ss. 45 and 46 of the Competition Act render a conspiracy to fix prices a criminal offence only when the agreement is made within Canada. Again, I disagree. The language of s. 45 is not directed to only those conspiracies entered into within Canada.

In my view, as discussed above, there is a good arguable case that there is a tort committed in Canada even when the conspiracy to fix prices in Canada is entered into beyond Canada. The defendants submit that the inquiry for the purposes of the tort of civil conspiracy stops with the simple fact of an agreement made beyond Canada. In my view, the relevant inquiry must include an analysis as to the actual provisions of the agreement, which allegedly provide for price-fixing in respect of products sold to and within Canada.

None of Degussa AG, Lonza Germany, Degussa U.S., Roche Switzerland and BASF AG has introduced any evidence that effectively challenges the service ex juris as not being within the requirements of Rule 17.02. In my view, and I so find, there is a good arguable case on the face of the pleadings in respect of each one of the four circumstances that would justify service ex juris with respect to these defendants.

The fact that a defendant is not itself present in Ontario is one relevant factor to be considered. However, the ultimate issue for a Canadian court is whether the subject matter of the action has a real and substantial connection to Ontario and the foreign defendant is connected to that subject matter: Gariepy v. Shell Oil Co., supra.

The subject matter of each action before the Court is an alleged tort in Ontario through an un-lawful conspiracy relating to price-fixing and the allocation of markets. The subject matter of the causes of action can relate to the locus of the damage, as well as to the locus of the alleged wrong which [page799] gave rise to the damage. This means the defendants can be said to be proper parties if the alleged price-fixing agreement and their actions to implement it could result in their being tortfeasors with respect to harm and damages caused in Ontario.

[116] At paras. 97-98 and 101, Justice Cumming specified that although the misconduct may occur inside or outside Ontario there must be a causal connection between the alleged misconduct and the damages suffered in Ontario. He stated:

There must be a causal connection between the alleged damage and the defendants to establish a realistic possibility that the defendants may be responsible in law for the damage through their unlawful conduct. If so, there is a real and substantial connection between the subject matter of the action and Ontario. In such instance the Ontario court has jurisdiction with respect to the proceeding and the foreign defendants. It is sufficient in the first instance to set forth allegations in the pleadings that prima facie meet this test.

In the context of a motion challenging jurisdiction, the plaintiffs have a low threshold to meet. Questions relating to the factual basis necessary to establish all the elements of tortious conduct are to be considered only as far as necessary to establish that unlawful conduct may have occurred in Ontario. Any further analysis should occur in the context of a trial to determine the merits of the action, since such analysis is beyond the scope of the present jurisdiction motions.

The participants in a conspiracy entered into geographically beyond Canada with the purpose of fixing prices and allocating markets within Canada (amongst other countries) would know, and indeed would intend, that damages (through artificially high prices) would be sustained in Canada, including Ontario, as a result of their agreement. As I have already said, in my view such an agreement would be a tort committed within Ontario. The most significant aspect of the alleged conspiracy, being the artificial raising of prices in Canada, is implemented within Canada and the agreement is directed at Canadian consumers. See Libman v. The Queen, 1985 51 (SCC), [1985] 2 S.C.R. 178; Gariepy v. Shell Oil Co., supra. The centre of gravity for each of the class actions, initially on behalf of putative plaintiff "national classes", is Ontario. The participants in any such conspiracies have voluntarily exposed themselves to the risk of litigation in Ontario: Long v. Citi Club, [1995] O.J. No. 1411 (Gen. Div.).

[117] In Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., Justice Cumming was satisfied that there was a good arguable case that the foreign defendants did acts or omissions inside or outside Ontario that caused damage in Ontario. There is nothing in the case at bar that supports the plaintiffs' co-conspirator argument that presupposes a good arguable case based only on the conduct of other defendants causing damages in Ontario or somewhere else.

[118] There is no support for the plaintiffs' theory in the other cases that I have read. I conclude that the plaintiffs' co-conspirator argument fails and they have not shown a good [page800] arguable case that NEC is jointly liable for any conspiracy committed by others causing damage in Ontario.

[119] I have one last observation before concluding this discussion of the plaintiffs' co-conspirator argument. NEC submits that there is juridical confusion and a problem with the commission of a tort line of authorities, because while in Club Resorts Ltd. v. Van Breda, the Supreme Court said that the location where a tort was committed is a presumptive factor, the court also stated, at para. 89, that the place where damages are sustained does not create a presumptive connecting factor.

[120] I do not see any juridical confusion. In some torts, for example, negligence, damages is a constituent element, but where the damages are suffered will include the place where the tort was committed and also other places. Visualize, in Forsythe v. Westfall (2015), 125 O.R. (3d) 135, [2015] O.J. No. 509, 2015 ONSC 758 (S.C.J.), after a motorcycle accident in British Columbia, the plaintiff received medical treatment in British Columbia and Alberta before returning home for more treatment in Ontario. Standing alone, where the damages from the personal injury were occasioned (British Columbia, Alberta and Ontario) did not make for a meaningful presumptive connection to any particular jurisdiction, but the damages did indicate where the tort was committed (British Columbia).

[121] For the case at bar, the tort of conspiracy may have been committed in Ontario where the damage from price-fixing occurred, but the plaintiffs did not show a good arguable case that NEC was a party to that conspiracy in the Ontario marketplace for lithium ion batteries, because the plaintiffs proffered no evidence or insufficient evidence of any acts or omissions by NEC causing damages in Ontario from price-fixing and they did not proffer sufficient evidence to satisfy the test from Moran v. Pyle National (Canada) Ltd. that shows activity in the Ontario marketplace. Rather, the plaintiffs proffered speculation that NEC was associated with lithium ion price-fixers in Ontario. Speculation of a defendant's guilt by association without any acts or omissions does not satisfy the good arguable case test.

H. Conclusion

[122] For the above reasons, I grant NEC's motion.

[123] The parties agreed that there shall be no order as to costs.

Motion granted.

End of Document