CITATION: Eidoo v. Infineon Technologies AG, 2015 ONSC 5493

COURT FILE NO.: 05-CV-4340

COURT FILE NO.: 10-CV-15178CP

DATE: 20150902

ONTARIO

SUPERIOR COURT OF JUSTICE

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

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 ELECTRONICS CANADA LTD., TOSHIBA CORPORATION, TOSHIBA AMERICA ELECTRONICS COMPONENTS INC., TOSHIBA OF CANADA LIMITED, WINBOND ELECTRONICS CORPORATION AND WINBOND ELECTRONICS CORPORATION AMERICA

Defendants

Odette Soriano, Robert A. Centa, and Caroline Jones for the Plaintiffs

Eric Letts for Raja Khoury, Class Member

HEARD: August 14, 2015

Proceeding under the Class Proceedings Act, 1992

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION AND OVERVIEW

[1] Khalid Eidoo and Cygnus Electronics Corporation are the Representative Plaintiffs in two actions in Ontario certified under the Class Proceedings Act, 1992, S.O. 1992, c. 6. There are parallel proceedings in British Columbia and Québec. The actions across the country have been ongoing for almost a decade, and progressive settlements have been reached and the actions have entered into an administrative phase pursuant to a Distribution Protocol that was approved by the courts in British Columbia, Ontario, and Québec. For the Ontario approval, see Eidoo v. Infineon Technologies AG, 2014 ONSC 6082.

[2] This motion addresses the issue of whether a Distribution Protocol in a class action settlement that was approved by courts in British Columbia, Ontario, and Québec contravenes the Ontario Human Rights Code, R.S.O. 1990, c. H.19 by discriminating against Class Members by providing adverse, differential treatment toward them based solely on the personal characteristics of family status and marital status.

[3] Not long before the implementation of the Distribution Protocol was approaching its completion, Class Counsel in Ontario were contacted by Eric Letts, an Ottawa, Ontario lawyer who alleged that the Distribution Protocol contravened the Human Rights Code. Mr. Letts threatened to initiate proceedings on behalf of a few clients who were Class Members for damages for the contravention of the Code.

[4] The gobsmacked Class Counsel denied any contravention of the Code, and brought the matter of the alleged contravention of the Code to the court’s attention. Mr. Letts and Class Counsel then attempted to resolve the matter by an anti-suit agreement with Mr. Letts and his clients that Class Counsel wished the courts to authorize. I, however, ruled that the issue of an alleged violation of the Ontario Human Rights Code should be addressed on its merits and not by an agreement between Class Counsel and a few Class Members. See Eidoo v. Infineon Technologies AG, 2015 ONSC 2675 and Eidoo v. Infineon Technologies AG, 2015 ONSC 3668.

[5] I ordered a motion for directions, which, after some twists and turns, is now before the court. The motion for directions morphed into a joint hearing of the courts of British Columbia, Ontario, and Québec.

[6] For the reasons that follow, I find that the Ontario Human Rights Code does not apply to a Distribution Protocol in a class action. I further find that had the Code been applicable, then the Distribution Protocol does not contravene the Code.

[7] Accordingly, no action need be taken, and the administration of this class action should simply continue and run its course without adjustment.

B. FACTUAL AND PROCEDURAL BACKGROUND

1. The Approval of the Distribution Plan

[8] In 2005, pursuant to the Class Proceedings Act, 1992, Khalid Eidoo and Cygnus Electronics Corporation sued: 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 Inc., Micron Semiconductor Products, Inc. o/a Crucial Technologies, Mosel Vitelic Corp., Mosel Vitelic Inc. and Elpida Memory, Inc.

[9] In 2010, in a second proposed class action, Mr. Eidoo and Cygnus Electronics sued: Hitachi Ltd., Hitachi America, Hitachi Electronic Devices (USA), Hitachi Canada Ltd., Mitsubishi Electronic 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.

[10] There is a companion action in British Columbia in which Pro-Sys Consultants Ltd. is the Representative Plaintiff. The British Columbia action is known as Pro-Sys Consultants Ltd. v. Infineon Technologies Inc. There is a companion action in Québec in which Option Consommateurs and Claudette Cloutier are the Representative Plaintiffs. The Québec action is known as Option Consommateurs c. Infineon Technologies AG. There were parallel proceedings in the United States.

[11] All the actions concern allegations that the Defendants conspired to fix prices in DRAM (dynamic random access memory) devices. The 2010 action in Ontario was the means to add defendants as co-conspirators to the conspiracy alleged in the 2005 class action. The claims in the various actions were 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.

[12] In Ontario, the Plaintiffs are represented by Harrison Pensa LLP and Sutts, Strosberg LLP. In British Columbia, the Plaintiff is represented by Camp Fiorante Matthews Mogerman. In Québec, the Plaintiffs are represented by Belleau Lapointe LLP. Class Counsel have been working together in all three jurisdictions.

[13] The actions were very vigorously contested. Certification motions were initially unsuccessful in both British Columbia and Québec. Certification was granted, however, by the British Columbia Court of Appeal and the Québec Court of Appeal.

[14] In the British Columbia action, the Defendants, other than Elpida Memory Inc., sought and were denied leave to appeal to the Supreme Court of Canada. A second attempt at leave to the Supreme Court of Canada was also sought on a reconsideration motion in the British Columbia action. However, leave to appeal to the Supreme Court of Canada was granted in the Québec action. The hearing before the Supreme Court of Canada was heard on October 17, 2012. On October 31, 2013, the Supreme Court of Canada upheld the authorization of the Québec action. The Supreme Court of Canada also found that indirect purchasers have a cause of action. See Infineon Technologies AG v. Option consommateurs, 2013 SCC 59.

[15] During the course of the litigation, the focus of attention has been on the British Columbia action, where the parties proceeded through discoveries and prepared for a trial that was scheduled and then rescheduled.

[16] While advancing on the litigation track in British Columbia, the Plaintiffs from time to time negotiated settlements with some of the Defendants and then sought court approvals for those settlements. In Ontario, consent certification orders for the purposes of the settlements were also obtained.

[17] Eventually, the actions settled in their entirety, and a settlement and a Distribution Protocol were approved by the courts. The aggregate recovery for Class Members was $79.5 million. The deadline for objecting to the Settlement Agreements was August 25, 2014, and no objections to the settlements were received.

[18] In my Reasons for Decision approving the Distribution Protocol, Eidoo v. Infineon Technologies AG, 2014 ONSC 6082, I stated at paragraphs 24-49 and 68-76:

Distribution Protocol

[24] As the Settlement Fund has accumulated from the various settlements (apart from Counsel Fees and Disbursements), the funds were not distributed to Class Members in order to save the expense of multiple distributions and to formulate a fair distribution protocol.

[25] Developing a fair protocol has been a challenge because Class Members are diverse and not similarly situated on the DRAM distribution chain, and it is a contentious matter about the amount of the overcharge absorbed at each level of the distribution chain.

[26] Further, the anticipated take up rates are likely to be different between different categories of Class Members. Some Class Members have very small claims and will have much less incentive to submit their decade old claims than other Class Members, including public authorities, who suffered significant DRAM cost overcharges and who will be highly motivated to participate in the claims distribution process.

[27] Under the proposed Distribution Protocol, the amount for distribution to the class will be the total of all settlement funds received in the proceedings, plus accrued interest, less Class Counsel’s approved fees and disbursements and approved administration and notice costs.

[28] A great deal of time and effort was expended in formulating a distribution plan. In creating the Distribution Protocol, Class Counsel have: (a) adopted adversarial roles representing different levels of the DRAM distribution chain; (b) reviewed the substantial expert evidence filed and the plan of allocation approved in the parallel U.S. Action for indirect purchasers; (c) consulted with the Representative Plaintiffs and many other Class Members; (d) interviewed industry participants knowledgeable about various aspects of DRAM distribution; (e) retained an independent economist to opine on the distribution of loss and in particular where the overcharge came to rest in the chain of distribution; and, (f) retained retired Supreme Court Justice Ian Binnie who participated in communication and dissemination of information to Class Members, convened hearings to establish the Distribution Protocol and consider the expert evidence. The Honourable Mr. Binnie delivered a report on his findings.

[29] Class Counsel submit that the proposed Distribution Protocol reflects a balance of economic, practical and legal principles and contains a number of features which permit reasonable flexibility to adapt and respond to the needs of Class Members in the execution of the claims process. The Protocol also allows for further judicial review in the event that unfairness or inequity emerges in the implementation of the plan.

[30] The Distribution Protocol divides the Settlement Fund into three Funds: (1) the End Consumer Fund: 50% of Settlement Fund; (2) the EMS (Electronic Manufacturing Services) Fund: 30% of Settlement Fund; and (3) the Other DRAM Purchaser Fund: 20% of Settlement Fund.

[31] The End Consumer Fund applies to class members who purchased DRAM for their own use and not for resale in the same or modified form. This category includes a wide range of consumers from individuals, through small and medium-sized businesses, all the way up to the largest Canadian businesses and Canadian governmental entities at the municipal, provincial and federal levels.

[32] The EMS Fund applies to claims by a class member for purchases of DRAM “in support of the manufacturing or assembly” of particular electronics products “by contract manufacturers or electronics manufacturing services firms pursuant to contracts with computer and/or non-computer original equipment manufacturers and/or other computer parts manufacturers for commercial resale in a modified form”. Claims for the purchase of DRAM to construct or assemble DRAM modules for commercial resale to End Consumers are excluded from claims on the EMS Fund.

[33] The Other DRAM Purchaser Fund addresses claims by any class members which do not fall into the End Consumer or EMS Funds. The class members whose purchases fall within the Other DRAM Purchaser Fund are a varied group including resellers, contract manufacturers who are not EMS manufacturers, and many others. Because the purchases of class members that fall in this category will vary substantially, three sub-categories have been created in the Other DRAM Purchaser Fund.

[34] A class member may claim in any Fund for which they have purchases of DRAM which qualify, and may claim in more than one Fund.

[35] Because DRAM is used in a wide variety of electronics, claims will be based on a common unit of measure, the “Computer Equivalency Unit” (“CEU”). One CEU is equivalent to the average amount of DRAM in a computer during the class period. Other products containing DRAM are then assigned a CEU value based on their average DRAM content as compared to DRAM content of an average computer. For Class Members who purchased raw DRAM or DRAM in large quantities, there is an additional grid for assigning a CEU value to those purchases.

[36] Each of the Funds has a dollar value assigned to it for each CEU. For End Consumers, each CEU is valued at $5. For EMS and Other DRAM Purchasers, each CEU is valued at $1.25. Among Other DRAM Purchasers Claims, this value will be further weighted according to whether the purchases are low, medium or high absorption.

[37] Claims will be calculated by multiplying a Class Member’s purchases of DRAM by the CEU value for the product purchased and the dollar value per CEU for those purchases. End Consumers will receive a minimum payment of $20, and have a simplified claims process for small claims.

[38] The Funds are designed to be self-contained, unless there is an unjust result after all claims are submitted. That is, absent an unjust result, even if one Fund is undersubscribed and another oversubscribed, the monies in the undersubscribed Fund will not be used to compensate the class members in the oversubscribed Fund. If any Fund is oversubscribed, the payouts to class members will be pro-rated down to the total amount in that Fund.

[39] If a Fund is undersubscribed, Class Counsel may implement a pro-rata increase in the compensation payable to claimants entitled to compensation from that Fund, unless a pro-rata increase is determined to be inappropriate. If a pro-rata increase is inappropriate, Class Counsel will prepare a proposal for the Courts in respect of any excess monies remaining in an undersubscribed Fund prior to payouts on that Fund occurring. In such a case, excess monies may be employed to implement a pro-rata increase up to a level at which it is appropriate, or may be distributed cy près, or may be used in part for each of those purposes.

[40] Mr. Binnie, the Representative Plaintiffs and Class Counsel all recommend the approval of the Distribution Protocol as fair, reasonable and in the best interest of the class.

Approval of Administration Protocol and Appointment of Claims Administrator

[41] Class Counsel have developed the Administration Protocol, which is a set of rules which will guide the administrative implementation of the claims process and Distribution Protocol. The Administration Protocol was designed to retain flexibility to deal with the claims process as it unfolds. The Administration Protocol provides for Class Counsel to play a continuing role in overseeing its implementation and the administration.

[42] The Administration Protocol contemplates two routes within the claims process: (1) a simplified process for End Consumers who elect to claim the $20 minimum; and (2) a more in-depth process for all other claimants and for End Consumers who purchased sufficient amounts of DRAM to claim more than $20.

[43] In both instances, claims will be filed via an online claims portal unless a Class Member does not have Internet access.

[44] The Administration Protocol does not set out a claims form or list what will be accepted as proof, but rather provides principles for the submission of claims. This provides the Claims Administrator with the flexibility to adjust the claims forms if it becomes apparent that Class Members are having difficulty, and to accept differing forms of proof as appropriate.

[45] An End Consumer who completes a simplified claim will not be required to provide any proof of their purchases beyond a declaration that they purchased at least one product containing DRAM during the class period.

[46] Class Counsel propose that the claims period be 90 days, with flexibility for Class Counsel and the Claims Administrator to extend the claims period if they consider the extension to be necessary and reasonable for the fair administration of the Distribution Protocol.

[47] The Administration Protocol provides for the appointment of an arbitrator to hear appeals from the Claims Administrator’s decisions. Class Counsel propose that Laura Bruneau be appointed as arbitrator. Ms. Bruneau has experience both as an arbitrator for appeals from claims administrators and in the administration of claims. She is a lawyer and fully bilingual.

[48] Class Counsel are recommending that NPT RicePoint Class Action Services Inc. be appointed as Claims Administrator. NPT RicePoint Class Action Services Inc. has bilingual capabilities and has been appointed claims administrator in other Canadian class actions, including other price-fixing conspiracy cases.

[49] The Representative Plaintiffs support the approval of the Administration Protocol and appointment of Claims Administrator and Arbitrator.

Settlement Approval, Distribution Protocol, and Approval of Administration Protocol, and Appointment of Claims Administrator

[68] Section 29(2) of the Class Proceedings Act, 1992 provides that a settlement of a class proceeding is not binding unless approved by the court. To approve a settlement of a class proceeding, the court must find that, in all the circumstances, the settlement is fair, reasonable, and in the best interests of the class: Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 (S.C.J.) at para. 57; Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 (S.C.J.) at para. 43; Kidd v. Canada Life Assurance Company, 2013 ONSC 1868.

[69] In determining whether a settlement is reasonable and in the best interests of the class, the following factors may be considered: (a) the likelihood of recovery or likelihood of success; (b) the amount and nature of discovery, evidence or investigation; (c) the proposed settlement terms and conditions; (d) the recommendation and experience of counsel; (e) the future expense and likely duration of litigation; (f) the number of objectors and nature of objections; (g) the presence of good faith, arm’s-length bargaining and the absence of collusion; (h) the information conveying to the court the dynamics of, and the positions taken by, the parties during the negotiations; and, (i) the nature of communications by counsel and the representative plaintiff with class members during the litigation. See: Fantl v. Transamerica Life Canada, supra at para. 59; Corless v. KPMG LLP, [2008] O.J. No. 3092 (S.C.J.) at para. 38; Farkas v. Sunnybrook and Women’s Health Sciences Centre, supra, at para. 45; Kidd v. Canada Life Assurance Company, 2013 ONSC 1868.

[70] In determining whether to approve a settlement, the court, without making findings of facts on the merits of the litigation, examines the fairness and reasonableness of the proposed settlement and whether it is in the best interests of the class as a whole having regard to the claims and defences in the litigation and any objections raised to the settlement: Baxter v. Canada (Attorney General) (2006), 2006 41673 (ON SC), 83 O.R. (3d) 481 (S.C.J.) at para. 10. An objective and rational assessment of the pros and cons of the settlement is required: Al-Harazi v. Quizno’s Canada Restaurant Corp. (2007), 49 C.P.C. (6th) 191 (Ont. S.C.J.) at para. 23.

[71] The case law establishes that a settlement must fall within a zone of reasonableness. Reasonableness allows for a range of possible resolutions and is an objective standard that allows for variation depending upon the subject matter of the litigation and the nature of the damages for which the settlement is to provide compensation: Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 (S.C.J.) at para. 70; Dabbs v. Sun Life Assurance Company of Canada, supra. A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally: Fraser v. Falconbridge Ltd. (2002), 24 CPC (5th) 396 at para. 13; McCarthy v. Canadian Red Cross Society (2007), 158 ACWS (3d) 12 (Ont. S.C.J.) at para. 17.

[72] In my opinion, having regard to the various factors used to determine whether to approve a settlement, the Settlement Agreements in the immediate case should be approved.

[73] My view is that the settlements are an excellent result in a very difficult and very risky class action.

[74] Similarly, the Distribution Protocol, which had to take into account very difficult economic and damage assessment issues in the marketplace for DRAM, is a fair and reasonable result for all Class Members. Courts use the same test to approve a distribution plan as to approve a settlement, and thus a plan of distribution will be appropriate if in all the circumstances, the plan of distribution is fair, reasonable and in the best interest of the class: Zaniewicz v. Zungui Haixi Corp., 2013 ONSC 5490 at para. 59.

[75] In the case at bar, the Distribution Protocol should be approved.

[76] With one adjustment, the Administration Protocol and the appointment of the Claims Administrator should also be approved. The adjustment is that the claims period should be for a fixed 120 day period. I only see problems with administering a 90 day period that can be adjusted to a longer period.

2. The Distribution Protocol

[19] The problem in the immediate case concerns whether the Distribution Protocol contravenes the Ontario Human Rights Code. The pertinent sections of the Distribution Protocol state:

Canadian DRAM National Class Actions Distribution Protocol

Allocation of Net Proceeds:

(1) END CONSUMERS FUND 50%

(2) EMS FUND 30%

(3) OTHER DRAM PURCHASERS FUND 20%

Rules for Distribution:

1. The net proceeds of all settlements and judgments in the Canadian DRAM national class actions will be distributed according to a claims-made process to compensate Class Members for DRAM and/or DRAM Products they purchased between April 1, 1999 and June 30, 2002 (the "Class Period"). Compensation is only available for new product purchases and not used product purchases.

2. Class Members may not recover in relation to DRAM or DRAM Products compensated or released as part of U.S. Proceedings or a private settlement.

3. Three funds will be created: (1) the End Consumers Fund; (2) the EMS Fund; and (3) the Other DRAM Purchasers Fund.

4. Class Members will be entitled to advance claims in the following categories: (1) End Consumers Claims; (2) EMS Claims; and (3) Other DRAM Purchasers Claims. Class Members may advance claims in respect of more than one category, provided those claims are in compliance with rules applicable to each category. The claims process will be designed to assist Class Members to easily and efficiently advance their claims in all applicable categories.

5. All valid claims made will be converted to a common unit of measure ("CEU") by the Claims Administrator based on the computer equivalent unit grid ("CEU Grid") attached as Schedule A and compensation will be calculated by the Claims Administrator based on the rules set out in the claims categories below.

6. Compensation payable to Quebec Class Members will be subject to deduction in respect of the amounts payable to the Fonds d'aide aux recours collectifs.

7. Additional rules applicable to each claims category are as follows:

End Consumers Claims:

8. An "End Consumers Claim" means a claim in respect of DRAM and/or DRAM Products purchased by a Class Member in the Class Period for the Class Member's own use and not for commercial resale in the same or modified form.

9. End Consumers Claims will be advanced by Class Members against the End Consumers Fund.

10. The End Consumers Fund will be allocated 50% of the net proceeds.

11. The "End Consumers CEU Value" will be fixed at $4 per CEU.

12. The End Consumer DRAM and/or DRAM Product purchases of family members residing m in the same household must be pooled together and filed as a single End Consumer Claim. Persons under the age of eighteen (18) at the time of filing will not be permitted to file a claim except as part of a household claim. Compensation payable in respect of a household claim will be issued to the person filing the claim on behalf of the household.

13. The Claims Administrator will convert the reported DRAM and/or DRAM Product purchases for each valid End Consumers Claim received into CEUs based upon the CEU Grid.

14. The compensation payable for each valid End Consumers Claim will be calculated by the Claims Administrator by accepting the Class Member's election of $20 in compensation or by multiplying the number of CEUs determined times the End Consumers CEU Value.

15. Each valid End Consumers Claim will be paid the greater of $20 or the compensation as calculated in the preceding paragraph out of the End Consumers Fund; subject to such pro-ration as may be required should there be insufficient monies in the End Consumers Fund to pay all valid End Consumers Claims.

16. If there are more monies allocated to the End Consumers Fund than are required to make payment of compensation to Class Members for all valid claims made against it, Class Counsel may implement a pro-rata increase in the compensation payable to Class Members. If a pro-rata increase is determined to be inappropriate, Class Counsel will prepare a proposal in respect of any excess money and will move to the Courts for approval of it prior to the distribution of the End Consumers Fund. In preparing a proposal in respect of how to distribute any excess monies, Class Counsel will consider all relevant factors including the utility and efficacy of a cy pres distribution, if appropriate.

Residual Discretion for the Management of the Plan:

32. Notwithstanding the foregoing, if, following the claims process and the calculation of compensation in accordance with this Distribution Protocol, Class Counsel have concerns that the claims process and/or Distribution Protocol has produced an unjust result on the whole or to any segment of the Class Members, they shall first determine whether the flexibility afforded by the rules of this Distribution Protocol can be applied in order to resolve any such issue. Failing that, Class Counsel may move to the Courts for approval of a reasonable modification to this Distribution Protocol to remedy any unjust result or for further directions with respect to the distribution of the net proceeds

33. In arriving at a proposal pursuant to paragraphs 16 and 31 or a determination that an unjust result has occurred, a modification is required or a decision to seek directions pursuant to paragraph 32, Class Counsel shall seek a consensus among themselves, failing which they may move to the Courts for a determination of any such issue.

3. The Implementation of the Distribution Protocol

[20] After the courts approved the Distribution Protocol, there was a notice program in which television advertising featured prominently. End Consumers filed 888,041 minimum compensation claims and there were 32,158 other claims by End Consumers.

[21] During the claims process, the Claims Administrator responded to more than 11,300 inquiries. No complaints were received about the pooling of the claims for compensation of family members.

4. Attributes of Distribution Schemes and Protocols

[22] Before going on to describe the allegation that the Distribution Protocol contravenes the Ontario Human Rights Code and how that allegation emerged, five aspects of distribution schemes in general and of the Distribution Protocol in the immediate case in particular need to be noted.

[23] First, distribution schemes are an intrinsic element of class actions and will arise in one of two ways. Where the defendant is found liable, distribution schemes will arise after there is a trial assessing the class member’s damages. Where the defendant agrees to a settlement and to pay compensation to the class, then a distribution scheme will arise as an aspect of the settlement, which is what occurred in the case at bar.

[24] Second, distribution schemes are of infinite variety. Section 26 of the Class Proceedings Act empowers the court to direct any means of distribution of amounts awarded where there is an aggregate assessment (section 24) and even empowers the court to distribute moneys where there are individual issues trials (section 25). Section 26 of the Act states:

Judgment distribution

26. (1) The court may direct any means of distribution of amounts awarded under section 24 or 25 that it considers appropriate.

Idem

(2) In giving directions under subsection (1), the court may order that,

(a) the defendant distribute directly to class members the amount of monetary relief to which each class member is entitled by any means authorized by the court, including abatement and credit;

(b) the defendant pay into court or some other appropriate depository the total amount of the defendant’s liability to the class until further order of the court; and

(c) any person other than the defendant distribute directly to class members the amount of monetary relief to which each member is entitled by any means authorized by the court.

Idem

(3) In deciding whether to make an order under clause (2) (a), the court shall consider whether distribution by the defendant is the most practical way of distributing the award for any reason, including the fact that the amount of monetary relief to which each class member is entitled can be determined from the records of the defendant.

Idem

(4) The court may order that all or a part of an award under section 24 that has not been distributed within a time set by the court be applied in any manner that may reasonably be expected to benefit class members, even though the order does not provide for monetary relief to individual class members, if the court is satisfied that a reasonable number of class members who would not otherwise receive monetary relief would benefit from the order.

Idem

(5) The court may make an order under subsection (4) whether or not all class members can be identified or all of their shares can be exactly determined.

Idem

(6) The court may make an order under subsection (4) even if the order would benefit,

(a) persons who are not class members; or

(b) persons who may otherwise receive monetary relief as a result of the class proceeding.

Supervisory role of the court

(7) The court shall supervise the execution of judgments and the distribution of awards under section 24 or 25 and may stay the whole or any part of an execution or distribution for a reasonable period on such terms as it considers appropriate.

Payment of awards

(8) The court may order that an award made under section 24 or 25 be paid,

(a) in a lump sum, forthwith or within a time set by the court; or

(b) in instalments, on such terms as the court considers appropriate.

Costs of distribution

(9) The court may order that the costs of distribution of an award under section 24 or 25, including the costs of notice associated with the distribution and the fees payable to a person administering the distribution, be paid out of the proceeds of the judgment or may make such other order as it considers appropriate.

Return of unclaimed amounts

(10) Any part of an award for division among individual class members that remains unclaimed or otherwise undistributed after a time set by the court shall be returned to the party against whom the award was made, without further order of the court.

[25] Third, the Class Proceedings Act, 1992 envisions that distribution schemes, and settlements for that matter, may differentiate between class members, who do not all have to receive the same allocation of the settlement proceeds. In other words, while in some cases it may be appropriate to distribute the judgment or the settlement funds per capita dividing the fund by the number of class members, pursuant to s. 26(1) of the Act, the court may direct any means of distribution that it considers appropriate.

[26] Fourth, ideally or optimally, if the access to justice goals of the Class Proceedings Act, 1992 and other class action statutes across the country are to be achieved, the judgment or the settlement funds should be distributed to the class members and not be refunded to the defendant or distributed cy pres, which achieves behaviour modification but not access to justice for individual class members. A fundamental policy factor underlying class action statutes across the country is the goal that class members should have access to justice and defendants should not get away with perpetrating small harms to many victims who as individuals would not sensibly incur the costs and risks of litigating for their individual claims. In other words, the ideal distribution scheme for a class action gets the compensation into the hands of the class members.

[27] Ironically, achieving this goal can be frustrated by class members not taking up the recovery available to them. The practical realities of human nature are such that historically, take up rates of class action settlements have been poor where the amounts to be distributed to individual class members are small, and in the case at bar, Justice Masuhara, Justice Gagnon, and myself, in assessing the appropriateness of the Distribution Protocol, were keenly interested in seeing what could be done to encourage End Consumer Class Members to actually make claims.

[28] At the time of the approval hearing, the courts were informed by Class Counsel that affording End Consumers with minimum compensation of $20 regardless of whether they were able to prove purchases of DRAM products to substantiate such a loss was a design feature of the Distribution Protocol. The idea of minimum compensation was that although a minimum payment ran the risk of overcompensating some Class Members, a $20 payment was thought to be sufficient to entice End Consumers to take the time and the trouble to make a claim.

[29] In the case at bar, the respective courts knew that those Class Members with substantial claims would be motivated to take the time and the trouble to make claims, but in assessing the appropriateness of the Distribution Protocol, Justice Masuhara, Justice Gagnon, and myself were interested in ensuring that there be a fulsome notice program and encouragement to End Consumer Class Members to at least claim the readily available $20 compensation.

[30] In his decision Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2014 BCSC 1936, Justice Masuhara, in British Columbia, stated at paragraphs 29-31 and 36:

29. Claims will therefore largely be calculated by multiplying the CEU value (for the product purchased by the class member) by the class member's volume of purchases (of that product) and the dollar value per CEU assigned to the appropriate Fund. End Consumers will receive a minimum payment of $20.

30. Because Class Counsel's primary goal is to directly compensate real class members, Class Counsel is not currently proposing any cy près distribution. If there are excess monies remaining in one or more of the Funds after the claims process has concluded and if Class Counsel determines that a pro-rata increase of the compensation payable is inappropriate, Class Counsel will prepare a proposal in respect of any excess money and will move to the Courts for approval of it prior to the distribution of the Fund. ….

31. Class Counsel state that they are committed to achieving the highest take-up rate possible. Class Counsel advise that they are determined to implement a robust and effective notice program to provide information about the claims process to class members and to encourage them to make claims.

32. I note the comment of Mr. Binnie that the process which Class Counsel engaged in to develop the Distribution Protocol was "thorough" and that Class Counsel took great care to apprise themselves of the merits of all claims, and to design a distribution which was fair and reasonable in light of that information. I agree as well that the Distribution Protocol "aims strongly to promote the distribution of funds to the people who suffered actual loss" and that the cy pres distribution, if any is left to be determined after the claims process is complete.

[31] In the Québec decision, Option Consommateurs c. Infineon Technologie a.g., 2014 QCCS 4949, Justice Gagnon stated at paras. 78-80, 84 and 85:

78. Dans un objectif de simplification et d'équité, chaque réclamation doit être traitée en fonction du nombre d'unités de mesure auquel correspond tel ou tel type de produit. L'unité de mesure est le "CEU" pour "Computer Equivalency Unit"²⁴.

79. Ainsi, un ordinateur (quelles qu'en soient les caractéristiques précises) vaut 1 CEU tandis qu'une imprimante (contenant beaucoup moins de DRAM) vaut 0,05 CEU. Et ainsi de suite.

80. De façon à motiver ceux parmi les consommateurs finaux qui ont acheté relativement peu de produits contenant de la DRAM, chacun de ceux-ci qui aura produit une réclamation valide recevra une compensation d'au moins 20 $.

81. Le Tribunal apprécie les efforts et à la créativité des avocats qui, au terme de consultations appropriées, sont parvenues à élaborer le Protocole de distribution.

82. Celui-ci parait concu en vue de proceder a une repartition adequate des montants nets recueillis, en reduisant la probabilite dun reliquat important.

[32] Fifth, with respect to the attributes of distribution schemes, there is nothing in the Class Proceedings Act, 1992 that refers to the Ontario Human Rights Code, and to be candid, the Code was not something on the court’s radar when I approved the settlement and the Distribution Protocol in the immediate case, or in any other case for that matter. The motion now before the court is a case of first instance about the application, if any, of the Human Rights Code to judgments or settlements in class actions.

5. Mr. Letts’ Allegation that the Ontario Human Rights Code has been Contravened

[33] On May 5, 2015, I received a letter from Jonathan J. Foreman of Harrison Pensa LLP, one of a consortium of Class Counsel in Ontario. Mr. Foreman advised that Class Counsel had been contacted by Eric Letts, an Ottawa, Ontario lawyer acting for five Class Members, who had advised his clients that the Distribution Protocol that had been approved by the courts in Ontario, British Columbia, and Québec contravened ss. 1 and 3 of the Human Rights Code, R.S.O. 1990, c. H.19 and that Mr. Letts’ clients intended to request an amendment to the Distribution Protocol and damages pursuant to s. 46.1 of the Code.

[34] As events unfolded, Mr. Letts’ challenge went beyond sections 1 and 3 of the Code to include challenges based on sections 9, 11, 12, and 13 of the Code.

[35] In order to understand, Mr. Letts’ challenge to the Distribution Protocol, the relevant provisions of the Human Rights Code are the Preamble and sections 1, 3, 9, 10, 11, 12, 13, 45.1, 46.1 and 47, which state:

Preamble

Whereas recognition of the inherent dignity and the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world and is in accord with the Universal Declaration of Human Rights as proclaimed by the United Nations;

And Whereas it is public policy in Ontario to recognize the dignity and worth of every person and to provide for equal rights and opportunities without discrimination that is contrary to law, and having as its aim the creation of a climate of understanding and mutual respect for the dignity and worth of each person so that each person feels a part of the community and able to contribute fully to the development and well-being of the community and the Province;

And Whereas these principles have been confirmed in Ontario by a number of enactments of the Legislature and it is desirable to revise and extend the protection of human rights in Ontario;

Therefore, Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

PART I - FREEDOM FROM DISCRIMINATION

Services

1. Every person has a right to equal treatment with respect to services, goods and facilities, without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital status, family status or disability.

Contracts

3. Every person having legal capacity has a right to contract on equal terms without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital status, family status or disability.

4. No person shall infringe or do, directly or indirectly, anything that infringes a right under this Part.

PART II - INTERPRETATION AND APPLICATION

Definitions re: Parts I and II

10. (1) In Part I and in this Part,

“equal” means subject to all requirements, qualifications and considerations that are not a prohibited ground of discrimination;

“family status” means the status of being in a parent and child relationship;

“marital status” means the status of being married, single, widowed, divorced or separated and includes the status of living with a person in a conjugal relationship outside marriage;

“services” does not include a levy, fee, tax or periodic payment imposed by law;

“spouse” means the person to whom a person is married or with whom the person is living in a conjugal relationship outside marriage.

Constructive discrimination

11.(1) A right of a person under Part I is infringed where a requirement, qualification or factor exists that is not discrimination on a prohibited ground but that results in the exclusion, restriction or preference of a group of persons who are identified by a prohibited ground of discrimination and of whom the person is a member, except where,

(a) the requirement, qualification or factor is reasonable and bona fide in the circumstances; or

(b) it is declared in this Act, other than in section 17, that to discriminate because of such ground is not an infringement of a right.

(2) The Tribunal or a court shall not find that a requirement, qualification or factor is reasonable and bona fide in the circumstances unless it is satisfied that the needs of the group of which the person is a member cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the cost, outside sources of funding, if any, and health and safety requirements, if any.

Idem

(3) The Tribunal or a court shall consider any standards prescribed by the regulations for assessing what is undue hardship.

Discrimination because of association

12. A right under Part I is infringed where the discrimination is because of relationship, association or dealings with a person or persons identified by a prohibited ground of discrimination.

Announced intention to discriminate

13. (1) A right under Part I is infringed by a person who publishes or displays before the public or causes the publication or display before the public of any notice, sign, symbol, emblem, or other similar representation that indicates the intention of the person to infringe a right under Part I or that is intended by the person to incite the infringement of a right under Part I.

Opinion

(2) Subsection (1) shall not interfere with freedom of expression of opinion.

PART IV – HUMAN RIGHTS TRIBUNAL OF ONTERIO

Dismissal in accordance with rules

45.1 The Tribunal may dismiss an application, in whole or in part, in accordance with its rules if the Tribunal is of the opinion that another proceeding has appropriately dealt with the substance of the application.

PART V - GENERAL

Civil remedy

46.1 (1) If, in a civil proceeding in a court, the court finds that a party to the proceeding has infringed a right under Part I of another party to the proceeding, the court may make either of the following orders, or both:

1. An order directing the party who infringed the right to pay monetary compensation to the party whose right was infringed for loss arising out of the infringement, including compensation for injury to dignity, feelings and self-respect.

2. An order directing the party who infringed the right to make restitution to the party whose right was infringed, other than through monetary compensation, for loss arising out of the infringement, including restitution for injury to dignity, feelings and self-respect.

Same

(2) Subsection (1) does not permit a person to commence an action based solely on an infringement of a right under Part I.

Act binds Crown

47. (1) This Act binds the Crown and every agency of the Crown.

Act has primacy over other Acts

(2) Where a provision in an Act or regulation purports to require or authorize conduct that is a contravention of Part I, this Act applies and prevails unless the Act or regulation specifically provides that it is to apply despite this Act.

[36] In response to Mr. Foreman’s letter, I directed my assistant Cindy Elphinstone to email Mr. Foreman, with copies to Mr. Letts and Heather Rumble Peterson, who is also of Class Counsel, the message that I was not prepared to deal with the matter by a telephone conference but should counsel wish, a motion could be brought on short notice for May 19, 22, 25, or 28, 2015.

[37] None of the parties brought a motion, and on May 20, 2015, I received by email a five-page letter from Mr. Letts who advised that: “The pending issue is not yet before the Court and it is my clients’ prerogative and right to prosecute their case as they choose and in accordance with the Rules of [Civil] Procedure.” The next correspondence, which was also sent on May 20, 2015, was an email message sent by Mr. Foreman to my assistant, Ms. Elphinstone, and copied to Mr. Letts and Ms. Peterson, which my assistant forwarded to me. Mr. Foreman told Ms. Elphinstone that “we are prepared to have a reporting case conference on the status of Mr. Letts’ complaint.” Mr. Foreman’s correspondence with Ms. Elphinstone prompted another letter from Mr. Letts on May 21, 2015.

[38] I put an end to this procedure by making a direction that it stop, and I ordered Class Counsel, within 14 days, to serve and file a notice of motion and supporting affidavit material for a motion for directions, which I scheduled for July 24, 2015. See Eidoo v. Infineon Technologies AG, 2015 ONSC 3282.

[39] The parties apparently did not wish to resolve the matter as I had directed. There were discussions and negotiations between Mr. Letts and Class Counsel, and Mr. Letts and his clients signed a letter agreement with Class Counsel in this action and in the companion actions in Québec and British Columbia. In their resolution of the matter, Class Counsel, Mr. Letts, and his clients agreed that the problems with the Human Rights Code could be resolved by giving the Claims Administrator an instruction to be posted on the claims website for the duration of the claims process. The proposed instruction was as follows:

When more than one claim is filed for the same household, the claims administrator shall provide the class members with the opportunity to explain the circumstances of their claims. The claims administrator may permit a reasonable adjustment of the distribution rules in order to facilitate such claims as it considers appropriate. In doing so, the claims administrator may require reasonable proof and explanation by the class member.

[40] With the making and dissemination of this instruction, Mr. Letts and his clients agreed to withdraw any complaint they may have and to certify that no motion will be made or any administrative proceeding taken in any forum in respect of the Canadian DRAM plan of settlement administration and claims process. The letter agreement provided that the instruction was not to be effective unless and until it was approved by the Superior Court of Québec and the Supreme Court of British Columbia.

[41] In my opinion, the parties’ approach to resolving the allegation that the Distribution Protocol violated the Ontario Human Rights Code was inappropriate, and I ordered that the motion for directions continue. In Reasons for Decision, Eidoo v. Infineon Technologies AG, 2015 ONSC 3668, I stated at paras. 11-12:

[11] Whatever is going on here, it does not work and whatever it is, it is not an appropriate and responsible way for the court to supervise a class proceeding. The proposed instruction may or may not be adequate to address what may or may not be a problem, raised by persons who may or may not have standing to challenge the approved settlement distribution scheme, but, in any event, the Court cannot endorse whatever this is at the whim of Class Counsel and Mr. Letts and his clients without ruling on the merits of the underlying dispute. The Court cannot indirectly endorse an anti-suit injunction prohibiting Mr. Letts’ clients from taking administrative proceedings that may or may not be available to them assuming that they are entitled to make claims notwithstanding the releases that are a part of the court approved settlement. The claim for costs is problematic. Why should costs be paid out of the settlement fund absent an actual ruling on the merits of the motion?

[12] The motion for directions shall proceed so that the Court can make a ruling on the merits.

[42] The motion for directions, however, did not proceed on July 24, 2015, because Class Counsel from across the country requested that a joint hearing of the courts in British Columbia, Ontario, and Québec be held.

[43] I agreed to a joint hearing, as did Justice Masuhara of the British Columbia Superior Court and Justice Gagnon of the Québec Superior Court, and the joint hearing was scheduled for August 14, 2015.

[44] With the joint hearing for directions scheduled, without asking permission, Mr. Letts’ client, Raja Khoury, brought a cross-motion, among other things, to have Mr. Letts appointed Class Counsel of a subclass in order to sue Class Counsel for negligence. The cross-motion prompted an emergency case conference. At the case conference, I adjourned the cross-motion, and I made the following endorsement:

This is a case conference to address the cross-motion brought by Raja Khoury, a class member that seeks the appointment of Mr. Letts as Class Counsel for a subclass and advances a negligence claim against other Class Counsel. I am adjourning the cross-motion sine die to allow Class Counsel to bring a motion to quash. The adjournment shall not affect Mr. Khoury’s standing on the motion returnable on August 14, 2015. I allow Mr. Khoury’s affidavit to be filed for the August 14, 2015 motion and direct that he may be cross-examined in Ottawa, such cross-examination to be scheduled before August 10, 2015.

6. The Pooling of Family Claims

[45] The festering point of the dispute between the parties is paragraph 12 of the Distribution Protocol, which requires the claims of family members to be pooled. Paragraph 12 states:

12. The end consumer DRAM and/or DRAM Product purchases of family members residing m in the same household must be pooled together and filed as a single End Consumer Claim. Persons under the age of eighteen (18) at the time of filing will not be permitted to file a claim except as part of a household claim. Compensation payable in respect of a household claim will be issued to the person filing the claim on behalf of the household.

[46] In order to resolve the argument that there has been a contravention of the Ontario Human Rights Code, it is necessary to understand precisely the economic effect of the pooling of family claims.

[47] In this regard, it is necessary to appreciate that the pooling of claims has no economic effect if the members of the family seek compensation beyond the $20 minimum compensation. In this circumstance, the pooling of claims is just a matter of administrative convenience and has no substantive impact on the individual family member’s claims. Thus, for example, if four family members had in the aggregate claims for more than $20, they could file a standard claim form and although they would receive a single payment, they could divide the money amongst themselves as appropriate.

[48] The requirement of the pooling of claims by family members does have an economic effect if the family members collectively do not have claims beyond the $20 minimum compensation. If the family has not purchased at least four DRAM devices, then the pooling of the claims means that the family, collectively, can only receive one minimum $20 payment.

[49] By way of illustration, under the Distribution Protocol, a family of four members who collectively purchased three DRAM products during the class period are taken to have suffered a $15 injury from price-fixing and with a pooled claim, the family members will receive $20 compensation for their $15 injury. They will not, however, receive $80 worth of aggregate compensation for their $15 injury, which they would receive if their claims were not pooled.

[50] Mr. Khoury argues that this illustration demonstrates that the four family members have suffered discrimination on the grounds of family status or marital status from the pooling of their claims. Class Counsel submits, however, that there is no discrimination to Class Members in receiving $5 of windfall compensation, (i.e. $20 for three claims worth $5 each) which they can share as they see fit, instead of receiving $65 of windfall compensation (i.e. $80 for three claims worth $5 each).

7. The Complaints of Raja Khoury, Greta Sawma, and Allan Drummond

[51] In the course of the run up to the motion now before the court, which had been prompted by my response to the interaction between Mr. Letts and Class Counsel, three of Mr. Letts’ clients; namely Raja Khoury, Greta Sawma, and Allan Drummond, delivered affidavits.

[52] Class Counsel point out that Mr. Khoury, Ms. Sawma, and Mr. Drummond never applied for compensation or invoked the mechanisms in the Distribution Protocol that empower the courts with a residual discretion to manage the administration of the settlement. While this point is true, I am going to ignore it as a factor in my analysis below, and from an analytical prospective, I will assume that Mr. Khoury, Ms. Sawma, and Mr. Drummond made the claims available to them under the Distribution Protocol.

[53] Ms. Sawma resides with her son, who was 11 or 12 years old during the Class Period. During this period, Ms. Sawma purchased less than four DRAM products. Thus, she has a pooled claim of $20.

[54] Mr. Drummond resides with his two adult sons, and it is not clear whether they were adults during the Class Period. The Drummonds know that they purchased DRAM products during the Class Period but they do not know how many and they have no proof of purchases. Mr. Drummond has a pooled claim of $20.

[55] Mr. Khoury lives with his wife, his daughter, who was a young child during the Class Period, and his parents. Although he knows of three DRAM products that were purchased during the Class Period and believes that his family may have also bought other products, there is no proof of any purchases. Mr. Khoury has a pooled claim of $20.

C. THE ARGUMENTS OF THE PARTIES

1. Mr. Khoury’s Argument

[56] Mr. Khoury submits that none of myself, Justices Masuhara and Gagnon, and former Supreme Court Justice Binnie, who prepared the report about the Distribution Protocol, expressly considered whether it contravened human rights legislation.

[57] I can immediately say that I agree with this submission. However, granted that the matter was not expressly considered, the important issue is what would have been the outcome had the courts considered whether human rights legislation applied to the Distribution Protocol. In this regard, Mr. Khoury submits that the courts would have concluded that the Distribution Protocol discriminates against Class Members on the grounds of family status and marital status contrary to s. 1 of the Code.

[58] Mr. Khoury submits that paragraph 12 of the Distribution Protocol contravenes s. 1 of the Code because it uses family or marital status to determine the quantum, process, and availability of the benefits of the settlement distribution process with adverse consequences. His argument is summarized in paragraphs 50 to 52, 57, 59, and 85 of his factum, which state:

50. The current Distribution Protocol operates in a discriminatory manner because it provides adverse, differential treatment towards some End-User Class Members based solely on the unrelated and protected personal characteristics of family status and marital status.

51. As described above in the Facts and within the Distribution Protocol, End-User Class Members who reside with another family member have a different, more cumbersome and less advantageous scheme for receiving Settlement funds based solely on their 2015 family/marital status.

52. End-user class members who currently reside within a family with another end-user class member:

(a) Lose their individual autonomy to make decisions, contract into the settlement and benefit from the settlement merely because they happen to reside with another class member 14-16 years after incurring the price-fixing damages;

(b) Lose their individual autonomy to have their damages and settlement determined on their individual merit;

(c) Receive 50%, or less, than other class members assuming their family shares the settlement proceeds;

(d) Have increased documentary requirements (itemizing purchases) and evidentiary requirements while still receiving a lesser amount of settlement proceeds;

(e) Have increased administrative and intra-family negotiations and discussions; and

(f) Experience the propagation and dissemination of prejudicial and discriminatory attitudes within their province and communities.

57. Without even an explanation, the Distribution Protocol violates section 64 of the Family Law Act, and all modern Ontario concepts of individual rights, by forcing End User class members who happen to be spouses with another End User class member in 2015 and who want to participate in the Settlement to forgo an independent, separate and distinct legal personality.

58. The DRAM Distribution Protocol acts exactly contrary to the Law Commission’s recommendation by creating a distribution regime that makes unsupported, stereotypical and prejudiced assumptions about family structures and dynamics.

59. The example case of Mr. Raja Khoury demonstrates that the Distribution Protocol prevented Mr. Khoury, a class member, from filing an independent claim. He would have had to get the consent and cooperation of his various family members with whom he resided to execute a claim. He would then have to either proceed with a simplified claim, or spend time and energy researching each family member’s historic purchases. If he then did file a claim, he would subsequently or at some point, have to engage in negotiations respecting the most equitable manner to distribute the settlement. The settlement that he received, whether for 2,3,4 or 5 family members as the case may be, would be much smaller per capita than if he were residing with roommates instead of family members. If he proceeded with a simplified claim, he would receive (assuming equal sharing) perhaps $4.00 instead of the $20 that he would receive if he were treated as an individual.

[59] Mr. Khoury submits that section 3, which provides a right to contract without discrimination, and section 12, which captures discrimination because of a person’s relationship with a person(s) identified by a prohibited ground of discrimination, have been contravened. His argument is set out in paragraphs 71 and 72 of his factum, which state:

71. The Distribution Protocol is propagating a contracting process within the meaning of the Section 3 of the Code which provides that “Every person having legal capacity has a right to contract on equal terms without discrimination because of … marital status, family status.”

72. The Distribution Protocol also violates s. 12 of the Ontario Human Rights Code because it bases the treatment of individuals in the contracting process and in the provision of a benefit.

[60] Finally, Mr. Khoury submits that Class Counsel have contravened the Code in their provision of services to the End Consumer Class Members. I will describe this argument in the discussion portion of these Reasons for Decision.

2. The Argument of Class Counsel

[61] Class Counsel submits that the court’s finding that the Distribution Protocol was fair reasonable and in the best interests of the class as a whole is a finding that the Distribution Protocol does not contravene the Ontario Human Rights Code and that it would be detrimental to the integrity of the class actions regime if late-breaking challenges, such as the one raised by Mr. Khoury, were allowed.

[62] Class Counsel submit that Mr. Khoury is estopped from attacking the Distribution Protocol and that his objection is a collateral attack on the court’s approval Order and an abuse of the court’s process.

[63] Further still, in arguments that I will detail below, Class Counsel submits that the Human Rights Code is not engaged or if it is engaged, it is not contravened by the Distribution Protocol.

D. ANALYSIS AND DISCUSSION

1. Introduction and Overview

[64] As I shall explain below, it is my opinion that the Ontario Human Rights Code does not apply to distribution schemes of judgments or settlements under the Class Proceedings Act, 1992. That finding is dispositive of this motion. However, in the analysis and discussion below, I shall go further and assume that the Code does apply to distribution schemes, and I shall examine whether the Distribution Protocol in the case at the bar contravenes the Code.

[65] I shall also examine whether Class Counsel contravened the Human Rights Code in promoting the Distribution Protocol to the courts across the country.

[66] Assuming the Code applies, my conclusion is that it has not been contravened in any of the ways submitted by Mr. Letts on behalf of Mr. Khoury and the other clients who perceived a violation of their rights under the Code. I also conclude that Class Counsel has not contravened the Code.

2. The Estoppel, Collateral Attack and Abuse of Process Arguments

[67] I shall decide on its merits Mr. Khoury’s challenge that the Distribution Protocol contravenes the Ontario Human Rights Code. Therefore, I shall say no more about Class Counsel’s arguments that counter Mr. Letts’ arguments on behalf of Mr. Khoury and others on technical grounds and not on their merits.

[68] In particular, I shall not discuss Class Counsel’s submission that Mr. Khoury’s arguments should be rejected on the grounds that the challenge to the approved Distribution Protocol comes too late or is precluded on the grounds of estoppel, collateral attack, or abuse of process.

[69] Although I previously held that the Distribution Protocol was fair, reasonable, and in the best interests of the Class Members, including the End Consumer Class Members, as noted above, at the time of the fairness hearing, I did not consider the Distribution Protocol through the lens of the Ontario Human Rights Code.

[70] I should note that had I actually considered the matter, s. 45.1 of the Human Rights Code, set out above, provides that the Human Rights Tribunal may dismiss an application if the Tribunal is of the opinion that another proceeding has appropriately dealt with the substance of the application.

[71] See: Paterno v. Salvation Army, 2011 HRTO 2298; Rock v. Toronto Community Housing, 2013 HRTO 78. These authorities suggest that had the issue of the Human Rights Code been raised at the time of the approval hearing, this court could have addressed the issue of whether there was a contravention of the Code and that the Human Rights Tribunal would then have likely recognized the court’s decision as dispositive of any human rights complaint.

3. The Human Rights Code and Class Proceedings

[72] The Human Rights Code is quasi-constitutional legislation and is to be given a broad and purposive interpretation: Ontario (Director, Disability Program) v. Tranchemontagne, 2010 ONCA 593 at para. 69.

[73] The preamble of the Code emphasizes the importance of recognizing the inherent dignity of all members of the human family. Section 9 provides that no person shall infringe or do, directly or indirectly, anything that infringes a right under the Code. Pursuant to s. 47 (2) of the Code, it applies and prevails over other legislation unless the other statute or regulation specifically provides that the Code is excluded.

[74] There are both similarities and differences between the Human Rights Code and s. 15 of the Canadian Charter of Rights and Freedoms, which creates a broad right to be free of discrimination by government actors or agents subject to a limited defence of justification provided by s. 1 of the Charter. The Charter, however, does not operate in the private sector, and although the Human Rights Code applies in both the private and public sectors, it has a scope or ambit; it does not prohibit all discrimination in society.

[75] Rather, the Human Rights Code creates a right to be free of discrimination only in the prescribed social areas of services, accommodation, contracts, employment, and vocational associations.

[76] See: McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39; Dallaire v. Les Chevaliers de Colomb – Conseil 6452, 2011 HRTO 639; Fair Parenting Inc. v. Durham Student Transportation Services, 2014 HRTO 1744 at paras. 6-7; Wing v. Niagara Falls Hydro Holding Corporation, 2014 HRTO 1472 at para. 50; Corcoran v. Roman Catholic Episcopal Corporation of the Diocese of Peterborough, 2009 HRTO 1600 at para. 9.

[77] Mr. Khoury argues that the Distribution Protocol contravenes s. 1 of the Code which provides that every person has a right to equal treatment with respect to “services, goods and facilities,” which are not defined terms save to the extent that s. 10 of the Code specifies that services do not include a levy, fee, tax, or periodic payment imposed by law.

[78] In Rai v. Ontario (Environment), 2012 HRTO 1744 and Braithwaite v. Ontario (Attorney General, 2005 HRTO 31, affd. Ontario (Attorney General) v. Ontario Human Rights Commission (2007), 2007 56481 (ON SCDC), 88 O.R. (3d) 455 the Ontario Human Rights Tribunal held that “services” is something which is of benefit that is provided by one person to another or to the public. In my opinion, however, the distribution of the funds from a court judgment assessing damages or the distribution of the proceeds of the settlement of a damages claim is not services, goods, or facilities within the ambit of the Human Rights Code.

[79] Although judges are an arm of government serving the public and although the administration of justice is a public service, judgments and orders, including the approval of a distribution scheme under the Class Proceedings Act, 1992, are not “services, goods and facilities.” Put simply, the Human Rights Code does not apply to court orders.

[80] This opinion about the ambit of services under the Code is shared by the Ontario Human Rights Tribunal. In Gibson v. Ontario (Attorney General), 2009 HRTO 870, the applicant alleged discrimination on the basis of family status in the provision of services by three Family Court judges who had ordered him to make child support payments in excess of what he felt was reasonable or fair. The Tribunal dismissed the claim, and it held that the content, reasons, and result of a court order are not “services” within the meaning of the Code.

[81] In Zaki v. Ontario (Community and Social Services), 2009 HRTO 1595, the Tribunal held that while a statutory decision making process is “services”, the decision rendered by the decision-maker is not part of the service. The Ontario Human Rights Tribunal has repeatedly held that the content, reasons, and the result contained in a decision of a statutory decision-maker are not part of the service to the public provided by the statutory decision-maker: Dallaire v. Les Chevaliers de Colomb – Conseil 6452, supra at para. 29. See also: Baird v. Workplace Safety and Insurance Appeals Tribunal, 2009 HRTO 99; Christianson v. Ontario (IPC), 2009 HRTO 203, reconsideration refused 2009 HRTO 424.

[82] Judgment proceeds or settlement proceeds are compensation for a civil wrong, and an injured class member does not receive a service when he or she receives a sum of money meant to restore him or her to the position he or she was in but for the civil wrong or in the position he or she would have been had the civil wrong not occurred.

[83] In the case at bar, Class Members alleged that they paid too much for products with DRAM because of the alleged price-fixing of the Defendants. Without admitting liability, the Defendants agreed to pay $80 million to the Class Members. The distribution of those funds was not the distribution of a service. It was compensation for settling a price-fixing complaint.

[84] I, therefore, conclude that the Ontario Human Rights Code does not apply to the Distribution Protocol that was approved by the courts of British Columbia, Ontario, and Québec. This conclusion is dispositive of the motion before the court and entails that nothing need be done in regards to the Distribution Protocol.

4. Assuming the Code Applies, Has It Been Contravened?

(a) Discrimination under the Ontario Human Rights Code

[85] As indicated above, although the above conclusion is dispositive of the motion before the court, I shall assume that the Ontario Human Rights Code does apply to distribution schemes under the Class Proceedings Act, 1992. Assuming the Code applies, the issue then is whether Mr. Khoury has demonstrated a prima facie case of discrimination that creates a disadvantage by perpetuating prejudice, pre-existing disadvantage or stereotyping.

[86] Unlawful discrimination may be defined as substantively differential treatment of a person or persons that creates a disadvantage and that is based on a personal attribute identified by the Code.

[87] The person alleging discrimination bears the onus of showing substantive inequality in how he or she is treated as opposed to formal inequality. Formal inequality is unequal treatment for those in similar situations and equal treatment for those in dissimilar situations. In contrast, substantive inequality recognizes that not all differences in treatment are violations of equality rights and that differences in treatment are sometimes necessary to achieve true equality. The person alleging discrimination bears the onus of showing substantive inequality that creates a disadvantage.

[88] A disadvantage is a distinction in treatment that: (a) imposes obligations, penalties, restrictions, or denials of benefits on persons with an attribute identified by the Code that are not imposed on others; and also (b) perpetuates prejudice or stereotyping.

[89] Not every distinction that creates a disadvantage is discriminatory. In Syndicat des employés de l'Hôpital général de Montréal c. Sexton, 2007 SCC 4, [2007] 1 S.C.R. 161 at para. 49, in a passage adopted by the Court of Appeal in Ontario (Director, Disability Program) v. Tranchemontagne, supra at para. 93, Justice Abella stated:

49. … [T]here is a difference between discrimination and a distinction. Not every distinction is discriminatory. It is not enough to impugn … conduct on the basis that what was done had a negative impact on an individual in a protected group. Such membership alone does not, without more, guarantee access to a human rights remedy. It is the link between that group membership and the arbitrariness of the disadvantaging criterion or conduct, either on its face or in impact, that triggers the possibility of a remedy. ….

[90] In determining whether there has been discriminatory treatment, the Court must determine whether the impugned treatment truly creates a disadvantage and whether the protected attribute played a role in creating the disadvantage. There must be a connection, albeit not necessarily a causal connection, between the adverse treatment and the ground of discrimination: Pieters v. Peel Law Assn., 2013 ONCA 396 at paras. 59-60; Québec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Center), 2015 SCC 39 at paras. 45-52.

[91] To demonstrate prima facie discrimination, a complainant must demonstrate that: (1) he or she has an attribute protected from discrimination under the Code; (2) he or she experienced disadvantageous treatment not imposed on others; and (3) the protected attribute was a factor in the adverse impact; i.e. there is a connection between the protected characteristic or prohibited ground and the impugned treatment.

[92] In Moore v. British Columbia (Ministry of Education), 2012 SCC 61 at para. 33, Justice Abella for the Supreme Court stated that to demonstrate prima facie discrimination, complainants are required to show: (1) that they have a characteristic protected from discrimination under the Code; (2) that they experienced an adverse impact with respect to the service; and (3) that the protected characteristic was a factor in the adverse impact.

[93] The complainant, however, is not required to prove that the entity alleged to have discriminated intended to discriminate against him or her: Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Center), supra at para. 40.

[94] If a prima facie case of discrimination has been established, then the burden shifts to the entity alleged to have discriminated to justify the conduct or practice, within the framework of the exemptions available under the human rights statutes; if the prima facie discriminatory conduct cannot be justified, then discrimination has been proven: Moore v. British Columbia (Ministry of Education), supra.

[95] In British Columbia (Public Service Employee Relations Commission) v. B.C.G.E.U., 1999 652 (SCC), [1999] 3 S.C.R. 3, sometimes referred to as the Meiorin case, the Supreme Court discussed justification in the context of the British Columbia government dismissing Ms. Meiorin as a forest firefighter because she had failed an aerobic fitness test. At para. 54 of her judgment, Justice McLachlin, as she then was, described justification as involving satisfying a three-step test; that is: (1) the prima facie discriminatory standard is rationally connected to the performance of the job; (2) the standard was adopted in an honest and good faith belief that it was necessary for the performance of the job; and (3) the standard was reasonably necessary for the performance of the job and it was impossible to accommodate the employee subject to the discriminatory standard without imposing undue hardship upon the employer.

[96] Beyond employment situations and speaking about justification in the broader context, to justify what has been shown to be prima facie discrimination, the entity alleged to have discriminated must show that: (1) it investigated alternative approaches; (2) the discriminatory conduct was reasonably necessary to establish a broader goal; and (3) it could not have done anything else reasonable or practical to avoid the negative impact on the individual. See: British Columbia (Public Service Employee Relations Commission) v. B.C.G.E.U., supra; Ontario (Human Rights Commission) v. Etobicoke (Borough), 1982 15 (SCC), [1982] 1 S.C.R. 202; Renaud v. Central Okanagan School District No. 23, 1992 81 (SCC), [1992] 2 S.C.R. 970; Central Alberta Dairy Pool v. Alberta (Human Rights Commission), 1990 76 (SCC), [1990] 2 S.C.R. 489; VIA Rail Canada Inc. v. Canadian Transportation Agency, 2007 SCC 15, [2007] 1 S.C.R. 650.

[97] See also: Toronto Police Services Board v. Phipps, 2012 ONCA 155; Armstrong v. British Columbia (Ministry of Health) (2010), 2010 BCCA 56, 283 B.C.A.C. 167 (B.C.C.A.), leave to appeal refused [2010] S.C.C.A. No. 128; R. v. Kapp, 2008 SCC 41, [2008] 2 S.C.R. 483; Andrews v. Law Society of British Columbia, 1989 2 (SCC), [1989] 1 S.C.R. 143 at para. 169; and O'Malley v. Simpsons-Sears Ltd., 1985 18 (SCC), [1985] 2 S.C.R. 536.

(b) Discrimination with respect to a Service, Good, or Facility

[98] In the case at bar, I agree with the submissions of Class Counsel that Mr. Khoury and the others have failed to show any disadvantage that is connected to any prohibited ground. If compensation for the harm caused by price-fixing to End Consumers can be regarded as a benefit, then, in my opinion, the restriction imposed by the pooling of family member’s claims that restricts overcompensation (windfall payments) is not a disadvantage. The purpose of the minimum $20 payment was to encourage claimants to apply for compensation not to encourage windfall payments. The pooling of the claims might have been a disadvantage to individual family members who were deprived of claiming more than $20, but under the Distribution Protocol they are not precluded from applying for more than $20.

[99] However, if I am wrong and the pooling of the claims of family members is a disadvantage, then it is a disadvantage that does not perpetuate prejudice or stereotyping. The pooling of claims is no affront to the dignity of the individual members of the family unit. It is not an affront to the dignity a woman to have to pool a claim for compensation with the other members of her family.

[100] However, if again I am wrong and the pooling of claims of family members is a disadvantage that perpetuates prejudice or stereotyping, then, in my opinion, the prima facie discrimination was justified and, therefore, does not count as discrimination.

[101] The purpose of the minimum payments was to encourage the take-up of compensation by End Consumers harmed by price-fixing and the pooling of family members claims for the minimum was a reasonable way to curb windfall compensation, which would be unfair to other Class Members, especially if the demand on the End Consumer settlement funds exceeded the funds and a ratable distribution would reduce the payment to Class Members.

(c) Discrimination with respect to a Contractual Process

[102] As noted above, Mr. Khoury submits the Distribution Protocol propagates a contracting process within the meaning of the s. 3 of the Ontario Human Rights Code, which provides that every person having legal capacity has a right to contract on equal terms without discrimination because of marital status, family status. He submits that the contracting process of the Distribution Protocol violates s. 12 of the Code because it bases the treatment of individuals in the contracting process based on family status or marital status.

[103] Apart from the fact that there is no discrimination for the reasons described above, there is no merit to these submissions, because the Distribution Protocol is not a contracting process. The Class Member’s right or opportunity to participate in the distribution process is not contractual in nature but rather is an incident of the settlement of their legal claims arising from price-fixing.

[104] In any event, s. 12 of the Code is not pertinent to the circumstances of the immediate case.

[105] Section 12 deals with what might be called discrimination by association; i.e., where a person who is not a member of a group subject to prejudice and discrimination is the victim of discrimination because of his association or relationship with that group: Nevo v. York University, 2013 HRTO 1146; Knibbs v. Brant Artillery Gunners Club, 2011 HRTO 1032. There is no perceivable discrimination by association arising from the Distribution Protocol.

5. The Human Rights Claim Against Class Counsel

[106] Mr. Khoury argues that within the settlement process, Class Counsel were providing a service and providing a benefit by: (a) litigating a matter on behalf of the End Consumer Class Members; (b) settling a matter on behalf of the End Consumer Class Members and (c) devising a Distribution Plan on behalf of the End Consumer Class Members. He argues that Class Counsel have discriminated in providing services and that the discrimination is overt and that the Distribution Plan is an announced intention to discriminate as contemplated by s. 13 of the Code and thus there is no possibility or exception to justify the impugned conduct.

[107] While I accept that Class Counsel has a solicitor and client relationship with Class Members and thus are providing legal services to the Class Members, for the reasons expressed above, the devising of a Distribution Plan that called for the pooling of claims by family members is not discriminatory conduct.

[108] As discussed above, it is an inevitable incident of class actions that there will be a distribution of the proceeds of a judgment or of a settlement and with the instructions of the Representative Plaintiff it will fall on Class Counsel to develop a distribution scheme that is fair and reasonable and in the best interests of the class as a whole.

[109] As explained above, there is no prima facie case of discrimination or the discrimination is justified, and thus Class Counsel cannot be faulted for devising a discriminatory Distribution Plan, which they did not do.

[110] It also follows that Class Counsel did not breach s. 13 of the Ontario Human Rights Code, because the Distribution Protocol is not the publication of a notice that indicates that Class Counsel intended to infringe a right under the Code or that Class Counsel intended to incite the infringement of a right under the Code. See Ruffolo v. York University, 2009 HTRO 1086.

E. CONCLUSION

[111] For the above reasons, I conclude that there is no merit to the arguments that the Distribution Protocol contravenes the Ontario Human Rights Code and, accordingly, no action need be taken.

[112] At the argument of the motion, both parties reserved the right to ask for costs.

[113] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Class Counsel’s submissions within 20 days of the release of these Reasons for Decision followed by Mr. Khoury’s submissions within a further 20 days.

Perell, J.

Released: September 2, 2015