CITATION: Fanshawe College v. Hitachi, Ltd. et al., 2016 ONSC 5118

COURT FILE NO.: 59044CP

DATE: 2016/08/12

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

The Fanshawe College of Applied Arts and Technology

Plaintiff

• and -

Hitachi, Ltd., Hitachi Asia, Ltd., Hitachi America, Ltd., Hitachi Displays Ltd., Hitachi Electronic Devices (USA), Shenzhen Seg Hitachi Color Display Devices Ltd., Hitachi Canada, Ltd., Irico Group Corporation, Irico Group Electronics Co. Ltd., Irico Display Devices Co., Ltd., LG Electronics, Inc., LG Electronics Taiwan Taipei Co. Ltd., LG Electronics USA, Inc., LG Electronics Canada, Panasonic Corporation F/K/A Matsushita Electric Industrial Co. Ltd., Panasonic Corporation of North America, Panasonic Canada Inc., Koninklijke Philips Electronics N.V., Philips Electronics Industries (Taiwan) Ltd., Philips Da Amazonia Industria Electronica Ltda, Philips Electronics North America Corporation, Philips Electronics Ltd., Samsung Electronics Co. Ltd., Samsung Electronics America Inc., Samsung Electronics Canada Inc., Samsung SDI Co., Ltd. (f/k/a Samsung Display Device Co.), Samsung SDI Brasil Ltda, Samsung SDI America, Inc., Samsung SDI Mexico S.A. De C.V., Shenzhen Samsung SDI Co. Ltd., Tianjin Samsung SDI Co., Ltd., Toshiba Corporation, Toshiba America Electronic Components Inc., Toshiba America Information Systems Inc., Toshiba of Canada Limited, Beijing Matsushita Color CRT Company, Ltd., Samtel Color, Ltd and MT Picture Display Co., Ltd.

Defendants

COUNSEL:

C Wright, R. Mogerman and L. Visser, for the plaintiff

C. Naudie, P. Franklyn and E. Thomas, for the defendants Koninklijke Philips Electronics N.V., Philips Electronics North America Corporation, Philips Electronics Ltd., Philips Electronics Industries (Taiwan) Ltd. and Philips da Amazonia Industria Electronics Ltd. (collectively the “Philips defendants”)

R. Kwinter and E. Kriaris, for the defendants Samsung Electronics Co. Ltd., Samsung SDI Co., Ltd. (f/k/a Samsung Display Device Co.), Samsung Electronics America Inc., Samsung Electronics Canada Inc., Samsung SDI America, Ltd., Samsung Mexico S.A. de C.V., Shenzhen Samsung SDI Co. Ltd., Tianjin Samsung SDI Co., Ltd. and Samsung SDI Brasil Ltda (collectively the “Samsung defendants”)

D. Kent and L. Brazil for the defendants L.G. Electronics Inc., LG Electronics U.S.A. Inc., LG Electronics Canada and LG Electronics Taiwan Taipei Co., Ltd. (collectively the “LG defendants”)

HEARD: January 18, 19 and 20, 2016

REASONS FOR DECISION

Grace J.

A. Introduction

1This action involves colour display tubes (“CDTs”), computer monitors containing CDTs (“CDT Products”), colour picture tubes (“CPTs”) and televisions containing CPTs (“CPT Products”).

2The Fanshawe College of Applied Arts and Technology (“Fanshawe”) alleges it purchased CDT Products and CPT Products at a time their prices and those for CDTs and CPTs, were illegally inflated by persons who manufactured, marketed, sold and/or distributed such items in Canada. Fanshawe asserts causes of action against and seeks damages from the defendants pursuant to the Competition Act, R.S.C. 1985, c. C-34 and at common law.

3On this motion, Fanshawe seeks an order certifying the action as a class proceeding pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”).

B. Procedural Background

4This action commenced on July 29, 2008. A related action started the following year.¹ The two proceedings were consolidated on June 10, 2015. Similar litigation was commenced in Quebec and British Columbia.

5Settlement has been achieved with some defendants with and with other defendants pending court approval. The Philips, Samsung and LG defendants remain.

6Class proceedings had been commenced in the United States in 2007 on behalf of direct and indirect purchasers.² The indirect purchaser action in the United States settled after it was certified on September 19, 2013. The direct purchaser action was settled in part and then certified as against the remaining defendants on July 8, 2015.

7Investigations were undertaken by competition authorities in Canada, the United States and Europe.

8No charges were laid in Canada.

9In the United States, Samsung SDI Company Ltd., one of the remaining defendants in this action, was charged with violating the Sherman Act (15 U.S.C. § 1) by engaging in a combination and conspiracy there and elsewhere to suppress and eliminate competition by fixing prices, reducing output and allocating market share of CDTs during the period from early January, 1997 to late March, 2006. As contemplated by an amended plea agreement dated May 12, 2011, Samsung SDI Company, Ltd. waived indictment, pled guilty and was fined $32 million (U.S.).

10On December 5, 2012, the European Commission adopted a decision that concluded a number of companies, including several of the defendants, colluded on prices, market share, customers and output, exchanged confidential information and monitored implementation of the collusive arrangements in the CDT and CPT sector.³ Fines were imposed on most of the participants aggregating more than €1.6 billion.⁴

C. Certification – the Statutory Test

11Certification is mandatory if Fanshawe satisfies the five requirements set forth in s. 5(1) of the CPA. The subsection requires:

a) First, that Fanshawe’s pleading disclose a cause of action: s. 5(1)(a);

b) Second, that there is an identifiable class of two or more persons that would be represented by Fanshawe: s. 5(1)(b);

c) Third, that the claims of the class members raise common issues: s. 5(1)(c);

d) Fourth, that a class proceeding be a preferable procedure for the resolution of those common issues: s. 5(1)(d); and

e) Fifth, that Fanshawe:

i. would fairly and adequately represent the interests of the class;

ii. has produced a plan that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding; and

iii. does not have an interest in conflict with the interests of other class members insofar as the common issues are concerned: s. 5(1)(e).

D. General Principles

12Some general principles should be mentioned before I turn to the statutory requirements in further detail.

13Fanshawe’s pleading will be regarded as disclosing a cause of action as required by s. 5(1)(a) of the CPA unless it is plain and obvious that its claim cannot succeed notwithstanding all facts pleaded are assumed to be true: Pro-Sys Consultants Ltd. v. Microsoft Corp., 2013 SCC 57, [2013] 3 S.C.R. 477 at para. 63 (“Microsoft”).

14A different standard applies to the four remaining certification requirements. Fanshawe must establish “some basis in fact” for each one of them. As Rothstein J. explained in Microsoft, supra at paras. 103-105:

…it is worth reaffirming the importance of certification as a meaningful screening device. The standard for assessing evidence at certification does not give rise to “a determination of the merits of the proceeding”…nor does it involve such a superficial level of analysis into the sufficiency of the evidence that it would amount to nothing more than symbolic scrutiny.

In any event, in my respectful opinion, there is limited utility in attempting to define “some basis in fact” in the abstract. Each case must be decided on its own facts. There must be sufficient facts to satisfy the applications judge that the conditions for certification have been met to a degree that should allow the matter to proceed on a class basis without foundering at the merits stage by reason of the requirements of…the CPA not having been met.

Finally, I would note that Canadian courts have resisted the U.S. approach of engaging in a robust analysis of the merits at the certification stage. Consequently, the outcome of a certification application will not be predictive of the success of the action at the trial of the common issues. I think it important to emphasize that the Canadian approach at the certification stage does not allow for an extensive assessment of the complexities and challenges that a plaintiff may face in establishing its case at trial. After an action has been certified, additional information may come to light calling into question whether the requirements…continue to be met. It is for this reason that enshrined in the CPA is the power of the court to decertify the action if at any time it is found that the conditions for certification are no longer met…

15The defendants submit Fanshawe has failed to satisfy the criteria set forth in ss. 5(1)(a), (b), (c), (d) and (e)(ii). I will deal with them in turn.

E. Has Fanshawe met the certification criteria?

i. Does Fanshawe’s pleading disclose a cause of action as s. 5(1)(a) requires?

Sections 36 and 45 of the Competition Act

16Section 45 is found in Part VI of the Competition Act. This action covers a timeframe commencing November 23, 1996 and ending November 21, 2007. During that period, s. 45(1) provided in part:

Every one who conspires...with another person

(b) to prevent, limit or lessen unduly, the manufacture or production of a product or to enhance unreasonably the price thereof…is guilty of an indictable offence…⁵

17In its Third Fresh as Amended Statement of Claim (“statement of claim”), Fanshawe alleges the defendants violated that section because they, among other things, conspired with each other and other unnamed co-conspirators “to raise, maintain, fix and/or stabilize the price” of CDTs, CDT Products, CPTs and CPT Products.

18Fanshawe also maintains the defendants’ actions “resulted in artificially increased prices” for those items which would not have been paid “in the absence of the illegal conspiracies”.

19Fanshawe alleges the defendants are liable to it and to the other class members pursuant to s. 36 of that statute. The operative part of s. 36(1) of the Competition Act provided and still provides a cause of action in these terms:

Any person who has suffered loss or damage as a result of

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

may in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct…an amount equal to the loss or damage proved to have been suffered by him…

20On October 31, 2013, the Supreme Court of Canada released its decisions in Microsoft, supra, Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2013 SCC 58 (“Sun-Rype”) and Option Consommateurs v. Infineon Technologies AG, 2013 SCC 59 (“Option Consommateurs”). The Court concluded indirect purchasers, such as Fanshawe in this case, may assert a claim against persons responsible for overcharges alleged to have been passed on to them.

21Appropriately, the defendants acknowledge the statement of claim pleads a viable cause of action under s. 36 of the Competition Act.⁶ However, they take issue with the other cause of action Fanshawe continues to rely upon, namely, unlawful means conspiracy.⁷ I turn to that aspect of the claim now.

Unlawful Means Conspiracy

22An unlawful means conspiracy has three elements: unlawful conduct that is directed toward the plaintiff, the defendant’s knowledge that injury to the plaintiff is likely to result and actual injury to the plaintiff: Microsoft, supra at para. 83.

23The defendants do not challenge Fanshawe’s assertion that each constituent element is addressed in the statement of claim. However, they note that the alleged unlawful conduct on which Fanshawe relies is a breach of the Competition Act. This, they maintain, precludes a common law claim.

24The defendants relied on Shah v. L.G. Chem Ltd., 2015 ONSC 6148, [2015] O. J. No. 5168 (S.C.J.) (“Shah”), leave to appeal granted, in part, 2016 ONSC 4670. After a lengthy and detailed review of the authorities, Perell J. concluded it was “plain and obvious…as a matter of statutory interpretation that the common law claim is precluded by the statutory cause of action.”⁸ In doing so, he refused to follow Airia Brands Inc. v. Air Canada, 2015 ONSC 5352 (S.C.J.)⁹ and Watson v. Bank of American Corporation, 2015 BCCA 362. Instead, he adopted the analysis of Newbury J. in Wakelam v. Wyeth Consumer Healthcare, 2014 BCCA 36.¹⁰

25The parties fully argued the issue on this motion. However, I do not hold a tie-casting vote.

26Until very recently the law in Ontario on this point was unsettled.¹¹ Whether the unlawful means conspiracy claim is barred because the Competition Act contains a comprehensive statutory scheme that precludes it was a question that required an answer from an appellate court. That answer has now been provided: Fanshawe College of Applied Arts and Technology v. AU Optronics Corporation, 2016 ONCA 621. The reasoning in Shah on this point was rejected.¹²

27Given the current state of the law, it is not plain and obvious that the statement of claim fails to disclose a reasonable cause of action insofar as the unlawful means conspiracy is concerned.

28The defendants next argue the common law claim is precluded by the doctrine of merger because it adds nothing to the statutory claim. I disagree.

29Punitive damages are among the remedies Fanshawe seeks. Same are not available under s. 36 of the Competition Act: Axiom Plastics Inc. v. E.I. DuPont Canada Co., 2007 CanLII 36817 (ON SC), [2007] O.J. No. 3327 (S.C.J.) at para. 151, leave to appeal denied, 2008 CanLII 23490 (ON SCDC), [2008] O.J. No. 1973 (Div. Ct.). The basic two year limitation period set forth in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, is subject to discoverability: see s. 5. Until very recently it was unclear whether the two year period mentioned in s. 36(4)(a) of the Competition Act commenced before the claim was discoverable. Recently, the Court of Appeal concluded s. 36(4)(a)(i) is subject to the discoverability principle: Fanshawe College of Applied Arts and Technology v. AU Optronics Corporation, supra at paras. 32-49. It remains to be seen whether that is the last word on the topic.

30Fanshawe’s Fresh as Amended Notice of Motion defines the class and two subclasses in a way which would include all direct and indirect purchasers of CDTs, CDT Products, CPTs and CPT Products even if none of the defendants had any connection to them. Such buyers are often referred to as “unconnected” or “umbrella purchasers”: Shah, supra at para. 158; Godfrey v. Sony Corporation, 2016 BCSC 844 (S.C.) at para. 5 (“Godfrey”).

31Perell J. explained the theory of liability to umbrella purchasers in Shah, supra at para. 159 as follows:

The theory of umbrella liability is that cartel activity could create an “umbrella” of supra-competitive prices that enable non-cartel members to set their prices higher than they otherwise would have under normal conditions of competition, thus affecting Umbrella Purchasers.

32The following instructive passage was adopted in Godfrey at para. 66:

Umbrella effects typically arise when price increases lead to a diversion of demand to substitute products. Because successful cartels reduce quantities and increase prices, this diversion leads to a substitution away from the cartels’ products toward substitute products produced by cartel outsiders…[T]he increased demand for substitutes typically leads to higher prices for the substitute products. Such price increases are called umbrella effects and may arise either in the same relevant market – for example, in cases where a cartel covers less than 100 percent of the firms in that market – or in neighbouring markets.¹³

33In Shah, Perell J. concluded it was plain and obvious umbrella purchasers did not have a reasonable cause of action despite the fact such claims have been certified in the past: see, for example, Crosslink Technology Inc. v. BASF Canada, 2014 ONSC 1682, leave to appeal refused 2014 ONSC 4529 (S.C.J.); Fanshawe College v. LG Philips LCD Co., 2015 ONSC 7211 (Div. Ct.); Irving Paper Ltd. v. Atofina Chemicals Inc., 2009 CanLII 92127 (ON SC), [2009] O.J. No. 4021, leave to appeal refused 2010 ONSC 2705 (S.C.J.); Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503, leave to appeal refused, 2010 S.C.C.A. No. 32, reconsideration of leave to appeal refused, 2012 CanLII 26716.

34Perell J. was of the view the umbrella purchasers’ claim was inconsistent with restitutionary law because their purchases did not enrich the defendants, such a claim would result in indeterminate liability, there was no causative link between umbrella purchasers and the defendants and liability to umbrella purchasers would not contribute to behaviour modification and deterrence of wrongdoing.¹⁴

35Masuhara J. reached the opposite conclusion in Godfrey. He was of the view that restitutionary law does not determine the scope of s. 36 of the Competition Act. I agree. The right of recovery under the section is determined by the claimant’s “loss or damage”, not an offender’s gain.

36Masuhara J.’s other conclusions on this issue also differed from those found in Shah. He was of the view liability was not “impermissibly indeterminate” and that the policy considerations limiting a duty of care in negligence were not compelling in cases of this kind. Further, causation is built into the umbrella theory because pricing decisions of non-cartel market participants are “taken by reference to a market price distorted by the cartel”.¹⁵ Finally, Masuhara J. found that a claim by umbrella purchasers furthered the objectives of the Competition Act “including compensation, deterrence and behaviour modification.”¹⁶

37There is much to be said for those observations.

38Further, I concede some difficulty in understanding how issues like indeterminate liability, causation and if important at all to a certification motion, behaviour modification and deterrence can be assessed at the pleadings stage of the analysis. It seems to me Shah takes the s. 5(1)(a) criteria to a level that goes beyond what a statement of claim reveals. In any event, on August 8, 2016, the plaintiffs in Shah were given leave to appeal two issues. One of them was the motion judge’s decision to deny certification to the extent of the umbrella purchaser claim.¹⁷

39Given the wording of s. 36(1) of the Competition Act and the theory that underlies the claims of umbrella purchasers, it is not plain and obvious that their claim would be unsuccessful.¹⁸

40Fanshawe’s pleading discloses a reasonable statutory and for present purposes, common law cause of action. The plaintiff has met the requirement contained in s. 5(1)(a) of the CPA.

ii. Is there an identifiable class of two or more persons that would be represented by Fanshawe as s. 5(1)(b) requires?

41Fanshawe proposes a class and two subclass definitions. The class is defined as:

All persons in Canada who purchased in Canada cathode display tubes (CDTs) and/or computer monitors containing CDTs (“CDT Monitors”) between November 23, 1996 and December 31, 2006, and/or colour picture tubes (CPTs) and/or televisions containing CPTs (“CPT Televisions”) between March 12, 1997 and November 21, 2007. Excluded from the class are the Defendants and the Defendants’ present and former parents, predecessors, subsidiaries, and affiliates.

42A proposed CDT Subclass is defined as:

All persons in Canada who purchased in Canada a CDT and/or a CDT Monitor between November 23, 1996 and December 31, 2006.

43A proposed CPT Subclass is defined as:

All persons in Canada who purchased a CPT and/or a CPT Television between March 12, 1997 and November 21, 2007.

44David Smith, Fanshawe’s Manager, Retail Services, deposed that the college purchased CDT Monitors and CPT Televisions in Canada from non-defendants during those periods of time. It is undisputed there were frequent purchases of those products in Canada during the operative periods.

45Class definitions serve three purposes: they identify those with potential claims against the defendants, define the parameters of the action by describing those who should be bound by the result and describe who is entitled to notice of certification: Amytrophic Lateral Sclerosis Society of Essex County v. Windsor (City), 2015 ONCA 572 at para. 35 (“ALS”); Sun-Rype, supra at para. 57.

46The defendants submit the proposed class and subclasses are over-inclusive because they include umbrella purchasers and others who did not pay any overcharge. I disagree.

47I have already concluded umbrella purchasers are not precluded from asserting a claim.

48The second objection assumes that any overcharge affected some, but not all, purchasers. No conclusions of that sort are possible based on the limited evidence assembled to date. In any event, the defendants’ objection is merits based and untenable.¹⁹ In Sun-Rype the plaintiffs failed to satisfy the requirement s. 5(1)(b) imposes because they failed to introduce evidence that established some basis in fact that at least two class members could be identified who had suffered loss. However, earlier in the decision Rothstein J. observed, at para. 57:

I do not take issue with the class definition on its face. It uses objective criteria, it does not turn on the merits of the claim, and it cannot be narrowed without excluding members who may have a valid claim. [Emphasis added]

49The applicable test had been articulated earlier by McLachlin C.J. in Hollick v. City of Toronto, 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 17 (“Hollick”):

The first question…is whether there is an identifiable class. In my view there is. The appellant has defined the class by reference to objective criteria: a person is a member of the class if he or she owned or occupied property inside a specified area within a specified time. Whether a given person is a member of the class can be determined without reference to the merits of the action. While the appellant has not named every member of the class, it is clear that the class is bounded (that is, not unlimited). There is, therefore, an identifiable class within the meaning of s. 5(1)(b).

50The passage is applicable here. Fanshawe has defined the class by reference to objective criteria: a person is a member of the class if a purchaser of one or more CDTs, CDT Monitors, CPTs and/or CPT Televisions in Canada within the applicable period. Whether a person is a member of the class can be determined without reference to the merits of the action. The class is broad but not boundless. Certification is not to be refused solely because the number of class members is not known: CPA, s. 6, item 4.

51Fanshawe’s evidentiary record was much more extensive than appears to have been filed in Sun-Rype. Importantly, the products in issue in the two cases are very different: Keatley Surveying Ltd. v. Teranet Inc., 2015 ONCA 248 at para. 70.

52In Tiboni v. Merck Frosst Canada Ltd., 2008 CanLII 37911 (ON SC), [2008] O.J. No. 2996 (S.C.J.), Cullity J. addressed a similar argument to the one advanced by the defendants here. At para. 78, the motion judge wrote in part:

In any class action involving claims for…economic loss, it is possible that the claims of some class members will be unsuccessful. This is virtually ordained by the authorities that preclude merits-based class definitions. As the Chief Justice recognized in Hollick, a minimum evidential basis must be provided for the existence of class members’ claims that raise common issues, but this falls far short of the proposition that the plaintiffs must establish on a balance of probabilities that all class members have claims that are likely to succeed, or that they have suffered harm.²⁰

53There is some basis in fact for concluding there is an identifiable class of two or more persons that would be represented by Fanshawe as s. 5(1)(b) of the CPA requires.²¹

iii. Do the claims of the class members raise common issues as s. 5(1)(c) of the CPA requires?

54Fanshawe proposes long and separate lists of common issues for the CDT Subclass and the CPT Subclass dealing with questions of liability and damages. They are set forth in Appendix “A” to these reasons.

55The phrase “common issues” is defined in s. 1 of the CPA to mean:

(a) common but not necessarily identical issues of fact, or

(b) common but not necessarily identical issues of law that arise from common but not necessarily identical facts.

56In ALS, supra Strathy C.J.O. explained the requirements of s. 5(1)(c) at para. 48:

A common issue must be a substantial ingredient of every class member’s claim and its resolution must serve to advance the resolution of that claim…The answer to the question must be capable of extrapolation to every member of the class…[Citations omitted]

57In Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, McLachlin C.J. said, at para. 39:

The underlying question is whether allowing the suit to proceed as a representative one will avoid duplication of fact-finding or legal analysis.

58All of the Chief Justice’s instructive comments at paras. 39-40 were adopted and listed in Microsoft at para. 108. To paraphrase:

(a) The commonality question should be approached purposively;

(b) An issue will be “common” only where its determination is necessary to the resolution of each member’s claim;

(c) Class members need not be identically situated vis-à-vis the opposing party;

(d) Common issues need not predominate over non-common issues. However, the class members’ claims must share a common ingredient. The court will examine the significance of the common issues in relation to the individual ones;

(e) Success for one class member must mean success for all. All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent.

59The defendants argue Fanshawe’s submission the proposed questions raise common issues has no basis in fact. I disagree.

60Not surprisingly, Fanshawe’s lists start with liability questions. In essence they ask whether the defendants were parties to a conspiracy to limit the production or to enhance unreasonably the price of CDTs, CDT Monitors, CPTs and/or CPT Televisions.

61Similar questions were posed in Microsoft.²²

62In Microsoft, the Supreme Court of Canada was clearly of the view that liability questions raised common issues whether relating to the Competition Act or common law causes of action. That conclusion was reached notwithstanding the fact the allegations related to acts that were alleged to have occurred over a period of 24 years, involved 19 different products, various co-conspirators, countless licences and a complicated chain of distribution. At paras. 110-112, Rothstein J. wrote:

The multitude of variables in indirect purchaser actions may well present a significant challenge at the merits stage. However, there would appear to be a number of common issues that are identifiable. In order to establish commonality, evidence that the acts alleged actually occurred is not required. Rather, the factual evidence required at this stage goes only to establishing whether these questions are common to all class members.

Myers J. concluded that the claims raised common issues. I agree that their resolution is indeed necessary to the resolution of the claims of each class member. Their resolution would appear to advance the claims of the entire class and to answer them commonly will avoid duplication in legal and factual analysis…

The differences cited by Microsoft are…insufficient to defeat a finding of commonality…[E]ven a significant level of difference among the class members does not preclude a finding of commonality. In any event, as McLachlin C.J. stated, “[i]f material differences emerge, the court can deal with them when the time comes”…

63Those comments are equally applicable here.²³

64The impact or damage questions proposed in Microsoft were the subject of additional commentary and analysis.

65Fanshawe acknowledges that it must establish some basis in fact that loss-related issues are capable of determination on a class-wide basis. In Microsoft, Rothstein J. explained the evidence that is required and the standard it must meet. At paras. 113 and 115, Rothstein J. said in part:

…The loss-related common issues, that is to say the proposed common issues that ask whether loss to the class members can be established on a class-wide basis, require the use of expert evidence in order for commonality to be established.

The role of the expert methodology is to establish that the overcharge was passed on to the indirect purchasers, making the issue common to the class as a whole…The requirement at the certification stage is not that the methodology quantify the damages in question; rather, the critical element that the methodology must establish is the ability to prove “common impact”…It is not necessary at the certification stage that the methodology establish the actual loss to the class, as long as the plaintiff has demonstrated that there is a methodology capable of doing so. In indirect purchaser actions, this means that the methodology must be able to establish that the overcharges have been passed on to the indirect-purchaser level in the distribution chain.

66I pause here simply to note that this action includes all purchasers of specified items, during specified periods, whether direct, indirect but connected or indirect and unconnected.

67Rothstein J. also addressed the quality of the expert evidence that was required. While recognizing that certification motions are argued before production or discovery, Rothstein J. held at para 118:

…the methodology must offer a realistic prospect of establishing loss on a class-wide basis so that, if the overcharge is eventually established at the trial of the common issues, there is a means by which to demonstrate that it is common to the class (i.e. that passing on has occurred). The methodology cannot be purely theoretical or hypothetical, but must be grounded in the facts of the particular case in question. There must be some evidence of the availability of the data to which the methodology is to be applied.

68If the requirement is not met, a certification motion is likely to fail: Chadha v. Bayer Inc. (2001), 2001 CanLII 28369 (ON SCDC), 54 O.R. (3d) 520 (C.A.).

69At Fanshawe’s request, economist Dr. Martin A. Asher authored a report dated August 2, 2013 with respect to the portion of the claim relating to CDTs and CDT Monitors on the one hand and CPTs and CPT Televisions on the other. The defendant retained economist Dr. David Reitman and later, consultant Paul Semenza to respond.

70Further reports followed. Those of Dr. Asher are dated May 6 and September 28, 2015.

71Dr. Asher relied on publically available information, documents produced by defendants who had settled and a redacted version of a declaration filed by Dr. Janet Netz in the indirect purchaser proceeding in the United States. While voluminous, that body of information is limited. The parties continuing to participate in this action have not yet taken the steps the Rules of Civil Procedure require in relation to production or discovery.

72For the purposes of his analysis, Dr. Asher assumed Fanshawe’s allegations concerning the existence of a price-fixing conspiracy were true. His task was to address the question of whether it would have caused putative class members harm.

73In Dr. Asher’s opinion the conspiracy inflated prices for CDTs, CDT Monitors, CPTs and CPT Televisions that were passed on to “initial” (direct) and “secondary” (indirect) purchasers. He was also of the opinion prices charged by non-conspirator suppliers would have been lower in the absence of the price-fixing conspiracy and therefore, umbrella purchasers would otherwise have paid less.

74Dr. Asher said his conclusions were based on these factors:

(a) The products the defendants manufactured which are the subject matter of the action were interchangeable with (but not identical to) one another;

(b) Demand declined during the relevant period;

(c) There was excess production capacity;

(d) The market was determined by the defendants and their co-conspirators;

(e) There were no viable economic substitutes for the product in question during the relevant period;

(f) There were large barriers to entry into the market;

(g) A pricing structure existed in the market.

75The economist explained why he believed data was available that would allow him to calculate the overcharge paid by direct purchasers and measure the economic injury suffered on a class-wide basis at each subsequent level of the chain of distribution using a multiple regression analysis.

76The defendants attacked virtually every aspect of Dr. Asher’s reports. In my view, certification is not the time or place for the kind of in depth critical review the defendants seek. Despite the passage of time this case is in its infancy. I emphasize production and oral discovery have not occurred. The exchange of affidavits and cross-examinations are not equivalent steps.

77If the defendants’ criticisms were accepted, I would be further entrenching a process which seems much different than the CPA contemplates. As noted earlier, certification is “a meaningful screening device”. It is not – and cannot be – equivalent to a trial based on a limited, though still humungous, written record.

78In any event, Dr. Asher’s reports provide “some basis in fact” to establish there was class-wide harm. I have reached that conclusion notwithstanding the reports of Dr. Reitman and Mr. Semenza on which the defendants rely, the extensive cross-examination of Dr. Asher undertaken on their behalf and the able submissions of defendants’ counsel.

79Rothstein J.’s observations in Microsoft at para. 126 are apposite. He wrote:

It is indeed possible that at trial the expert evidence presented by Microsoft will prove to be stronger and more credible…However, resolving conflicts between the experts is an issue for the trial judge and not one that should be engaged in at certification…The trial judge will have the benefit of a full record upon which to assess the appropriateness of any damages award that may be made pursuant to the proposed methodology.

80Fanshawe’s lists of proposed common issues ask whether damages can be measured on an aggregate basis. Section 24(1) of the CPA gives the court jurisdiction to award damages on a broad, rather than individual, basis. Any uncertainty in the law was removed with the release of Microsoft. An aggregate damages provision is procedural, relates to remedy and can only be invoked once liability, including the existence of a compensable loss, has been proven: Microsoft, at paras. 131-132.

81However, that does not mean that the certification order must exclude the issue. To the contrary. As Rothstein J. wrote in Microsoft at para. 134:

The question of whether damages assessed in the aggregate are an appropriate remedy can be certified as a common issue. However, this common issue is only determined at the common issues trial after a finding of liability has been made. The ultimate decision as to whether the aggregate damages provisions of the CPA should be available is one that should be left to the common issues trial judge.²⁴

82Subject to that caution, the claims of Fanshawe raise common issues as s. 5(1)(c) of the CPA requires.

iv. Is a class proceeding the preferable procedure as s. 5(1)(d) of the CPA requires?

83Determination of the preferable procedure requires consideration of the three principal objectives of class proceedings: judicial economy, access to justice and behaviour modification: Microsoft, supra at para. 137; AIC Limited v. Fischer, 2013 SCC 69, [2013] 3 S.C.R. 949 at paras. 16-17; Hollick, supra at paras. 27-31; Cassano v. Toronto Dominion Bank, 2007 ONCA 781, paras. 55-64.

84My response to this question reflects the views I have expressed while addressing the earlier elements of the statutory test for certification.

85The trial judge’s answers to the questions relating to the existence, nature, duration and effect(s), if any, of the alleged conspiracy would significantly advance this complex action. The objective of judicial economy is achieved.

86In Godfrey, Masuhara J. addressed the presence of umbrella purchasers at this stage of his analysis. I agree with the observations made at paras. 211-212 of that decision:

I acknowledge the inclusion of umbrella purchasers may lead to added challenges. However, I do not think these challenges will be so great that the proceeding will be unfair, inefficient, or unmanageable. Many of the issues are common to all class members. The issues focusing on the defendants’ conduct are the same. The loss-based issues differ somewhat, but…many of the issues between the two subclasses overlap somewhat. As such, including the umbrella purchasers will avoid duplication of fact-finding or legal analysis.

If the inclusion of the umbrella purchasers makes the action unmanageable, the case management judge can amend the certification order, decertify the proceeding, or make any other order that is appropriate.

87Although time will tell, individual issues may remain insofar as damages are concerned. However, those issues do not, in my view, predominate. If individual issues remain after determination of the common issues, the court may invoke the broad procedural powers section 25 of the CPA confers.²⁵

88Furthermore, certification cannot be refused on the sole ground the relief claimed includes a claim for damages that would require individual assessment: CPA, s. 6, item 1.

89Certifying this proceeding promotes access to justice. The record compiled on this motion alone demonstrates the reality that an action of this kind would be impossible to pursue individually: Crosslink Technology Inc. v. BASF Canada, 2014 ONSC 1682 (S.C.J.), leave to appeal refused 2014 ONSC 4529 (S.C.J.).

90It should be self-evident that Fanshawe’s success in the proceeding will, if achieved, further the CPA’s objective of behaviour modification. As Cumming J. said in Alfresh Beverages Canada Corp v. Hoechst AG, [2002] O.J. No. 79 (S.C.J.) at para. 16, in pursuing remedies under the Competition Act “the private class action litigation bar functions as a regulator in the public interest for public policy objectives”.

91There is some basis in fact for concluding a class proceeding is the preferable procedure as s. 5(1)(d) of the CPA requires.

v. Has Fanshawe proposed a workable litigation plan as s. 5(1)(e)(ii) of the CPA requires?

92The litigation plan requirement of the CPA is not to be treated as a mere afterthought: McCracken v. Canadian National Railway, 2012 ONCA 445, at para. 145. Winkler, C.J.O. offered this guidance at para. 146:

Preparing a litigation plan requires the plaintiff to translate his or her analytical proposal for a class proceeding into practice by having to explain, in concrete terms, the process whereby the common issues, and any remaining individual issues, will be decided. The need for how a proposed common issue would be resolved for all class members on a common basis serves as an important check in considering if the plaintiff has met the common issues and preferable procedure criteria.

93The requirement was expressed in less onerous terms in Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 (C.A.). At para. 95, Goudge J.A. wrote:

The litigation plan produced by the appellants is, like all litigation plans, something of a work in progress. It will undoubtedly have to be amended, particularly in light of the issues found to warrant a common trial. Any shortcomings…can be addressed under the supervision of the case management judge once the pleadings are complete. Most importantly, nothing in the litigation plan exposes weaknesses in the case as framed that undermine the conclusion that a class action is the preferable procedure.²⁶

94The court must also recognize that “neither the parties nor the court is blessed with perfect foresight” at the certification stage: LeFrancois v. Guidant Corp., [2008] O.J. No. 1397 (S.C.J.) at para. 97, leave to appeal refused 2009 CanLII 76 (ON SCDC), [2009] O.J. No. 36 (Div. Ct.). Furthermore, certification may occur if the deficiencies in the litigation plan that exist at the time of certification can be cured through amendment: Ibid at para. 113; Airia Brands at paras. 144 and 145.

95Fanshawe’s original motion record contains a litigation plan dated September 10, 2013. While somewhat generic, it addresses a number and range of issues. They include reporting to and communicating with class members generally and at specific points in time, interlocutory steps, including oral and documentary discovery following development of the discovery plan rule 29.1 of the Rules of Civil Procedure requires, the common issues trial and if Fanshawe obtains a favourable decision, steps following the common issues trial. The latter section addresses subsequent steps, whether aggregate damages are or are not awarded.

96Fanshawe’s litigation plan does not address all of the helpful suggestions made by Nordheimer J. in Bellaire v. Independent Order of Foresters, 2004 CanLII 95288 (ON SC), [2004] O.J. No. 2242 (S.C.J.) at para. 53. For example, it does not detail the steps that will be taken to identify, locate and gather evidence from all necessary witnesses.

97However, Fanshawe addressed that omission in paragraphs 80 through 82 of its reply factum. I cannot imagine a plaintiff in a price-fixing action being in a position to provide much more information, if any, at this stage of the proceeding. For present purposes Fanshawe’s litigation plan is adequate.

98No other items have been identified by the defendants that cause me to wonder anew whether Fanshawe has met the common issues or preferable procedure criteria. The requirements set forth in s. 5(1)(e) of the CPA have also been met.

F. Conclusion and Costs

99For the reasons given, the relief sought in Fanshawe’s fresh as amended notice of motion is granted.

100If the parties are unable to agree on costs, brief written submissions may be made by Fanshawe and the defendants by no later than September 7 and 30, 2016 respectively.

“Justice A. D. Grace”

Justice A. D. Grace

Released: August 12, 2016

Appendix “A”

Fanshawe’s proposed common issues

A. CDT Subclass questions

1. Did the Defendants, or any of them, breach s. 45 the Competition Act (which is contained in Part VI of the Competition Act) giving rise to liability pursuant to s. 36 of the Competition Act?

(i) Did the Defendants and/or any unnamed co-conspirators conspire with each other to limit or lessen, unduly, the production of CDTs?

(ii) Did the Defendants and/or unnamed co-conspirators conspire with each other to enhance unreasonably the price of CDTs?

(iii) Did the Defendants and/or unnamed co-conspirators intend that, as a result of the conspiracy, prices of both CDTs and CDT Monitors would be enhanced unreasonably?

(iv) Did CDT Subclass members suffer injury as a result?

2. Are the Defendants, or any of them, liable in tort for conspiracy to fix prices for CDTs?

(i) Did the Defendants and/or any unnamed co-conspirators unlawfully conspire with each other to limit or lessen, unduly, the production of CDTs, or to enhance unreasonably the price of CDTs?

(ii) Did the Defendants and/or unnamed co-conspirators intend that, as a result of the conspiracy, prices of both CDTs and CDT Monitors would be enhanced unreasonably?

(iii) Was the Defendants’ unlawful conduct directed towards CDT Subclass members?

(iv) Did the Defendants know, or ought they to have known, in the circumstances, that injury to CDT Subclass members was likely to result?

(v) Did CDT Subclass members suffer injury as a result?

3. Over what period of time did the CDT conspiracy take place?

4. Over what period of time did the CDT conspiracy affect the price of CDTs and/or CDT Monitors?

5. Did the Defendants, or any of them, take affirmative or fraudulent steps to conceal the CDT conspiracy?

6. Can damages for the CDT Subclass be measured on an aggregate basis and, if so, what are the aggregate damages for the CDT Subclass?

7. Are the Defendants, or any of them, liable to pay punitive or exemplary damages having regard to the nature of their conduct and if so, in what amount and to whom?

8. Should the full costs of investigation in connection with this matter, including the cost of the proceeding or part thereof, be fixed or assessed on a global basis pursuant to section 36 of the Competition Act and if so, in what amount?

B. CPT Subclass questions

1. Did the Defendants, or any of them, breach s. 45 the Competition Act (which is contained in Part VI of the Competition Act) giving rise to liability pursuant to s. 36 of the Competition Act?

(i) Did the Defendants and/or any unnamed co-conspirators conspire with each other to limit or lessen, unduly, the production of CPTs?

(ii) Did the Defendants and/or unnamed co-conspirators conspire with each other to enhance unreasonably the price of CPTs?

(iii) Did the Defendants and/or unnamed co-conspirators intend that, as a result of the conspiracy, prices of both CPTs and CPT Televisions would be enhanced unreasonably?

(iv) Did CPT Subclass members suffer injury as a result?

2. Are the Defendants, or any of them, liable in tort for conspiracy to fix prices for CPTs?

(i) Did the Defendants and/or unnamed co-conspirators unlawfully conspire with each other to limit or lessen, unduly, the production of CPTs, or to enhance unreasonably the price of CPTs?

(ii) Did the Defendants and/or unnamed co-conspirators intend that, as a result of the conspiracy, prices of both CPTs and CPT Television would be enhanced unreasonably?

(iii) Was the Defendants’ unlawful conduct directed towards CPT Subclass members?

(iv) Did the Defendants know, or ought they to have known, in the circumstances, that injury to CPT Subclass members was likely to result?

(v) Did CPT Subclass members suffer injury as a result?

3. Over what period of time did the CPT conspiracy take place?

4. Over what period of time did the CPT conspiracy affect the price of CPTs and/or CPT Televisions?

5. Did the Defendants, or any of them, take affirmative or fraudulent steps to conceal the CPT conspiracy?

6. Can damages for the CPT Subclass be measured on an aggregate basis and, if so, what are the aggregate damages for the CPT Subclass?

7. Are the Defendants, or any of them, liable to pay punitive or exemplary damages having regard to the nature of their conduct and if so, in what amount and to whom?

Should the full costs of investigation in connection with this matter, including the cost of the proceeding or part thereof, be fixed or assessed on a global basis pursuant to section 36 of the Competition Act and if so, in what amount?

Footnotes

1. 1It was entitled Fanshawe College v. LG Electronics Taiwan Taipei Co. Ltd. et al. and was assigned court file no. 63604CP/09.
2. 2In re Cathode Ray Tube (CRT) Antitrust Litigation was commenced in the United States District Court for the Northern District of California as Master Case No. CV-07-5944-SC.
3. 3They are part of what is more broadly described as the cathode ray tube (“CRT”) sector.
4. 4Samsung SDI Co., Ltd. and Koninklijke Philips Electronics NV participated in this motion. Fines were imposed against both companies in relation to CDTs and CPTs.
5. 5The subsection was amended significantly in March, 2010. It now addresses price fixing in these words: 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…
6. 6That acknowledgement is contained in para. 83 of the defendants’ factum.
7. 7Although raised in the statement of claim, Fanshawe confirmed in its factum that it was not pursuing certification of a cause of action based on intentional interference with economic relations.
8. 8See para. 228.
9. 9Leave to appeal refused 2016 ONSC 4929 (S.C.J.).
10. 10Leave to appeal was denied, [2014] SCCA No. 215. See, too, Low v. Pfizer Canada Inc., 2015 BCCA 506.
11. 11See, too, at the Supreme Court of Canada level, Orpen v. Roberts, 1925 CanLII 2 (SCC), [1925] S.C.R. 364 and Rawluk v. Rawuluk, [1990] 1 S.C.R. 170. On August 8, 2016, Stewart J. granted the plaintiffs leave to appeal two issues. One of them was the motion judge’s refusal to certify the unlawful means conspiracy claim. The leave decision is reported at 2016 ONSC 4670 (Div. Ct.).
12. 12See the discussion at paras. 62-92.
13. 13Roman Inderst, Frank P. Maier-Rigaud and Ulrich Schwalbe, “Umbrella Effect” (2014) 10:3 Competition L. & Econ. 739 at 740.
14. 14See paras. 164-176.
15. 15At para. 77, quoting Kone and Others v. OBB-Infrastruktur AG, C-557/12 (5 June 2014), ECLI:EU:C:2014:1317 at para. 29.
16. 16At para. 78.
17. 172016 ONSC 4670 (Div. Ct.).
18. 18The defendants submitted umbrella purchasers have no cause of action under s. 36 of the Competition Act because they did not deal with the alleged conspirators. However, s. 36 requires loss arising from conduct that is contrary to Part VI of the statute. It remains to be seen whether a direct relationship between alleged victim and wrongdoer is required.
19. 19Section 5(5) of the CPA provides that an order certifying a class proceeding is not a determination of its merits.
20. 20Leave to appeal refused 2008 CanLII 61238 (ON SC), [2008] O.J. No. 4731 (Div. Ct.)
21. 21In my view this case is analogous to Microsoft and entirely different from Sun-Rype.
22. 22The questions are set forth in the appendix to the Supreme Court of Canada’s reasons for decision.
23. 23The defendants argued R. v. Nova Scotia Pharmaceutical Society, 1992 CanLII 72 (SCC), [1992] 2 S.C.R. 606 (“PANS”) required consideration of a host of factors which could not be analyzed on a class-wide basis. In my view, the defendants repackaged the argument that was made before and rejected by the Supreme Court of Canada. PANS was considered by the Divisional Court in Fanshawe College v. LG Philips LCD Co. Ltd., 2015 ONSC 7211 (Div. Ct.) when it affirmed the motion judge’s decision to certify the proceeding. See, too, Option Consommateurs v. Infineon Technologies AG, 2013 SCC 59, [2013] 3 S.C.R. 600 at para. 75.
24. 24See, too, Fanshawe College v. LG Philips, supra note 23. Such an award was made in Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921.
25. 25Fulawka v. The Bank of Nova Scotia, 2012 ONCA 443 at paras. 157-158, leave to appeal dismissed 2013 CarswellOnt 3152 (S.C.C.); 2038724 Ontario Ltd. v. Quizno’s Canada Restaurant Corp., 2010 ONCA 466 at paras. 60-61, leave to appeal dismissed [2010] S.C.C.A. No. 348.
26. 26This case was not referred to in McCracken v. Canadian National Railway.