Court File and Parties

COURT FILE NO.: CV-12-446737-CP DATE: 20160914 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

URLIN RENT A CAR LTD. and FADY SAMAHA Plaintiffs

and

FURUKAWA ELECTRIC CO. LTD., AMERICAN FURUKAWA, INC., FUJIKURA LTD., FUJIKURA AMERICA INC., FUJIKURA AUTOMOTIVE AMERICA LLC, LEONI AG, LEONI KABEL GMBH, LEONI WIRING SYSTEMS, INC., LEONISCHE HOLDING, INC., LEONI WIRE INC., LEONI ELOCAB LTD., LEONI BORDNETZ-SYSTEME GMBH, SUMITOMO ELECTRIC INDUSTRIES LTD., SEWS CANADA LTD., SUMITOMO WIRING SYSTEMS, LTD., SUMITOMO ELECTRIC WIRING SYSTEMS, LTD., SUMITOMO WIRING SYSTEMS (U.S.A.) INC., YAZAKI CORPORATION, YAZAKI NORTH AMERICA INC., S-Y SYSTEMS TECHNOLOGIES EUROPE, GMBH, G.S. ELECTECH, INC., G.S.W. MANUFACTURING INC. and G.S. WIRING SYSTEMS INC. Defendants

Proceedings under the Class Proceedings Act, 1992

BEFORE: Justice Edward P. Belobaba

COUNSEL: David Sterns and Charles M. Wright for Plaintiffs Kevin Wright and Susan Friedman for Furukawa Defendants Jessica Kimmel and Suzy Kauffman for Fujikura Defendants Neil Campbell and Lindsay Lorimer for Sumitomo Defendants Katherine L. Kay for SY Systems Defendants Paul J. Martin for G.S. Electech Defendants Alexandra Shelley for Leoni Defendants

HEARD: September 14, 2016

Furukawa and Fujikura AWHS Settlements

[1] I am currently case-managing some 33 class actions alleging price-fixing in the automotive parts industry. The actions are at various stages of litigation and involve a variety of auto parts including automotive wire harness systems (“AWHS”), instrument panel clusters (“IPC”) and fuel senders.

[2] The class actions materialized in the aftermath of high-profile criminal and regulatory investigations and prosecutions in the United States, Canada and Europe. Several international auto parts suppliers pleaded guilty to the charges against them and agreed to pay hefty fines, some in the hundreds of millions of dollars. In the U.S. prosecutions, 31 executives have been sentenced to significant prison terms and another 30 have been indicted. The class actions in the U.S. and Canada have been brought on behalf of direct purchasers, automobile dealers and/or end-payors.

[3] I recently approved settlements in class actions involving the Yazaki defendants (relating to AWHS, IPC and fuel senders) and the Chiyoda defendants (relating to AWHS).[^1] The settlement amounts approved by this court ranged from $75,000 (Chiyoda AWHS) to $10.4 million (Yazaki AWHS).[^2]

[4] Class counsel now advise that settlements have been reached with the Furukawa and Fujikura defendants with respect to AWHS. The action against Furukawa has settled for $2.3 million; the action against Fujikura for $1,083,280. The settlements also contain the usual bar orders, broad releases and promises of continuing co-operation on the part of the defendants.

[5] Class counsel ask that the class actions be certified for settlement purposes and that the settlements and proposed legal fees be approved under ss. 29(2) and 32(2) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”).[^3] The settlements are conditional upon the approval of the Ontario, British Columbia and Quebec courts. Approval motions to similar effect are pending in B.C. and Quebec.

[6] At the conclusion of the hearing today, I advised counsel that the proposed settlements and legal fees were approved and that written reasons would follow. These are my reasons.

Certification for Settlement Purposes

[7] As in the Yazaki and Chiyoda settlements, [^4] here as well I have no difficulty certifying the class actions against the Furukawa and Fujikura defendants for settlement purposes. Apart from the representative plaintiffs, all of the auto-parts actions that I am currently case managing are similar if not identical in overall approach and structure with the same cause of action, common issue and litigation plan.

[8] The requirements of s. 5(1) of the CPA are satisfied. The pleadings disclose a cause of action (under s. 36 of the Competition Act, R.S.C. 1985, c. C-34 [^5] and the common law tort of conspiracy); there is an identifiable class of two or more persons; the claims of the class members raise a common issue (“did the defendants conspire to fix prices …?”); it is obvious that a class action would be the preferable procedure; and the plaintiffs are suitable representative plaintiffs with a workable litigation plan. Certification for settlement purposes is easily granted.

Settlement Approval

[9] The applicable law is well known. The court must be satisfied that the proposed settlement is fair and reasonable and in the best interests of the class. [^6] In making this determination, the court must look beyond the self-serving “boiler plate” that still pervades the typical settlement approval factum ( “we’re experienced class counsel - we know what we’re doing – trust us” ) and look for objective evidence that the proposed settlement is indeed in the best interests of the class. As I noted in Sheridan Chevrolet v. Furukawa Electric et al, 2016 ONSC 729 [^7]:

If class action judges are to do their job (and be more than rubber-stamps) in the settlement approval process, and ensure that the settlement amount is indeed fair and reasonable and in the best interests of the class (and not just class counsel) then at the very least class counsel should provide affidavit evidence explaining why the actual settlement amount is fair and reasonable or more or more specifically, clear reasons why the settlement amount is in the “zone of reasonableness.” [^8]

[10] To their credit, class counsel provided the court with detailed affidavit evidence showing why the Furukawa and Fujikuri settlements fall within a zone of reasonableness and are in the best interests of the class.

[11] For both settlements, class counsel presented information about the estimated loss or harm to class members by considering the relevant sales volume in Canada and applying the “10 per cent overcharge” and “50 per cent pass through” analysis that appears to be accepted in price-fixing cases and that I used when approving the Yazaki and Chiyoda settlements. [^9]

[12] The relevant sales volume in Canada for the Furukawa defendants was estimated (class counsel say very generously) at $40.9 million; the price-fixing overcharge was thus $4.09 million; and the 50 per cent pass through to the indirect purchaser class members was about $2.045 million in actual loss or damage. The $2.3 million settlement amount is therefore readily acceptable and falls easily within the zone of reasonableness.

[13] The relevant sales volume in Canada for the Fujikura defendants was estimated at $2.24 million in US dollars (or about $2.91 million in Canadian dollars). Applying the 10 per cent overcharge and 50 per cent pass through analysis, the actual loss or damage sustained by the class members herein was about $145,000. It follows from this that the $1,083,280 settlement amount (which is many times more than the actual loss and must have included other confidential considerations) is readily acceptable and falls easily within the zone of reasonableness.

[14] In short, I am satisfied that the Furukawa and Fujikura AWHS settlements are fair and reasonable and in the best interests of the class.

Legal Fees Approval

[15] Based on the retainer agreements, class counsel are entitled in each case to a 25 per cent contingency plus disbursements and taxes. As discussed in Cannon v. Funds for Canada Foundation, 2013 ONSC 7686 [^10], this contingency amount is presumptively valid and on the facts herein should be approved. Class counsel are entitled to the requested legal fees in the amount of $784,920.96, disbursements in the amount of $85,321.91, and applicable taxes.

Disposition

[16] The proposed class actions against the Furukawa and Fujikura defendants are certified for settlement purposes. The Furukawa and Fujikura AWHS settlements, for $2.3 million and $1,083,280 respectively, are approved. As are class counsels’ legal fees.

[17] Orders to go as per the draft Orders that I signed today at the conclusion of the hearing.

Belobaba J. Date: September 14, 2016

Footnotes

[^1]: Sheridan Chevrolet v. Furukawa Electric et al, 2016 ONSC 729. [^2]: Ibid., at paras. 6 and 15. [^3]: Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”). [^4]: Supra, note 1. [^5]: Competition Act, R.S.C. 1985, c. C-34. [^6]: Dobbs v. Sun Life Assurance, (1998), 40 O.R. (3d) 429 (Gen. Div.), aff’d (1998) , 41 O.R. (3d) 97 (C.A.), leave to appeal to S.C.C. refused Oct. 22, 1998. [^7]: Supra, note 1. Also see the discussion in Leslie v. Agnico-Eagle Mines, 2016 ONSC 532 and Rosen v. BMO Nesbitt Burns Inc., 2016 ONSC 4752. [^8]: Supra, note 1, at para. 12. [^9]: Supra, note 1. [^10]: Cannon v. Funds for Canada Foundation, 2013 ONSC 7686.