Sheridan Chevrolet v. Furakawa Electric et al, 2016 ONSC 729
CITATION: Sheridan Chevrolet v. Furakawa Electric et al, 2016 ONSC 729
DATE: 20160203
Court File No. CV-12-446737-CP
SUPERIOR COURT OF JUSTICE
BETWEEN:
SHERIDAN CHEVROLET CADILLAC LTD., PICKERING AUTO MALL LTD., and FADY SAMAHA
- and –
FURUKAWA ELECTRIC CO. LTD., AMERICAN FURUKAWA INC., FUJIKURA LTD., FUJIKURA AMERICA INC., FUJIKURA AUTOMOTIVE AMERICA LLC, LEAR CORPORATION, KYUNGSHIN-LEAR SALES AND ENGINEERING, 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, INC., SUMITOMO WIRING SYSTEMS (U.S.A.), INC., YAZAKI CORPORATION, YAZAKI NORTH AMERICA, INC., S-Y SYSTEMS TECHNOLOGIES EUROPE, GMBH, DENSO CORPORATION, DENSO INTERNATIONAL AMERICA, INC., TECHMA CORPORATION, DENSO MANUFACTURING CANADA, INC., DENSO SALES CANADA, INC., TOKAI RIKA CO., LTD., TRAM, INC., TRQSS, INC., G.S. ELECTECH, INC., G.S.W. MANUFACTURING, INC., G.S. WIRING SYSTEMS INC., MITSUBISHI ELECTRIC CORPORATION, MITSUBISHI ELECTRIC AUTOMOTIVE AMERICA, INC., MITSUBISHI ELECTRIC SALES CANADA INC., HITACHI, LTD., HITACHI AUTOMOTIVE SYSTEMS, LTD., and HITACHI AUTOMOTIVE SYSTEMS AMERICAS, INC.
Proceeding under the Class Proceedings Act, 1992
Court File No. CV-15-519208-CP
SUPERIOR COURT OF JUSTICE
BETWEEN:
SHERIDAN CHEVROLET CADILLAC LTD., THE PICKERING AUTO MALL LTD., and FADY SAMAHA
Plaintiffs
- and -
CHIYODA MFG. CO., LTD., CHIYODA USA CORPORATION, and ASTI CORPORATION
Defendants
Proceeding under the Class Proceedings Act, 1992
Court File No.: CV-12-449238-CP
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SHERIDAN CHEVROLET CADILLAC LTD., THE PICKERING AUTO MALL LTD., and FADY SAMAHA
- and -
YAZAKI CORPORATION, YAZAKI NORTH AMERICA INC., NIPPON SEIKI CO., LTD., N.S. INTERNATIONAL, LTD., NEW SABINA INDUSTRIES, INC., CALSONIC KANSEI CORPORATION, CALSONIC KANSEI NORTH AMERICA, INC., CONTINENTAL AG, CONTINENTAL AUTOMOTIVE SYSTEMS US, INC., CONTINENTAL TIRE CANADA, INC. (FORMERLY KNOWN AS CONTINENTAL AUTOMOTIVE CANADA, INC.), DENSO CORPORATION, DENSO INTERNATIONAL AMERICA, INC., DENSO MANUFACTURING CANADA, INC., DENSO SALES CANADA, INC., CONTINENTAL AUTOMOTIVE ELECTRONICS LLC, and CONTINENTAL AUTOMOTIVE KOREA LTD.
Proceeding under the Class Proceedings Act, 1992
Court File No.: CV-13-482959-CP
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SHERIDAN CHEVROLET CADILLAC LTD., PICKERING AUTO MALL LTD., and FADY SAMAHA
- and –
YAZAKI CORPORATION, YAZAKI NORTH AMERICA INC., DENSO CORPORATION, DENSO INTERNATIONAL AMERICA INC., DENSO MANUFACTURING CANADA, INC. and DENSO SALES CANADA, INC.
Proceeding under the Class Proceedings Act, 1992, SO 1992, c 6
BEFORE: Justice Edward P. Belobaba
COUNSEL: Charles M. Wright and David Sterns for Plaintiffs Robert Kwinter for Yazaki Defendants David Kent and Laura Brazil for Chiyoda Defendants Sandra Forbes for Denso and Techma Defendants Paul Martin for G.S. and G.S.W. Defendants Kelly Friedman for Hitachi Defendants Susan Freedman for Furakawa Defendants Linda Plumpton for Mitsubishi Defendants Suzy Kaufman for Fujikura Defendants Neil Campbell and Allison Worone for Sumitomo Defendants James Gotowiec for Leoni Defendants Mel Hogg for SY Systems Defendants
HEARD: January 28, 2016
Proceedings under the Class Proceedings Act, 1992
Automotive Wire Harness Systems, Instrument Panel Clusters & Fuel Senders Yazaki & Chiyoda Settlement and Legal Fee Approvals
Reasons for Decision
[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 such as 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 auto parts suppliers, such as Yazaki, Nippon Seiki and Continental Automotive 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, more than 30 executives were sentenced to significant prison terms.
[3] In the U.S. as well, class proceedings relating to AWHS, IPC and fuel senders were brought on behalf of direct purchasers, automobile dealers and end-payors. In the AWHS category, settlements have been achieved with four defendant groups, including the Yazaki defendants. In the IPC category, settlements have been reached with two groups of defendants, including the Yazaki defendants. In fuel senders, there has been one settlement to date with the Yazaki defendants.
[4] In Canadian class action litigation, settlements have been reached with Yazaki in the AWHS, IPC and Fuel Sender categories and with Chiyoda for AWHS. The largest settlement is the Yazaki AWHS settlement ($10.4 million). The other three are more modest, for various reasons as explained in the material filed with the court: Yazaki IPC ($500,000); Yazaki Fuel Senders ($100,000); and Chiyoda AWHS ($75,000). Each of the settlement agreements requires the settling defendant to provide substantial cooperation in the ongoing prosecution of the actions.
[5] At the hearing on January 28, 2016, the plaintiffs presented four motions for Orders approving:
a. An AWHS settlement agreement entered into with Yazaki dated October 19, 2015 in the action bearing court file number CV-12-446797-CP (the “Original Ontario AWHS Action”) and certifying the Original Ontario AWHS Action as against Yazaki for settlement purposes only;
b. An AWHS settlement agreement entered into with Chiyoda, dated November 20, 2015 in the action bearing court file number CV-15-519208-CP and certifying the Chiyoda Action as against Chiyoda for settlement purposes only;
c. An IPC settlement agreement entered into with Yazaki dated October 19, 2015 in the action bearing court file number CV-12-449238-CP; and
d. a Fuel Senders settlement agreement entered into with Yazaki dated October 19, 2015 in the action bearing court file number CV-13-482959-CP.
[6] I had no difficulty certifying the Chiyoda Action as against Chiyoda for settlement purposes. The requirements set out in s. 5(1) of the Class Proceedings Act[^1] were easily satisfied. I also had no difficulty, approving the Chiyoda AWHS settlement, the Yazaki IPC settlement and the Yazaki Fuel Senders settlement. I found that the (modest) amounts, given the explanations provided in the respective Motion Records, were fair and reasonable and in the best interests of the class. I signed the required Orders.
[7] It was the Yazaki AWHS settlement in the amount of $10.4 million that caused me concern. Not the certification component. The class definition is sensible and clear. The Ontario AWHS Settlement Class is defined as:
All Persons in Canada who, during the Class Period, (a) purchased, directly or indirectly, an Automotive Wire Harness System; and/or (b) purchased or leased, directly or indirectly, a new or used automotive vehicle containing an Automotive Wire Harness System; and/or (c) purchased for import into Canada, a new or used automotive vehicle containing an Automotive Wire Harness System. Excluded Persons and Persons who are included in the Quebec Settlement Class and the BC Settlement Class are excluded from the Ontario Settlement Class.
[8] And the proposed common issue is simply stated and to the point:
Did the Settling Defendants conspire to fix, raise, maintain, or stabilize the prices of Automotive Wire Harness Systems in Canada and elsewhere during the Class Period? If so, what damages, if any, did Settlement Class Members suffer?
[9] Each of the five requirements set out in s. 5(1) of the CPA is satisfied. The pleadings disclose a cause of action; there is an identifiable class of two or more persons that would be represented by the representative plaintiffs; the claims of the class members raise common issues; there is no question that a class proceeding would be the preferable procedure; and the plaintiffs are suitable representative plaintiffs with a workable litigation plan. As already noted, certification for settlement purposes is easily granted.
[10] It was the actual settlement that was problematic. I was not satisfied with what has now become an almost “boiler plate” formulation of the reasons for court approval that can be found in almost every plaintiff’s factum. The boiler-plate for settlement approval comes down to something like this: “We’re experienced class counsel; we know what we’re doing; there were lots of litigation risks; we negotiated the best possible deal for the class members; trust us.”
[11] I am not denigrating class counsel - the vast majority of whom have enormous integrity and probably work very hard to achieve outcomes that are in the best interests of the class. I am criticizing the boiler-plate that is found in too many of the settlement approval facta and the judges who succumb to the “we’re experienced class counsel - we know what we’re doing – trust us” kind of argumentation.
[12] 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 specifically, clear reasons why the settlement amount is in the “zone of reasonableness.”
[13] Because this is a price-fixing action, I needed basic information such as the estimated amount of the “over-charge” and why the $10.4 million amount was fair and reasonable. I asked class counsel to provide this additional information, and to their credit, they understood my concern and filed a supplementary affidavit within a few days.
[14] The supplementary affidavit addressed the $10.4 million settlement directly and made the following important points:
(i) Vehicles sold in Canada during the class period contained about $50 million worth of Yazaki AWHS.
(ii) It is difficult to estimate the amount of overcharge from price-fixing but some studies (cited by class counsel) suggest that cartels generally result in a 10 per cent overcharge; class counsel believes in this case that this is a “rough but fair estimate.”
(iii) It is reasonable to believe that original equipment manufacturers absorbed about 50 per cent of the overcharge and passed on about 50 per cent.
(iv) Thus the economic harm or damages sustained by class members is in the range of $2.5 to $5.0 million.
(v) When one adds the value of Yazaki’s co-operation and the fact that Yazaki would probably be reluctant to pay more than 10 per cent of its U.S. settlement (which was US$96.7 million) and one discounts for the various and significant litigation risks, class counsel submits that the $10.4 million settlement herein is “well within the zone or range of reasonableness.”
[15] I agree with class counsel and I am so persuaded. I find the $10.4 million more than fair and very much in the best interests of the class.
[16] I also approve class counsels’ fee requests for all four settlements as discussed herein. Based on the retainer agreements, class counsel is entitled in each case to a 25 per cent contingency plus disbursements and taxes. As I made clear in Cannon,[^2] this contingency amount is presumptively valid and there is no good reason herein not to approve the legal fees.[^3]
Disposition
[17] The proposed AWHS class actions against Yazaki and Chiyoda are certified for settlement purposes.
[18] The AWHS settlements with Yazaki ($10.4 million) and Chiyoda ($75,000) and the IPC and Fuel Sender settlements with Yazaki ($500,000 and $100,000 respectively) are approved.
[19] Class counsel’s legal fees, described above, are also approved.
[20] Orders to go accordingly.
Belobaba J.
Date: February 3, 2016
[^1]: Class Proceedings Act, 1992, S.O. 1992, c. 6.
[^2]: Cannon v. Funds for Canada Foundation, 2013 ONSC 7686.
[^3]: I asked class counsel to remove the “legal research” electronic subscription charges from the disbursements page (for the same reason that lawyers do not charge clients for print subscriptions) and he agreed to do so.