The Fanshawe College of Applied Arts and Technology v. Hitachi, Ltd. et al.

CITATION: Fanshawe College v. Hitachi, Ltd. et al., 2016 ONSC 8212

COURT FILE NO.: 59044CP

DATE: 2016-10-24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 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, Defendants

BEFORE: Grace J.

HEARD: October 18, 2016

ENDORSEMENT

[1] The Fanshawe College of Applied Arts and Technology (“Fanshawe”) and others have entered into a national settlement agreement with three groups of defendants. If approved by the courts having jurisdiction over the class actions that have been commenced, the settlements would resolve the dispute relating to cathode ray tubes (“CRT”) insofar as those defendants are concerned.

[2] Three motions are before this court. Two of them were heard jointly during an October 18, 2016 hearing conducted by videoconference with the Honourable Catherine La Rosa of the Superior Court of Quebec. Those motions sought:

(a) approval of the proposed settlements; and

(b) approval and payment of amounts proposed on account of fees, disbursements and applicable taxes.

[3] In the third motion, Fanshawe seeks to discontinue this action against some, but not all, of the Samsung defendants. I will deal with each motion in turn.

[4] Before doing so I make these preliminary comments:

(a) first, this is not the first motion seeking approval of a settlement or proposed fees in this proceeding. Settlement with two (the “Chunghwa defendants”) was approved by the court in 2010. A settlement with a group of five (the “Panasonic defendants”) was implemented as a result of court approval in 2015. Each time fee approval was sought and granted;

(b) second, notice of the hearing was published in the manner directed by the court. No objection was received. No one other than the parties’ counsel attended the hearing. No one other than Fanshawe’s counsel made submissions on October 18, 2016. All other counsel were passive observers.

A. The Settlement Approval Motion

[5] Fanshawe filed affidavits of lawyer Andrea DeKay (sworn October 11, 2016) and its manager, Retail Services, David Smith (sworn October 6, 2016) in support of its motion.

[6] National Settlement Agreements entered into with:

(a) Toshiba Corporation, Toshiba America Electronic Components Inc., Toshiba America Information Systems Inc. and Toshiba of Canada Limited (the “Toshiba defendants”) made as of May 12, 2016;

(b) Japan Display Inc., Hitachi Ltd., Hitachi Asia, Ltd., Hitachi America, Ltd., Hitachi Electronic Devices (U.S.A.), Inc. and Hitachi Canada, Ltd. (the “Hitachi defendants”) made as of January 19, 2016; and

(c) LG Electronics, Inc. (“LG”) made as of August 11, 2016,

were filed as exhibits to Ms. DeKay’s affidavit.

[7] In Canadian dollars, they require payments of $3,794,290 by the Toshiba defendants, $2,804,400 by the Hitachi defendants and $7,750,000 by LG. The terms of the settlement agreements are usefully summarized by Ms. DeKay at paras. 36-38; 48-50 and 56-57 of her affidavit.

[8] Paragraphs 30-41 of Fanshawe’s factum as well as paras. 28-34 of its factum in court file no. 54054 C.P. summarize the applicable principles.

[9] I am satisfied, based on the evidence, that the preconditions to certification have been met. I addressed s. 5(1) of the Class Proceedings Act in the adversarial context in the reasons released August 12, 2016. On this motion the proposed class definition and common issues are the same as in the approved settlements: Fanshawe’s factum, para. 31.

[10] Ms. Dekay’s affidavit also described in detail the process that culminated in the settlement agreements, including proceedings in other jurisdictions and their results, the procedural history of this action, the CRT market and the place of the Toshiba defendants, the Hitachi defendants and LG within it, along with Fanshawe’s theory concerning their role in the alleged price fixing conspiracy and the settling defendants’ response. The rationale for the settlement amounts was explained. The non-monetary terms of the resolution were outlined.

[11] I am well satisfied there is sufficient reason to accept class counsel’s recommendation and to conclude the proposed settlements with the Toshiba defendants, the Hitachi defendants and LG are fair, reasonable and in the best interests of the settlement class. Proceedings have been protracted and hard fought.

[12] Negotiations have occurred over time between well represented parties. The compromises achieved warrant approval.

B. The Fee Approval Motion

[13] On January 24, 2008, Fanshawe entered into a retainer agreement. The retainer agreement was approved by the court in 2010. It contemplates a legal fee equal to twenty-five percent of amounts recovered – whether at trial or by settlement – plus disbursements and applicable taxes.

[14] As noted, recovery of fees was approved in the context of the Chunghwa and Panasonic settlements. The percentage specified in the retainer agreement was applied.

[15] That relief is requested again.

[16] After allocating a portion (3.6 percent) of the settlement amounts to the Quebec settlement class, the contractual percentage was applied. Class counsel in Ontario seek approval of a combined fee (for Ontario and B.C. class counsel) of $3,459,887.25 plus $222,041 for disbursements (inclusive of interest) plus applicable taxes.

[17] In his October 6, 2016 affidavit, David Smith acknowledged class counsel’s request was consistent with the retainer agreement. He added “and I have no difficulty with … an application” of the stipulated 25 percent.

[18] Ms. DeKay summarized the risks undertaken by class counsel at length in paras. 22 through 25 of her October 13, 2016 affidavit.

[19] She mentioned the following matters:

(a) legal complexity and uncertainty. Issues mentioned included whether indirect purchasers and/or umbrella purchasers had a cause of action, the existence of the passing on defence, the scope of the Competition Act, Ontario’s jurisdiction over foreign defendants, rights of contribution and indemnity among co-conspirators and the duration of liability of the founder members of a cartel;

(b) evidentiary issues and factual complexity including the identity of the members of the alleged conspiracy, the impact on liability of a joint venture, determining levels of culpability and their impact, if any, on liability, proof of the existence and magnitude of damages;

(c) assessing the likelihood of recovery from defendants in multiple and distant jurisdictions.

[20] No matter how a fee is structured in a retainer agreement, same “must ultimately be fair and reasonable in all the circumstances of the case”: Lavier v. MyTravel Canada Holidays Inc., 2013 ONCA 92 at para. 22.

[21] A multitude of factors warrant consideration. The terms of the retainer agreement which was negotiated with and signed by a sophisticated representative plaintiff are important, particularly where, as here, court approval has been obtained. I have already noted the absence of objection.

[22] Counsel also rely on:

(a) the monetary and non-monetary benefits of the three additional settlements;

(b) the risk assumed at the time this action was commenced and as it has continued. From my vantage point I would observe that the law has evolved in a way which is favourable to Fanshawe: see, for example, the triology of cases that includes Pro-Sys Consultants Ltd. v. Microsoft Corp., 2013 SCC 57, [2013] 3 S.C.R. 477 and post the LG Settlement agreement, see Fanshawe v. Au Optronics Corporation, 2016 ONCA 621. However, legal issues still abound. Evidentiary ones do too. Ultimate recovery of an award, even if obtained, remains to be determined;

(c) the fact no application was made to the Class Proceedings Fund for assistance and no third party funding was sought. I was advised that class counsel had indemnified Fanshawe against an adverse cost award.

[23] To those I would add the importance of recognizing the diligence and skill of experienced class counsel.

[24] On the other hand, I cannot deny the presence of discomfort. Class counsel have already been well compensated. Since the filing of the fee motion arising from the Panasonic settlement, class counsel’s docketed time has a value of approximately $380,000. The mere thought of recovery of more than $3.459 million in such circumstances would cause almost anyone’s heart to race.

[25] According to Ms. DeKay’s affidavit total docketed time (presumably to or close to October 13, 2016) was $1,328,189.75. Fees of $963,210.73 were approved in connection with the Panasonic settlement and $464,000 in connection with the resolution relating to Chunghwa. Approval of the requested fee on this motion would bring the aggregate to about $4,887,098. The total amount of the settlements that have been approved now total approximately $20,521,690.

[26] If the requested fee were approved, class counsel would receive a fee which is approximately 3.68 times the value of the hours billed.

[27] In Eidoo v. Infineon Technologies AG, 2013 ONSC 853 (S.C.J.), Perell J. concluded an interim fee award of 20 percent of the settlement amount was fair and reasonable despite the 30 percent rate contained in the retainer agreement. The rationale for the result is not easily discernible.

[28] I accept that class counsel should be rewarded for taking on and successfully pursuing with care, diligence and skill a complex, uncertain and important matter that yields a significant return. However, their compensation should not – indeed it cannot be – disproportionate.

[29] Momentum for settlement clearly exists. While of the view the fees that are the subject of this motion have reached the generous level, they are still within a range which I am comfortable in characterizing as fair and reasonable in all of the circumstances.

[30] The amount requested on account of disbursements did not cause concern.

[31] For the reasons given, fee approval is granted.

C. The Motion to Discontinue as against the Samsung Electronics Defendants

[32] Paragraphs 10 and 12 of Bridget Moran’s October 11, 2016 affidavit satisfy me that it is, indeed, appropriate for Fanshawe to discontinue this action as against Samsung Electronics Co. Ltd., Samsung Electronics America Inc. and Samsung Electronics Canada Inc. They have been referred to collectively as the Samsung Electronics defendants.

D. Summary

[33] For the reasons given, orders to issue as signed by me today.

“Justice A. D. Grace”

Justice A. D. Grace

Date: October 24, 2016 (transcribed April 23, 2018)