Court File and Parties

COURT FILE NO.: CV-13-483540 DATE: 2018/10/15

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

KHURRAM SHAH and ALPINA HOLDINGS INC. Plaintiffs – and – LG CHEM, LTD., LG CHEM AMERICA, INC., PANASONIC CORPORATION, PANASONIC CORPORATION OF NORTH AMERICA, PANASONIC CANADA, INC., SANYO ELECTRIC CO., LTD., SANYO NORTH AMERICA CORPORATION, SANYO ENERGY (U.S.A.) CORPORATION, SONY CORPORATION, SONY ENERGY DEVICES CORPORATION, SONY ELECTRONICS, INC., SONY OF CANADA LTD., SAMSUNG SDI CO., LTD., SAMSUNG SDI AMERICA, INC., SAMSUNG ELECTRONICS CANADA INC., HITACHI LTD., HITACHI MAXELL, LTD., MAXELL CORPORATION OF AMERICA, MAXELL CANADA, GS YUASA CORPORATION, NEC CORPORATION, NEC TOKIN CORPORATION, NEC CANADA, TOSHIBA CORPORATION, TOSHIBA AMERICA ELECTRONIC COMPONENTS, INC. and TOSHIBA OF CANADA LIMITED Defendants

Counsel: Linda Visser and Jean-Marc Leclerc for the Plaintiffs Ian C. Matthews for the Defendants NEC Corporation and NEC Tokin Corporation Evangelia (Litsa) Kriaris for the Defendants Samsung SDI Co., Ltd. and, Samsung SDI America, Inc. Byron Shaw for the Defendants Sony Corporation, Sony Energy Devices Corporation, Sony Electronics, Inc., and Sony of Canada Ltd. Chenyang Li for the Defendants LG Chem and LG Chem America, Inc. Wendy Sun for the Defendants Hitachi Maxell, Ltd., and Maxell Corporation of America Daphne Papadatos for the Defendants Toshiba Corporation, Toshiba America Electronic Components, Inc. and Toshiba of Canada Limited Scott Azzopardi for the Defendants Panasonic Corporation, Panasonic Corporation of North America, Panasonic, Canada, Inc., Sanyo Electric Co. Ltd., Sanyo North America Corporation and Sanyo Energy (U.S.A.) Corpiration

Proceedings under the Class Proceedings Act, 1992

HEARD: October 15, 2018

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] Pursuant to the Class Proceedings Act, 1992, the Plaintiffs, Khurram Shah and Alpina Holdings Inc., have brought a competition law class action. The action is brought on behalf of direct, indirect, and umbrella purchasers in the marketplace for rechargeable Lithium Ion Battery Cells (“LIBs”).

[2] The 26 Defendants are: LG Chem, Ltd., LG Chem America, Inc., Panasonic Corporation, Panasonic Corporation of North America, Panasonic Canada, Inc., Sanyo Electric Co., Ltd., Sanyo North America Corporation, Sanyo Energy (U.S.A.) Corporation, Sony Corporation, Sony Energy Devices Corporation, Sony Electronics, Inc., Sony of Canada Ltd., Samsung SDI Co., Ltd., Samsung SDI America, Inc., Samsung Electronics Canada Inc., Hitachi Ltd., Hitachi Maxell, Ltd., Maxell Corporation of America, Maxell Canada, GS Yuasa Corporation, NEC Corporation, NEC Tokin Corporation, NEC Canada, [Inc.], Toshiba Corporation, Toshiba America Electronic Components, Inc., and Toshiba of Canada Limited.

[3] The action was discontinued or dismissed as against five Defendants: Hitachi Ltd., Maxell Canada, NEC Canada, Inc., Toshiba of Canada Limited (all discontinuances), and GS Yuasa Corporation (dismissal).

[4] Two Japanese corporations, NEC Corporation and NEC Tokin Corporation (collectively “NEC”) were successful in having the action dismissed on jurisdictional grounds (Shah v. LG Chem, Ltd., 2015 ONSC 2628), but subsequently NEC agreed to settle the claims against it. The settlement requires court approval.

[5] Related class proceedings with a consortium of Class Counsel are proceeding in British Columbia and Québec. NEC was not named in the Québec or the British Columbia proceedings.

[6] The Plaintiffs allege that the 19 remaining Defendants (in seven groupings) conspired to fix the price of LIBs manufactured and sold in Canada for the 11 years between January 1, 2000 and December 31, 2011.

[7] Two groups of Defendants; that is: Samsung SDI Co., Ltd. and, Samsung SDI America, Inc. (collectively “Samsung”) and Sony Corporation, Sony Energy Devices Corporation, Sony Electronics, Inc., and Sony of Canada Ltd. (collectively “Sony”) have signed settlement agreements. These settlements require court approval.

[8] The Plaintiffs’ action, which was certified after a contested certification motion that included certification as against Sony (Shah v. LG Chem, Ltd., 2015 ONSC 6148, leave to appeal granted 2016 ONSC 4670 (Div. Ct.), var’d 2017 ONSC 2586 (Div. Ct.), var’d 2018 ONCA 819), has been certified for settlement purposes as against NEC and Samsung (Shah v. LG Chem, Ltd., 2017 ONSC 7206).

[9] The Plaintiffs now move for approval of the NEC, Samsung, and Sony settlements, and Class Counsel move for an order: (1) approving class proceedings retainer agreements; and (2) approving fees and disbursements in connection with the settlements.

B. Facts

1. The Class Actions

[10] The Plaintiffs commenced their action in June 2013. They claimed general and special damages of $75 million and punitive and exemplary damages of $10 million for conspiracy, interference with economic relations, unjust enrichment, and conduct that is contrary to Part VI of the Competition Act. The Statement of Claim alleges that the price-fixing conspiracy caused damages in Canada because the prices of LIBs sold directly or indirectly to the Plaintiffs and other proposed Class Members in Canada were at artificially inflated levels, and the proposed Class Members paid more for LIBs and products containing LIBs than they would have in the absence of the wrongful conduct.

[11] Class Counsel in the Ontario action is a consortium of Sotos LLP and Siskinds LLP. In 2014, they won carriage after a carriage motion against Consumer Law Group Professional Corporation and Rochon Genova LLP (Wilson and Shah v. LG Chem, 2014 ONSC 1875).

[12] Parallel litigation was commenced in British Columbia and Québec. Class Counsel in Ontario is cooperating with the law firms Camp Fiorante Matthews Mogerman LLP (“CFM”), counsel in the B.C. action, and Belleau Lapointe s.e.n.c.r.l. counsel in the Québec action. CFM will be paid out of any fees awarded in the Ontario action, which along with the action in Québec are the active actions.

[13] Morganti Legal PC commenced a proceeding in January 2013. By agreement with Class Counsel in Ontario, Morganti Legal PC withdrew from the case and discontinued its action. Class Counsel agreed to pay Morganti Legal its disbursements ($1,030.24), and to pay its time incurred on the file ($30,000) plus one-half of any multiplier awarded to Class Counsel in a fee award. The $1,030.24 disbursement amount is claimed in the disbursements sought. Any fee amounts payable to Morganti Legal will be paid out of any award made to Class Counsel.

[14] As noted above, NEC was successful in having the action dismissed on jurisdictional grounds but in July 2015, NEC agreed in principle to settle the claims against NEC. (NEC was a small player in terms of its global market share. NEC’s market share ranged for a high of 6% in 2000 to a low of 0% in 2010 on October 15, 2015.) Under the Settlement Agreement, NEC agreed to pay $50,000. It also agreed to provide copies of the documents that were produced in the U.S. proceedings and to the U.S. Department of Justice. As a term of the settlement, the Plaintiffs abandoned the appeal of the order on the jurisdiction motion. The NEC Settlement Agreement was amended on September 15, 2017 to take into account, among other things, the fact that the representative plaintiff in Québec changed following execution of the October 15, 2015 Agreement.

[15] In 2015, settlement discussions began between the Plaintiffs and Samsung. An agreement in principle was reached and the parties continued to negotiate the specific terms of the settlement. The Settlement Agreement was signed on November 21, 2017.

[16] Meanwhile in 2015, after a four-day hearing, I certified the action as a class action under the Class Proceedings Act, 1992. More precisely, I certified the statutory cause of action (s. 36 of the Competition Act) for conduct that is contrary to s. 45 of the Competition Act, and I certified the associated common issues.

[17] For the certification order, in the class definition, I removed what the parties called the “Unconnected Purchasers” or “Umbrella Purchasers” from class membership. I did not certify the Plaintiffs’ causes of action for unlawful means conspiracy and unjust enrichment based on a contravention of the Competition Act. I did not certify the predominant purpose conspiracy and the interference with economic relations tort claim.

[18] The result was a national class action with the following class definition:

All persons in Canada who, between January 1, 2000 and December 31, 2011 (the "Class Period"), purchased a Lithium Battery* manufactured by the Defendants and/or any of the following products containing a Lithium Battery manufactured by the Defendants: (1) notebook computer**; (2) cell phones, including smartphones***; (3) tablet computers; (4) e-book readers; (5) MP3 players; (6) personal digital assistants; (7) handheld GPS; (8) handheld video players; and/or (9) lithium ion battery packs (collectively "LIB Products"). Excluded from the class are the Defendants and the Defendants' present and former parents, predecessors, subsidiaries and affiliates, and any person who timely and validly opts out of the proceeding.

*a Lithium Battery is a rechargeable battery cell which uses lithium-ion technology.

**for greater certainty, a notebook computer includes a laptop computer.

***excluding cell phones acquired as part of a cellular phone service contract.

[19] In January 2016, the Plaintiffs and Defendants sought leave to appeal the Certification Order. Both motions for leave were heard by the Divisional Court in August 2016, with the Plaintiffs being granted leave and the Defendants being denied leave (Shah v. LG Chem, Ltd., 2016 ONSC 4670 (Div. Ct.)). In April 2017, the Divisional Court allowed the Plaintiffs’ appeal as it related to the claim for the tort of unlawful means conspiracy, but the Divisional Court did not allow the appeal as it related to umbrella purchaser claims (Shah v. LG Chem, Ltd., 2017 ONSC 2586 (Div. Ct.), var’d 2018 ONCA 819). The Plaintiffs were granted leave to appeal to the Ontario Court of Appeal on the umbrella purchaser issue. In October 2018, the Court of Appeal varied the judgement of the Divisional Court to include the umbrella purchasers (Shah v. L.G. Chem Ltd., 2018 ONCA 819).

[20] The issue of umbrella purchasers will ultimately be resolved in an appeal pending before the Supreme Court of Canada in Godfrey v. Sony Corporation, 2016 BCSC 844, aff’d 2017 BCCA 302, leave to appeal to S.C.C. granted [2017] S.C.C.A. No. 408, an unrelated class-action proceeding that originated in British Columbia.

[21] By agreement among the parties, there have been no costs awarded in respect of any motions or appeals in the Ontario action.

[22] In the spring of 2016, the Plaintiffs began settlement negotiations with Sony. Over the next year, the settlement discussions continued. The negotiations culminated with an agreement in principle in June 2017. The Sony Settlement Agreement was signed in February 2018. Under the settlement, Sony agreed to pay $4.5 million, and it agreed to cooperate in the ongoing litigation by providing relevant documents and data, employee interviews and authentication of information and documents.

[23] In June 2017, the Québec action was authorized on behalf of persons in Québec. The Defendants’ motion for leave to appeal to the Québec Court of Appeal was denied. The Plaintiffs intend to amend the class definition in the Ontario action to exclude Québec residents.

[24] Both the Ontario and the Québec proceedings are now in the discovery stage. The defendants have produced more than 1.5 million documents. Class Counsel have loaded the documents into a review platform, performed various analytics and have spent 728 hours reviewing documents.

[25] There are parallel class proceedings in the United States brought on behalf of direct and indirect purchasers that have been consolidated pursuant to the United States’ multidistrict litigation protocol. Certification of the American proceedings was denied in April 2017, and subsequent attempts to have the denial of certification reconsidered for the indirect purchasers on new evidence have failed. Notwithstanding the denials of certification in the United States, several settlement agreements have been achieved in the United States. The direct purchaser litigation was resolved in its entirety, with most settlements being reached before the unsuccessful certification motion. In the indirect purchaser action, settlements have been reached with all defendants except one (Panasonic/Sanyo).

[26] As noted above, in Canada, on November 21, 2017, the Plaintiffs entered into a settlement agreement with Samsung, whereby Samsung agreed to pay a total of U.S. $2.2 million.

[27] The Settlement Agreements with NEC, Samsung, and Sony respectively provide the following, among other things:

• the Settlement Amounts will be held in an interest-bearing trust account for the benefit of Settlement Class Members;
• the costs of disseminating the Notice of Certification and Settlement Approval Hearings are to be paid by Class Counsel from the Settlement Amounts;
• the Settling Defendants agree to provide reasonable cooperation to the plaintiff class in order to assist in the continued prosecution of this action against the non-settling defendants.

[28] As part of the Settlement Agreements, the parties are seeking an order that precludes any right to contribution and indemnity against the Settling Defendants, and preserves the non-settling Defendants’ rights of discovery as against the Settling Defendants. The bar order provides that if a court ultimately determines there are rights of contribution and indemnity between co-conspirators, the Plaintiffs will limit their claims against the non-settling Defendants to those damages allocable to the sales and/or conduct of the non-settling Defendants.

[29] The NEC Settlement Agreement is conditional upon approval of the Ontario Court. The Samsung and Sony settlements are conditional upon approval of the Ontario and Québec Courts.

[30] Pursuant to court order, notice of the settlement approval hearing was disseminated. To date there have been no objections to the settlements.

2. Counsel Fee

[31] The combined legal fee sought by Siskinds, Sotos and CFM is $1,608,719.17. The following chart summarizes the fee sought:

NEC Settlement Amount	$ 50,000.00
Plus: Interest as of August 31, 2018	$ 1,167.83
Total	$51,167.83
Ontario and BC Fee Application (25%)	$12,791.96
Sony Settlement Amount	$4,500,000.00
Plus: Interest as of August 31, 2018	$ 34,126.03
Total	$4,534,126.03
Ontario and BC Fee (25% * 87% = 21.75%)	$986,172.41
Samsung SDI Settlement Amount	$2,778,600.00
Plus: Interest as of August 31, 2018	$ 24,870.37
Total	$2,803,470.37
Ontario and BC Fee (25% * 87% = 21.75%)	$609,754.81
Total Ontario and BC Fee Application	$1,608,719.18

[32] In Québec a fee approval application was brought by Belleau Lapointe s.e.n.c.r.l. in respect of Samsung and Sony. It made no fee claim in respect of NEC. The settlement and fee approval motions were heard and allowed by the Québec Superior Court on September 26, 2018, approving total fees of $237,628.24 and disbursements of $37,622.16. These amounts represent 13% of the 25% contingency fee sought by Class Counsel. In this motion, Siskinds, Sotos and CFM are requesting the remaining 87% of the 25% contingency fee.

[33] The total docketed time incurred since the commencement of the action until July 31, 2018 is broken down as follows:

Law Firm	Total Docketed Time
Siskinds	$1,057,030.00
Sotos	$1,076,152.34
CFM	$583,296.25
TOTAL	$2,716,478.59

[34] The requested fees of $1,608,719.18 represent a multiplier of 0.59 on the total docketed time to date.

[35] Class counsel are also claiming disbursements totalling $430,958.57. The largest disbursement pertains to expert fees.

[36] The requested fees and disbursements are consistent with the retainer agreements, which specify that “Class Counsel’s fee shall be 25% of the amounts paid by the defendants in satisfaction of any judgment(s), order(s), report(s) on a reference, or settlement(s), including any pre-judgment interest or post-judgment interest, plus disbursements and applicable taxes”.

C. Analysis

1. Settlement Approval

[37] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, or settlement of a class action. Section 29 states:

Discontinuance, abandonment and settlement

29.(1) A proceeding commenced under this Act and a proceeding certified as a class proceeding under this Act may be discontinued or abandoned only with the approval of the court, on such terms as the court considers appropriate.

Settlement without court approval not binding

(2) A settlement of a class proceeding is not binding unless approved by the court.

Effect of settlement

(3) A settlement of a class proceeding that is approved by the court binds all class members.

Notice: dismissal, discontinuance, abandonment or settlement

(4) In dismissing a proceeding for delay or in approving a discontinuance, abandonment or settlement, the court shall consider whether notice should be given under section 19 and whether any notice should include,

(a) an account of the conduct of the proceeding;

(b) a statement of the result of the proceeding; and

(c) a description of any plan for distributing settlement funds.

[38] 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 at para. 57 (S.C.J.), Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 at para. 43 (S.C.J.), Kidd v. Canada Life Assurance Company, 2013 ONSC 1868).

[39] 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 the 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 (Fakhri v. Alfalfa's Canada, Inc., 2005 BCSC 1123; Jeffery v. Nortel Networks Corp., 2007 BCSC 69; Corless v. KPMG LLP, [2008] O.J. No. 3092 at para. 38 (S.C.J.); Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 at para. 59 (S.C.J.); Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 at para. 45 (S.C.J.); Kidd v. Canada Life Assurance Company, 2013 ONSC 1868).

[40] In determining whether to approve a settlement, the court, without making findings of fact 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 ONSC 41673, 83 O.R. (3d) 481 at para. 10 (S.C.J.)). 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 at para. 23 (Ont. S.C.J.) )).

[41] In mandating that settlements are subject to court approval, the class action statutes place an onerous responsibility to ensure that the class members interests are not being sacrificed to the interests of Class Counsel who have typically taken on an enormous risk and who have a great deal to gain not only in removing that risk but in recovering an enormous reward from their contingency fee. The incentives and the interests of class counsel may not align with the best interests of the class members, and, thus, it falls on the court to seriously scrutinize the proposed settlement both in its making and in its substance (Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 ONSC 14855, 40 O.R. (3d) 429 at para. 30 (Gen. Div.); L. (T.) v. Alberta (Director of Child Welfare), 2015 ABQB 815 at para. 11; AFA Livforsakringsaktiebolag v. Agnico-Eagle Mines Ltd., 2016 ONSC 532 at paras. 3-17; Sheridan Chevrolet Ltd. v Furukawa Electric Co., 2016 ONSC 729; McIntyre v. Ontario, 2016 ONSC 2662 at para. 26; Welsh v. Ontario, 2018 ONSC 3217; Perdikaris v. Purdue Pharma, 2018 SKQB 86).

[42] 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 at para. 70 (S.C.J.); Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 ONSC 14855, 40 O.R. (3d) 429 (Gen. Div.)). A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally (Fraser v. Falconbridge Ltd., [2002] O.J. No. 2383 at para. 13 (S.C.J.); McCarthy v. Canadian Red Cross Society (2007), 158 ACWS (3d) 12 at para. 17 (Ont. S.C.J.) )).

[43] Generally speaking, the exercise of determining the fairness and reasonableness of a proposed settlement involves two analytical exercises. The first exercise is to use the factors and compare and contrast the settlement with what would likely be achieved at trial. The court obviously cannot make findings about the actual merits of the Class Members’ claims. Rather, the court makes an analysis of the desirability of the certainty and immediate availability of a settlement over the probabilities of failure or of a whole or partial success later at a trial. The court undertakes a risk analysis of the advantages and disadvantages of the settlement over a determination of the merits. The second exercise, which depends on the structure of the settlement, is to use the various factors to examine the fairness and reasonableness of the terms and the scheme of distribution under the proposed settlement (Welsh v. Ontario, 2018 ONSC 3217).

[44] In the case at bar, I am satisfied that the settlements with NEC, Samsung, and Sony, are fair and reasonable and in the best interests of the Class Members. These settlements are approved.

2. Fee Approval

[45] The fairness and reasonableness of the fee awarded in respect of class proceedings is to be determined in light of the risk undertaken by the lawyer in conducting the litigation and the degree of success or result achieved (Parsons v. Canadian Red Cross Society, 2000 ONSC 22386, [2000] O.J. No. 2374 at para. 13 (S.C.J.); Smith v. National Money Mart, 2010 ONSC 1334 at paras. 19-20, varied 2011 ONCA 233; Fischer v. I.G. Investment Management Ltd., [2010] O.J. No. 5649 at para. 25 (S.C.J.) )).

[46] Factors relevant in assessing the reasonableness of the fees of class counsel include: (a) the factual and legal complexities of the matters dealt with; (b) the risk undertaken, including the risk that the matter might not be certified; (c) the degree of responsibility assumed by class counsel; (d) the monetary value of the matters in issue; (e) the importance of the matter to the class; (f) the degree of skill and competence demonstrated by class counsel; (g) the results achieved; (h) the ability of the class to pay; (i) the expectations of the class as to the amount of the fees; and (j) the opportunity cost to class counsel in the expenditure of time in pursuit of the litigation and settlement (Smith v. National Money Mart, 2010 ONSC 1334, varied 2011 ONCA 233; Fischer v. I.G. Investment Management Ltd., [2010] O.J. No. 5649 at para. 28 (S.C.J.) )).

[47] The court must consider all the factors and then ask, as a matter of judgment, whether the fee fixed by the agreement is reasonable and maintains the integrity of the profession (Commonwealth Investors Syndicate Ltd. v. Laxton, [1994] B.C.J. No. 1690 at para. 47 (B.C.C.A.) )).

[48] In my opinion, having regard to the various factors used to determine whether to approve Class Counsel’s fee request, the request in the immediate case should be approved.

D. Conclusion

[49] For the above reasons, the settlements and the fee requests are approved.

Perell, J.

Released: October 15, 2018.