COURT FILE NO.: CV-13-483540
DATE: 2019/06/05
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, INC., TOSHIBA CORPORATION, TOSHIBA AMERICA ELECTRONIC COMPONENTS, INC. and TOSHIBA OF CANADA LIMITED
Defendants
Jean-Marc Leclerc for the Plaintiffs
Sandra Forbes for the Defendants LG Chem Ltd. and L. G. Chem America, Inc.
Vera Toppings and Daphne Papadatos for the Defendants Toshiba Corporation, Toshiba America Electronic Components, Inc. and Toshiba of Canada Limited
Meg Bennett 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.) Corporation, Sony Corporation, Sony Energy Devices Corporation, Sony Electronics Inc., and Sony of Canada Ltd.
Proceedings under the Class Proceedings Act, 1992
HEARD: June 5, 2019
PERELL, J.
REASONS FOR DECISION
A. Introduction
[1] In this already certified competition law class action, settlements have been reached and approved against three groups of Defendants; namely: (1) NEC Corporation and NEC Tokin Corporation, (collectively “NEC”); (2) Samsung SDI Co., Ltd. and Samsung SDI America, Inc. (collectively, “Samsung”) and (3) Sony Corporation, Sony Energy Devices Corporation, Sony Electronics, Inc., and Sony of Canada Ltd. (collectively “Sony”).
[2] The Plaintiffs, Khurram Shah and Alpina Holdings have now reached settlements with: (1) LG Chem, Ltd. and LG Chem America, Inc. (collectively “LG Chem”); and (2) Toshiba Corporation, Toshiba America Electronic Components, Inc. and Toshiba of Canada Limited (collectively “Toshiba”).
[3] The Plaintiffs now move for approval of this second round of settlements and Class Counsel moves for approval of the fees and disbursements in connection with the settlements. The orders are on consent of the settling parties and are unopposed by the non-settling defendants.
B. Factual Background
1. Factual and Procedural Background to the Class Action
[4] In June 2013, pursuant to the Class Proceedings Act,[^1] the Plaintiffs, Khurram Shah and Alpina Holdings Inc., brought a competition law class action. The action is brought on behalf of direct and indirect purchasers in two distribution channels in the marketplace for rechargeable Lithium Ion Battery Cells (“LIBs”).
[5] 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.
[6] The Plaintiffs allege that the Defendants 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] The Plaintiffs claim 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.[^2] 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.
[8] Related class proceedings with a consortium of Class Counsel are proceeding in British Columbia and Quebec.
[9] A detailed factual and procedural history of the class action is set out in my Reasons for Decision approving the first round of settlements[^3] and in my Reasons for Decision certifying this action for settlement purposes as against LG Chem.[^4] I incorporate that history by reference.
[10] For present purposes, I note that in the first round of settlements, the settlement amounts were (1) $50,000 for the NEC settlement); (2) $2.2 million (USD) for the Samsung settlement; and, (3) $4.5 million for the Sony settlement.
2. The LG Chem Settlement
[11] LG Chem pleaded guilty to criminal charges in the U.S. arising out of the alleged conspiracy and agreed to pay a fine of $1.056 million (USD). Its guilty plea, however, related to the period between April 2007 to September 2008, in contrast to the certified class period which is between 2000-2011. LG Chem’s guilty plea pertained to cylindrical LIB used in notebook computer battery packs only, in contrast to the certified class action, which pertains to all cylindrical, prismatic and polymer LIB, and to numerous products in which these batteries are used, not just notebook computer batteries. LG Chem settled the indirect purchaser claim in the U.S. for $39 million (USD).
[12] After Class Counsel had completed a detailed review of the Defendants’ production that involved some role by LG Chem and reviewed the proceedings in the United States involving LG Chem, settlement discussions between the Plaintiffs and LG Chem began in December 2017 and an agreement in principle was reached in March 2018.
[13] Negotiations continued and the settlement agreement was signed on October 1, 2018. The main terms of the settlement agreement are as follows:
• the settlement amount is $3.9 million (USD), approximately $5.1 million;
• LG Chem agrees to provide cooperation in the ongoing litigation, including making employees with knowledge of the allegations in the proceeding available for interviews with Class Counsel.
[14] The Canadian LG Chem settlement is 10% of the U.S. indirect purchaser settlement. I am advised that as a general rule, Class Counsel seek to obtain a result that is roughly 1/10th of the U.S. indirect settlement, on the theory that the Canadian population and economy is roughly 10% of the U.S.
[15] LG Chem’s market share was relatively modest, compared to other defendants. LG Chem’s market share was below 10% until the very end of the Class Period. LG’s LIB market share over the period during which it pleaded guilty was only approximately 7%. Other defendants with greater market share (including settled defendants Sony and Samsung, having market shares in the 15-20% range) stood to potentially gain more from the conspiracy than LG Chem.
[16] Class Counsel expressed the opinion that there were significant litigation risks. Class Counsel stated that the U.S. indirect class action was troubled by numerous issues and was never certified. Class Counsel opined that if there was no settlement, many of the issues debated in the U.S. could be expected to be raised as disputes in the Canadian litigation against LG Chem, including: (a) whether the scope of available data would be sufficient to establish antitrust impact for all products identified in the proposed class definition; (b) whether the expert’s regression analysis could successfully isolate the effects on LIB and LIB products (the overcharge); and (c) whether there was sufficient evidence to prove pass-through of overcharges to indirect purchasers.
3. The Toshiba Settlement
[17] The Plaintiffs and Toshiba had a first round of settlement negotiations that were unsuccessful. However, after the settlement in the U.S. was announced, the negotiations resumed and occurred over a short period of time in late 2018. The Toshiba settlement agreement was signed in February 2019.
[18] Under the terms of the agreement, among other things, Toshiba pays settlement funds of $264,957.67 and is required to provide an oral evidentiary proffer to Class Counsel.
[19] The U.S. indirect purchaser settlement with Toshiba is $2.0 million (USD). The proposed Canadian settlement represents 10% of the U.S. settlement amount, on the basis of applicable exchange rates at the time of the agreement with Toshiba.
[20] Class Counsel’s information is that Toshiba existed the LIB market in 2004, prior to the guilty pleas by other defendants. Toshiba did not plead guilty and was not prosecuted in any jurisdiction. Toshiba had very limited market share prior to 2004: 11% in 2000, and 7% in 2002. The plaintiffs’ review of the documentary evidence involved limited evidence implicating Toshiba in the alleged conspiracy.
4. Class Counsel Fee Request
[21] Siskinds LLP and Sotos LLP are co-counsel in the Ontario action. Parallel litigation was commenced in B.C. and Quebec. Siskinds and Sotos are working cooperatively with the law firms Camp Fiorante Matthews Mogerman LLP, counsel in the B.C. action, and Belleau Lapointe s.e.n.c.r.l. counsel in the Quebec action.
[22] Morganti Legal PC commenced a parallel proceeding in January 2013. By agreement with Siskinds, Sotos and Camp Fiorante Matthews Mogerman LLP, Morganti withdrew from the case and discontinued its action. Class Counsel agreed to pay Morganti its disbursements incurred in the litigation ($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. As there is a negative multiplier, Morganti will only receive a portion of its time, consistent with that received by Ontario and B.C. counsel. Any fee amounts payable to Morganti will be paid out of any award made to Class Counsel. It will not result in a higher payment by settlement class members.
[23] In January 2019, Class Counsel’ fee request in respect of settlements involving NEC, Samsung SDI and Sony in the amount of $1,608,719.18 and disbursements of $446,519.27 (including interest) was approved.
[24] Consistent with the retainer agreements, which specify a 25% contingency fee, Class Counsel claim $1,186,257.10 in fees. Class Counsel also claim $35,602.78 in disbursements (including interest).
[25] The combined legal fee sought by Siskinds, Sotos and CFM is $1,186,257.10. The following chart summarizes the fee sought:
Toshiba Settlement Amount
$264,759.97
Ontario and B.C. Fee Application (25%)
$66,189.92
LG Chem Settlement Amount
$5,119,923.59
Plus: Interest as of April 30, 2019
$29,810.58
Total
$5,149,734.17
Ontario and B.C. Fee Application (25% * 87% = 21.75%)
$1,120,067.18
Total Ontario and BC Fee Application
$1,186,257.10
[26] The total fees are less than the total docketed time (a multiplier of 0.85).
[27] Class Counsel have funded all disbursements associated with advancing this action and did not apply to the Class Proceedings Fund or a third-party funder.
C. Analysis
1. Settlement Approval
[28] 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.
[29] 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.[^5]
[30] 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.[^6]
[31] 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.[^7] An objective and rational assessment of the pros and cons of the settlement is required.[^8]
[32] 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.[^9]
[33] 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.[^10] A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally.[^11]
[34] 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.[^12]
[35] In the case at bar, I am satisfied that the settlements with LG Chem and Toshiba are fair and reasonable and in the best interests of the Class Members. These settlements are approved.
2. Fee Approval
[36] 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.[^13]
[37] 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.[^14]
[38] 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.[^15]
[39] 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
[40] For the above reasons, the settlements and the fee requests are approved.
Perell, J.
Released: June 5, 2019.
COURT FILE NO.: CV-13-483540
DATE: 2019/06/05
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, INC., TOSHIBA CORPORATION, TOSHIBA AMERICA ELECTRONIC COMPONENTS, INC. and TOSHIBA OF CANADA LIMITED
Defendants
REASONS FOR DECISION
PERELL J.
Released: June 5, 2019
[^1]: 1992, S.O. 1992, c. 6.
[^2]: R.S.C. 1985, c. C-34.
[^3]: Shah v. LG Chem Ltd., 2018 ONSC 6101.
[^4]: Shah v. LG Chem, Ltd., 2019 ONSC 554.
[^5]: 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.
[^6]: 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.
[^7]: Baxter v. Canada (Attorney General) (2006), 2006 CanLII 41673 (ON SC), 83 O.R. (3d) 481 at para. 10 (S.C.J.).
[^8]: Al-Harazi v. Quizno’s Canada Restaurant Corp. (2007), 49 C.P.C. (6th) 191 at para. 23 (Ont. S.C.J.).
[^9]: Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 CanLII 14855 (ON SC), 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.
[^10]: 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 CanLII 14855 (ON SC), 40 O.R. (3d) 429 (Gen. Div.).
[^11]: 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.).
[^12]: Welsh v. Ontario, 2018 ONSC 3217.
[^13]: Parsons v. Canadian Red Cross Society, 2000 CanLII 22386 (ON SC), [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.).
[^14]: 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.).
[^15]: Commonwealth Investors Syndicate Ltd. v. Laxton, [1994] B.C.J. No. 1690 at para. 47 (B.C.C.A.).```