COURT FILE NO.: CV-13-483540

DATE: 2019/11/28

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

Jean-Marc Leclerc for the Plaintiffs

Kevin Wright for the Defendants, Hitachi Maxell Ltd., Maxell Corporation of America

Maureen Littlejohn for the Defendant LG Chem, Ltd., LG Chem America Inc.

Proceedings under the Class Proceedings Act, 1992

HEARD: November 28, 2019

PERELL, J.

REASONS FOR DECISION

1. Introduction

[1] In this already certified competition law class action, settlements have been reached and approved against five 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”) (3) Sony Corporation, Sony Energy Devices Corporation, Sony Electronics, Inc., Sony of Canada Ltd. (collectively “Sony”); (4) LG Chem, Ltd. and LG Chem America, Inc. (collectively “LG Chem”) and (5) Toshiba Corporation, Toshiba America Electronic Components, Inc. and Toshiba of Canada Limited (collectively “Toshiba”).

[2] The Plaintiffs, Khurram Shah and Alpina Holdings Inc., have reached another settlement, this time with Maxell Holdings, Ltd. (formerly Hitachi Maxell Ltd.) and Maxell Corporation of America (collectively “Maxell”). On September 9, 2019, the action was certified as a class action for settlement purposes.[^1] The Plaintiffs now move for approval of the settlement. Including Maxell, the settlements to date total $13.0 million, and Class Counsel also moves for approval of its fee and disbursements.

B. Background to the Class Action

[3] In June 2013, pursuant to the Class Proceedings Act,[^2] the Plaintiffs, Khurram Shah and Alpina Holdings Inc., brought a competition law class action. The action was brought on behalf of direct and indirect purchasers in two distribution channels in the marketplace for rechargeable Lithium Ion Battery Cells (“LIBs”).

[4] 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.

[5] The Plaintiffs alleged 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.

[6] 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.[^3] 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.

[7] Related class proceedings with a consortium of Class Counsel are proceeding in British Columbia and Quebec.

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

[9] Two Japanese corporations, NEC Corporation and NEC Tokin Corporation were successful in having the action dismissed on jurisdictional grounds.[^4]

[10] In 2015, I certified the action as a class action under the Class Proceedings Act, 1992.[^5] 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.

[11] 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 concluded that these causes of action, while they exist, have been precluded by the statutory cause of action. I did not certify the predominant purpose conspiracy and the interference with economic relations tort claim.

[12] 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. The Divisional Court subsequently allowed the Plaintiffs’ appeal as it related to the claim for the tort of unlawful means conspiracy, but did not allow the appeal as it related to umbrella purchaser claims.[^6] The Plaintiffs were granted leave to appeal to the Ontario Court of Appeal on the umbrella purchaser issue.

[13] On October 12, 2018, the Ontario Court of Appeal reversed the decision of the Divisional Court and certified the action to include the claims of umbrella purchasers.[^7] Leave to appeal to the Supreme Court of Canada was sought in December 2018. Leave to appeal was denied.[^8] The result of the appeals is that umbrella purchaser claims and claims for unlawful means conspiracy are certified.[^9]

[14] A related case in Quebec that is being pursued on a coordinated basis with Belleau Lapointe s.e.n.c.r.l ("Belleau") was authorized in 2017. The Defendants' motion for leave to appeal to the Quebec Court of Appeal was denied. Now that certification is final, the Plaintiffs will amend to the Ontario class definition to exclude Quebec residents and to include umbrella purchasers.

[15] Both the Ontario and Quebec proceedings are now in the discovery stage. The parties have exchanged voluminous documentary discovery

[16] While the certification contest has been raging, Class Counsel reached settlements with NEC, Samsung, and Sony. The action was re-certified for settlement purposes and the settlements were approved.[^10] Subsequently, settlements were reached with LG Chem and Toshiba and the settlements were approved.[^11] As noted above, the Plaintiffs negotiated a settlement with Maxell and now seeks approval of that settlement.

[17] If this settlement is approved, the Panasonic/Sanyo Defendants will be the only remaining Defendants in the litigation.

1. Background to the Settlements

[18] On October 11, 2018, the Plaintiffs entered into a settlement agreement with Maxell, which agreed to pay settlement proceeds of $300,000 USD.

[19] The Settlement Agreement provides the following, among other things:

a. The $300,000 USD will be held in an interest-bearing trust account for the benefit of Settlement Class Members;

b. The costs of disseminating the Notices of Hearing are to be paid by Class Counsel from the Settlement Amount;

c. Maxell agrees to provide reasonable cooperation to the Plaintiff class in order to assist in the continued prosecution of this action against the non-settling Defendants.

[20] The Settlement Agreement is conditional upon approval of the Ontario court. The parallel Quebec class action was discontinued as against Maxell. The parallel British Columbia class action will be dismissed as against Maxell and other Releasees who are named as Defendants in the BC Proceeding, and the BC Plaintiff shall seek to register the Ontario order approving the Settlement Agreement with the British Columbia Supreme Court, pursuant to the Enforcement of Canadian Judgments and Decrees Act.[^12]

[21] In assessing the merits of the settlement, Class Counsel considered information about the nature and scope of the conspiracy, based on documentary discovery, information from settled Defendants, the European Commission decision, and publicly available U.S. court materials.

[22] Class Counsel also considered the outcome of the U.S. litigation. The plaintiffs in the U.S. litigation sought certification of a narrower class compared to Canada in terms of product definition. Certification was denied. The U.S. direct and indirect purchaser actions settled in their entirety.

[23] Class Counsel use the value of the U.S. indirect purchaser settlement as a benchmark. Class Counsel consider the indirect purchaser settlements as an appropriate comparison, rather than the direct and indirect purchaser settlements combined, because most lithium batteries entered Canada after being incorporated into a finished product. As a general rule, Class Counsel seek to obtain a result that is roughly 10% of the U.S. indirect settlement, on the theory that the Canadian population and economy is roughly 10% of the U.S..

[24] The Maxell Canadian settlement is just under 9% of the U.S. settlement.

[25] In accepting this amount, Class Counsel considered the following factors that were specific to Maxell: (a) Maxell denied liability; (b) Maxell did not plead guilty or seek immunity or leniency in any jurisdiction; (c) Maxell's witnesses in the U.S. litigation denied any wrongdoing; and (d) the documents do not disclose a liability case against Maxell. Although Class Counsel did not agree that Maxell had no exposure, Class Counsel were aware that there was limited documentary evidence implicating Maxell in the alleged conspiracy.

[26] The Quebec Proceeding was discontinued as against Maxell. Quebec represents approximately 23% of the Canadian population.

[27] Maxell had a modest market share in the lithium battery market (ranging from 3-5% between 2000 and 2010), and Maxell had no sales of pouch batteries and almost no sales of cylindrical batteries. The vast majority of Maxell's sales were of prismatic batteries (a more difficult case to prove due to Defendants' lower market share).

C. Class Counsel Fee Request

[28] Consistent with the retainer agreements, which specifies a 25% fee, Class Counsel request $97,997.38 in fees. Class Counsel also request $18,785.79 in disbursements (including interest of $208.70).

[29] 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.

[30] To date, this Court approved Ontario and B.C. counsel's fees in the amount of $2,666,232.93 and disbursements totaling $482,122.05 (including interest) in respect of settlements involving NEC ($50,000), Samsung SDI Sony Toshiba ($264,759.67) and LG totaling approximately $12.7 million. If the Court approves the proposed fee request, the total fees awarded to Ontario and B.C. counsel will be $2,764.230.31.

[31] The total docketed time incurred since the commencement of the action until October 31, 2019 has a value of $3,520 001.50 is broken down as follows:

Law Firm	Docket time since last fee request	Total Docketed Time Since Commencement
Sotos	$66,184.84	$1,269,933.00
Siskinds	$146,020.00	$1,543,830.50
CFM	$33,702.25	$706,238.00

D. Analysis

1. Settlement Approval

[32] 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.

[33] 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.[^13]

[34] 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.[^14]

[35] 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.[^15] An objective and rational assessment of the pros and cons of the settlement is required.[^16]

[36] 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.[^17]

[37] 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.[^18] A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally.[^19]

[38] 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.[^20]

[39] In the case at bar, I am satisfied that the settlement with Maxell is fair and reasonable and in the best interests of the Class Members. The settlement is approved.

2. Fee Approval

[40] The fairness and reasonableness of the fees 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.[^21]

[41] 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.[^22]

[42] 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.[^23]

[43] 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.

E. Conclusion

[44] For the above reasons, the settlement and the fee request are approved.

Perell, J.

Released: November 28, 2019.

COURT FILE NO.: CV-13-483540

DATE: 2019/11/28

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

REASONS FOR DECISION

PERELL J.

Released: November 28, 2019

[^1]: Shah v. LG Chem, Ltd., 2019 ONSC 5202

[^2]: 1992, S.O. 1992, c. 6.

[^3]: R.S.C. 1985, c. C-34.

[^4]: See Shah v. LG Chem, Ltd., 2015 ONSC 2628.

[^5]: Shah v. LG Chem, Ltd., 2015 ONSC 6148, leave to appeal granted 2016 ONSC 4670 (Div. Ct.), var’d 2017 ONSC 2586 (Div. Ct.).

[^6]: Shah v. LG Chem, Ltd., 2017 ONSC 2586 (Div. Ct.).

[^7]: Shah v. LG Chem, Ltd. 2018 ONCA 819.

[^8]:

[^9]: The umbrella purchaser issue was argued before the Supreme Court of Canada in Godfrey v Sony Corporation in December 2018. In September 2019, the Supreme Court held that umbrella purchasers in that case had a cause of action under s. 36 of the Competition Act. See Godfrey v Sony Corporation *

[^10]: Shah v. LG Chem, Ltd., 2018 ONSC 6106.

[^11]: Shah v. LG Chem, Ltd., 2019 ONSC 554 and Shah v. LG Chem, Ltd., 2019 ONSC 3453.

[^12]: S.B.C. 2003, c.29.

[^13]: 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.

[^14]: 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.

[^15]: Baxter v. Canada (Attorney General) (2006), 2006 CanLII 41673 (ON SC), 83 O.R. (3d) 481 at para. 10 (S.C.J.).

[^16]: Al-Harazi v. Quizno’s Canada Restaurant Corp. (2007), 49 C.P.C. (6th) 191 at para. 23 (Ont. S.C.J.).

[^17]: 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.

[^18]: 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.).

[^19]: 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.).

[^20]: Welsh v. Ontario, 2018 ONSC 3217.

[^21]: 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.).

[^22]: 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.).

[^23]: Commonwealth Investors Syndicate Ltd. v. Laxton, [1994] B.C.J. No. 1690 at para. 47 (B.C.C.A.).