Court File and Parties

COURT FILE NO.: 04-CV-274614-CP

DATE: 20191202

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: TORONTO TRANSIT COMMISSION, Plaintiff

– and –

MORGANITE CANADA CORPORATION (c.o.b. as NATIONAL ELECTRICAL CARBON CANADA), NATIONAL ELECTRICAL CARBON PRODUCTS, INC., MORGANITE INC., MORGANITE ELECTRICAL CARBON LTD., THE MORGAN CRUCIBLE COMPANY PLC, CARBONE OF AMERICA (LCL) LTD., LE CARBONE LORRAINE S.A., SCHUNK GmbH, SCHUNK KOHLENSTOFFTECHNIK GmbH and SGL CARBON A.G., Defendants

BEFORE: E.M. Morgan J.

COUNSEL: Steven Rosenhek and Nicholas Carmichael, for the Plaintiff Grant Worden, for the Defendant, SGL Carbon A.G. Glenn Zakaib, for the Carbone Defendants John Brown, for the Schunk Defendants

HEARD: November 29, 2019

CERTIFICATION AND DISMISSAL

I. The certification request

[1] Counsel for the Plaintiff and counsel for the Defendants, Carbone Of America (LCL) Ltd., Le Carbone Lorraine S.A., Schunk GmbH, Schunk Kohlenstofftechnik GmbH and SGL Carbone A.G. (collectively, the “Remaining Defendants”) appeared before me to advise that the issues remaining in this action have been resolved. They seek to certify the action on consent, to approve class counsel fees in the amount of $239,895.26, and to have the action dismissed.

II. The action to date

[2] The action was commenced by Statement of Claim issued on August 25, 2004. It is based on allegations of price fixing and price maintenance in the markets for electrical carbon current collectors and carbon brushes. Those items are used in a number of different products, including in public transit vehicles. The proposed class was composed of all purchasers of these products in Canada.

[3] In 2006, the Plaintiff settled with the Defendants, Morganite Canada Corporation, National Electrical Carbon Products, Inc., Morganite Inc., Morganite Electrical Carbon Ltd., and the Morgan Crucible Company PLC (collectively, the “Settling Defendants”) for $825,000. That settlement was approved by Hoy J. in Toronto Transit Commission v Morganite Canada Corporation, 2007 ONSC 2811. Her Honour also approved the amendment of the Statement of Claim to include only Canadian municipal transit authorities in the class.

[4] The Remaining Defendants have continued to be Defendants in the action after the Plaintiff resolved its claim against the Settling Defendants.

[5] Five class members have to date submitted eligible claims in accordance with the 2007 settlement. A total of $600,000 of the settlement proceeds was distributed to the class members. The balance of $225,000 was held back by class counsel and placed in an interest-bearing trust account.

[6] The Plaintiff and the five class members wish to terminate their claim. As indicated above, they are seeking certification, court approval of class counsel’s fees, and dismissal of the action on a without costs basis. I see no reason not to grant the Orders sought.

[7] In certifying the claim as against the Settling Defendants, Hoy J. reviewed the nature of the claim. She noted that when it comes to class action certification, “The requirements are the same in a settlement context as in a litigation context, although it is generally accepted that they need not be as rigorously applied in a settlement context as a litigation context”: TTC v Morganite, para 11.

[8] The class and its claims have not changed since the date of Justice Hoy’s ruling. As noted, since that time only 5 claimants have come forward as class members from among the “less than 10” that the parties estimated might make claims at the time. Given the passage of 12 years, one can assume that the 5 claimants who came forward to share in the proceeds paid by the Settling Defendants are the only class members.

[9] In her reasons for judgment, Hoy J. addressed each of the criteria under section 5(1) of the Class Proceedings Act, 1992, SO 1992, c 6 (“CPA”). She found the action to have met all of those criteria.

[10] Since everything but the number of Defendants is the same today as it was at the 2007 settlement, I can do no better than to set out Justice Hoy’s reasons for certification, at paras 14-23:

I am satisfied that the pleadings disclose a cause of action.

The proposed class, as set out in the Amended Amended Statement of Claim is as follows:

All municipal transit authorities in Canada which purchased electric carbon products, specifically carbon current collectors and carbon brushes, in Canada directly from the defendants, their co-conspirator, and their subsidiaries or controlled affiliates, during the period beginning in 1976 through and continuing to December 12, 2006, the date of the settlement agreement (the “Class Period”).

The class is defined by reference to objective criteria, without reference to the merits of the action.

As discussed below, the settlement is based on sales revenue during 1995 to 1998 only. The evidence before me is that the 1976 start date for the Class Period was selected based on findings of the European Commission regarding the historical origins of the cartel activity in Europe among the defendants and their predecessors and affiliates. Class counsel says it chose 1976 as a start date for the conspiracy because that was the first date on which a right of private action for anti-competitive conduct existed in Canada, pursuant to the predecessor statutes to the Competition Act.

Class counsel believes that the total number of transit authorities falling within the Class is less than 10, even with the relatively long Class Period.

I am satisfied that the definition of the class is not overly broad, and the requirement of s. 5(1)(e) of then Act is met in this settlement context.

Class counsel proposes that the Settlement Class be certified on the basis of the following common issues:

(a) During the Class Period, did Morganite Electrical Carbon Ltd. and its affiliates conspire, combine, agree or arrange with the other Defendants to prevent or lessen unduly competition in the supply and sale of Electrical Carbon Products to municipal transit authorities in Canada through the implementation of a price-fixing and market-sharing agreement?

(b) During the Class Period, did Morganite Canada Corporation implement pricing directions made by other concerning Electrical Carbon Products sold to certain municipal transit authorities in Canada?

I am satisfied in this settlement context that the proposed common issues will avoid duplication of fact-finding and legal analysis and meet the requirements of s. 5(1)(c) of the Act.

Similarly, in this settlement context I am satisfied that a class action is a fair, efficient and manageable way of advancing the claim and that it is preferable to other means of resolving the claims of the class members, and that the requirement of s. 5(1)(d) of the Act is met.

I am also satisfied that the TTC will adequately represent the interests of the class and does not have an interest in conflict with the interests of other members of the class. The settlement agreement provides that all class members share pro rata in the settlement funds. The settlement agreement supplants the requirement for a litigation plan.

III. The current proposal

[11] Since the settlement with the Settling Defendants, Morganite Canada Corporation and its affiliates have not been involved in the action. However, the substance of the common issues identified by Hoy J. remain the same. Accordingly, the common issues as defined by Hoy J. can serve as common issues for present purposes, with the names of the Remaining Defendants substituted for Morganite Canada Corporation and its affiliates. In all other respects the reasoning of Justice Hoy in the passages quoted above is apt today.

[12] Section 29(1) of the CPA grants the court authority to approve a discontinuance or abandonment of a proceeding where appropriate. Although it does not specifically mention dismissal of a proceeding, there appears to be no substantive reason why that should not also be within the court’s authority to approve. In Gradja v Barrick Gold Corporation, 2019 ONSC 4869, the parties had settled and agreed that the claim would be dismissed on a without costs basis. Perell J. observed, at para 13, that, “Practically speaking, the relief sought in the immediate case is equivalent to an abandonment or discontinuance of the proposed class action.”

[13] Under section 29, where the court grants approval to discontinue or abandon a claim it is incumbent on it to determine that there will be no prejudice to the class. The same is true with respect to a dismissal of the claim. The purpose of the approval is to prevent the abuse that would obtain if there were any suggestion that the Plaintiff or its counsel had designed a collusive or inadequate settlement: Durling v Sunrise Propane Energy Group Inc., [2009] OJ No 5969, para 14.

[14] Plaintiff’s counsel have advised that the class members have all been compensated in the payout from the Settling Defendants. They have also discussed with their client the fact that pursuing any further remedy against the Remaining Defendants may cost more than it recovers and, indeed, may expose the Plaintiff and class to costs. Under those circumstances, there does not appear to be any prejudice to the class members in having the claim dismissed at this point. There is certainly nothing to suggest anything collusive or otherwise untoward about the proposed dismissal of the action.

[15] Furthermore, where a settlement on a ‘no payment, no costs’ basis is advantageous and consented to by both sides, “there is no need or reason to require a notice of the [dismissal]: Web Objective, Inc. v SociaLabra, Inc., 2018 ONSC 664, para 25. The class is composed of a very small number of municipal transportation companies, all of whom have been involved in the matter since the time of the resolution with the Settling Defendants. The dismissal at this point is more of a formality to end the proceeding than a substantive new step which will take any of the class members by surprise.

[16] The fee payment to class counsel represents, with accrued interest, what the class members set aside and anticipated when they received the proceeds of settlement from the Settling Defendants. It is a reasonable amount – roughly 25% of the settlement proceeds. I see no reason why it should not be approved as requested.

IV. Disposition

[17] The action is hereby certified as a class proceeding under the CPA.

[18] Fees in the amount of $239,895.26 are approved and are to be payed to class counsel out of the funds held in trust by class counsel in respect of this matter.

[19] The action is dismissed without costs for or against any party.

[20] There will be an Order signed as submitted to me at the hearing of the motion.

Morgan J.

Date: December 2, 2019```