Court File and Parties

COURT FILE NO.: 1899/15 CP DATE: 2021-03-12 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sean Allot, Plaintiff AND: Panasonic Corporation; Panasonic Corporation of North America; Panasonic Canada Inc.; KOA Corporation; KOA Speer Electronics, Inc.; ROHM Co. Ltd.; ROHM Semiconductor U.S.A., LLC.; Vishay Intertechnology, Inc.; Hokuriku Electric Industry Co.; HDK America Inc.; Kamaya Electric Co., Ltd.; Kamaya, Inc.; ALPS Electric (North America), Inc.; Midori Precisions Co., Ltd.; Midori America Corporation; Susumu Co., Ltd.; Susumu International (USA) Inc.; Tokyo Cosmos Electric Co.; and Tocos America, Inc., Defendants

BEFORE: Justice R. Raikes

COUNSEL: Jonathan Foreman, Jean-Marc Metrailler, Sarah Bowden, Anne Legate-Wolfe, Linda Visser and Kristen King, Counsel for the Plaintiff Emrys Davis and John Rook, Counsel, for the Panasonic Defendants Katherine Kay and Sinziana Hennig, Counsel for the KOA Defendants Paul Martin, Counsel for the ROHM Defendants Donald Houston and Gillian Kerr, Counsel for the Vishay Defendants Paul Wearing and Robert Tighe, Counsel for the Hokuriku Defendants Sandra Forbes and Maura O’Sullivan, Counsel for the Kamaya Defendants Kyle Taylor, James Orr, and Annie Tayyab, Counsel for the Alps Defendants Tetsuya Takahashi and Arwin Ataee, Counsel for the Midori Defendants Kevin Wright, Todd Shikaze, and Wendy Sun, Counsel for the Susumu Defendants David Kent and Samantha Gordon, Counsel for the Tokyo Cosmos and Tocos Defendants

HEARD: February 2, 2021

Endorsement

[1] The plaintiff has entered into a settlement agreement with the Panasonic defendants. That settlement requires court approval pursuant to s. 29(2) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, as amended. The plaintiff brings a motion for that approval. As part of the settlement, if approved, the action will be dismissed as against the Panasonic defendants.

[2] The motion is supported by the settling defendants. The remaining non-settling defendants take no position on the motion.

[3] This action was earlier certified for settlement purposes. If the settlement is not approved, the certification will automatically be set aside and treated as if it never occurred. The same applies to the fact of and terms of the settlement agreement.

[4] There are three parallel class proceedings: one in each of Quebec and British Columbia, and this action. By the terms of the settlement agreement, court approval is required in all three actions. If any court declines approval, the settlement is terminated and, as above, the action proceeds as if there never was a settlement or certification.

[5] It has been brought to my attention that the settlement has been approved in Quebec.

Nature of the Action

[6] This action was commenced on September 11, 2015. The plaintiff alleges in his statement of claim that the defendants participated in an unlawful conspiracy to fix, raise, maintain, or stabilize the price of linear resistors in Canada with the intent to raise prices of linear resistors and products containing linear resistors.

[7] Linear resistors are devices that regulate the flow of electric current. They are found in a wide range of electronic products including computers, televisions, cell phones etc.

Class Definition

[8] On October 19, 2020, I certified the following class, for settlement purposes only, as against the Panasonic defendants:

All Persons or entities in Canada who purchased Linear Resistors or a product containing a Linear Resistor between July 9, 2003 and September 14, 2015, other than (1) all BC Settlement Class members (2) all Quebec Settlement Class members and (3) Excluded Persons.

(The capitalized words in the class definition are defined terms in the settlement agreement.)

[9] The Quebec and British Columbia actions were likewise authorized/certified on the same basis.

Class Counsel

[10] Class counsel in this action is working cooperatively with plaintiff’s counsel in the Quebec and British Columbia actions. All are experienced class action counsel with past involvement in complex cases involving, inter alia, price fixing cases.

Procedural Status

[11] The three actions are still in their procedural infancy despite the fact that this action is already more than five years old. The plaintiff has served his certification motion materials but, to date, the defendants have not filed responding materials. A contested certification motion with all or some of the remaining defendants seems likely. The return date for that motion has not been set.

Settlement Agreement

[12] This is the first settlement in the action. The parties entered into a written settlement agreement on July 7, 2020. Pursuant to the agreement,

1. The Panasonic defendants will pay $2,350,000 for the benefit of the settlement class. That amount is inclusive of prejudgement interest and costs. The settlement class includes class members from all three actions;

2. The Panasonic defendants will provide cooperation to the plaintiffs as described below; and

3. In return, the actions against these defendants are dismissed and full and final releases of the Panasonic defendants are given. Those releases are incorporated into the terms of the orders made by the courts.

[13] Subject to payment of class counsel fees, the plaintiffs propose that the monies paid be held in trust pending resolution of the action as against all or other defendants.

[14] Section 4 of the settlement agreement sets out the cooperation to be provided by the Panasonic defendants, and the limits on the use to be made of documentation provided by those defendants. The cooperation includes

1. An oral evidentiary proffer through a meeting between counsel that will set out Panasonic’s relevant and non-privileged information derived from their investigation and factual inquiries of the matters in issue. That will include information from business records, testimonial transcripts, and employee or witness interviews;

2. Within 30 days after the “Effective Date” (a defined term), Panasonic will provide a. copies of documents together with any pre-existing translations produced by Panasonic to the Canadian Competition Bureau, the U.S. Department of Justice and/or in the U.S. litigation. b. any deposition transcripts for depositions of current or former employees, officers or directors in the U.S. litigation including exhibits, and any deposition transcripts of future depositions in the U.S. litigation; c. copies of declarations or affidavits of current or former employees, officers or directors of Panasonic, including all exhibits; d. copies of responses to requests to admit in the U.S. litigation; e. disclosure of customer and sales data produced in the U.S. litigation and Panasonic will answer reasonable questions in respect of that data; and f. disclosure of the identities and any known particulars of major global original equipment manufacturers reasonably known to Panasonic that purchased linear resistors that were incorporated into products sold to customers in Canada during the class period.

3. Within 90 days after the action is certified, Panasonic will make reasonable efforts to provide documentation concerning finished products containing linear resistors sold in Canada during the claim period as well as additional sales information; and

4. A voluntary video or telephone interview with counsel for Panasonic and one current employee, not under oath, but it can be recorded.

[15] In addition, Panasonic agreed to provide some ongoing assistance to authenticate documents and to provide evidence on a summary judgment motion or at trial. There are limits on the extent of the obligations of the Panasonic defendants.

[16] Plaintiff’s counsel advise that the evidentiary proffer has already occurred and the plaintiff has garnered significant information through that proffer. They are satisfied that the cooperation from the Panasonic defendants will be very helpful in the prosecution of the action against the remaining defendants. They note that they have obtained information that would not ordinarily be available to them at this stage of the proceeding.

The Negotiations

[17] The negotiations took place between counsel over the course of several months. No mediator was involved. The negotiations were arm’s length and adversarial. The Panasonic defendants were involved in comparable U.S. litigation which they also resolved.

Non-Settling Defendants

[18] The settlement agreement and draft order provided seek to anticipate and address the concerns that might arise for defendants who are not party to the settlement. The terms used are standard in cases such as this one where there are multiple defendants who share potential joint and several liability with possible prospective crossclaims.

[19] As mentioned, the non-settling defendants take no position on the motion for settlement approval.

Notice to Class and Objectors

[20] Notice was provided to putative class members with respect to certification and the settlement in accordance with my order dated October 19, 2020. The notice program included, inter alia, newspaper publication, a press release, a banner ad, and posting on social media sites dedicated to this action. Class member were advised of their right to opt out of the action and to oppose the approval of the settlement including how to do so.

[21] There were no opt-outs and no objections made to the settlement.

Legal Principles

[22] As indicated, class action settlements require court approval: Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 29.

[23] In Osmun v. Cadbury Adams Canada Inc., 2010 ONSC 2643, Strathy J. (as he then was) adopted the summary of principles applicable to a motion for settlement approval from the decision of the Cullity J. in Nunes v. Air Transat A.T. Inc. at para. 7:

a) to approve a settlement, the court must find that it is fair, reasonable and in the best interests of the class;

b) the resolution of complex litigation through the compromise of claims is encouraged by the courts and favoured by public policy;

c) there is a strong initial presumption of fairness when a proposed settlement, which was negotiated at arm’s length by counsel for the class, is presented for court approval;

d) to reject the terms of a settlement and require the litigation to continue, a court must conclude that the settlement does not fall within a zone of reasonableness;

e) a court must be assured that the settlement secures appropriate consideration for the class in return for the surrender of litigation rights against the defendants. However, the court must balance the need to scrutinize the settlement against the recognition that there may be a number of possible outcomes within a zone or range of reasonableness. All settlements are the product of compromise and a process of give-and-take. Settlements rarely give all parties exactly what they want. Fairness is not a standard of perfection. Reasonableness allows for a range of possible resolutions. A less than perfect settlement may be in the best interests of those affected by it when considered in light of the risks and obligations associated with continued litigation;

f) it is not the court’s function to substitute its judgment for that of the parties or to attempt to renegotiate a proposed settlement. Nor is it the court’s function to litigate the merits of the action or simply rubber stamp a proposed settlement; and

g) the burden of satisfying the court that a settlement should be approved is on the party seeking approval.

[24] In assessing the reasonableness of a proposed settlement, the following factors are useful:

a) the presence of arm’s length bargaining and the absence of collusion;

b) the proposed settlement terms and conditions;

c) the number of objectors and nature of objections;

d) the likelihood of recovery or likelihood of success;

e) the recommendations and experience of counsel;

f) the future expense and likely duration of litigation;

g) information conveying to the courts the dynamics of, and positions taken by the parties during the negotiations;

h) the recommendation of neutral parties, if any; and

i) the degree and nature of communications by counsel and the representative plaintiff with class members during the litigation.

(See Osmun, at para. 32; Nunes, at paras. 6-7; Farkas v. Sunnybrook and Women’s Health Sciences Centre, at para. 45).

[25] The above factors are not to be applied in a mechanical way. It is not necessary that all factors be present in every case, nor that they be given equal weight: Osmun, at para. 33. These factors are a guide to aid in assessing whether the settlement is fair and reasonable and in the best interests of the class as a whole.

[26] In the absence of evidence to the contrary, the recommendation of experienced counsel should be given great weight. Counsel are well-positioned to assess the potential risks and rewards of the litigation: Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., at para. 142.

[27] Early settlements that help both to finance and advance the prosecution of the action against non-settling defendants are productive for both class counsel and class members: Mancinelli v. Royal Bank of Canada, 2016 ONSC 6953, at para. 33.

[28] Cooperation with the first settling defendant is particularly important and offers substantial benefit to the class: Nutech Brands Inc. v. Air Canada, at para. 37. In Osmun, at para. 36, Justice Strathy observed:

[36] …In addition, securing the cooperation of Cadbury and ITWAL is an important and immeasurable non-pecuniary benefit. This would be significant in any case, but in a conspiracy action, where the allegation is that the defendants share a dark secret, obtaining the cooperation of two of the alleged conspirators to assist the plaintiff in pursuing the alleged co-conspirators is of inestimable value. ...

Analysis

[29] The plaintiff has provided an informal economic analysis based on global sales of linear resistors by the Panasonic defendants during the claim period, an estimate of the share of those sales that reached Canada, an estimate of the overcharge on that share, and an estimate of the pass-through rate, with a conversion to Canadian dollars. That analysis was informed by counsel’s investigations of the global and domestic markets as well as risk factors relevant to potential recovery if the action proceeded.

[30] I am mindful that this action is still in its early stages from a procedural standpoint. The contested certification motion has not been heard. No discoveries have taken place. Documentary discovery has yet to happen. This is not a case where the settlement occurs on the eve of trial after some risks have been overcome and significant disclosure has occurred that permits a more detailed and comprehensive analysis of potential recovery. Depending on what issues are certified and what is not, the economic/financial disclosure needed to obtain a comprehensive damages assessment may be years away and may never happen.

[31] I cannot conclude on the evidence before me that the economic approach taken by plaintiff’s counsel at this stage is flawed or deficient. It is one approach to estimating possible future recovery from these defendants. It takes into account the myriad of risks inherent in this litigation. It may not be an approach that would be used in a trial where damages are determined, but that does not mean that it fails to provide the court with some evidence on which to base its assessment of the fairness of the settlement. At a minimum, it provides insight into plaintiff’s counsel’s rationale for the dollar amount at which settlement was achieved.

[32] The amount payable by the Panasonic defendants is not as great as one might have expected given that it includes prejudgment interest and costs. It appears to fall at the lower end of the range of recovery conservatively estimated by plaintiff’s counsel. However, the amount must be considered in light of the other benefits obtained and the risks in this litigation.

[33] This is the first settlement in the action. In addition to the monetary component of the settlement, Panasonic is providing information and documentation to the plaintiff that will assist the plaintiff in pursuing recovery from the remaining defendants. As Justice Strathy observed in Osmun, that is “an important and immeasurable non-pecuniary benefit”.

[34] The Panasonic defendants do not admit liability and, indeed, if this settlement is not approved, they will likely vigorously defend the litigation. Likewise, the Panasonic defendants do not accept or agree with the approach taken by plaintiff’s counsel or the figures used by them in estimating potential recovery if ultimately successful.

[35] The Panasonic defendants are large corporations with the apparent means to fight this litigation for years to come. Success on the motion for certification, on the common issues if certified and the measure of any recovery are uncertain. Conspiracy actions are notoriously difficult. The end of this litigation is years in the future with much heavy slogging still to go. The measure of risk involved is reflected in the agreement reached by experienced counsel.

[36] I observe that the settlement was reached following several months of arm’s length negotiations. Class counsel have a track record in this kind of litigation. They have undertaken and continue to investigate the facts underpinning the claim. They are recommending this settlement to the court as a reasonable compromise having regard to the benefits to the class and the risks in the litigation.

[37] The representative plaintiff deposed his support for the agreement made. There are no objectors to same.

[38] I am satisfied that this settlement provides real and significant benefits to the plaintiff class. The settlement lies within the range of reasonable outcomes. I find that the settlement is fair, reasonable and in the best interest of the class. The settlement is approved.

Draft Order

[39] Counsel provided a draft order the terms of which are satisfactory save for para. 21 which reads:

21. THIS COURT ORDERS that the Settlement Amount shall be held in the Trust Account by Ontario Counsel or its duly appointed agent for the benefit of Settlement Class Members, pending further order of this Court on notice to the Defendants and, subject to the approval of this Court, after the Effective Date, the Settlement Amount can be used to pay Class Counsel Disbursements incurred for the benefit of the Settlement Classes in the continued prosecution of the Ontario Action against the Non-Settling Defendants. This paragraph shall not be interpreted as affecting the rights of the Plaintiff or the Settlement Classes to claim such Class Counsel Disbursements in the context of a future costs award in their favor against the Non-Settling Defendants, or the rights of the Non-Settling Defendants to oppose and resist any such claim. [Italics added.]

[40] As the italicized words indicate, plaintiff’s counsel contemplate applying to the court to have monies paid out to counsel to fund future disbursements in the prosecution of the Ontario action. I do not agree with that term for the following reasons:

1. There is a motion already before me that, if granted, would see counsel reimbursed their disbursements to date and would pay them a fee from the settlement amount paid;

2. That request is based on retainer agreements pursuant to which counsel agreed to accept certain financial risks including payment of disbursements;

3. The monies paid by the defendants will be reduced by whatever amount is approved by the court for fees and disbursements to this point;

4. The settlement monies are not a “piggy bank” to eliminate or reduce counsel’s obligations under the retainer agreement which includes the risk they agreed to take on;

5. It may well be contrary to the retainer agreement to have counsel get further monies for future disbursements. I observe that doing so certainly reduces counsel’s risk which, in turn, may reduce what fees are approved; and

6. Such a motion can be brought in any event. I do not wish to suggest by including it in this order that such a motion is appropriate.

[41] If the italicized words are removed, the balance of the paragraph is acceptable. Counsel are requested to send me a clean order for my signature.

Justice R. Raikes Date: March 12, 2021