Litigation Brief

Canadian Supreme Court Grants Leave in Pro-Sys/Microsoft and Sun-Rype Indirect Purchaser Competition/Antitrust Class Actions

Earlier today the Supreme Court of Canada, per Justices LeBel, Fish and Cromwell, granted leave to appeal in the Pro-Sys Consultants Ltd. v. Microsoft Corporation and Sun-Rype Products Ltd. v. Archer Daniels Midland Company cases.

These cases relate to conflicting indirect purchaser class action certification decisions in British Columbia (two companion decisions of the British Columbia Court of Appeal) and Quebec (a recent decision of the Quebec Court of Appeal).

(See: Quebec Court of Appeal rejects B.C. Court of Appeal passing-on defence decisions in Pro-Sys and Sun-Rype and British Columbia Court of Appeal allows Microsoft appeal in Pro-Sys v. Microsoft - creates de facto passing-on defence).

The central issue to be decided by the Supreme Court will be the ability of “indirect purchasers”, that is purchasers further down the supply chain than "direct purchasers" of products, to proceed with claims against defendants in price-fixing class actions.

Presently, based on conflicting appellate decisions in British Columbia and Quebec, there is uncertainty as to indirect purchasers’ ability to proceed with such claims as well as the status of the related “passing-on defence” in Canada (which originated in the United States in the context of indirect purchaser class action litigation).

For the British Columbia Court of Appeal’s judgments in the Pro-Sys and Sun-Rype cases see:

Pro-Sys Consultants Ltd. v. Microsoft Corporation (B.C.C.A.)

Sun-Rype Products Ltd. v. Archer Daniels MIdland Company, et al. (B.C.C.A.)

For the procedural history of these cases before the Supreme Court see:

Pro-Sys Consultants Ltd., et al. v. Microsoft Corporation, et al. (docket 34282)

 

Court of Appeal awards compensation for representative plaintiff in class action

Louise Parsons was the representative plaintiff in a class action lawsuit against Coast Capital Savings Credit Union over excessive overdraft interest under the Trade Practices Act and the Business Practices and Consumer Protection Act. 

The parties proposed a settlement to the trial court in the amount of $4.85 million, which included: compensation for members of the class, a portion of which Parsons would have been entitled to; and compensation in the amount of $10,000 to Parsons for serving as the representative plaintiff.  The trial court accepted the $4.85 million settlement but denied the $10,000 payment to Parsons, reasoning that the Class Proceedings Act does not provide for payment to a representative plaintiff except in cases of exceptional service by the representative.

Parsons appealed on the ground that the trial court erred in requiring that she demonstrate that she had performed a service of special significance as a predicate to receiving payment as the class representative.  The Respondent argued that awarding special compensation for a representative plaintiff was a matter of discretion for the trial court, and creates a conflict of interest for class representatives.  The issue before the Court of Appeal was under what circumstances compensation should be paid to a representative plaintiff of a class beyond the compensation paid to class members generally in class proceedings certified under the Class Proceedings Act.

5th class action lawsuit filed against BP

A shareholder class action lawsuit against BP Plc was filed in the Eastern District of Louisiana today. This is the fifth class action lawsuit filed against BP since the oil spill in the Gulf of Mexico several weeks ago. This latest class action, Greenfield v. BP Plc, alleges that BP's shareholders were misled by representations in BP's public disclosure documents regarding its commitment to safety and operational integrity, and risks of operation. BP is not the only defendant, however. Also named are several BP directors including CEO Tony Hayward, CFO Byron Grote and Chair Carl-Henrie Svanberg. The plaintiffs are represented by the New York firm of Zwerling, Schachter & Zwerling.  

Final Fantasy XIII class action suit filed

A San Diego man, on behalf of a number of Playstation 3 players, has started a class action lawsuit against Sony Computer Entertainment Inc., Square Enix of America Holdings, Inc., and Square Enix, Inc. over alleged damage caused by playing the video game Final Fantasy XIII. According to a Class Action Complaint filed several days ago in the United States District Court, Northern District of California, Final Fantasy XIII is defective and causes PS3 consoles to freeze and become permanently inoperable. The class action class consists of all US residents who bought the game for PS3s since the game's release in March of this year, and is expected to exceed $5 million.

Court of Appeal allows tobacco companies to make third party claim against government

In a split decision, the Court of Appeal has partially allowed a third party claim made by tobacco companies' against the federal government.

In Knight v. Imperial Tobacco, 2009 BCCA 541, the defendant tobacco companies asked that the government of Canada be added as a party to a class action brought for the recovery of damages associated with smoking "mild" or "light" cigarettes.  The defendants had argued that they would be entitled to contribution and indemnity from Canada in the event they were found liable, but a chambers judge dismissed that third party claim as a "plain and obvious" certain failure.

A majority of the Court of Appeal's five-judge panel partially reversed that decision, declining to strike the third party notice in its entirety.  The majority upheld the decision of the chambers judge that it was plain and obvious that the Trade Practice Act, R.S.B.C.  1996, c. 457 (the “Act”) does not expressly or by implication apply to Canada, and that in any event, Canada does not constitute a "supplier" for the purposes of the Act.  The majority, however, upheld the third-party notice with respect to the defendants' claims relating to Canada's liability for negligent misrepresentation and negligent development of tobacco strains, as the Justices were not satisfied that it was plain and obvious that those claims would fail.  The majority set aside the order quashing the third party notice in its entirety, and struck only the portions relating to the defendants' claims that: (i) they are entitled to contribution and indemnity from Canada on the basis of consumer protection legislation; (ii) Canada owed them a duty of care with respect to the design of tobacco varieties used in light and mild  cigarettes; and (iii) they are entitled to indemnification by Canada on the basis of the doctrine of equitable indemnity.

To read the full decision of the Court of Appeal, click here.

BC class action against non-resident defendants allowed to proceed by Court of Appeal

The Court of Appeal has dismissed an appeal by US defendants who argued that, as they had only a “tenuous or relatively insignificant” connection to BC, the province’s courts lacked the territorial competence to hear a class action against them.  

In Stanway v. Wyeth Pharmaceuticals Inc., 2009 BCCA 592, the plaintiff had commenced a class action after contracting breast cancer as a result of taking Progestin concurrently with the defendant pharmaceutical companies’ hormone therapy drug.  The plaintiff purchased and used the drug in BC, but the US defendants did not have any facilities, bank accounts, or employees in the province, and had not been required to register with Canadian regulatory authorities.   The US defendants accordingly sought to have the claims against them dismissed on the basis that BC courts did not have territorial competence over them under the Court Jurisdiction and Proceedings Transfer Act, SBC 2003, c. 28.

The BC Court of Appeal confirmed that the tort of negligent manufacture will be taken to have occurred in the place where the damage was suffered, regardless of where the elements of the tort took place, if the wrongdoer knew or ought to have known the defective product would be used in the place where the damage took place.  The Court further confirmed that a failure to warn BC consumers of a hazardous product constitutes a tort committed in BC regardless of where the omission took place, if the defendant knew or ought to have known the product would be used in BC.  "The plea that the US defendants were parties to torts committed in British Columbia presumptively establishes direct and significant connections between British Columbia and the facts on which the proceeding against the US defendants is based.  In other words, it establishes a sufficient real and substantial connection to clothe the British Columbia Supreme Court with jurisdiction over the US defendants."  The Court dismissed the appeal.

To read the full decision of the Court of Appeal, click here.

For more information on class actions in British Columbia, click here.

Court of Appeal certifies class in a price fixing conspiracy action to recover alleged overcharges

On November 12, 2009, the BC Court of Appeal reversed a trial judge's decision to deny certification of a class that would have included direct and indirect purchasers of certain memory chips used in various electronics.  The Court of Appeal’s ruling in Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503 may lead to further litigation in this area because it arguably makes it easier to certify much larger classes in price fixing cases.

Overview

The Respondents are, collectively, the world's largest manufacturers of dynamic random access memory ("DRAM"), a memory chip in most computers and other electronic devices.  During the class period, which extended from 1999 to 2002, the Respondents' DRAM production reaped global revenues of approximately USD $80 billion.

In the United States, all but one of the Respondents have pleaded guilty to criminal charges in relation to an international conspiracy to fix DRAM prices during the class period, and have paid fines totaling over USD $730 million in relation to their price-fixing cartel.   Additionally, several Respondents have settled class actions in the US for approximately USD $160 million.

The Appellant purchased a laptop from a retailer in B.C. during the class period and subsequently brought the action on behalf of all those who directly or indirectly purchased DRAM in B.C. from the Respondents during the class period.  The Appellant sought damages for civil conspiracy to fix prices and for intentional interference with economic interests.  The Appellant also sought damages pursuant to section 36(1) of the Competition Act, R.S.C. 1985, c. C-34, punitive damages, restitutionary awards for unjust enrichment, constructive trust, and waiver of tort, including orders that the Respondents disgorge the  profits of their conspiracy.

The Court of Appeal held that the trial judge erred in concluding that the quantification of the overcharge resulting from the Respondents' price-fixing could not be tried as a common issue.