On November 12, 2009, the British Columbia Court of Appeal
unanimously allowed an appeal from the dismissal of a class
certification motion in an action alleging price-fixing against
certain manufacturers of DRAM (dynamic random access memory) chips,
which are found in a wide variety of electronics products. The B.C.
Court of Appeal certified a class of direct and indirect purchasers
of DRAM and products containing DRAM.1
As reported in the May 2008 issue of
The Competitor,2 the motion judge had
denied certification largely on the grounds that the plaintiff had
not proposed a workable class-wide method for determining the
existence or fact of harm to members of the proposed class,
consisting almost exclusively of indirect purchasers of DRAM. Such
a methodology would require an examination of whether and in what
amount any alleged overcharges from the alleged price-fixing
agreement were passed by DRAM manufacturers through the chains of
distribution to class members. The lower court found that the
plaintiff had not satisfied its burden of "establish[ing] that
the proposed methodology has been developed with some rigour and
will be sufficiently robust to accomplish the stated task." In
particular, the court rejected the use of statistical sampling or
averaging methodologies, holding that "the plaintiff cannot
circumvent the need to prove harm on a class-wide basis by
resorting to the aggregation principles in the [Class
Proceedings Act], which would be available only after such a
pass-through was already established on a class-wide basis."
In the absence of a class-wide means of proving liability, the
motion judge held that a class proceeding would be unmanageable and
was not the "preferable procedure" for resolution of the
plaintiff's claims.
On appeal, the Court of Appeal held that the motion judge
"erred in concluding that the aggregate monetary claim could
not be tried as a common issue" and in concluding that a class
action was not the "preferable procedure". With respect
to common issues, the Court of Appeal concluded that the
plaintiff's restitutionary claims of unjust enrichment,
constructive trust and waiver of tort "can be established at
trial by proof of unlawful gain without individual proof of loss by
class members." The Court held that the B.C. Class
Proceedings Act "authorizes the use of statistical
evidence to assess an aggregate monetary award", and that
"[i]t was common ground that statistical regression analysis
is in theory capable of providing reasonable estimates of gain or
aggregate harm and the extent of pass-through in price-fixing
cases." The Court further held that while "[t]he burden
is on the plaintiff to show 'some basis in fact' for each
of the certification requirements, [.] in conformity with the
liberal and purposive approach to certification, the evidentiary
burden is not an onerous one" and the plaintiff's expert
economic evidence "met the low threshold".
Remarkably, the B.C. Court of Appeal stated that the "total unlawful gain by the respondents from sales of DRAM to class members", calculated for purposes of the plaintiff's restitutionary claims, "would necessarily reflect the total loss suffered by the class." Contrary to the trial judge who held that "the invocation of the doctrine of waiver of tort or constructive trust by unjust enrichment does not enable the plaintiff to avoid the 'common issues' requirement to demonstrate a methodology that will establish the pass through effect to Class Members on a class-wide basis", the Court of Appeal reached the opposite conclusion:
Having concluded that proof of damage could be established as a
common issue on a class-wide basis, the B.C. Court of Appeal held
that a class action would be the "preferable procedure".
The Court held that the trial judge "overlooked that the goal
of behaviour modification also considers other potential
wrongdoers" and "discounted the importance of access to
justice". In this case, the Court stated that "the only
apparent alternative to a class action is no action at all",
and to the extent "potential difficulties of proof [arise] out
of the complexities involved", these can be dealt with at
trial. The Court remarked that if "it should turn out that a
common issues trial is unmanageable", the motion judge can
always decertify the action.
The DRAM decision from the B.C. Court of Appeal is a marked
departure from the longstanding decision of the Court of Appeal for
Ontario in Chadha v. Bayer3, which had been
followed in several other decisions in Ontario and elsewhere,
including with respect to the nature of the scrutiny of expert
evidence to be performed by the judge hearing the certification
motion and the preferable procedure analysis. The defendants note
the complete absence in the record of any evidence to support the
Court of Appeal's statement that ". the gain obtained by
the respondents will be the mirror image of the total loss suffered
by the class."; indeed, the evidentiary record establishes
that the loss to the class is not capable of determination on a
class-wide basis, and it certainly would not be the "mirror
image" of any alleged gain to the defendants. The defendants
are considering an application for leave to appeal to the Supreme
Court of Canada.
Footnotes
1 Pro-Sys Consultants Ltd. v. Infineon Technologies
AG, 2009 BCCA 503. Stikeman Elliott LLP represents Infineon
Technologies AG and Infineon Technologies North America Corp. in
Canadian class actions commenced in British Columbia, Quebec and
Ontario, with a team that includes Katherine Kay, Eliot Kolers,
Yves Martineau and Mark Walli.
2 See the May 9, 2008 issue of
The Competitor.
3 [2003] O.J. 27
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