Four recent decisions from the Ontario courts affirm the importance of preserving remedies for plaintiffs impacted by unlawful conspiracies. The decisions relate to four separate price-fixing conspiracies involving LCD panels (used in televisions, computer monitors and notebook computers), lithium-ion batteries (used in various electronic products, including mobile phones and notebook computers), CRTs (an older technology used in televisions and computer monitors), and shipments of cargo by air. Siskinds LLP and Camp Fiorante Matthews Mogerman are co-counsel on all four actions. Sotos LLP is co-counsel in the Lithium-Ion Batteries action.
The Court of Appeal’s Decision in LCD – Discoverability and Complete Code
In the LCD class action, the Ontario Court of Appeal addressed two matters that have been the subject of conflicting case law in Canada. The first issue was whether a limitation period set out in section 36(4) of the Competition Act is subject to discoverability. Section 36 of the Competition Act permits plaintiffs to bring civil actions to recover damages suffered as a result of price-fixing conspiracies, but section 36(4) provides that no action may be brought “after two years from … a day on which the conduct was engaged in …” A finding that discoverability applied would mean that the limitation period would not begin running until the plaintiff, through a reasonable exercise of diligence, discovered or ought to have discovered the wrongful conduct.
In the LCD action, the defendant brought a summary judgment motion, claiming that the action was commenced beyond the limitation period set out in section 36(4). The motion judge held that section 36(4) was subject to discoverability and the defendant appealed. The Ontario Court of Appeal upheld the motion judge’s findings. In doing so, the Court of Appeal relied on comments from the Supreme Court of Canada that “the fundamental unfairness of requiring a plaintiff to bring a cause of action before he could reasonably have discovered that he had a cause of action is a compelling consideration.” The Court of Appeal noted that this consideration is particularly applicable in the context of secretive and deceptive anti-competitive agreements and concluded that any other interpretation of section 36(4) had the potential to deprive victims of the chance to make a claim.
The second issue in the LCD action was whether the plaintiff was entitled to rely on the tort of unlawful conspiracy in their pleadings. The defendant asserted that the inclusion of the remedy in section 36 of the Competition Act meant that the Competition Act was a complete code, such that the plaintiff could not rely on a breach of the Competition Act to provide the unlawful act that would form the basis of the tort claim in unlawful conspiracy. The Court of Appeal rejected this assertion, holding that it would be incongruous with the purpose of the Competition Act to eliminate a tort claim that serves to punish anti-competitive behaviour.
Certification of Price-Fixing Class Actions
The Lithium-Ion Batteries, Air Cargo and CRT decisions relate to certification. The certification motion is a significant step where the court determines whether the case may proceed as a class action. Because individual damages may be small, but the costs of prosecuting an action against cartel participants are high, price-fixing cases are often especially well-suited to proceed as class actions. Nonetheless, plaintiffs in price-fixing cases are required to establish that their particular action should be certified.
The Divisional Court’s Decisions in the Lithium-Ion Batteries and Air Cargo Actions
In the Lithium-Ion Batteries case, both parties sought leave to appeal the certification decision. The defendants sought and were denied leave to appeal based on the analysis of the expert evidence. The plaintiffs sought and were granted leave to appeal on two grounds, the first being the complete code issue, which has now been resolved by the Court of Appeal.
The second issue was whether so-called “umbrella purchasers” have a cause of action in price-fixing cases. These purchasers are persons who purchased the relevant product from a non-conspirator. The theory behind the inclusion of umbrella purchasers in price-fixing cases is that because the conspiracy participants dominated the market, they were able to drive market prices up and non-conspirators followed by charging higher prices. Accordingly, even purchasers from non-conspirators would have been harmed by the unlawful activities of the conspirators. The motion judge excluded umbrella purchasers from the certified class, but the Divisional Court granted leave to appeal on this issue, as there are conflicting decisions on this point, and it has never been considered by an appellate court in Canada.
The Air Cargo action was certified in August 2015. The defendants sought leave to appeal certification on the same issues raised in the Lithium-Ion Batteries action. The Divisional Court refused to grant leave to appeal, holding that granting leave in the Air Cargo action on the same issues for which leave had been sought in the Lithium-Ion Batteries action could lead to significant delays and conflicting decisions.
Certification of the CRT Action by the Superior Court of Justice
On August 12, 2016, the Superior Court of Justice issued its decision certifying the CRT class action. The motion judge held that umbrella purchasers have a cause of action in a price-fixing conspiracy case, finding that these claims are causally connected to the defendants’ unlawful conduct and that the right of recovery under section 36 is not determined by the offender’s gain. The motion judge declined to engage in a debate respecting competing expert evidence, in accordance with direction from the Supreme Court of Canada.
Taken together, these four decisions, all released within a two week span, affirm the importance of ensuring that plaintiffs can pursue statutory and common law remedies for losses suffered as a result of price-fixing conspiracies. Given the costs of pursuing a price-fixing conspiracy case—which can cost hundreds of thousands of dollars in expert fees alone—most victims of price-fixing conspiracies cannot pursue their claims alone. Certification of these cases as class actions permits plaintiffs to seek recovery of their damages in a cost-efficient manner. An inclusive approach that includes umbrella purchasers and permits plaintiffs to plead statutory and common law remedies enhances access to justice. Likewise, the finding that section 36(4) of the Competition Act is subject to discoverability prevents conspirators from escaping liability through secretive concealment, allowing victims to recover their losses, as intended by Parliament.
For More Information
If you would like more information about the LCD, Lithium-Ion Batteries, Air Cargo, or CRT actions, please click on the name of the relevant case. These links contain detailed information about the cases and allow you to register to receive updates about the litigation, including information about any settlements and the distribution of settlement funds.