Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1181164
LEXPERT MAGAZINE | OCTOBER 2019 31 On September 20, 2019, the Supreme Court released its long- awaited decision in Pioneer Corp v Godey. Godey is the Su- preme Court's latest decision involving price-fixing class actions, and expands on and clarifies the basic approach to these cases that the Court laid out six years ago in Pro-Sys Consultants Limited v Microso Corporation. Background and Issues e plaintiffs allege that the defendants conspired to fix the price of optical disc drives and related products. ey commenced an action for damages arising from the alleged conspiracy and moved to certify the action as a class proceeding. e case raised four discrete issues. First, the plaintiffs sought to include as part of the class not only direct purchasers of the drives, but also indirect purchas- ers (who purchased the drives from the direct purchasers) and so-called umbrella purchasers (who purchased drives made by companies who were not alleged to have participated in the con- spiracy on the theory that the conspiracy still led those manu- facturers to set higher prices as well). Prior to Godey, there had been significant controversy in the jurisprudence as to whether umbrella purchasers had a cause of action and could be included in a proposed class. Second, the case raised an issue as to whether the two-year limitation period in the Competition Act is subject to the prin- ciple of discoverability. e plaintiffs in Godey commenced the action against some of the defendants more than two years aer the allegedly conspiratorial conduct had occurred. ose defen- dants argued that the applicable two year limitation period in the Competition Act had expired prior to the plaintiffs' attempt to add them to the action and that the claims were statute- barred. Again, the jurisprudence on this issue had been mixed. ird, the case raised a question as to whether s 36(1) of the Competition Act, which creates a statutory cause of action for breaches of the Act, ousted the availability of common law claims (such as civil conspiracy) against individuals who engage in price- fixing. Finally, there was a question regarding the appropriate stan- dard for certification of a class action involving indirect purchas- ers, namely whether a plaintiff must be able to show (through expert evidence) that all indirect purchasers at that level were impacted by the conspiracy, or only that the impact of the con- spiracy reached the indirect purchaser level in some way. e lat- ter is obviously much easier to show than the former. The Supreme Court of Canada's Decision e case was argued before the Supreme Court of Canada in December 2018, and the decision was released on September 20, 2019. In a decision authored by Justice Brown, the majority of the Court adopted the plaintiff 's position on each of the four is- sues described above. First, with respect to umbrella purchasers, the majority held that umbrella purchasers do have a cause of action under s 36(1) (a) of the Competition Act. In so holding, the majority relied on the broad language of s 36(1)(a), which provides a cause of ac- tion to "any person who has suffered loss or damage as a result of " conduct contrary to s 45 of the Competition Act. It also held that extending a cause of action to umbrella purchasers was consistent with the purposes of the Competition Act to deter anti-competi- tive behaviour and compensate victims. e majority rejected the notion that recognizing a cause of action for umbrella purchas- ers exposes defendants to indeterminate liability because liability would be limited by the class period, the specific products whose prices are alleged to have been fixed, and the requirement that plaintiffs prove that they actually suffered a loss or damage as a result of the conspiratorial conduct. Second, with respect to the discoverability issue, the majority held that a discoverability principle was implied by s 36(4)(a)(i) The SCC on Umbrella Purchaser Class Actions Let it Rain: "WITHOUT SUCH A REQUIREMENT, PARTIES AND COURTS HAVE NO ASSURANCES THAT A COMMON ISSUES TRIAL WILL ACTUALLY BE ABLE TO PROVIDE AN AFFIRMATIVE ANSWER AS TO WHETHER ANY IDENTIFIABLE SET OF CLASS MEMBERS ACTUALLY SUFFERED HARM." By Paul-Erik Veel LENCZNER SLAGHT LLP CHANGE AGENT COLUMNS