Today, the Supreme Court of Canada released the highly-anticipated decision in Godfrey v. Sony Corporation, addressing a number of issues important to how Canadian courts will approach certification of competition (antitrust) class actions.
The past 15 years have seen a steady increase in the number of class actions being brought that plead violations of the Competition Act. These cases usually involve allegations of bid rigging or price fixing, which can attract civil and criminal liability. In 2013, in Pro‑Sys Consultants Ltd. v. Microsoft Corporation, the Supreme Court of Canada articulated the tests to apply when evaluating whether to certify a competition class action. In the years that followed, a number of issues arose in competition class actions, leading to inconsistent approaches to certification. On September 20, 2019, the Supreme Court of Canada released the highly-anticipated decision in Godfrey v. Sony Corporation, deciding four key issues that have featured in many of these types of class actions.
Many of Canada’s competition class actions have been temporarily paused, awaiting this decision. With the decision now out, these cases are expected to come back to life. In the coming weeks, McCarthy Tétrault will provide in-depth coverage of the Court’s judgment in Godfrey through a special five-part series, focusing on each issue and its implications. For this first part of the series, we summarize the issues and the Court’s key rulings.
What is this case about?
The plaintiff initiated a class action alleging that the defendant companies had participated in a price-fixing cartel that had raised the price paid by British Columbians for optical disc drives and products containing such devices between 2004 and 2010. The proposed class consisted of both direct and indirect purchasers, as well as purchasers of products that were not manufactured or supplied by the defendants, i.e. umbrella purchasers. The plaintiff alleged five causes of action, including a breach of section 45 of the Competition Act, the tort of civil conspiracy, the unlawful means tort, unjust enrichment and waiver of tort. With certain exceptions, the certification judge conditionally certified the action as a class proceeding and included umbrella purchasers within the class. The British Columbia Court of Appeal dismissed the appeal and confirmed the certification judge’s decision.
What did the Supreme Court say?
In an 8-1 ruling (with Justice Côté dissenting in part), the Supreme Court dismissed the appeal. Below is an overview of the Supreme Court’s findings on each issue.
Issue 1 – limitation period and s. 36: The majority found that the discoverability principle applies to the limitation period contained in the statutory cause of action in s. 36 of the Competition Act. In the majority’s view, “[T]he discoverability rule applies to the limitation period in s. 36(4)(a)(i), such that it begins to run only when the material facts on which [the] claim is based were discovered … or ought to have been discovered … by the exercise of reasonable diligence.” Côté J dissented on this point.
Issue 2 – umbrella purchasers: The majority found that principles of remoteness or indeterminate liability do not foreclose the right of umbrella purchasers to seek damages in price-fixing class actions. Although the majority acknowledged that umbrella purchasers’ actions may be complex or difficult to prove, the court held that it was not “plain and obvious” that an umbrella purchaser’s claim would not succeed. As a result, their claim could be certified so as to proceed to trial. Côté J dissented on this point.
Issue 3 – complete code: The Supreme Court found that the enactment of the statutory cause of action in s. 36(1) of the Competition Act did not oust common law and equitable actions by its express terms or by necessary implication. It found that “Section 36(1) is neither duplicative of the tort of civil conspiracy nor does it provide a “new and superior” remedy”. Finally, it found that s. 36(1) does not represent a comprehensive and exclusive code regarding claims for anti-competitive conspiratorial conduct.
Issue 4 – loss as a common issue: The majority held that in order for loss-related questions to be certified as common issues, a “plaintiff’s expert methodology need only be sufficiently credible or plausible to establish loss reached the requisite purchaser level”. The majority went on to say that at trial; however, only class members that actually suffered a loss would be in a position to recover. Côté J dissented on this point.
What does this mean going forward?
For an in-depth analysis of each of these issues and its implications on competition class actions and class actions more generally, do not miss the four subsequent parts of this series, which will be published in the upcoming weeks.