British Columbia has been known as a haven for class actions in Canada. The bar for certification was set very low and British Columbia is regarded as being the most plaintiff-friendly province for class actions in Canada. On August 18, 2017, the British Columbia Court of Appeal released a significant decision that may have wide-ranging implications for certification of actions commenced in B.C.
Godfrey v. Sony Corporation
Godfrey v. Sony Corporation involves an appeal from a decision allowing a certification of a class action on behalf of direct and indirect purchasers of optical disc drives. The proposed class action alleges that the defendants participated in a global, criminal price-fixing cartel that raised the price British Columbians paid for the drives. Mr. Godfrey, the class representative, alleges five causes of action: a breach of the Competition Act, the tort of civil conspiracy, the unlawful means tort, unjust enrichment, and waiver of tort. The conditional certification by the court below was aggressively contested, on three grounds.
The defendants alleged that Mr. Justice Masuhara erred in law by:
- recasting the standard of commonality at certification for indirect purchasers;
- holding that a breach of section 45 of the Competition Act could supply the “unlawfulness” element for various common law causes of action; and
- holding that “umbrella purchasers” could assert various causes of action against the defendants.
Four Key Areas Addressed in Decision
In its decision, the appellate court addressed four key issues:
- The Limitations Defence. The Court of Appeal found that it is not plain and obvious that the discoverability principle does not apply to the Competition Act. Further, the Court confirmed that limitation periods can, though usually should not be, considered at the certification stage.
- Competition Act Violations Can Be an “Unlawful Means”. The Court held that it is not plain and obvious that the Competition Act is a complete code and that violations of the Act’s criminal provisions can be pleaded as the “unlawful means” for a tort claim.
- No Harm to All Class Members at Certification Stage. The Court held that the commonality requirement for certification is satisfied where the plaintiffs present a plausible method for demonstrating that an overcharge reached the indirect purchaser level of the distribution channel, not each individual within that level. This means that a proposed class can include parties that ultimately have not suffered damage as a result of the pleaded conduct.
- Umbrella Purchasers Claims Can Proceed. The Court concluded that any concern over indeterminate liability was unwarranted because of several reasons, including that:
- the class period is temporally limited;
- the class definition is constrained;
- the claims relate to a specific product;
- the umbrella purchasers likely represent a small proportion of customers; and
- the defendants may have sought to increase prices on a market-wide basis.
Will Other Provinces Go Lower?
This case confirms the low bar for certification of class actions in B.C. Interestingly, this case stands in stark contrast to recent Ontario decisions and the general certification trend in other provinces. It will be important to watch if B.C. continues to be an outlier, or if the province’s preference for a low threshold influences the rest of Canada.