Law Times

Law timeS • September 5, 2011 An online resource 1.800.263.3269 Focus On CLASS ACTIONS Rulings put competition law in disarray Lawyers decry confusion following April appeal court decisions BY JUDY VAN RHIJN For Law Times ers of goods fl ies in the face of other Cana- dian jurisprudence, lawyers say. In doing so, the court has not only T thrown competition law into disarray, it has also highlighted the unpredictability of judicial approaches when dealing with class actions as a whole. But Andrew Roman, a litigation partner at Miller Th omson LLP who was instrumental in the drafting of On- tario's class proceedings legislation, says the law related to class actions has long been confusing. "Th e courts are having a hard time dealing with it. Th e decisions are every which way. It often seems to depend on who the judge is rather than what the law is." As Roman points out, all of the un- certainty makes it diffi cult to settle cases. "You can only settle if you think you know what the outcome will be. At pres- ent, it turns on the toss of a coin. Cases everyone thinks are likely to be certifi ed aren't and vice versa." Th e court's rulings in Pro-Sys Consul- tants Ltd. v. Microsoft Corp. and Sun-Rype Products Ltd. v. Archer Daniels Midland Co., delivered concurrently in April, illus- trate the point perfectly. Th e B.C. appeal court overturned favourable certifi cation decisions in the two anti-trust class ac- tions despite an obvious inconsistency with a previous B.C. ruling and with cases in other provinces, particularly Ontario. Th ese were cases that Roman consid- ered to be "very likely" to be certifi ed. "Th at's not to say they are likely to win the case at trial," he says. "Th e only ques- tion on certifi cation is, does the plaintiff get his day in court? Or, in other words, is this an appropriate case for a class action? In my view, that should be a fairly simple question with relatively little controversy, yet it is hugely controversial and people 'Cases everyone thinks are likely to be certified aren't and vice versa,' says Andrew Roman. typically spend millions on deciding if they will go to court. It should be simple and quick and predictable." According to Roman, the reliance by the majority on the Supreme Court de- cision in Kingstreet Investments Ltd. v. New Brunswick (Finance), a tax law case related to the passing on of a tax, came out of left fi eld. Justice P.D. Lowry, with Justice David Frankel concurring, said that because the Supreme Court in that case didn't allow the defence of passing on — which would let the defendant reduce its liability to those who paid an unlawful charge by establishing that some or all of it was passed on to others — it couldn't be raised as a cause of action by those to whom the charge was passed on. If it could, the defendant would be liable for the whole amount charged to the direct purchaser plus any portion passed on to an indirect purchaser. Th at in turn would lead to double liability. Justice Ian Donald, who gave the mi- nority decision, distinguished Kingstreet. He said a central fact of the plaintiff 's case was that Microsoft had combined with the direct purchasers to achieve the overcharge. In his view, if the court were to give eff ect to Microsoft's pass-through analysis, the only class holding a valid claim would be the very group that par- ticipated in the illegal scheme and the in- nocent victims would be left out. Vancouver lawyer J.J.Camp, who has sought leave to appeal the decisions to the Supreme Court, says that even a sig- nifi cant percentage of the defence bar is saying that the decisions can't stand and that the Supreme Court needs to resolve the matter. But Camp doesn't believe that a reversal of the Kingstreet decision would be necessary. "We don't think Kingstreet says what the majority said it says. It was never intended to be drawn into competition law." Neil Finkelstein of McCarthy Tétrault LLP, who represented the defendants, declined to comment, but Roman states emphatically that Kingstreet had nothing to do with the issue. "Very often, what happens is that the court wants a particu- lar outcome, so they cite a particular case. If it seems plausible and it's from the Su- preme Court, people don't look at it too closely. When you look at this case, that isn't what it said at all." Roman blames a judicial tendency he British Columbia Court of Appeal's rejection of competition class actions for indirect purchas- of not understanding economics, statis- tics, and mathematics. "In an economic crime like price fi xing, judges think you can never fi nd out how much that was overpaid, but economists can fi gure it out. Th e Ontario courts have pointed out that economists do that all the time. If judges aren't aware of that, they are making assumptions." Roman compares the issue to dropping a stone in a pond. "You see the ripples, and they eventually stop, but these judges are saying they can't even see the initial splash. Th is is not a problem of a direct or indirect purchaser. Th at distinction is ob- solete. Th is is a problem of remoteness." In fact, s. 36 of the Competition Act makes no reference to direct or indirect purchasers but says that any person who suff ers a loss may sue. Roman recalls many matters that have settled in simi- larly complicated circumstances, partic- ularly the famous vitamin case in which various European companies engaged in price fi xing on raw ingredients sold to manufacturers. "Th ey sold it to drug stores who sold it to us, and everyone got compensated. Th ese decisions say that if I cheat enough people in a complicated way, I get off . It's like saying, 'If we can't do it perfectly, we won't do justice at all.'" Roman believes the B.C. judgment leaves all purchasers, direct or otherwise, with no incentive to proceed. "Th e direct purchasers have lost nothing because they passed it on to the indirect purchasers. If they were to sue and recover, they would have got to keep the money twice. Th ose who actually bore the loss are precluded from applying." As a result, Roman is of the opinion that the Supreme Court needs to look at the question of economic evidence and deter- mine when the court can make an assump- tion and when it can't. "In a particular case, the plaintiff may bring an economist who says, 'I can calculate that loss,' and the de- fence has one who says, 'No you can't.' Th e court may have to decide on that and not make assumptions." 2012 BRITISH COLUMBIA LEGAL TELEPHONE DIRECTORY Get naMeS, MaiLinG addreSSeS, eMaiL addreSSeS and PhOne nuMberS fOr LawyerS and Law OfficeS in britiSh cOLuMbia, nunavut, nOrthweSt territOrieS and the yukOn In one handy volume you'll have a single means of access to every lawyer and law firm in British Columbia, Northwest Territories, Nunavut and the Yukon. Published annually, the current edition includes: • British Columbia Notaries • British Columbia Land Surveyors • Shorthand Reporter's Association • Canadian Association of Para-Legals • Northwest Territories, Nunavut and Yukon listings. 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• Focus On Class Actions