Page 10 April 20, 2015 • lAw Times
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Antitrust trilogy goes beyond competition cases
SCC rulings bolster burden in seeking certification more generally
BY JULIUS MELNITZER
For Law Times
he trilogy of cases
surrounding the
Supreme Court of
Canada's 2013 deci-
sion in Pro-Sys Con-
sultants Ltd. v. Microsoft Corp.
is perhaps best known for its
rejection of the American doc-
trine prohibiting antitrust class
actions against indirect purchas-
ers.
But the trilogy is equally im-
portant for two principles that
bolster the burden on plaintiffs
seeking certification in class ac-
tions generally. The first is the
top court's ruling that judges
must scrutinize proposed meth-
odologies at the certification
stage to ensure they offer a "re-
alistic prospect of establishing
loss on a class-wide basis." The
second is the requirement that
the class be identifiable by po-
tential members, as established
by another of the trilogy cases,
Sun-Rype Products Ltd. v. Archer
Daniels Midland Co.
Because these last two prin-
ciples are applicable to class ac-
tions generally, they've arguably
had greater potential impact
than the ruling affecting indirect
purchasers as it applies only to
competition class actions.
"Pro-Sys is an attempt by
the Supreme Court of Canada
to make certification a mean-
ingful screening device," says
Michael Eizenga of Bennett
Jones LLP in Toronto.
Indeed, initial speculation
that the methodology re-
quirement in Pro-Sys applied
only to competition cases
has proven to be unfounded.
In Andriuk v. Merrill Lynch
Canada Inc., for example,
the plaintiffs put forward
a novel theory of damages
that linked the loss to Mer-
rill Lynch's conduct and not
to other market forces. But in
May 2014, the Alberta Court
of Appeal upheld a decision
at first instance denying cer-
tification on the basis that the
plaintiffs hadn't established a
methodology that could main-
tain that theory on a class-wide
basis. The upshot was that com-
mon issues relating to causation
or damages couldn't be certified.
"The court did not distin-
guish Pro-Sys as an antitrust
case," says Eizenga.
Still, Chris Naudie of Osler
Hoskin & Harcourt LLP in To-
ronto says the courts haven't gone
far enough in dealing with the
methodology requirement.
"Some courts simply point
to conflicts in the evidence as to
the effectiveness of the method-
ology and then just stop there
instead of assessing whether the
methodology is plausible," he
says. "Their position is that the
certification motion is not the
time and place to address con-
flicts in the evidence, but that in
my view should not end the in-
quiry as to whether there is some
basis in fact that the proposed
methodology will establish the
loss on a class-wide basis."
By way of example, Naudie
points to Superior Court Justice
Helen Rady's ruling on the is-
sue in Crosslink Technology, Inc.
v. BASF Canada, a products li-
ability case. He also points to the
B.C. Supreme Court's ruling in a
price-fixing class action, Fairhurst
v. Anglo American PLC.
"My concern in both cases is
that the analysis is not faithful to
the [Supreme Court]'s require-
ment that the expert evidence
be assessed to some degree," says
Naudie.
"Justice Rady's analysis, for
example, is limited to three para-
graphs."
Naudie derives some opti-
mism, however, from the January
2015 decision of the B.C. Court
of Appeal in Charlton v. Abbott
Laboratories Ltd. The court held
that the absence of generalized
risk data establishing causation
on a class-wide basis was an in-
surmountable evidentiary bar-
rier to certification.
"Charlton shows that there is
some traction in appellate courts
to breathe meaning into the stan-
dard, but it's not clear that all
courts are getting the message,"
says Naudie.
Since the release of Sun-Rype,
defendants have also taken aim
at the requirement for an iden-
tifiable class requirement. "This
requirement is becoming an
important battleground in class
actions," says Eizenga. "But the
results have been mixed."
In March 2014, for example,
the Ontario Superior Court de-
nied certification in Keatley Sur-
veying Ltd. v. Teranet Inc. after
concluding that the plaintiff had
failed to meet the requirement
for an identifiable class.
The plaintiffs had alleged Ter-
anet, the manager of Ontario's
electronic land registry system,
had infringed copyright by sell-
ing copies of surveys found in
provincial land registry of-
fices. The defendant opposed
certification on the basis that
the plaintiff had failed to
demonstrate the existence of
an identifiable class of two or
more people.
Justice Carolyn Horkins
agreed with the defendant.
The evidence led by the
plaintiff failed to show that
any of the surveyors affected
had a complaint they wished
to determine in a class pro-
ceeding. This failure barred
certification.
But the Divisional Court
overturned the decision and
certified the case. The court
ruled the identifiable-class
criterion didn't require evi-
dence of two or more people
who wished to have their claims
determined in a class proceeding.
"The court noted that Sun-
Rype does not mention that class
members must desire to join the
litigation," says Eizenga.
"The requirement is simply
that individuals be able to estab-
lish that they belong to the class."
Last week, the Ontario Court
of Appeal dismissed Teranet's
appeal. "The Court of Appeal
swung the pendulum back again
to a very pro-certification, low-
bar certification stance," says Kirk
Baert of Koskie Minsky LLP, who
with colleague Celeste Poltak
represents the class.
Justice Elaine Adair of the
B.C. Supreme Court also had
occasion to deal with the issue
in Ladas v. Apple Inc. The case
involved allegations that Apple's
operating system performed
synchronization functions in a
manner that breached the pri-
vacy rights of users.
The only evidence tendered
in support of the identifiable
class criterion was an affidavit
from the plaintiff 's law firm list-
ing 17 people said to be mem-
bers of the class with retainer
agreements attached.
Adair ruled this evidence
was insufficient to establish that
these individuals were potential
class members. While agreeing
with the court in Keatley that
plaintiffs don't have to demon-
strate that the potential mem-
bers desired to join the class,
they do have to show they may
fall within it.
"Ladas is a promising sign
that the courts will take the self-
identification requirement seri-
ously," says Naudie.
"Class members should be
able to know whether or not they
fit into a class because otherwise
it's questionable whether a class
action is doing much to advance
access to justice." LT
'Pro-Sys is an attempt
by the Supreme Court
of Canada to make
certification a
meaningful
screening device,'
says Michael Eizenga.
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