Law Times

Law times • OctOber 20, 2008 FOCUS to test the courts in Canada. While the United States has Courts see more competition-related litigation C Class actions make revival BY DARYL-LYNN CARLSON For Law Times lass action litigation related to matters based on com- petition law has returned recognized related class actions by limiting damages to the ini- tial purchaser class, the Cana- dian courts have asserted that they are open to multiple classes of claimants, although plaintiff counsel must prove how class members were affected through- out the chain of distribution. In the matter of Chadha v. system and find a common basis to do that." Bayer Inc., the divisional court reversed certification, based on supporting evidence it deemed did not address the complexities involved in finding price-fixing effects on indirect purchasers. There's been almost a chill on competition-related class ac- tions since. "For a number of years there was only one price fixing case and two competition cases of any kind that had gone to contested certification hear- ing in a class action setting," says David Kent, a partner at McMillan LLP. "They had stood for the proposition that the courts would take [a] hard look at harm to class members on a common basis and if you couldn't show how you were go- ing to do that you weren't going to get certified." Kent is currently defence coun- sel for the defendants in Pro-Sys v. Infineon Technologies, a class action involving the makers of Dynamic Random Access Memory who are alleged to have fixed the price of the computer chip component in a cartel-style conspiracy. Certification was denied in the matter although the plain- tiffs are appealing. Kent says the U.S. solution "just makes all of these tracing problems go away. "What the Canadian courts have said is, 'We're not going to be as dogmatic as the U.S. courts and say that the down- stream folks can't sue,'" he ex- plains. "Anybody can sue but the flip side of that is you're going to have to demonstrate how you will establish how harm has trickled through the The DRAM litigation is the first price fixing matter after Chadha to be heard at a contested certification hear- ing. It includes direct pur- chasers, but mostly involves people who bought comput- ers or cars that have chips in them and there's a long dis- tribution system of plaintiffs, says Kent. "So the question was, how would court deal with it?" He says the DRAM liti- gation, launched in courts in British Columbia and Que- bec, is important because the B.C. judge reaffirmed the need to consider competing economic evidence along with providing proof of aggregate damages that would demon- strate harm to the numerous class members throughout the distribution chain. "It really said all roads con- tinue to lead back to having a com- mon proof class-wide approach to harm and it wasn't there." Michael Brown, a partner at complex and virtually impos- sible it is to prove." Most competition-related class actions stem from in- vestigations of price fixing or price maintenance which are both illegal under the Competition Act and the fi- nancial liability exposure a business could face in a civil action is significant. "The civil liability will out- strip the potential liability of a full fine," says Brown. "The competition bureau has an en- actment fine of max $10 mil- lion whereas the exposure on the civil side can be in the hun- dreds of millions of dollars." He points to the well- 'What the Canadian courts have said is, 'We're not going to be as dog- matic as the U.S. courts and say that the downstream folks can't sue," explains David Kent. Ogilvy Renault LLP who is cur- rently involved in another com- petition class action matter, ac- knowledges the decision in the DRAM matter is so far "a blow to plaintiffs." "The legal question is not a matter of proving a conspira- cy took place or that it's a price maintenance case, the interesting issue is whether these cases are vi- able as class actions," he says. He notes that plaintiff counsel face an onerous task of proving harm incurred by class members throughout a distribution chain. He gives a hypothetical example of the notion called "pass through"; a producer of monosodium glu- tamate who may have fixed the product's price, sells it to a soup maker who then sells the soup product to a retailer. "Because there's that chain of distribution, the end consumer has no way of demonstrating that the two cent increase was actually passed all the way down through the chain of distribution," he says. "So you can understand how by lawyers throughout Canada and could be of significance to the development of class action jurisprudence. known vitamin class action against upwards of 20 vitamin makers and their subsidiar- ies that resulted in a collective settlement of $125 million and fines of $50 million. Brown says the DRAM case is being closely watched emerging eco-friendly industry with advertising products with- in the law. Paul Feuer, a lawyer at Ogil- vy Renault LLP who joined the firm following eight years at the Competition Bureau, says the new guidelines are designed to provide businesses with direc- tion to make environmental claims and self-declared envi- ronmental claims. "The purpose of these guide- lines is really to help businesses figure out the best way to make sure their advertising practices conform with generally accept- ed rules of best practices," says Feuer. "It codifies what the con- cept of eco-friendly and green means in context of making a claim of being green that isn't going to be deceptive." Feuer says the guidelines in- PAGE 11 clude "an excellent set of exam- ples" that can be referenced by lawyers advising their clients. The guidelines also include "I could easily see this case going up to the Supreme Court of Canada," Brown says. In an unrelated development, the Canadian Standards As- sociation in a joint effort with the Competition Bureau has released guidelines to help the criteria regarding the use of some of the common, nation- ally recognized "green" symbols to depict the nature of their product. He says the bureau is giving businesses a year-long grace pe- riod "before they will start low- ering the boom," although he expects only blatantly egregious offences will be pursued as the guidelines are introduced. LT WHAT CAN YOUR ONLINE RESEARCH SERVICE DO FOR YOU? CAN YOU ACCESS MORE THAN 55,000 ACTUAL COURT DOCUMENTS? PLEADINGS, MOTIONS, AND FACTA? www.westlawecarswell.com/youcan Request a demo for a chance to win $2,500 in AMEX gift certificates Untitled-2 1 www.lawtimesnews.com YOU CAN. LitigatorTM With WestlaweCARSWELL, , exclusive to WestlaweCARSWELL, provides access to six topical Court Document Galleries, as well as other materials essential to your litigation practice, including seven Quantum Services, Profiler, Practice Guides, Commentary, Current Awareness resources, and Lawyer and Expert Directories.. AUTHORITATIVE. INNOVATIVE. TRUSTED. 9/30/08 9:44:55 AM

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