The Supreme Court of Canada today released its long-awaited decisions in three price-fixing class actions: Pro-Sys Consultants Ltd. v. Microsoft Corporation, Sun-Rype Products Ltd. v. Archer Daniels Midland Company and Infineon Technologies AG v. Option consommateurs.
Key findings of the Court include:
- Indirect purchasers have a cause of action at law. This is today’s most significant finding.
- The passing-on defence is inapplicable throughout the whole of restitutionary law, and therefore is not available to defendants in price-fixing cases.
- Any risk of double recovery can be managed by the courts.
- Complexity regarding proof of damages should not ban suit by indirect purchasers.
- The certification stage is concerned with the form of the action and not its merits.
- The standard of proof to be applied to individual certification requirements other than the requirement that the pleadings disclose a reasonable cause of action remains whether there is “some basis in fact” which establishes each of the remaining individual certification requirements.
- The “some basis in fact” standard does not require proof on a balance of probabilities, nor does it require that the court resolve conflicting facts and evidence at the certification stage. Rather, each case must be decided on its own facts and the court must be satisfied that the conditions for certification have been met to a degree that should allow the matter to proceed on a class basis.
- In any class action, there must be some basis in fact to show that two or more persons can prove that they fit within the class definition.
- Resolving conflicts between the experts is an issue for trial not certification.
- The Court indicated that in order to demonstrate that loss-related issues meet the “some basis in fact” standard, plaintiffs in indirect purchaser actions generally tender expert evidence in the form of economic models and methodologies to attempt to establish that the defendant’s alleged overcharges have been passed on to the indirect purchaser level in the distribution chain. The Court held that the methodology must also be sufficiently credible or plausible to establish some basis in fact for the commonality requirement in that it offers a realistic prospect of establishing loss on a class-wide basis so that, if the overcharge is established at trial, it can be demonstrated that passing on has occurred and such overcharge is common to the class. The methodology must not be purely theoretical or hypothetical. Rather, it must be grounded in the facts of the particular case in question, and there must be some evidence of the availability of the data to which the methodology is to be applied.
- The aggregate damages provisions of provincial class proceedings legislation relate to remedy and are procedural - they cannot be used to establish liability (i.e., loss).
These principles will no doubt be the subject of extensive legal and judicial commentary in the weeks and months to come.