[1] On appeal from a judgment of the Superior Court, District of Montreal (the Honourable Richard Mongeau), dated June 17, 2008 that granted the respondents' declinatory exceptions and dismissed the appellant's motion for authorization to institute class action proceedings;
[2] For the reasons of Kasirer, J.A., with which Forget and Pelletier, JJ.A. agree, THE COURT:
[3] ALLOWS the appeal and sets aside the judgment of the Superior Court;
[4] DECLARES that Elpida Memory, Inc., having desisted from the appeal, is no longer party to these proceedings and DECLARES FURTHER that Elpida Memory, Inc.'s liability for costs, should costs be awarded against the respondents in the final judgment on the merits, is limited to costs in the proceedings before Mongeau J. prior to this appeal;
[5] GRANTS the appellant's motion seeking authorization to institute the class action;
[6] ASCRIBES to Option Consommateurs the status of representative for the purpose of exercising the class action on behalf of the following group:
Toute personne qui a acheté au Québec de la mémoire vive dynamique (DRAM) et/ou un ou des produits équipés de mémoire vive dynamique (DRAM) (…) entre le premier avril 1999 et le 30 juin 2002 inclusivement.
Toutefois, une personne morale de droit privé, une société ou une association n'est membre du groupe que si, en tout temps depuis le 5 octobre 2003 elle comptait sous sa direction ou sous son contrôle au plus cinquante (50) personnes liées à elle par contrat de travail, et qu'elle n'est pas liée avec la requérante.
[7] DECLARES the nature of the action to be one of extracontractual civil liability;
[8] IDENTIFIES the following as the principal questions of fact and of law to be treated collectively in the action:
· Les Intimées ont-elles comploté, se sont-elles coalisées ou ont-elles conclu un accord ou un arrangement ayant pour effet de restreindre indûment la concurrence dans la vente de la mémoire vive dynamique (DRAM) et, dans l'affirmative, durant quelle période ce cartel a-t-il produit ses effets sur les membres du groupe?
· La participation des Intimés au cartel constitue-t-elle une faute engageant leur responsabilité solidaire envers les membres du groupe?
· Le cartel a-t-il eu pour effet d'occasionner une augmentation du prix payé au Québec à l'achat de DRAM et/ou de produits équipés de DRAM et, dans l'affirmative, cette augmentation constitue-t-elle un dommage pour chacun des membres du groupe?
· Quel est le montant total des dommages subis par l'ensemble des membres du groupe?
· La responsabilité solidaire des Intimées est-elle engagée à l'égard des frais suivants encourus ou à encourir pour le compte des membres du groupe dans la présente affaire :
a) les frais d'enquête;
b) le coût des honoraires extrajudiciaires des procureurs de la Requérante, de la Personne désignée et des membres du groupe; et
c) le coût des déboursés extrajudiciaires des procureurs de la Requérante, de la Personne désignée et des membres du groupe? ;
[9] IDENTIFIES the following as the principal conclusions that relate to the aforementioned questions :
ACCUEILLIR l’action en recours collectif de la Représentante et des membres du groupe contre les Défenderesses;
CONDAMNER les Défenderesses solidairement à payer à la Personne désignée et aux membres du groupe un montant égal à la somme des revenus des Défenderesses et des autres membres du Cartel générés par la portion artificiellement gonflée des prix de vente de la mémoire vive dynamique (DRAM) vendue au Québec et/ou équipant des produits vendus au Québec et ordonner le recouvrement collectif de ces sommes;
CONDAMNER les Défenderesses solidairement à acquitter les coûts encourus pour toute enquête nécessaire afin d'établir leur responsabilité en l'instance, incluant les honoraires extrajudiciaires des procureurs et les déboursés extrajudiciaires, y compris les frais d'expert et ordonner le recouvrement collectif de ces sommes;
CONDAMNER les Défenderesses solidairement à payer sur toutes les sommes susdites l'intérêt légal ainsi que l'indemnité additionnelle prévue au Code civil du Québec à compter de la date de signification de la présente requête;
Ordonner aux Défenderesses solidairement de déposer au greffe de cette Cour, la totalité des sommes susdites, ainsi que les intérêts et l'indemnité additionnelle;
Ordonner que la réclamation de chacun des membres du groupe fasse l'objet d'une liquidation individuelle ou, si ce procédé s'avère inefficace ou impraticable, ordonner aux Défenderesses solidairement de payer une somme correspondant au montant de l'ordonnance de recouvrement collectif aux fins d'être utilisée pour introduire des mesures qui bénéficieront aux membres du groupe et dont la nature sera déterminée par le tribunal;
Le tout avec dépens, y compris les frais d'expert et d'avis;
[10] DECLARES that, except in the case of exclusion, members of the group will be bound by any and all judgments relating to the class action in the manner provided by law;
[11] FIXES the time limit for requesting exclusion from the group at sixty (60) days from the date of publication of the notice to members, from which time the members of the group who have not requested exclusion therefrom will be bound by any and all judgments that are rendered in the class action;
[12] ORDERS the publication of the notice to members within sixty (60) days from this judgment in the La Presse, Le Soleil and The [Montreal] Gazette newspapers.
[13] REMANDS the file to the Chief Justice of the Superior Court for determination of the judicial district in which the class action will proceed and for appointment of the judge charged with hearing the case;
[14] With costs on appeal against the respondents, except Elpida Memory, Inc. Costs in first instance to follow suit.
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REASONS OF KASIRER, J.A. |
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[15] Dynamic random access memory, generally referred to as "DRAM", is a semiconductor memory product that provides high-speed storage and retrieval of electronic information. It is found in many commonly-used electronic devices including computers and servers.
[16] The respondent companies were all manufacturers of DRAM between 1999 and 2002. They have all admitted to participation in a conspiracy to fix prices in the multi-billion dollar DRAM market during a part of that period. In 2004, all of the respondents, except Micron Technology, Inc., agreed to plead guilty in the United States District Court for the Northern District of California to the following charges:
[…] participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of Dynamic Random Access Memory ("DRAM") to be sold to certain original equipment manufacturers of personal computers and servers ("OEMs") from on or about July 1, 1999, to on or about June 15, 2002 in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.
The charges referred to sales of DRAM directly affecting the following OEMs in the United States: Dell Inc., Compaq Computer Corporation, Hewlett-Packard Company, Apple Computer Inc., International Business Machines Corporation and Gateway Inc. Following their guilty pleas, the respondents were fined substantial amounts. In exchange for certain measures of clemency, Micron Technology, Inc. decided to cooperate with the authorities. Micron acknowledged, however, that the U.S. Department of Justice investigation revealed price fixing by its employees in the DRAM market.
[17] On October 9, 2001, Claudette Cloutier, who lives in Montreal, purchased a personal computer outfitted with DRAM from the Dell Computer Corporation from her home by computer over the Internet. She placed the order on Dell’s website and paid the price in full with a credit card. The invoice of the sale recorded Dell's address for payment to be in Toronto and the standard-form contractual terms stipulated that the sale was deemed to have taken place in Ontario and was subject to Ontario law.
[18] Ms. Cloutier claims to have paid an artificially inflated price for her computer as a result of the respondents’ wrongful conspiracy to fix the price of DRAM. She says she is a member of a class of purchasers of DRAM in Quebec to whom the respondents are civilly liable. She seeks status as the designated representative in class action proceedings brought against the respondents for which the petitioner in the Superior Court, Option consommateurs, seeks authorization to bring the class action.
[19] The class is described in the motion as follows:
Toute personne qui a acheté au Québec de la mémoire vive dynamique (DRAM) et/ou un ou des produits équipés de mémoire vive dynamique (DRAM) (…) entre le premier avril 1999 et le 30 juin 2002 inclusivement.
Toutefois, une personne morale de droit privé, une société ou une association n’est membre du groupe que si, en tout temps depuis le 5 octobre 2003 elle comptait sous sa direction ou sous son contrôle au plus cinquante (50) personnes liées à elle par contrat de travail, et qu’elle n’est pas liée avec la requérante.
[20] In its motion to institute these proceedings, Option consommateurs alleges that the respondents' conduct served to inflate artificially the price of DRAM, and devices containing DRAM, sold in Quebec from April 1999 to July 2002. In so doing, the respondents failed to respect statutory obligations under the Competition Act[1] and breached the general extracontractual duties imposed upon them by the Civil Code of Québec. The effects of the unfair price-fixing purportedly extends not only to computers and servers sold in Quebec, but to all devices outfitted with DRAM, including printers, hard drives, cellular telephones, digital cameras, MP3 players and more. Members of the class include direct and indirect purchasers of DRAM who suffered losses by assuming, in whole or in part, the inflated portion of the price of DRAM sold in Quebec. Direct purchasers are those persons who acquired DRAM directly from the respondents. An indirect purchaser is a person who bought DRAM or products containing DRAM from either a direct purchaser or from another person, himself or herself also an indirect purchaser, at a different level in one of the multiple chains of distribution of the product en route to the eventual end-user.
[21] The headquarters of all of the respondents are in countries other than Canada. None of them has a place of business in Quebec. From the start of the proceedings, they have said that Quebec courts have no jurisdiction to hear the matter and that, in any event, the requirements for the authorization to institute a class action have not been met.
[22]
In deciding the appellant’s motion to authorize
the proceedings, the presiding judge declared that the Superior Court did not
have proper territorial jurisdiction to hear the class action because no damage
was suffered in Quebec. The judge also held that even if the Superior Court
had proper jurisdiction, he would have dismissed the motion to authorize the
bringing of the class action. While the motion did disclose questions of law
or fact common to the class, he decided that the facts alleged did not seem to
justify the conclusions sought pursuant to article
[23]
Option consommateurs and Ms. Cloutier appeal,
arguing that the motions judge was wrong to decline jurisdiction ratione
loci and that the requirements for authorization in article
[24] An application by the appellant to adduce new evidence in respect of participation of the respondents in a price-fixing cartel pertaining to DRAM sold in Europe has been granted by this Court in a judgment released concurrently with these reasons.
[25]
With great respect for the motions judge’s
contrary opinion, I am of the view that the Superior Court does have
jurisdiction to decide this matter and that the class action should have been
authorized to proceed. I will treat the three major issues on appeal in turn:
(I) the source in law of the claims made by members of the class; (II) territorial jurisdiction over financial losses of members of the
class under article
I Sources in law of claims made by the different members of the class
[26] As a preliminary matter, it is important to dispel the notion that the direct and indirect purchasers of DRAM in the class base their claims of distinct contractual and extracontractual sources.
[27]
At first blush one might suppose that the direct
purchasers of DRAM have a contractual claim against one or another of the
respondents from whom they procured DRAM as well as an extracontractual claim
against all of the respondents involved in the conspiracy. Accordingly,
article
[28]
In point of fact, the class action rests on a
single, extracontractual source for all members of the class. All of the
direct and indirect purchasers invoke the same extracontractual fault as the
basis for their respective causes of action: the conspiracy to inflate
artificially the price of DRAM among the six respondents. The conspiracy would
ordinarily have given rise to a civil remedy pursuant to section
[29]
The fact that the respondents also contracted
individually with the direct purchasers does not mean that they are obliged, by
reason of the prohibition against the exercise of an option, to conform to the
rules governing contractual liability as members of the class. Article
[30]
Article
787 - Observations générales - Le problème de l'option se pose lorsqu'une victime, partie à un contrat valablement formé qui est applicable à la situation, décide de porter son litige sur le plan extracontractuel. […]
[…]
797 - Situations limites - […] Pour qu'il y ait responsabilité contractuelle, certaines conditions doivent être satisfaites. Il doit premièrement exister un contrat valable entre les parties. Si le contrat est nul […], alors on ne peut pas invoquer la responsabilité contractuelle. […] Le problème se pose aussi quant à la responsabilité découlant d'un fait fautif qui a lieu dans la phase précontractuelle. Dans ce dernier cas, il est clair que la responsabilité doit être extracontractuelle, puisque, justement, aucun contrat n'a été formé.
[31]
The conspiracy complained of here by which the
six respondents sought to fix the price of DRAM took place in this
precontractual period. It is the conspiracy upon which the direct purchasers'
legal action is based, not the non-performance of the individual contracts to
purchase DRAM concluded later. As legal scholars have made plain, a fault
committed in the precontractual period is, in principle, a delictual one.[5] Article
[32] One might draw an analogy - albeit an imperfect one - between the conspiracy to fix prices here and fraud or a failure to satisfy the requirements of good faith arising in the precontractual period. This sort of conduct, where it amounts to a precontractual fault, is best characterized as having an extracontractual source.[6]
[33]
The motion for authorization of the class action,
at paragraphs 2.7 and 2.7.1, invokes the wrongful conspiracy among the six
respondents as the basis for the recourses of direct and indirect purchasers.
We know from the exhibits filed in support of the motion that certain of the
respondents have admitted to participating in a conspiracy to fix the price of
DRAM in the United States and elsewhere. The conspiracy is, in Quebec law, the
act giving rise to liability (or the fait générateur
de responsabilité) which, according to the
allegations in the claim, is an extracontractual fault in respect of all the
members of the class. As a result, one cannot say that a difference in source
of liability as between direct and indirect purchasers, considered alone,
creates an obstacle to the class action under article
* * *
II Territorial jurisdiction of the Superior Court
[34]
Each of the respondents presented motions asking
the Superior Court to decline jurisdiction to hear the case pursuant to article
[35]
The motions judge agreed. After recalling that
the burden of establishing a basis for jurisdiction fell to the appellant, the
judge held that the loss suffered by the designated representative Ms. Cloutier
did not constitute "damage [...] suffered in Québec", within the meaning
of article
[36]
The appellant argues that the issue of
territorial jurisdiction should not have been decided at this stage of the
proceedings. In any event, says the appellant, the judge was mistaken to
decline jurisdiction under article
[37] With respect, I find myself unable to agree with the judge that Ms. Cloutier did not suffer damage in Quebec. I propose to consider, in turn, the timeliness of the debate on jurisdiction, the place at which the contract was concluded and the nature of Ms. Cloutier’s loss as the basis of territorial jurisdiction.
II.1 Timeliness of the motion to dismiss
[38] Citing Thompson,[9] the appellant argues that there are insufficient materials in the record to decide properly on territorial jurisdiction at this stage of the proceedings. The motions judge - who is the designated judge charged with management of the class action - considered this argument and decided otherwise. He noted, first, that the parties had agreed to proceed on the ratione loci exception at the same time as the motion for authorization of the class action (para. [17]). He then held that, in the circumstances of this case, it would be appropriate to proceed on the matter at this early stage (para. [22]).
[39] I agree with the judge that it was appropriate to decide on the declinatory exception at the authorization stage rather than on the merits in this case.
[40] Territorial jurisdiction here turns largely on the circumstances of Ms. Cloutier as representative of the class in her dealings with the respondents. It is not, strictly speaking, a matter that needs to be treated collectively. The facts necessary to dispose of the matter are in the record now. The appellant’s proposal opens the door to the unwelcome possibility that the class action would continue unnecessarily past the authorization stage without a disposition of the question of territorial jurisdiction. Not only does Thompson, properly construed, not require this manner of proceeding,[10] but the better view is that the general principles of economy of judicial resources and deference owed to the views of the judge managing the class action dictate the opposite approach.
II.2 Basis
for territorial jurisdiction under article
[41]
The respondents are not domiciled in Quebec nor
do they have a place of business here. The alleged conspiracy is said to have
transpired in the "United States and elsewhere", although none of the
facts alleged suggests that the wrongdoing actually took place in the
province. Taking the allegations in the motion as true, as we are bound to at
this stage of the proceedings, the analysis of jurisdiction will proceed on the
assumption that the fault took place outside of Quebec.[11] Jurisdiction for this personal action taken against foreign
defendants and involving wrongdoing outside of Quebec must rest on another
connecting factor. By exception to the general rule that an action of this
nature is brought before the court of the domicile of the defendant, Ms.
Cloutier relies on the international jurisdiction of Quebec courts based on the
damage she suffered in Quebec pursuant to article
[42] Ms. Cloutier is not suing in contract but on the basis of an alleged extracontractual fault committed by the respondents.[12] Ms. Cloutier says that the respondents are extracontractually liable for the loss she sustained in Quebec because the price of the computer she bought was artificially inflated as a result of the respondents’ conspiracy.
[43] The position of the respondents is a simple one. As foreign defendants who admitted to wrongdoing under the Sherman Act in the United States, they cannot be called before the Superior Court to answer to Ms. Cloutier’s complaint. That complaint, they say, arises out of a contract made under Ontario law, with a third party, in respect of which she suffered no damage in Quebec that can give jurisdiction to courts here.
[44]
Article
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3148. Dans les actions personnelles à caractère patrimonial, les autorités québécoises sont compétentes dans les cas suivants:
[…]
3° Une faute a été commise au Québec, un préjudice y a été subi, un fait dommageable s'y est produit ou l'une des obligations découlant d'un contrat devait y être exécutée;
[…]. |
3148. In personal actions of a patrimonial nature, a Québec authority has jurisdiction where
[…]
(3) a fault was committed in Québec, damage was suffered in Québec, an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec;
[…]. |
[45]
In Spar Aerospace Ltd.,[13] the Supreme Court held that the notion of "real and
substantial connection" between the facts of a case and the Quebec courts
is subsumed under article
[46]
Ms. Cloutier suffered no bodily or moral injury,
of course, nor did she suffer a loss to corporeal property situated in Quebec.
But it is alleged that, however incorporeal, her financial loss suffered upon
the purchase of the computer from Dell is included in what article
[47]
Respondents answer that her financial loss alone
is not enough to ground jurisdiction in the circumstances. They point to a
line of cases decided by this Court, notably Quebecor Printing, which
underscores a danger - perhaps the better word is inconvenience - of courts
assuming jurisdiction on the basis of a plaintiff's financial loss said to have
been suffered in Quebec by reason only of his or her domicile being located in
the province. Such a loss cannot be the basis for jurisdiction under article
II.2.1 Was the contract entered into at Ms. Cloutier's Montreal address?
[48]
Ms. Cloutier's contract with Dell is not,
strictly speaking, the basis for the cause of action against the respondents
who were not a party to it. While it is true that the respondents did not sell
the computer in question to Ms. Cloutier, the appellant argues that the
contract is relevant in determining the respondents’ possible extracontractual
liability to her for the loss she suffered on the occasion of its purchase. The
appellant contends that the contract was concluded in Montreal and,
accordingly, the damage was suffered in Quebec for the purposes of article
[49]
The relevance of the contract to the
extracontractual cause of action is as a "juridical fact"[16]
rather than as a "juridical act" per se. The
contract is not the alleged source of the respondents' obligation to Ms.
Cloutier as a juridical act, nor is it to be confused with the juridical fact
of the wrongful conspiracy - the alleged fait générateur de responsabilité - upon which Ms. Cloutier relies to establish liability. But the
contract is a relevant juridical fact for identifying when and where the
alleged financial loss - the overpayment for the computer because of the price
fixing of the DRAM - was suffered by Ms. Cloutier at the hands of the
respondents. Under the general law of civil liability in Quebec, a contract
taken as a juridical fact can be the occasion upon which damage crystallizes
for the purposes of an action in extracontractual liability brought by one of
the contracting parties against a third-party wrongdoer under article
[50] All parties have acknowledged that had Ms. Cloutier been called, she would have testified that she purchased the computer and related property on October 9, 2001 from her home in Montreal, by computer, via the website "dell.ca".[17] But the respondents are quick to point out that the contract was not so plainly agreed to in Quebec. On the invoice of sale, the address of the Dell Computer Corporation to which payment is to be remitted is a post office box in Toronto, Ontario. The respondents argue that the contract was formed in Ontario because that was the place in which the offeror received Ms. Cloutier’s acceptance. Moreover, the terms and conditions accompanying the invoice applicable to on-line purchases include a clause stipulating that the sale is deemed to have been entered into in Ontario and is to be interpreted according to the laws of Ontario. Additionally, say the respondents, Ms. Cloutier solicited an offer from Dell when she initiated her purchase of the computer via the Dell website, such that the transaction is not a remote-parties contract pursuant to the then applicable provisions of the Consumer Protection Act.[18]
[51] Ms. Cloutier contends that the contract with Dell was a consumer contract subject to the Consumer Protection Act and that, according to the applicable rules, contract was deemed to have been entered into at her address in Montreal.
[52] The motions judge decided the contract between Ms. Cloutier and Dell was entered into in Ontario (para. [74]). The judge was of the view that the allegations in the motion were insufficient to establish that the sale took place after a solicitation by Dell and, as a result, the contract was not a remote-parties contract under the Consumer Protection Act.
[53] Was the judge right to exclude the application of the Consumer Protection Act here and, as a result, hold that the provision that deems the transaction as having been entered into at the Quebec address of Ms. Cloutier to be inapplicable?
[54] At the relevant time, sections 20 and 21 of the Consumer Protection Act[19] included a definition of a remote-parties contract and a rule that fixed the place at which those contracts were deemed to have been concluded:
[55]
In my view, section
[56] I am of the respectful opinion that the judge erred in law, at para. [75], when he decided that Ms. Cloutier failed to establish that the sale took place after a solicitation by Dell. The non-solicitation caveat is an exception to a general rule of public order designed to protect consumers. Ms. Cloutier did have the burden of showing that she fell under the general rule at section 20. But according to general principles of statutory interpretation, the burden of showing that the exception applied to exclude the contract from the application of section 20 fell to the person invoking it.[20] This is no less true - on the contrary, the application of this rule appears to me to be all the more compelling - by reason of the public order character of the rule in question. To throw the burden of proving the application of the non-solicitation rule on the consumer would wrongly thwart the legislative policy it is designed to serve, i.e. to protect consumers from the untoward effects of the usual application of the private law rules that would have had the contract concluded at the place at which the acceptance was received.[21] Finally, the Boulay,[22] case upon which the respondents rely to shift the burden of proving the exception onto Ms. Cloutier, provides no real comfort to their position. In a 4-paragraph opinion reported with sparse facts, Deschamps, J.A., as she then was, noted that nothing in the record before her indicated that the merchant had solicited the consumer. In holding that the Consumer Protection Act did not apply, Deschamps, J.A. observed in a paragraph not cited by the respondents that solicitation by the merchant was highly unlikely on the facts.[23] Nothing in Boulay indicates a basis for comparing what transpired there with the relationship between Dell and Ms. Cloutier in their internet transaction in the case at bar.
[57]
In any event, quite apart from the burden of
proof, it is difficult to see what would suggest that the offer to which Ms.
Cloutier responded in making the purchase from the website was
"solicited" by her within the meaning of section 20 of the Act. In
the various allegations of the motion and the exhibits filed, nothing indicates
the arrangement was something other than an ordinary purchase made by a person
from amongst the products on standing offer on a vendor’s website. From the
allegations and the exhibits, it would seem that the operation that transpired
between Ms. Cloutier and Dell is the virtual equivalent of a purchase by mail
or telephone, by a consumer, of a product advertised for sale at a sticker
price in a catalogue published by merchant who makes the catalogue readily
available to the public. The better view is that the offer made by Dell on its
website was not solicited by Ms. Cloutier but merely accepted by her and, as
such, the remote-parties definition in section 20 applies rather than the
general rule on contract formation at article
[58] The respondents argue, in the alternative, that even if the transaction was a remote-parties contract, it would be wrong to apply the Consumer Protection Act to their relationship with Ms. Cloutier which is neither contractual nor is it one between a merchant and a consumer as those terms are defined in the Act. Citing this Court’s judgment in Novapharm,[24] they argue that the Act should not apply to them because they are not merchants. Applying the Consumer Protection Act to the respondents would amount to giving the Act an implausible extraterritorial application and inappropriately extend its purview to a non-consumer sale between two foreign businesses, i.e. between the manufacturers of DRAM and Dell. The definition of remote-parties contracts and the deeming rule in section 21 can only be of use, they say, in a consumer-merchant context in Quebec.
[59] Novapharm is of no assistance to the respondents here. Ms. Cloutier is not suing the respondents as merchants under the Consumer Protection Act: the rule in section 21 that deems the contract to have been concluded in Montreal is not being invoked to ground an action in contract against the respondents, as merchants, by Ms. Cloutier, as a consumer. The operating premise of the motion to authorize the class action is that the respondents’ delictual conduct caused damage to Ms. Cloutier on the occasion that she purchased the computer with DRAM from Dell in Quebec. The circumstance is different from Novapharm in which the Court refused to allow a consumer to sue a merchant in the absence of a consumer contract between them. Here, the respondents are sued in delict, not as merchants, but as third parties whose conduct allegedly resulted in a consumer paying too much for a computer outfitted with price-inflated DRAM.
[60]
Finally, section
II.2.2 Financial loss as "damage [...] suffered in
Québec" under article
[61]
The respondents take the position, as an
alternative argument, that even if the contract is deemed to have been
concluded in Quebec, the nature of the loss suffered by Ms. Cloutier is an
insufficient basis for territorial jurisdiction under article
[62]
The motions judge was of this view. After
quoting at length from decisions of this Court in Quebecor Printing and Hydro
Aluminum Wells, as well as distinguishing cases cited by the appellants, he
decided that the financial loss suffered by Ms. Cloutier was insufficient for
establishing jurisdiction pursuant to article
[63]
I respectfully disagree. Ms. Cloutier’s damage
was suffered in Quebec within the meaning of article
[64]
In my view, Quebecor Printing stands for
the principle that when financial damage is only recorded in Quebec (in
French I would say "comptabilisé"), that alone is insufficient to ground territorial
jurisdiction for the purposes of article
[65]
The text of the Code lends itself best to this
reading: the French term "préjudice" in article
[66] In Quebecor Printing, a Quebec plaintiff claimed jurisdiction based on its economic loss recorded in Quebec in respect of a contract to be performed elsewhere and for a debt to be paid elsewhere. I take it as central to my colleague Beauregard, J.A.’s reasons that the obligation was to be performed, as he said, "totalement à Memphis" and that the debt was to be paid "à Memphis". He wrote that "[...] le fait que Regenair, dont le siège social est au Québec, ne reçoit pas le paiement de sa créance, laquelle est payable à Memphis, ne fait pas qu’un préjudice a été subi au Québec".[28] In other words, the loss was suffered in Memphis but the damage was recorded in Quebec. This was not enough to ground jurisdiction in Quebecor Printing.
[67] This distinction between financial damage that is merely recorded in Quebec, on the basis of the location of the plaintiff’s domicile, and injury that is otherwise suffered in Quebec, is a strong theme running through the cases. In Foster,[29] for example, it is this feature of Quebecor Printing that is emphasized by the Court:
CONSIDERING that the mere fact that Respondent has its head office in Montreal
and that any monetary loss would presumably be recorded in Montreal, is
not attributive of jurisdiction within the meaning of article
(Emphasis added.)
[68]
Hydro Aluminum Wells is cited by the respondents as authority for its submission that
Ms. Cloutier's financial damage does not suffice as a connecting factor under
article
[69]
The distinction between financial injury
materially suffered in Quebec and financial damage merely recorded here is
important in respect of a balanced policy of establishing appropriate
"international jurisdiction" for Quebec courts, in the absence of an
exceptional grounds for holding the courts to be a forum non conveniens.
If the legislature had been inclined to establish jurisdiction on the basis of
damage recorded in Quebec, why did it not recognize the plaintiff’s domicile
alone in the connecting factors listed in article
[70]
On the other hand, financial loss substantively
suffered in Quebec based on material facts arising in the province, as opposed
to damage that is merely recorded in the patrimony of a Quebec plaintiff, is a
sufficient basis for establishing jurisdiction for the Quebec courts under
article
[71]
Where the injury is materially suffered in Quebec, as
opposed to damage merely being recorded here based on the plaintiff’s domicile,
courts have been less hesitant to find jurisdiction on the basis of financial
loss. In Sterling,[32] a case in which the Court was divided, Rochon, J.A. held that the
fact that Quebec was the place of the performance of the contract meant that
the plaintiff in a distinct action for latent defects could properly be said to
have suffered damage there. The recent case of British Airways p.l.c.[33]
provides useful guidance for the case at bar. Two
airlines had conspired outside Quebec to raise prices on certain airline
tickets. In seeking authorization for a class action against them, the
plaintiff argued that there was both a contractual recourse against the airline
from whom the ticket was purchased and an extracontractual recourse against the
co-conspirator. In the Superior Court, it was held that the conspiracy took
shape, as it affected the consumers, at the time the tickets were purchased in
Quebec. Unlike Quebecor Printing, said Payette J., the financial loss
in this case was suffered in Quebec.[34] When the motion for leave to this Court was dismissed, my
colleague Dalphond, J.A. wrote the following: "[…] les résidants du Québec qui ont contracté avec British Airways et qui
ont alors payé un prix artificiellement gonflé par suite de manœuvres illégales
impliquant Virgin, ces personnes ont subi au Québec un préjudice (art.
[72] Applying the foregoing analysis to the facts alleged in the motion to bring the class action proceedings, I am of the view that the Superior Court has jurisdiction to hear the matter. Ms. Cloutier suffered an economic loss to be sure, but it is of a different character than the one spoken to by the Court in respect of the plaintiff in Quebecor Printing. She alleges that she paid too high a price for the computer she purchased because of the unfairly priced DRAM it contained. That remote-parties contract between Ms. Cloutier and Dell was deemed by the Consumer Protection Act to have been concluded in Montreal. The loss that she suffered on the occasion of concluding that contract grounds jurisdiction for the Quebec courts here. That loss is a "préjudice/damage" within the meaning of article 3148(3) notwithstanding its purely financial character. Taking the facts alleged in the motion to be true, it constitutes a material injury, suffered in Quebec, that was caused by the price-fixing conspiracy. The loss was not just recorded here because of the locus of Ms. Cloutier's patrimony but it was substantively suffered here and, as a result, grounds jurisdiction for the class action.
III Authorization of the class action pursuant to articles
[73]
Leaving to one side his conclusion that the
declinatory exception justified the dismissal of the motion, the judge
proceeded to consider whether the class action should be authorized pursuant to
the rules set forth in articles
1002
et seq. of the Code of Civil
Procedure. He was mindful that the tenor of the proceedings at this early
stage limited his task to that of a "filter" for recourses that,
prior to any debate on the merits, do not qualify as class actions. The judge
analyzed each of the four requirements of article 1003 prior to concluding that
the class action should not be authorized. He decided that the facts alleged
by the appellants do not appear to justify the conclusions sought pursuant to
article
[74] All of the above findings were contested on appeal. I propose to treat articles 1003(b) and (d) first, as they were the principal matters in dispute, before considering the judge's other findings that led him to the conclusion that the class action should not be authorized.
III.1 Article
[75] The appellant submits that the judge erred in deciding that the essential elements of a cause of action in extracontractual liability were not properly made out in the motion to satisfy the requirements for authorization. For the judge, the facts alleged failed to justify the conclusion that an actionable fault had been committed by the respondents and, in particular, that the motion was insufficient to demonstrate prima facie conduct that would violate the Competition Act (paras. [171] et seq. of the judgment a quo). He decided that the allegations relating to the passing-on of the loss down to the indirect purchasers were not part of Quebec law (paras. [169] et seq.). Finally, the causal link between the alleged fault and losses was not established as it need be at the authorization stage (paras. [177] et seq.).
[76]
Mindful as I am of the deference an appellate
court owes to the views of the motions judge under article
III.1.1 Fault
[77]
Paragraph 2.6 of the motion to institute class
action proceedings alleges that the respondents failed to respect their
statutory obligations under sections
[78]
What remained was the claim under the general
law of civil liability. Paragraph 2.7 alleges that the respondents' conduct
failed to meet the requirements imposed by the duty not to harm others by
reason of wrongful conduct under the Civil Code of Québec. The alleged
commission of an offence under section 45, while no longer the basis of a civil
action under the Competition Act, remains relevant insofar as it may or
may not reveal the violation of a statutory norm giving rise to extracontractual
liability under article
[79] In paragraph 2.7.1 the appellants provide detail of the alleged civil wrongs upon which the class action in Quebec is based by reference to the criminal proceedings undertaken in the United States against the respondents. Thirteen exhibits are incorporated by reference into the motion. They include press releases from the Antitrust Division of the U.S. Department of Justice in which it is announced that named respondents agreed to plead guilty to participating in an "international conspiracy" to fix prices in the DRAM market and to pay fines;[36] "informations" which set forth the charges brought against certain of the respondents in United States District Court;[37] and "plea agreements" in which certain of the respondents agreed to plead guilty to charges of "participating in a conspiracy in the United States and elsewhere […]".[38] The exhibits contain no specific reference to Quebec.
[80] The motion also includes allegations relating to Ms. Cloutier, as well as to losses she and other members of the class allegedly suffered. In paragraph 2.14, the appellant states "[l]e Cartel a eu pour effet de restreindre indûment la concurrence, de gonfler artificiellement le prix du DRAM vendue au Québec et par le fait même de gonfler artificiellement le prix de vente des produits équipés de DRAM vendus au Québec". Paragraph 2.15 asserts that during the time period in which the cartel was active, Quebec buyers paid "un prix artificiellement gonflé" for DRAM sold in the province. "Il en va de même des acheteurs subséquents de DRAM et/ou de produits équipés de DRAM vendus au Québec à qui les premiers acheteurs auraient, en tout ou en partie, refilé la portion artificiellement gonflé du prix de la DRAM": paragraph 2.15.1 thus contains a reference to the passing-on of the loss from direct to indirect purchasers of DRAM in Quebec. The appellant states in paragraphs 2.16, 2.17 and 3 that the losses collectively suffered by the members of the class are equal to the portion of the sale price of DRAM in Quebec that was artificially inflated as a result of the conduct of the cartel.
[81] Did the petitioner properly allege fault for the purposes of an action in extracontractual liability under Quebec law?
[82] The exhibits from the U.S. Department of Justice and the U.S. courts allude to the respondents’ conduct pursued "in the United States and elsewhere" and speak to an "international conspiracy" for price-fixing of DRAM. As the respondents point out in argument, none of these documents discloses conduct undertaken in Canada that would suggest, in itself, a crime or a civil fault was committed here. Not only does the motion fail to allege wrongful conduct that was committed in Canada, say the respondents, but the applicable provisions of Canadian competition law have not been satisfied. They contend that a violation of the Sherman Act for conduct pursued outside of Canada does not necessarily imply that there has been undue restraint of competition under Canadian law. In particular, subsection 45(1) of the Competition Act[39] requires that a conspiracy "unduly" (in French "indûment") restrain competition, and this undue character of restraint of trade is not properly alleged here.
[83] The respondents are right to say that the factors identified as necessary to determine whether there is undue restraint of competition by the Supreme Court of Canada in Nova Scotia Pharmaceutical Society[40] are difficult to discern in the motion. In that case, the Court underscored the importance of undertaking an analysis of market structure, including a measure of the commercial power of the cartel in question to a finding that restraint of competition is undue under section 45. While the motion invokes the undue character of the conduct at paragraph 2.14 without detail, it relies primarily on the exhibits for details of how the cartel achieved its ends. The respondents say these materials contain little or no information on market share and market structure - key requirements under section 45 as interpreted by the courts - and provide no sense on how that conduct affected the Canadian market.
[84] I am not inclined to the respondents’ narrow reading of the motion and the exhibits. However spare the facts alleged in respect of the usual criteria used to measure undue restraint of trade in Canadian law, it would seem to me fair to infer, at this early stage, that the commercial power of the cartel and the structure of the DRAM market are such that the conspiracy satisfies the undue requirement in the Act. According to the materials submitted as exhibits, the cartel was sufficiently powerful to shake the American market and to affect major manufacturers such as Dell, IBM and Apple. The cartel materially affected the European market for DRAM as well. The conspiracy is of course admitted to the extent of the pleas agreements. The appellant is far from having established its case on the merits, but it is fair to say that the extent of the conspiracy as made plain by the plea agreements is sufficient, at this stage, to conclude that the allegations of undue restraint of trade are made out.
[85]
The respondents raise the further problem that
the facts alleged, including the materials in the exhibits, only provide a
factual basis for wrongful behaviour that took place in the United States.
They contend that to invoke this conduct as the basis for an offence under
section
[86]
The debate as to the extraterritorial reach of
section 45 raised by the respondents is not helpful to decide the matter as to
whether a civil fault has been properly alleged. Accepting, for the purposes
of argument, that the Canadian authorities were precluded from prosecuting the
conduct of the respondents as a crime under the Competition Act, that
does not answer the question as to whether there is a civil cause of action in
Quebec law for wrongful conduct, committed elsewhere, that causes a loss to a
Quebec plaintiff. Moreover the focus on wrongful conduct in the United States
distorts the claim made by the appellant. First, the motion does not restrict
the alleged misconduct to the United States - it is alleged that the wrong took
place "in the United States and elsewhere", and indeed that is
reflected in the general tenor of the exhibits. This is not just because the
respondents are not all American corporations. In this Court, the appellant
was allowed to adduce new evidence of a press release bearing on a settlement
decision of the European Commission relating to antitrust conduct by producers
of DRAM in the European Economic Area.[42] That settlement, which involves companies related to the
respondents, tends to show the international character of the conspiracy. The
appellant’s theory of the case is that the conspiracy affected the sale of DRAM
in the United States and elsewhere, including Europe, but also in the market
for DRAM in Quebec. That behaviour resulted in an actionable civil wrong in
Quebec law even if the respondents were not, themselves, in Canada when the
wrong was committed. Whatever the relevance of the locus of the conspiracy for
a prosecution under section 45 of the Act, the fact that the conspiracy was
committed outside of this country is not decisive for an action in civil
liability under article
[87]
I would go further. Whatever the relevance of
territoriality and of the strict definition of undue competition for criminal
liability under section 45, those concerns fail to speak to the cause of action
in civil liability in Quebec which is the basis of the class action here. The
debate surrounding whether or not the specific requirements are properly
alleged under section
[88]
The respondents contend that they cannot be held
liable under article
III.1.2 Allegations of harm suffered
[89] Since injury is an essential element of the cause of action in civil liability brought against the respondents, the motion for authorization must allege facts that set forth the loss suffered by Ms. Cloutier and the other members of the class in order to justify the conclusions sought.
[90] In paragraphs 2.14 to 2.17 of its motion, the appellant asserts that the wrongful conduct of the respondents had the effect of artificially inflating the price of all DRAM sold in Quebec. The artificially inflated price meant that those who purchased DRAM directly from the respondents suffered a loss equivalent to a portion of the inflated price assumed by them as a result of the conspiracy. The same is said of indirect purchasers, including Ms. Cloutier, the designated representative, who bought her computer from Dell. The losses of the indirect purchasers would be predicated on some or all of the losses suffered being "passed on" through the chain of distribution, either by the direct purchasers or by other indirect purchasers from whom the aggrieved party acquired the DRAM. If the direct purchasers absorb all the loss, there are no losses to "pass on" to the indirect purchasers who acquire DRAM or devices outfitted with DRAM from them. By the same token, if the direct purchasers pass on the entire amount of the overcharge, they suffer no losses themselves and the indirect purchasers assume the full consequences of the wrong.
[91] According to the appellant in paragraph 2.16, all members of the class suffered harm in that they assumed, in whole or in part, a portion of the artificially inflated price of DRAM sold here. "En bout de piste", writes the appellant in paragraph 2.17 of the motion, "les dommages subis collectivement par la Personne désignée et les autres membres du groupe sont égaux à la portion artificiellement gonflée des prix de vente de la DRAM vendue au Québec et/ou équipant des produits vendus au Québec". The appellant thus claims a single, aggregate amount of losses on behalf of all direct and indirect purchasers in the class. That amount, it says, will be divided up between the members of the class, according to the extent of their individualized loss, to be determined at a later stage in the proceedings.
[92]
The judge clearly understood that the class is
made up of direct and indirect purchasers of DRAM. He was of the view that the
failure to allege precisely the losses suffered by indirect purchasers,
including by the designated representative who herself is an indirect acquirer
of DRAM, meant the action must fail. In respect of the harm suffered, he
decided that the motion failed to meet the requirements of article
[93]
The appellant argues the judge erred on both
points. It says the allegations in the motion met the prima facie test
applicable under article
[94]
Were the allegations sufficiently precise so
that they met the test in article
[95] The respondents submit that the allegations of losses by indirect purchasers in the motion are couched in language that is lacking in both precision and assertiveness. The motion does not make plain what harm, if any, the indirect purchasers have suffered. There is no detail on how the appellant knows the loss exists, nor any explanation on how it is to be calculated. The appellant even uses the conditional tense in the pleadings in a manner that suggests the speculative character of the loss: according to paragraph 2.15.1 of the motion, the indirect purchasers who paid an inflated price are those "à qui les premiers acheteurs auraient, en tout ou en partie, refilé la portion artificiellement gonflée du prix de la DRAM" (emphasis added). For the respondents, this lack of precision and assertiveness in the allegations means the judge was right to dismiss the motion under article 1003(b).
[96]
The allegations relating to losses in the motion are
indeed bare-boned. There is good authority for the principle that article
[97] I disagree with the overbroad reading the respondents give to Toyota.
[98]
However spare the allegations may be, they
constitute a prima facie demonstration of the loss sufficient for the
purposes of meeting the requirements of article
[99] The respondents do not give sufficient regard to the manner in which the dicta in Toyota is confined to its particular facts. Baudouin, J.A. was insistent that his reasons did not change the usual burden faced by class action petitioners at the authorization stage.[52] It was the very particular character of the price-maintenance scheme, which put an end to price negotiation by new car buyers, that explained why the motion for a class action failed in that case. For able negotiators contending with the price-maintenance scheme in Toyota, the fixed price created a loss. But for poor negotiators in the same class, the fixed price resulted in a gain. There was accordingly no way of knowing, based on the allegations made, whether losses outweighed gains and, importantly, how the foregone opportunity to negotiate was to be quantified as a loss.[53] Contrary to Toyota, it cannot be said in the present case that the allegations create an uncertainty as to whether there is an aggregate loss to direct and indirect buyers of DRAM. The allegations are precise in that respect. This is not a case that runs the risk, at trial, of disintegrating into the multiple trials Baudouin, J.A. warned against in Toyota. Indeed the motions judge himself recognized at paragraph [153] of the judgment a quo.
[100] Whether the appellant succeeds in the substantial business of proving this loss at trial remains to be seen. Even the means for proving that loss, especially complicated given the presence of multiple chains of direct and indirect purchasers, is not clear at this stage. But for the purposes of authorization under Quebec law, the loss is properly alleged, however fleetingly. As the respondents themselves acknowledge, the presentation of expert evidence is not the norm at the authorization stage in Quebec under the Code of Civil Procedure and, where rules applicable elsewhere might require a sophisticated methodology of proof of loss to be advanced before certification of a class action, the absence of such a methodology is not fatal here.
[101] But it is not enough to have merely alleged the loss. Respondents argue that the losses suffered by indirect purchasers, including the representative, are legally deemed not to be losses susceptible of compensation by reason of the state of the law in Canada in respect of the passing-on defence.
[102] The appellant must establish, says the respondent, that some of the illegal overcharge was passed on to Ms. Cloutier and the other indirect purchasers of DRAM. If no such passing-on occurred, the indirect purchasers have no place in the class and the proceedings cannot be authorized. They say that the judge was right to dismiss the action on this point. Without an analysis of every transaction along the distribution chain from the direct purchaser to others "downstream", one cannot simply assume that the alleged overcharge flowed through the various levels of indirect purchasers leaving them each with a part of the loss. Without the ability to prove that the loss was passed on, there is no reason to believe that the indirect purchasers belong in the class. They invoke Hanover Shoe, in which the U.S. Supreme Court explained that the variables affecting prices in different economic settings mean the task of showing the passing on of losses "would normally prove insurmountable".[54] Moreover, say the respondents, passing-on presents the serious risk of multiple liability for defendants for the same loss if it is allowed to be invoked by indirect purchasers offensively. The direct purchaser would likely recover all or part of an overcharge that one or more indirect purchasers also claimed. For these reasons, the U.S. federal courts have generally deemed the losses to have been suffered only by the direct purchasers. Defendants have been prevented from invoking passing-on as a defence in actions by direct purchasers and, as a result, indirect purchasers are generally precluded from suing under federal antitrust law.[55]
[103] In support of this view, the respondents cite in particular the recent decision of the British Columbia Court of Appeal in Sun-Rype.[56] In this appeal from an order certifying a class action involving a claim from a combined class of direct and indirect purchasers, the majority of the Court of Appeal declared that the pleadings did not disclose a cause of action against defendants accused of price-fixing high fructose corn syrup used in soft drinks. The majority relied on dicta from the Supreme Court of Canada, written in a different context, that suggest that Canadian law does not recognize the theory of passing-on when raised in defence.[57] The passing-on (or "passing-through") defence, where permitted, would allow the alleged wrongdoer to defeat the claim of a direct purchaser for an overcharge resulting from price-fixing on the grounds that the direct purchaser merely passed on that overcharge to indirect purchasers and therefore suffered no loss as a result of the price-fixing.
[104] As the respondents point out, this defence has traditionally been refused in federal antitrust law in the United States. They say that on the same basis as was decided in Hanover Shoe, Canadian law does not permit wrongdoers to avoid liability to direct purchasers of property at inflated price by hiding behind the passing-on defence. For the respondents - indeed this is central to the reasoning of the majority of the B.C. Court of Appeal in Sun-Rype - the non-availability of the defence of passing-on to the wrongdoers in an action by direct purchasers potentially renders those wrongdoers fully liable for the loss to the direct purchaser arising from the price fixing.[58] It follows logically, in keeping with this view, that the indirect purchasers of DRAM cannot sue for losses that were passed on because they would be seeking to recover the same losses as the direct purchasers to whom 100% are due. A class made up of direct and indirect purchasers, all claiming a portion of the overcharge, creates the distinctly unfair probability of double recovery.
[105]
According to the respondents, the principle
against double recovery that governs the law of tort and restitution in the
common law should also apply in the Quebec law of extracontractual liability to
defeat the claim of indirect purchasers and undo the class. In short, because
of the non-availability of the passing-on defence for direct purchasers of
DRAM, the indirect purchasers such as Ms. Cloutier are deemed to have suffered
no loss and, under article
[106]
Moreover, the respondents contend that the
losses of the indirect purchasers are not the direct and immediate consequence
of the alleged wrong and thus, pursuant to article
[107]
Alongside the principle against double recovery
and the Quebec rule in article
[108] I disagree with the motions judge that the rules relating to passing-on are a bar to authorizing the class action here. The appellant’s allegations of injury are not defeated by either the double recovery argument or the complexity argument raised by the respondents in connection with passing-on of the loss to indirect acquirers of DRAM.
[109]
I draw my views in large part from the
dissenting opinion of Donald J.A. in Sun-Rype to conclude here that it
would be premature to dismiss the motion under article
[110] The facts of this case invite us to consider the use of the theory of passing-on not as a shield to protect the wrongdoers but as a sword to allow the indirect purchasers to make plain their losses. The respondents are not invoking passing-on of the overcharge by direct purchasers as a defence to the claim against them; instead, the indirect purchasers are arguing that, as a matter of fact, those losses moved down the chain, in whole or in part, and justify, aggressively rather than defensively, a claim by them against the respondents for price fixing. Passing-on is thus "seen from a different angle" here, as Justice Donald noted in Sun-Rype.[63] As the trial judge noted in that case, "it is a mistake to equate pass-through as a defence at law with pass-through as a factual occurrence".[64]
[111] Here the direct and indirect purchasers have banded together to claim the aggregate of the losses they have suffered from the respondents. The motions judge correctly noted this when he referenced the "global" character of the claim of the appellant (para. [43]), and the "structure" of the class action based on the purchasers of DRAM, whether they be direct or indirect acquirers (para. [86]). In this respect, the circumstances are similar to those in Sun-Rype in which Donald, J.A. observed that "[t]here is no realistic possibility of double recovery with a single all-encompassing assessment".[65] The respondents are not called upon to answer separately for claims made by the direct purchasers (to whom respondents would be required to account for 100% of the losses in the absence of a passing-on defence) and by the indirect purchasers (to whom the respondents protest that they would be answerable for as much again should the losses be viewed as passed on). A single loss resulting from the overcharge is claimed at this stage, whether that loss will belong, at the end of the day, to the direct or indirect purchasers in the class. The aggregate character of the claim made at this stage and the structure of the class preclude the overcharges from being exacted more than once from the respondents.
[112] In Sun-Rype, both the majority and minority addressed the issue of whether the structure of the class and the aggregate character of the losses claimed truly preclude the possibility of "double recovery" for the same injury. The Court considered the matter from the useful perspective of the hypothetical situation whereby direct and indirect purchasers took different actions against the alleged wrongdoer. The majority put it this way: "[...] if both the DPs [direct purchasers] and the IPs [indirect purchasers] had independent causes of action against the defendants who could not raise a passing-on defence - the defendants could be liable to the DPs for 100% of the overcharge they paid and could also be liable to the IPs for whatever amount of the overcharge may have been passed on: double recovery (the recovery of the same loss twice by different plaintiffs), which our law will not sanction".[66]
[113] Here again, in my respectful view, one must take care to avoid the risk of blurring the distinction between the availability of passing-on as a defence in law and passing-on of the loss in fact. The rule in Hanover Shoe precluding the alleged wrongdoer from avoiding liability to the direct purchasers by raising the passing-on defence does not mean, as a matter of fact, that the passing on of the losses down to the indirect purchasers did not take place. The matter is an evidentiary issue. If the respondents faced an independent action by direct purchasers and paid them 100% of the losses, notwithstanding evidence that the loss was passed on to indirect purchasers, the direct purchasers would have unjustly enriched themselves at the expense of the indirect purchasers. The amount of that impoverishment exists, as a matter of fact, whether or not the indirect purchasers would, in this hypothetical situation, be legally entitled to seek its recovery subsequently from the direct purchasers who were unjustly enriched at their expense.
[114] The problem presents itself differently in a class action where the direct and indirect purchasers join together, in a common cause, to claim a single amount as the total overcharge. The fact is that here neither the double recovery nor the unjust enrichment scenario risk arising in that context. The issue is what losses, in total, were suffered by direct and indirect purchasers; in this connection, the passing-on defence has no useful application, and the possibility of overrecovery is precluded. On this point, I find useful the remarks formulated by Rice J., the trial judge in Sun-Rype, whose reasons in this regard were approved by Donald, J.A., in dissent, on appeal. Rice J. answered the argument against allowing the indirect purchasers to use passing-on as a sword when direct purchasers can recover 100% as follows:[67]
[53] [...] Firstly, it is a
mistake to equate pass-through as a defence at law with pass-through as a
factual occurrence. It could be that pass-through actually occurred in fact,
even if the court does not allow the defendants to use this fact as a defence
to the plaintiffs’ claims. The second mistake is that the defendants face
potential liability not to "direct purchasers" but to the class as a
whole. Using the "top down" approach outlined in 2038724 Ontario
Ltd. v. Quizno’s Canada Restaurant Corp. (2009), 96 O.R. (3d) 252, 250
O.A.C. 87 (Div. Ct.) at para. 67, and employed in this province in both DRAM [Pro-Sys
Consultants Ltd. v. Infineon Technologies AG,
[115]
As Rice J. noted, this approach has been
employed elsewhere where class-wide claims encourage a focus on the aggregate
aspect of the award rather than a separate approach to sub-classes of direct
versus indirect purchasers. It should be noted that the approach is sometimes
used in causes of action based on the law of restitution in the common law, in
particular where a claim is made, in the absence of full proof of loss, for a
wrongdoer to disgorge benefits wrongly earned in order to make restitution on a
class-wide basis. I make special mention of this to say that it is not the
line of reasoning I am following here where the Quebec law of obligations lacks
some of the resources, at least directly, deployed by the law of Equity in such
circumstances. In an action in civil liability in Quebec, the responsibility
of the respondents cannot be established in the absence of proof of loss: the
direct and indirect purchasers must have suffered a loss and must prove that
loss in order to win at the end of the day. That proof will be made at trial
and, as I have said, the allegations made here - which may rightly be
criticized, I think, for their unhelpful lack of detail - nevertheless meet the
prima facie test under article
[116]
I hasten to note that there is one difference in
the composition of the group in Sun-Rype and that in the present case
that, at least theoretically, opens the door to a double recovery argument in
Quebec that did not arise in the same way in the B.C. instance. In Sun-Rype,
the class extended to all direct and indirect purchasers. Because all direct
purchasers were in the class, there was no chance than one or more would take
individual action in damages - with the benefit of the 100% ‘no passing-on
rule’ - which would potentially impugn the aggregate character of the losses
claimed in the class action. In Quebec, however, article
[117]
Not only would it be wrong, in my view, to
dismiss this claim for aggregate losses based on concerns for double recovery,
it would be wrong to dismiss it on the theory that the evidentiary burden faced
by the appellants for the indirect purchasers is too onerous. This challenge
will be a substantial one at trial but it would be inappropriate, once damage
is alleged, to say that the class action should not proceed past the
authorization stage because the challenge is too great. In Quebec, this is a
matter properly left to the trial judge. In the law relating to class actions
across Canada, rules differ as to how unfettered the path should be to proving
damage at the authorization stage. In our case, the appellant has not brought
forward at authorization what in other jurisdictions is sometimes described as
a "clear methodology" for calculating losses. However, as a general
matter, these evidentiary concerns are addressed at trial, not at the
authorization stage here.[68] One certainly cannot exclude, as a matter of evidence, that the
appellant’s case will not founder at that later stage. But that risk is not
fatal at authorization in Quebec when the facts are properly alleged. Under
article
[118]
As a further argument, respondents submit that
losses suffered by indirect purchasers such as Ms. Cloutier fail to meet the
requirement in article
[119] The indirect purchasers are wrongly complaining of a "damage by ricochet", contend the respondents. They say it cannot be said to be the direct consequence of the alleged price-fixing conspiracy.
[120]
There is no merit in this argument as a basis
for dismissing the motion at this stage of the proceedings. The mere fact that
some purchasers acquired DRAM "indirectly" through others, and that
the overcharges were passed on, does not necessarily make the injury suffered
any less direct within the meaning of article
III.1.3 Causation
[121] The motions judge found that the facts in support of the existence of a causal link between the wrongdoing and the losses were not properly alleged. Again citing Toyota at paragraph [177] of his reasons, the judge was of the view that the omission in the motion was fatal to the cause of action: "[l]e lien de causalité est en quelque sorte laissé à l’imagination et non pas allégué d’une façon satisfaisante. C’est une hypothèse qui ne s’appuie sur aucun fait" (para. [179]).
[122]
The appellant says the judge was mistaken in
holding the class to too high a standard at this stage of the proceedings. It
argues that paragraphs 2.14 and 2.15 of the motion allege a sufficient link
between the conspiracy and the artificially inflated prices paid for DRAM sold
in Quebec. The appellant went to lengths at the hearing to point out what it
views as a source of unfairness in the proceedings. The judge had dismissed an
early motion by the respondents to adduce evidence that members of the class
sustained a loss in Quebec as a result of the alleged conspiracy. He decided
that such evidence was not required at the authorization stage. Later in the
proceedings, and following the Court of Appeal’s ruling in Toyota, the
appellant asked for a postponement to adduce evidence that the losses were
linked to the conspiracy. The judge dismissed the application for a
postponement. The appellant now says it was unfair of the motions judge to
cite this Court's ruling in Toyota in deciding that there was no prima
facie demonstration of the causal link in order to dismiss the class action
under article
[123]
There is no reason to suppose that the judge
made a reviewable error in the proceedings leading up to the judgment under
appeal. I am of the view, however, for the same reasons stated above in
respect of the application of Toyota to the allegations of harm, that
the judge should have considered the allegations relating to causation to be
sufficient at this stage. The judge was right that, here again, the
allegations in the motion are not fulsome. But in my view they are sufficient,
given the nature of the claim and the structure of the class, to meet the test
in article
[124] The claim made by the appellants that the conspiracy affected the price of all DRAM sold in Quebec is indeed a sweeping one. At trial, the appellant runs the risk of discovering the truth in the old saying that qui trop embrasse mal étreint. But sweeping is not a synonym for speculative. As in the case of the losses suffered, the evidentiary task will be a heavy one, but the facts alleged on causation, taken as true, seem to justify the conclusion sought as required by law at this stage of the proceedings.
III.2 Articles
[125]
The motions judge decided that Ms. Cloutier and
Option consommateurs are not in a position to represent the members of the
class adequately and, pursuant to the requirement to that effect under articles
[126]
On the first point, the judge based his view on
Ms. Cloutier’s lack of standing to sue on the ground that she purchased her
computer in Ontario and thus could not represent persons who acquired DRAM in
Quebec (para. [230]). I have already expressed my view that Ms. Cloutier’s
contract, as a remote-parties consumer contract with Dell, was deemed to have
been concluded at her address, in Montreal, by operation of then applicable
sections
[127] Respondents argue, subsidiarily, that even if she bought her computer in Quebec, she is a not proper representative for a class of persons who may have purchased a wide range of devices - from cell phones to digital cameras - with whom she has nothing in common. Indeed the plea agreements, which record the admission of guilt signed by the respondents other than Micron, are limited to DRAM "[…] sold to certain original equipment manufacturers of personal computers and servers […]" (exhibit R-2). Those six manufacturers of computers and servers are named in the exhibits. Yet paragraph 2.3 of the motion speaks not only to computers and servers, but to all manner of electronic devices containing DRAM.
[128] Respondents are right to suggest that a person cannot act as representative of a class when his or her situation differs markedly from other members of the class. But here the acquisition of DRAM in Quebec at a wrongfully inflated price is the common denominator; it is not material whether the DRAM is found in a cell phone or in a game console. The law typically tests the unity of the class through the presence and sufficiency of common questions. In the present case, as we shall see, the judge rightly held those questions justify authorization of the class action.
[129] Is Ms. Cloutier’s capacity to represent the class more seriously threatened by the possible conflict of interest between direct and indirect purchasers of DRAM? One might well presume that the latter category is made up predominantly - but not exclusively - of consumers. As we have seen, even on a factual basis, direct purchasers will be inclined to argue that none of the losses they have suffered has been passed on to indirect purchasers. On the other hand, the indirect purchaser will argue that all of the loss will be passed on. It will be impossible, say the respondents, for the disparate interests of these class members to be reconciled around a single litigation strategy as the class action proceeds.
[130] I disagree. When the losses suffered as a result of the alleged price fixing are considered as an aggregate, all members of the class share the same interest - to work towards the highest possible amount of losses to be awarded to the class as a whole. At this stage there is no conflict. There is, instead, a common cause against the respondents, as befits a class action. I find compelling the following remarks of the trial judge in Sun-Rype[69] on this point who did not see the passing-on issue as one that divided the members of this class at this stage:
[194] Even assuming that this is an arguable issue that needs to be determined at trial, I disagree with the defendants’ contention that the resolution of the issue places the direct and indirect purchasers in conflict at this stage. At the certification stage, both direct and indirect purchasers have an interest in moving the litigation forward to trial. They both have the same interest in not engaging s. 4(1)(a) [of the Class Proceedings Act] by not arguing that the other has no cause of action. It is like the classic ‘prisoner’s dilemma’, where two prisoners can only escape from their cell if they co-operate, even though both may have an incentive to turn the other in. The only parties at this time that have an interest in having the direct and indirect purchasers in a conflict of interest are the defendants.
[131] It is true that, at a later stage, direct and indirect purchasers may well have opposing interests when it comes to dividing the common pool of damages among all members of the class. It would be disingenuous to say that a class made up of direct and indirect purchasers carries with it no potential for conflict, especially if and when the time comes to divide the bounty of a successful class action. But this is not unique to this class action and I fail to see why it would be the basis in law for denying authorization to proceed to trial. For the moment, they are bound up in the prisoners' dilemma aptly described by Rice J. in Sun-Rype.
[132]
The judge added that he saw a conflict between,
on the one hand, Option consommateurs and, on the other hand, the retailers and
other non-consumer purchasers of DRAM in the class. The respondents argue, in
support of this view, that article
[133]
The respondents give no concrete reason to
suggest that Option consommateurs is not up to the task of representing
non-consumers in the present context. I do not agree with the reading of
article
III.3 Article
[134] The motions judge was of the view that the individual claims by the
members of the proposed class raise identical, similar or related questions of
law or fact in a manner that satisfies article
[135]
The respondents argue that the motions judge was
mistaken in that the composition of the class - made up as it is by direct and
indirect purchasers of DRAM - is such that questions of fact and law cannot be
identical, similar or related. More specifically, they contend that the
judge’s finding at para. [242] of his reasons contrasts his ruling on common
questions at article
[136]
The judge was, in my view, quite right to hold
that the common questions requirement was met. There was no conflict between
members of the class at this stage that detracts from the unity of the class as
revealed by the presence of common questions. The judge rightly sensed that
recognizing the common questions would allow for the avoidance of unnecessary
costs and repetition of proceedings that would come with separate inquiries
into questions of law and fact if the members did not proceed as a class. This
concern is at the core of the inquiry under article
[137]
In sum, I am of the view that the motion
satisfies all the requirement of the various legs of article
[138] I am mindful that an appellate court owes deference to the findings of a judge deciding on a motion for authorization in particular in respect of the judge’s evaluation of whether the facts alleged in the motion can sustain the cause of action.[71] This is no doubt especially important to bear in mind when the judge in first instance prepares a carefully-written opinion as in the case at bar. However it will be plain from these reasons that I am of the opinion that this is a circumstance in which the Court is right to intervene. I base this on my own view that, stated respectfully, differs from that of the motions judge on a matter of principle - in particular, the requirement of article 1003(b) as explained in Toyota - and the questions of law including the application of the passing-on to indirect purchasers in the present case.
* * *
[139] I would allow the appeal and set aside the judgment of the Superior Court. I would grant the appellant's motion seeking authorization to bring the class action on terms consistent with these reasons. Costs should be awarded on appeal against the respondents, except Elpida Memory, Inc. Costs in first instance should follow suit.
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NICHOLAS KASIRER, J.A. |
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[1] R.S.C. 1985, c. C-34.
[2]
"Comme les comportements visés à l'article 36 peuvent par ailleurs
constituer une faute civile [based on article
[3] The rule precluding option applies where a person fails in his
or her duty to honour contractual undertakings (i.e. "[…] manque
à ce devoir / fails in this duty" (art. 1458, para. 2)):
see generally Jean Pineau and Serge Gaudet,
[4] Pierre-Gabriel Jobin with the coll. of Nathalie Vézina, Baudouin et Jobin: Les obligations, 6e éd, (Cowanville, Éd. Yvon Blais, 2005) nos 787 and 797, references omitted.
[5] See, e.g., René Savatier, Traité de la responsabilité civile, t. 1, (Paris, LGDJ, 1939) nos 114 et seq.
[6]
Didier Lluelles and Benoît Moore,
[7] Quebecor Printing Memphis Inc. v. Regenair Inc.,
[8] Bank of Montreal v. Hydro Aluminum Wells inc.,
[9] Thompson v. Masson,
[10] Justice LeBel, then of this Court, observed in Thompson, ibid.,
that a court may not have in hand the factual elements required to dispose of
arguments on territorial jurisdiction at an early stage, but he did not
preclude such a ruling (as noted by Mongeau J. in para. [16] of the judgment a
quo). In other cases, courts have not shied away from ruling on a
declinatory exception at the authorization stage: see, e.g., Dell
Computer Corp. v. Union des consommateurs,
[11] As I have noted, the exhibits filed in support of the motion
speak to a conspiracy undertaken in the Unites States and elsewhere. The
appellant presented new evidence, discussed below, that suggests that the
conspiracy also took place in Europe. In addition, the appellant alleges in
para. 41 of its factum that the fault, because of its transnational
ramifications, "n’a pas été commise à un endroit défini" but stops short of suggesting that the fault took place in
Quebec. For the purposes of discussion of the location of the loss under
article
[12] It bears noting that the respondents say that Dell Computer Corporation from whom Ms. Cloutier purchased her personal computer is a distinct legal person from Dell Inc., one of the six manufacturers to whom the respondents directly supplied DRAM according to the "Plea Agreements" submitted as exhibits to this action. There is no evidence in the record as to whether the Dell Computer Corporation obtained the DRAM in the computer from Dell Inc. or anyone else directly connected to the respondents.
[13] Spar Aerospace Ltd. v. American Mobile Satellite Corp.,
[14] Hoteles Decameron Jamaica Ltd. v. D’Amours,
[15] "Le qualificatif [matériel] est entendu, en droit, de façon plus large que dans la langue courante. Est matériel le dommage qui est directement susceptible d'évaluation pécuniaire": Jacques Flour et al., Droit civil. Les obligations 2. Le fait juridique, 11th ed., (Paris: Armand Colin, 2005) n°135.
[16] In this connection, the contract may be considered a "juridical fact": see, the definition of "fait juridique" in Gérard Cornu, Vocabulaire juridique, 3rd ed. (Paris: P.U.F (Quadrige), 2002) 384.
[17] Admission, 6 May 2008 referring to R-3, the invoice recording the purchase issued by Dell on 10 October 2001.
[18] R.S.Q., c. P-40.1.
[19] Ibid. Sections 20 and 21 were repealed by S.Q. 2006, c. 56, s. 3.
[20] Abel Skiver Farm Corp. v. Ville de Ste-Foy,
[21] See, on this policy choice, Nicole L’Heureux, Droit de la consommation, 5th ed. (Cowansville: Ed. Yvon Blais, 2000) nº 33.
[22] Boulay v. Services financiers Noram inc., 1998 CanLII 12546 (C.A.). Rousseau-Houle J.A. dissented.
[23] Respondents cite paragraphs 11 and 13 of Boulay, ibid., but leave out paragraph [12] which relates the distinguishing facts: "[...] le fait que le contrat porte sur le financement de l’achat par l’appelant de dix lithographies de Stanley Cosgrove permet d’inférer que le financement a été sollicité par l’appelant [i.e. the supposed consumer]".
[24]
Option consommateurs v. Novapharm,
[25] It bears noting that the choice of the word "damage"
in the English text of article
[26] See Gérald Goldstein, "De la pertinence et de la localisation du préjudice économique ou continu aux fins de la compétence internationale des tribunaux québécois" (2010) 69 R. du B. 169 , 197 who explains, in connection with a more ambitious argument, that nothing in article 3148(3) excludes financial loss, as such, from the material injury that can ground jurisdiction.
[27] See Sophie Morin, Le dommage moral et le préjudice extrapatrimonial (Cowansville: Éd. Yvon Blais, 2011), Part II, ("Dommage et préjudice en quête de sens"), especially 156 et seq. Professor Morin distinguishes between "préjudice" and "dommage" to this end, although in a manner opposite to the Quebec legislature.
[28] Supra, note 7, paras. [8] and [9].
[29] Foster v. Kaycan Ltd.,
[30] Hydro Aluminum Wells, supra, note 8, para. [30], reference omitted.
[31] Ibid., paras. [9], [10], [22] to [26] (place of delivery of the merchandise and of payment in the United States) and [60].
[32] Sterling Combustion inc. v. Roco Industries inc.,
[33] Option consommateurs v. British Airways, p.l.c.,
[34]
Ibid.,
[35]
British Airways, p.l.c. v. Option consommateurs,
[36] See, e.g., U.S. Department of Justice Press Release dated September 15, 2004 concerning Infineon Technologies AG, Exhibit R-1.
[37] See, e.g., Information re Unites States of America v. Infineon Technologies AG, Exhibit R-2, including "description of the offence".
[38] See, e.g., the Plea Agreement signed by respondent Infineon Technologies AG on September 14, 2004, Exhibit R-4. It is comparable to agreements signed by the other respondents, except Micron Technology, Inc., and filed as exhibits in support of the motion.
[39] Subs.
[40] R. v. Nova Scotia Pharmaceutical Society,
[41] See paras. [190] to [192] of the judgment a quo, in which
the judge relied in particular on R. v. Libman,
[42] The press release, dated May 19, 2010, is entitled
"Antitrust: Commission fines DRAM producers 331 million euros for price
cartel; reaches first settlement in a cartel case". It was declared to be
admissible new evidence pursuant to article
[43]
Acier d’armature Rô inc. v. Stelco inc.,
[44] I note that the Court tempers its obiter dictum in Acier d’armature Rô, cited ibid., by recognizing that there are exceptions to the overlap observed (12-13).
[45] See Pierre-Gabriel Jobin, "La violation d'une loi ou d'un règlement entraîne-t-elle la responsabilité civile?" (1984) 44 R. du B. 222 , 230-1 and Odette Jobin-Laberge, "Norme, infraction et faute civile" in Développements récents en déontologie, droit professionnel et disciplinaire, vol. 137 (Cowansville: Éd. Yvon Blais, 2000) 31.
[46] Where s.
[47] Harmegnies v. Toyota Canada inc.,
[48] Hanover Shoe Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968) [hereinafter Hanover Shoe].
[49] See the observations of Roy J. in Option consommateurs v.
Novopharm Ltd.,
[50] Toyota, supra, note 47, para. [44]. See also para. [47].
[51] Ibid., para. [54].
[52] Ibid., paras. [43] and [44].
[53] See Baudouin, J.A.'s explanation of how the no-negotiating scheme operated to the benefit of some and to the detriment of others, ibid., paras. [51] and [52].
[54] Hanover Shoe, supra, note 48, 492-3.
[55] See William H. Page, "The Limits of State Indirect Purchaser Suits: Class Certification in the Shadow of Illinois Brick" (1999) 67 Antitrust L.J. 1.
[56] Sun-Rype Products Ltd. v. Archer Daniels Midland Co.,
[57] Kingstreet Investments Ltd. v. New Brunswick (Finance),
[58] See Sun-Rype, supra, note 56, paras. [80] et seq.
[59] Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).
[60] Kingstreet, supra, note 57, paras. [48] to [51].
[61] Canadian Forest Products, supra, note 57, especially paras. [205] and [206].
[62] Chada v. Bayer Inc., [2003] O.J. No. 27 (C.A.), especially paras. [45] and [51]. An application for leave to appeal in this case was dismissed: [2003] S.C.C.A. No. 106.
[63] Sun-Rype, supra, note 56, para. [23].
[64] Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2010 BCSC 922, para. [53], per Rice J.
[65] Sun-Rype, supra, note 56, para. [26].
[66] Sun-Rype, ibid., para. [82], per Lowry, J.A. (Frankel, J.A. concurring).
[67] Sun-Rype Products Ltd. v. Archer Daniels Midland Co., supra, note 64, para. [53], quoted with approval by Donald, J.A. in Sun-Rype, supra, note 56, para. [25]
[68]
See, e.g., Pharmacience v. Option consommateurs,
[69] Supra, note 64, para. [194].
[70] Western Canadian Shopping Centres inc. v. Dutton,
[71] See Bouchard v. Agropur Coopérative,
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