Cheung v NHK Spring Co.

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Cheung v. NHK Spring Co., Ltd.,

2022 BCSC 1738

Date: 20221006

Docket: S1910612

Registry: Vancouver

Between:

And

Tony Cheung, Sylvie de Bellefeuille and Graeme Honeyman

Plaintiffs

NHK Spring Co., Ltd., NHK International Corporation,

NHK Spring (Thailand) Co., Ltd., Nat Peripheral (Hong Kong) Co., Ltd.,

TDK Corporation, TDK U.S.A. Corporation, TDK Corporation of America,

SAE Magnetics (HK) Ltd., Headway Technologies, Inc.,

Magnecomp Precision Technology Public Co., Ltd.,

Magnecomp Corporation and Hutchinson Technology Inc.

Defendants

Brought under the Class Proceedings Act, R.S.B.C. 1996, c. 50

Before: The Honourable Mr. Justice Coval

Reasons for Judgment

Counsel for the Plaintiffs:

R. Mogerman, K.C.

D. Jones

M. Segal

C. Mogerman

Counsel for the Defendants, NHK Spring

Co., Ltd., NHK International Corporation,

NHK Spring (Thailand) Co., Ltd., and Nat

Peripheral (Hong Kong) Co., Ltd.:

D. Gadsden

A. Shafey

B. O’Grady

Counsel for the Defendants, TDK

Corporation, SAE Magnetics (HK) Ltd.,

Headway Technologies, Inc., Magnecomp

Precision Technology Public Co., Ltd.,

Magnecomp Corporation and Hutchinson

Technology Inc.:

D. Houston

N. Iatrou

K. Booth

D. Siracusa

E. Schultze

Cheung v. NHK Spring Co., Ltd.

Place and Dates of Hearing:

Place and Date of Judgment:

Page 2

Vancouver, B.C.

May 30–31 and June 1–3, 2022

Vancouver, B.C.

October 6, 2022

Cheung v. NHK Spring Co., Ltd.

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Table of Contents

INTRODUCTION ....................................................................................................... 5

THE PARTIES ........................................................................................................... 6

ASSEMBLIES............................................................................................................ 7

THE PROPOSED CLASS ......................................................................................... 7

CAUSES OF ACTION ............................................................................................... 8

COMMON ISSUES.................................................................................................. 11

EXPERT EVIDENCE ............................................................................................... 12

Dr. Reutter on damages methodology.................................................................. 12

Dr. Winter’s critique.............................................................................................. 13

Dr. Reutter’s reply ................................................................................................ 15

Dr. Reutter on Canadian consumers.................................................................... 16

Dr. Mayer on data availability ............................................................................... 17

EVIDENTIARY OBJECTIONS................................................................................. 17

JURISDICTION CHALLENGE ................................................................................ 21

CERTIFICATION ..................................................................................................... 26

Section 4(1)(a) – Viable Cause of Action ............................................................. 27

Sections 36 and 45........................................................................................... 28

Civil conspiracy................................................................................................. 32

Unjust enrichment............................................................................................. 33

Direct purchasers.............................................................................................. 34

Section 4(1)(b) – Identifiable Class ...................................................................... 34

Section 4(1)(c) – Common Issues........................................................................ 38

Causation and damages................................................................................... 39

Aggregate damages ......................................................................................... 43

Punitive damages ............................................................................................. 45

S. 4(1)(d) – Preferability ....................................................................................... 45

Section 4(2)(a).................................................................................................. 47

Section 4(2)(b).................................................................................................. 48

Section 4(2)(c) .................................................................................................. 48

Section 4(2)(d).................................................................................................. 48

Section 4(2)(e).................................................................................................. 48

Conclusion on preferability................................................................................ 49

Cheung v. NHK Spring Co., Ltd.

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Section 4(1)(e) – Representative Plaintiffs........................................................... 49

CONCLUSION......................................................................................................... 49

SCHEDULE A.......................................................................................................... 50

Cheung v. NHK Spring Co., Ltd.

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Introduction

[1]

The plaintiffs apply for certification of a national class action against the

defendants for alleged price-fixing of computer hard-drive components known as

suspension assemblies (“Assemblies”).

[2]

Similar class proceedings have been filed in Ontario and Québec. Counsel for

the plaintiffs in the three Provinces are cooperating and have agreed to this

application for national certification.

[3]

The defendants are headquartered in Japan. At the material times, they

manufactured approximately 95% of Assemblies worldwide. The plaintiffs led

evidence, undisputed at this stage, of the defendants pleading guilty to price-fixing of

Assemblies in Japan, Taiwan, Brazil and the United States.

[4]

The plaintiffs allege that, due to the price-fixing, the proposed class members

paid an unlawfully inflated price, or “overcharge”, for products containing

Assemblies. They say this overcharge passed through the supply chain to

purchasers of computer products across Canada, including in hard disk drives

(“HDDs”), computers, servers, video recorders and gaming consoles. They seek

damages for class members from January 1, 2003 to April 30, 2016 (“Class Period”).

[5]

The plaintiffs contend the case for certification is equivalent to other

successfully certified class actions alleging price-fixing of electronic components,

such as Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503

[Pro-Sys], and Pioneer Corp. v. Godfrey, 2019 SCC 42 [Godfrey].

[6]

The defendants say this case differs from these certifications in two key ways.

First, the alleged price-fixing agreements were made and implemented entirely

outside Canada. The defendants argue that our courts therefore lack jurisdiction and

the key provisions of the Competition Act, R.S.C. 1985, c. C-34 [Act], relied on in the

prior cases do not apply.

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[7] Second, they argue that, because Assemblies represent such a small portion

of the cost of the consumer products in which they are used, there is no realistic

prospect of tracing and quantifying any alleged overcharge passed through the

complex global supply chain into the Canadian market. Any impact on Canadian

class members must be negligible, or even non-existent, and so the proposed action

fails to satisfy the statutory requirements for certification or serve the purposes of a

class proceeding.

[8]

I find that the plaintiffs have satisfied the requirements for certification under

the Class Proceedings Act, R.S.B.C. 1996, c. 50, s. 4(1) [CPA]. They are therefore

certified as the representatives of the proposed national class, for determination of

the common issues identified below.

The Parties

[9]

The proposed representative plaintiffs, Dr. Graeme Honeyman and Sylvie De

Bellefeuille, reside in British Columbia and Québec, respectively. Each appears to

have purchased laptop computers during the Class Period containing one or more

Assemblies. Mr. Tony Cheung is no longer being put forward as a representative

plaintiff.

[10] The defendants manufacture, market and sell Assemblies. During the Class

Period, the defendants fell into three corporate groups. NHK Spring Co. Ltd. is the

parent of the NHK Group. TDK Corporation is the parent of the TDK Group. Both

corporate groups are headquartered in Japan. Courts and regulatory bodies in the

United States, Japan, Taiwan and Brazil have found the parent companies and

some subsidiaries to have participated in price-fixing conspiracies for their

Assemblies.

[11]

Hutchinson Technology Inc. (“Hutchinson”) is based in the United States,

where it was found guilty of participating in this price-fixing conspiracy. In 2013, it

was purchased by the TDK Group.

Cheung v. NHK Spring Co., Ltd.

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Assemblies

[12] Assemblies are small, inexpensive subcomponents of HDDs.

[13] HDDs store and retrieve digital data in electronic devices. Many computer

products contain one or more HDDs, and each HDD typically includes between one

and three Assemblies. Assemblies hold the electromagnetic read/write heads of the

HDDs while they float in place to read and write information.

The Proposed Class

[14] The plaintiffs allege the defendants controlled the Assembly market and

colluded to increase market prices. Their Assemblies were incorporated in products

manufactured by some of the world’s largest technology companies and made their

way into Canada through predictable supply channels.

[15] The Claim defines the proposed “Class Members” as:

All persons and entities in Canada who purchased one or more HDD

Suspension Assemblies, or one or more products which contained an HDD

Suspension Assembly, between January 1, 2003, and April 30, 2016 (“Class

Period”), including a subclass of all persons and entities in Canada who

purchased one or more HDD Suspension Assemblies, or one or more

products that contained an HDD Suspension Assembly, in Québec during the

Class Period (“Québec Subclass”).

[16] This definition includes all direct and indirect purchasers, in Canada, of

Assemblies manufactured by the Defendants. Direct purchasers are those who

purchased Assemblies directly from the defendants. The defendants submitted

evidence denying any direct sales of Assemblies in Canada during the Class Period,

and thus denying the existence of any such Class Members.

[17] Indirect purchasers are those who purchased products containing the

defendants’ Assemblies. They are comprised largely of purchasers of HDDs, or

products containing HDDs, and include both consumers and commercial entities.

[18] The definition also includes direct and indirect “umbrella purchasers”. These

are purchasers of Assemblies made by manufacturers other than the defendants.

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The theory being that the defendants’ anti-competitive cartel activity creates an

‘umbrella’ of inflated prices causing non-cartel manufacturers to raise prices to meet

the market: see Godfrey, para. 58. Given the defendants’ high market share,

umbrella purchasers are a small portion of the Class.

Causes of Action

[19] The second amended notice of civil claim (“Claim”) pleads that the

defendants agreed to fix, maintain, increase or control the price of Assemblies. It

alleges they did so by exchanging sensitive information, bid-rigging and allocating

markets.

[20] This anti-competitive conduct was allegedly directed at the plaintiffs and the

other Class Members, with a predominant purpose of harming them, when the

defendants knew, or should have known, that unlawfully inflating prices for

Assemblies would do so. It pleads that injury was caused to Class Members by

payment of the unlawful overcharge passed through the supply chain.

[21] The causes of action are:

a) breach of s. 36 of the Act;

b) civil conspiracy;

c) unjust enrichment; and,

d) for the Québec Subclass, civil extra-contractual liability under s. 1457 the Civil

Code of Québec, C.Q.L.R., c. CCQ-1991 [CCQ].

[22] Section 36(1) of the Act creates a private right of action for conduct contrary

to Part VI. It permits any person who has suffered loss or damage as a result of that

conduct to sue for their loss, thus providing a cause of action for direct, indirect and

umbrella purchasers: Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC

57, paras. 63–71 [Microsoft]; Godfrey, paras. 56–78.

[23] The Claim alleges the defendants’ price-fixing agreement breached Part VI,

s. 45. It alleges this s. 45 breach, in addition to creating a s. 36 cause of action,

Cheung v. NHK Spring Co., Ltd.

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satisfies the illegality requirement for civil conspiracy and supports the claim for

restitution in unjust enrichment: see Godfrey, para. 84.

[24] Godfrey describes the purpose of the Act as it relates to price-fixing cases.

Justice Brown wrote:

[65]

As I have already recounted, the purpose of the Competition Act is to

“maintain and encourage competition in Canada” with a view to providing

consumers with “competitive prices and product choices” (s. 1.1). A

conspiracy to price-fix is the “very antithesis of the Competition Act’s

objective” (Shah (ONCA), at para. 38). Monetary sanctions for such anti-

competitive conduct therefore further the Competition Act’s purpose. This

Court has also recognized two other objectives of the Competition Act of

particular relevance here, being deterrence of anti-competitive behaviour, and

compensation for the victims of such behaviour… (Infineon Technologies AG

v. Option Consommateurs, 2013 SCC 59, [2013] 3 S.C.R. 600 (“Infineon”), at

para. 111; Sun-Rype Products Ltd. v. Archer Daniels Midland Company,

2013 SCC 58, [2013] 3 S.C.R. 545 (“Sun-Rype”), at paras. 24-27; Microsoft,

at paras. 46-49). Interpreting s. 36(1)(a) so as to permit umbrella purchaser

actions furthers both of these objectives.

[25] Sections 36 and 45 of the Act say:

Recovery of damages

36 (1) Any person who has suffered loss or damage as a result of

(a) conduct that is contrary to any provision of Part VI, or

(b) the failure of any person to comply with an order of the Tribunal or

another court under this Act,

may, in any court of competent jurisdiction, sue for and recover from the

person who engaged in the conduct or failed to comply with the order an

amount equal to the loss or damage proved to have been suffered by him,

together with any additional amount that the court may allow not exceeding

the full cost to him of any investigation in connection with the matter and of

proceedings under this section.

…

Conspiracies, agreements or arrangements between competitors

45 (1) Every person commits an offence who, with a competitor of that person

with respect to a product, conspires, agrees or arranges

(a) to fix, maintain, increase or control the price for the supply of the

product;

(b) to allocate sales, territories, customers or markets for the production or

supply of the product; or

Cheung v. NHK Spring Co., Ltd.

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(c) to fix, maintain, control, prevent, lessen or eliminate the production or

supply of the product.¹

[26] Regarding conspiracy, the Claim alleges both predominant purpose and

unlawful means conspiracy. Predominant purpose conspiracy is the defendants’

agreement to a common design, with the predominant purpose of injuring the

plaintiff by lawful or unlawful means, and injury in fact occurs. Unlawful means

conspiracy is the defendants’ unlawful conduct directed toward the plaintiff, while

they knew, or ought to have known, that injury was likely, and injury in fact occurs:

Microsoft, paras. 74, 80.

[27] For unjust enrichment, the Claim pleads that the overcharge represents an

enrichment of the defendants, a corresponding deprivation to the Class Members,

and an absence of juristic reason because of the defendants’ unlawful conduct.

There is no claim in unjust enrichment for umbrella purchasers. By definition, any

deprivation suffered by umbrella purchasers would not correspond to an enrichment

of the defendants.

[28] Finally, regarding extra-contractual liability for the Québec subclass, the

plaintiffs rely on Infineon Technologies AG v. Option Consommateurs, 2013 SCC 59,

in which the Supreme Court of Canada held that indirect purchasers have a viable

claim under CCQ s. 1457 if their alleged injuries resulted from the defendants’ anti-

competitive conduct.

[29] Section 1457 says:

1457. Every person has a duty to abide by the rules of conduct which lie upon

him, according to the circumstances, usage or law, so as not to cause injury

to another.

Where he is endowed with reason and fails in this duty, he is responsible for

any injury he causes to another person by such fault and is liable to

reparation for the injury, whether it be bodily, moral or material in nature.

¹From the beginning of the Class Period until March 12, 2010, a prior version of s. 45 was in effect. It

prohibited agreements intending to “unduly” lessen competition in the production, manufacture,

purchase or supply “of a product”.

Cheung v. NHK Spring Co., Ltd.

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[30] Following Infineon, the Claim pleads that the s. 45 breach, and the other

conspiratorial acts alleged, establish both fault for the purpose of s. 1457 and a

causal connection to the injury of paying the overcharge.

Common Issues

[31] The proposed common issues are attached as Schedule A.

[32] They fall into three broad categories. First, those relating to the alleged

wrongful acts of the defendants, i.e. the existence, scope and effect of the alleged

price-fixing agreements. The plaintiffs say all Class Members have a common

interest in proving the facts surrounding these alleged wrongful acts.

[33] Second are the consequences of those acts for the plaintiffs, i.e., causation of

harm or loss on a class-wide basis. In price-fixing cases such as this, plaintiffs seek

to establish, through expert econometrics, that the overcharge was passed on in

such a way as to make loss common to the class as a whole: Microsoft, para 115.

[34] As stated in Ewert v. Nippon Yusen Kabushiki Kaisha, 2019 BCCA 187

[Ewert], in a price-fixing conspiracy as alleged here, where indirect purchasers are

predominant, “[t]he methodology to prove loss is vital for these claims if they are to

be certified as part of a class proceeding.” Without a methodology capable of

establishing harm on a class-wide basis, “individual issues relating to loss may

overwhelm the common issues concerning wrongful acts and render the action

unmanageable … under s. 4(1)(d)”: Ewert, paras. 69, 84.

[35] Third are the claims for aggregate and punitive damages. The plaintiffs argue

that, if they are successful at the common issues trial, it is reasonably likely that

aggregate damages will be awarded under CPA, s. 29(1). They say punitive

damages are common because determinable based solely on the defendants’

conduct.

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Expert Evidence

Dr. Reutter on damages methodology

[36] Dr. Keith Reutter is an economist specializing in economic and statistical

analysis in antitrust cases. He has provided expert evidence in many complex price-

fixing cases, including in the Canadian electronics industry.

[37] The plaintiffs submitted three reports from Dr. Reutter. They rely on his first

report (“Reutter #1”) as a plausible and realistic methodology to measure any

overcharge passed through the supply chain on a class-wide basis to each

purchaser level in Canada.

[38] This report proposed a standard econometric regression model to isolate the

impact of the alleged conspiracy on Assembly pricing. Based on his experience, Dr.

Reutter expected that the requisite information would be available from the

defendants’ transaction, cost and pricing data, and from public and third-party

sources.

[39] In response to the questions posed by the plaintiffs’ counsel, Reutter #1

concluded that:

a) There are methods to determine if, at each level of the distribution

chain, members of the proposed Class would have been impacted by

defendants’ alleged wrongdoing, based on evidence that is common

to the members of the proposed Class. The methods to make such a

determination are described herein.

b) There are methods available to determine if, at each level of the

distribution chain, umbrella purchaser members of the proposed Class

would have been impacted by defendants’ alleged wrongdoing, based

on evidence that is common to the members of the proposed Class.

The methods are described herein.

c) There are methods available to determine any overcharge and Class-

wide damages that may have resulted from the alleged wrongdoing,

based on evidence that is common to members of the proposed

Class. The methods are described herein.

d) I have identified the data necessary to address questions (a) through

(c), and determined that data is available, or ought to be available …

Cheung v. NHK Spring Co., Ltd.

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[40] Reutter #1 said the Assembly market was vulnerable to price-fixing during the

Class Period because of a number of factors: the small number of Assembly

manufacturers; barriers to market entry; lack of substitutes (as Assemblies are

necessary components of HDDs); and, Assemblies of one manufacturer being

substitutable for those of another.

[41] The report explained that an overcharge is calculable by comparing the price

of Assemblies, had the market been functioning properly, with the actual price as

inflated by the alleged misconduct (“but-for price”). The but-for price is calculable by

a standard regression method that adjusts for relevant factors including consumer

income, costs of input (e.g., labour and energy), consumer tastes and preferences,

time of year and flooding in Thailand (where he said most Assembly manufacturing

occurred).

[42] To calculate pass-through, Dr. Reutter said it is reasonable to assume direct

purchasers paid the full amount of any overcharge. He based this on the economic

factors, described above, that render the Assembly market vulnerable to collusive

conduct. In his view, economic principles indicate some calculable portion of this

overcharge would have passed through each level of the distribution chain. He said

the overcharge’s impact on umbrella purchasers is also calculable by accepted

economic models.

Dr. Winter’s critique

[43] Dr. Ralph Winter is an economist, and a Professor Emeritus of Strategy and

Business Economics and Research Chair in Business Economics and Policy at the

Sauder School of Business. He holds a Ph.D. in economics from the University of

California at Berkeley and has published extensively on industrial organization.

[44] The defendants asked whether, in his opinion, Reutter #1 proposed reliable

methods for determining any overcharge from the alleged wrongdoing or identified

the information necessary to reliably estimate such overcharge. Dr. Winter

concluded that it achieved neither goal. In his view, there was “no reliable method of

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estimating the pass-through rate and therefore no reliable method of estimating

damages to members of the proposed Class in this matter.”

[45] Regarding estimating overcharge, Dr. Winter’s primary critique was that

Dr. Reutter’s method failed to account for important factors affecting price and so

could not isolate the alleged misconduct. He said the key omitted factors were:

a) Technological changes that affect functionality, demand and cost. Dr. Winter

said these changes must be analyzed not only for Assemblies, but also for

HDDs, final consumer products and even competitive products; and,

b) Product differences, and even differences between different models of the

same product. Dr. Winter said there are important differences between, for

example, laptops, game consoles, photocopying machines and automobiles,

and between specific models within these categories, which are substantial

enough that they potentially affect Assembly pricing.

[46] With respect to estimating pass-through, Dr. Winter said Dr. Reutter’s method

suffered two main defects, causation and quantification:

a) His regression analysis shows the extent to which upstream and downstream

prices change together, but does not indicate causation. Dr. Winter said

changes in downstream prices are more likely caused, not by changes in

upstream prices, but by changes in common causes external to both (such as

technological change).

b) Even if Dr. Reutter’s model could identify causal impact, it would be

impossible to quantify the impact of changes in Assembly prices on HDD

prices because Assemblies generally constitute 0.1% of HDD prices, and

almost no HDD manufacturer adjusts prices to reflect such small changes in

input costs. He said, although this is only a problem in calculating pass-

through from Assembly manufacturers to HDD manufacturers, it is enough to

render unreliable the pass-through rate for the entire supply chain.

[47] Finally, Dr. Winter said Dr. Reutter’s regressions would need to be performed

at least 25 times because there are five distinct supply chains for at least five

product categories containing Assemblies. He said the data required by Dr. Reutter’s

method is likely unavailable for this “huge challenge”.

Cheung v. NHK Spring Co., Ltd.

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Dr. Reutter’s reply

[48] Dr. Reutter’s reply report (“Reutter #2”) said Dr. Winter’s critiques did not

cause him to alter his initial opinions. As a general response, he said that the use of

regression models to estimate overcharge and pass-through is standard practice for

economists in antitrust cases.

[49] Dr. Reutter responded to Dr. Winter’s criticisms about the ability of the

regression methodology to calculate overcharge as follows:

a) Regarding accounting for all important factors, one cannot identify all

important variables in advance, but the type of additional variables identified

by Dr. Winter can be included in the analysis if necessary;

b) Regarding technological change, it is standard for the method to account for

this; and

c) Regarding time period, regression models have none of the limitations

alleged.

[50] Dr. Reutter’s responded to Dr. Winter’s criticisms about calculating pass-

through as follows:

a) Regarding causation between upstream and downstream prices, Dr. Winter’s

assertion that causation cannot be attributed by regression analyses is

contrary to mainstream economics. According to Dr. Reutter, “if regression

analyses were unable to address causation…, then decades of empirical

economic analysis, including … that related to antitrust, would be

meaningless”;

b) Regarding the overcharge being too small to track, changes in upstream input

prices get passed to downstream products even for inputs with low per-unit

price. In support of this, Dr. Reutter cited what he said are “basic tenets” of

economics and an article by a leading author in his field;

c) Regarding the unavailability of necessary data, he identified potential sources

and says such undertakings are common;

d) Regarding complexity, he disputed whether 25 regression analyses will be

necessary because the downstream market for electronics’ products is

generally considered competitive; however, regardless of the number of such

analyses, he said the model is applicable.

Cheung v. NHK Spring Co., Ltd.

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Dr. Reutter on Canadian consumers

[51] Dr. Reutter’s third report (“Reutter #3”) opined that the defendants’

Assemblies were likely imported into Canada during the Class Period, thereby

passing the overcharge on to Class Members. The plaintiffs relied on this report in

response to the argument that the defendants had no connection to the Canadian

marketplace.

[52] Dr. Reutter’s key conclusion was:

Given the concentration in both the HDD Suspension Assembly and the HDD

OEM markets, it is reasonable to conclude that NHK and TDK (including

Hutchinson) HDD Suspension Assemblies would have been imported to

Canada during the proposed Class period via a standalone HDD or other

HDD Product. It is expected that defendants themselves or direct purchasers

have the data and documents necessary to make a more definitive

statement.

[53] Dr. Reutter started from his finding, in Reutter #1, that the defendants

accounted for 96% of the worldwide sales of Assemblies at the material times.

[54] He opined that the market was further consolidated by the three globally-

dominant HDD manufacturers, to whom the defendants sold their Assemblies.

Based on this, he said the defendants’ Assemblies “would have become part of the

international supply chain for HDDs and HDD Products and would have been

distributed to countries around the world.”

[55] Dr. Reutter found nothing in the public record of the dominant HDD

manufacturers to suggest Canada was an outlier: “The Canadian market for

consumer electronics is no different than that for any other [W]estern economies.”

He attached industry advertisements for sale of their HDD products in Canada

during the Class Period, and information from Canadian government databases

about the manufacturer’s HDD products being imported into Canada. The financial

filings of some of the HDD manufacturers indicated their products being in major

computer brands sold in Canada at the material times. He also opined that the only

non-defendant manufacturer of Assemblies lacked the capacity to be the sole

supplier of Assemblies into the Canadian market.

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Dr. Mayer on data availability

[56] Dr. Michael Mayer is an Associate Professor in the Department of Mechanical

and Mechatronics Engineering at the University of Waterloo. The plaintiffs rely on his

evidence to support their ability to identify the specific manufacturer of Assemblies in

various products.

[57] Dr. Mayer’s affidavit said he expected that, with relevant manufacturer

documentation, he could identify the specific products containing Assemblies from

particular manufacturers. His conclusions included the following:

16. Conventional electronics hardware engineering is a tightly controlled and

highly organized process. Companies who engage in the electronics

hardware engineering process produce a document often referred to as a

[BoM] as a main source of information used to design, budget and

manufacture a product. It is standard practice for all companies to have such

a document for all of their products.

17. In my experience, BoMs contain an exhaustive list of all of the different

parts and assemblies that are required to construct, manufacture or repair a

product. Typically, a BoM contains the following information for each

component part: part name, an internal identification or part number,

manufacturer, manufacturer part number, description, unit of measure, size,

length, weight, and cost, as well as specifications or features of the product,

for each component part used.

…

20. In my opinion, BoMs are a source of information which can assist in

identifying products that contain HDD Suspension Assemblies. I expect that

electronic product manufacturers have BoMs that would indicate the

particulars of any HDD contained within the electronic product, and I expect

that HDD manufacturers have BoMs that indicate the particulars of their

constituent components, including HDD Suspension Assemblies.

…

27. I also expect that HDD Suspension Assembly manufacturers would have

specification sheets, BoMs, plans, and/or designs, used for both their own

internal manufacturing purposes and which could be used to provide product

information to their customers. With design drawings in particular, I expect

that I could identify the manufacturer of HDD Suspension Assemblies

visually.

Evidentiary Objections

[58] The defendants object to the admissibility of Reutter #3 and Dr. Mayer’s

affidavit.

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[59] Against Reutter #3, they argue his opinion that Assemblies entered Canada

as part of the normal distribution chain is outside his expertise, as he has no

particular experience with HDDs or global distribution channels for the electronics

industry. They argue further that it is based on unattributed hearsay, unsupported

statements and summaries of publicly available material.

[60] Dr. Reutter’s expertise as an economist specializing in antitrust cases

involves investigation of the applicable distribution chains. Reutter #1 described this.

It said for example: “Estimating indirect Class-wide damages will require an analysis

of the volume of HDD Products imported to Canada during the proposed Class

period. Public sources of data, for instance import trade data reported by Industry

Canada, can be accessed to estimate the number and value of HDD Products

entering Canada.”

[61] In my view, therefore, analyzing how Assemblies came to Canada as part of

the market’s distribution chain is within Dr. Reutter’s expertise.

[62] Turning to the defendants’ second objection, Mazur v. Lucas, 2010 BCCA

473, summarizes the permissibility of an expert relying on information obtained

through his or her investigation and research:

[40]

From these authorities, I would summarize the law on this question as

to the admissibility of expert reports containing hearsay evidence as follows:



An expert witness may rely on a variety of sources and resources in

opining on the question posed to him. These may include his own intellectual

resources, observations or tests, as well as his review of other experts’

observations and opinions, research and treatises, information from others –

this list is not exhaustive. (See Bryant, The Law of Evidence in Canada, at

834-835)



An expert may rely on hearsay. One common example in a personal

injury context would be the observations of a radiologist contained in an x-ray

report. Another physician may consider it unnecessary to view the actual x-

ray himself, preferring to rely on the radiologist’s report.



The weight the trier of fact ultimately places on the opinion of the

expert may depend on the degree to which the underlying assumptions have

been proven by other admissible evidence. The weight of the expert opinion

may also depend on the reliability of the hearsay, where that hearsay is not

proven by other admissible evidence. Where the hearsay evidence (such as

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the opinion of other physicians) is an accepted means of decision making

within that expert’s expertise, the hearsay may have greater reliability.



The correct judicial response to the question of the admissibility of

hearsay evidence in an expert opinion is not to withdraw the evidence from

the trier of fact unless, of course, there are some other factors at play such

that it will be prejudicial to one party, but rather to address the weight of the

opinion and the reliability of the hearsay in an appropriate self-instruction or

instruction to a jury.

[63] Following Mazur, I find Reutter #3 to be admissible. At this early stage, and

particularly when there has been no document production or discovery, it is

unsurprising that publicly available information -- including government statistics,

retailer information, and corporate press releases -- was used to investigate the

HDD supply chain into Canada. Such supply and distribution chain investigation falls

within Dr. Reutter’s expertise as an economist specializing in price-fixing analysis.

Dr. Reutter said he expects the defendants or their direct purchasers will have more

definitive data and documents on these issues.

[64] Dr. Reutter based many of his conclusions in Reutter #3 on his analysis of

market concentration in Reutter #1, for which he provided the sources of publicly

available information. He also provided the public information sources for his

conclusions about the market consolidation of HDD manufacturing (relying on the

defendants’ affidavit evidence that they sold their Assemblies to these

manufacturers) and the public consumer retailer sources indicating the sale of

products in Canada. To a great extent, his further conclusions were based on

identified government sources and public company financial filings.

[65] I see nothing objectionable in Dr. Reutter’s analysis or conclusions,

particularly given that at this stage it is relied on, not to support ultimate findings of

fact on a balance of probabilities, but to provide some basis in fact to support the

existence of the alleged common issues.

[66] The defendants pointed to their cross-examination of Dr. Reutter where he

acknowledged three missing footnotes, and so was not in the moment able to

identify the source of certain information. In my view, this did not undermine the

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admissibility of his affidavit, given that most sources are provided and its limited

evidentiary purpose at this stage.

[67] As a final point, I note Dr. Winter’s acknowledgment in cross-examination that

products containing Assemblies would have been sold in Canada during the Class

Period.

[68] Turning to Dr. Mayer’s affidavit, the defendants say his opinions about

sources of information from which to identify the specific manufacturer of Assemblies

in particular products is improper reply, violating the rule against case-splitting, and

includes inadmissible argument and speculation.

[69] The plaintiffs say Dr. Mayer’s evidence is proper reply to the defendants’

evidence that: (a) the defendants lack the ability to track the distribution of their

Assemblies in terms of end-use product or geographic market; and (b) it is

impossible to determine the brand of Assembly in a particular HDD without

destroying the HDD or end-product.

[70] In my view, Dr. Mayer’s affidavit is admissible reply evidence. It is

understandable that the plaintiffs might not have anticipated the defendants’

evidence of inability to track and identify their Assemblies in downstream products,

particularly given the sophistication of the defendants and their industry and

markets.

[71] If Dr. Mayer’s affidavit were not admissible as proper reply, I would still admit

it in the overall interests of justice. Although served after the agreed deadlines, it is

not unusual in the lead-up to a complex, wide-ranging hearing such as this for

counsel to realize additional evidence is required to fully present their case.

[72] The defendants identified no prejudice from the lateness of Dr. Mayer’s

affidavit. It was delivered promptly after the affidavits from the defendants’ principals

that raised these issues, well before the scheduled cross-examination of the

plaintiffs’ witnesses, and eight months before the certification hearing. In my view,

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the late delivery did not prejudice the defendants’ ability to respond to this evidence

had they chosen to do so.

[73] Finally, the defendants objected to paragraphs 13, 26 and 27 in Dr. Mayer’s

affidavit as speculation without evidentiary foundation. I do not accept these

objections.

[74] At paragraph 13, Dr. Mayer explained that, where a product contains an HDD,

the presence of the HDD and its associated specifications have utility with respect to

the data storage capabilities of the product. In my view, this statement was based on

Dr. Mayer’s knowledge of HDDs and his experience in the electronic materials

industry. I also did not understand from the defendants why it was a controversial

statement or material to this application.

[75] At paragraphs 26 and 27, Dr. Mayer said he expects HDD and Assembly

manufacturers to have bills of materials, specification sheets, designs and other

documentation providing details about the specific Assemblies used in certain

products. In my view, this expectation was reasonably founded on Dr. Mayer’s

experience and expertise in the electronics industry.

Jurisdiction Challenge

[76] The defendants filed jurisdictional responses challenging the Court’s

jurisdiction over them. Pursuant to Supreme Court Civil Rules, R. 21-8 and the Court

Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 [CJPTA], they apply to

stay or dismiss the claim for lack of territorial competence.

[77] They argue the uncontested facts differentiate this case from those price-

fixing cases where jurisdiction has been found. They say the following facts

demonstrate a lack of real and substantial connection to British Columbia:

a) No relevant presence in Canada – None of the TDK or NHK entities were

headquartered or operate in Canada and none of them ever carried on any

business in Canada for Assemblies.

Cheung v. NHK Spring Co., Ltd.

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b) No direct sales in Canada – There have been no direct sales of HDD

Suspension Assemblies of any kind into Canada.

c) No conspiracy in Canada – The plaintiffs have not pleaded that the

defendants: (i) conspired to fix prices in Canada; (ii) actually did fix prices in

Canada; or (iii) allocated markets within Canada.

(a) No local defendant or Canadian market to allocate – There is no “local

defendant” alleged as part of the conspiracy and there was no Canadian

market for Assemblies to allocate or apportion.

d) No meaningful or compensable loss – To the extent that the plaintiffs can

establish that Assemblies were sold indirectly into Canada, any alleged

overcharge was too negligible to amount to harm suffered in British Columbia.

[78] In response, the plaintiffs say two connecting factors under the CJPTA create

a presumption of real and substantial connection between the Claim and British

Columbia. First, it concerns a tort committed here because, as a matter of law, the

tort of conspiracy occurs where the harm occurs. Second, it concerns restitutionary

obligations that, to a substantial extent, arose here.

[79] The Claim alleges a foreign conspiracy with foreseeable impact on Canadian

purchasers. It alleges the defendants’ Assemblies came to Canada in various

electronic products “through normal channels of sale” and the defendants knew this

would occur and would cause harm to Canadian consumers. It pleads that the

conspiracy “was intended to, and did, affect prices of [Assemblies] and products

containing Assemblies sold in Canada, including British Columbia,” and that the

defendants knew, or should have known, this would injure purchasers here and

elsewhere.

[80] CJPTA, s. 3(e) provides territorial competence over a defendant if there is a

real and substantial connection between British Columbia and the facts on which the

proceeding is based. Section 10 enumerates non-exhaustive circumstances, or

“connecting factors”, that presumptively establish such a connection: Club Resorts

Ltd. v. Van Breda, 2012 SCC 17, para. 41.

[81] The relevant provisions are:

Application of this Part

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2 (1) In this Part, “court” means a court of British Columbia.

(2) The territorial competence of a court is to be determined solely by

reference to this Part.

Proceedings against a person

3 A court has territorial competence in a proceeding that is brought against

a person only if

…

(e) there is a real and substantial connection between British

Columbia and the facts on which the proceeding against that

person is based.

…

Real and substantial connection

10 Without limiting the right of the plaintiff to prove other circumstances that

constitute a real and substantial connection between British Columbia

and the facts on which a proceeding is based, a real and substantial

connection between British Columbia and those facts is presumed to exist

if the proceeding

…

(f) concerns restitutionary obligations that, to a substantial extent,

arose in British Columbia

(g) concerns a tort committed in British Columbia,

[82] In my view, the governing authority for this jurisdictional challenge is Ewert v.

Höegh Autoliners AS, 2020 BCCA 181 [Höegh], which found a strong presumption

of a real and substantial connection to British Columbia for a foreign price-fixing

conspiracy resulting in higher prices paid by British Columbians.

[83] Höegh summarizes the two-stage process under the CJPTA (at paras. 16-

17). At stage one, the plaintiff can establish a presumption of real and substantial

connection between the subject matter of the litigation and the forum by satisfying

one of the connecting factors. At stage two, the defendant can rebut the presumption

by showing that, despite the connecting factor, a real and substantial connection

does not actually exist on the facts.

[84] In my view, Höegh supports the plaintiffs at stage one because it held that the

tort of conspiracy is committed in British Columbia if a defendant participates in a

conspiracy elsewhere but the conspiracy causes harm here.

Cheung v. NHK Spring Co., Ltd.

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[85] In Höegh, the defendants were among the world’s largest roll-on/roll-off

marine shippers, transporting vehicles around the world. They allegedly conspired to

fix marine shipping prices, resulting in higher prices for purchasers of imported

vehicles in British Columbia. As here, the claims against them were for breach of

s. 45 of the Act and civil conspiracy.

[86] The parties disputed whether the defendants had any business presence in

British Columbia or shipped vehicles purchased by British Columbia consumers. The

chambers judge found jurisdiction, even assuming the two disputed connections to

British Columbia did not exist, on the basis that that “a conspiracy occurs in British

Columbia if the harm is suffered here, regardless of where the wrongful conduct

occurred”: para. 33. The Court of Appeal agreed, providing a summary of the law

regarding jurisdiction over conspiracy claims:

[77]

In summary, Imperial Tobacco and Fairhurst plainly stand for the

proposition, for the purpose of assessing territorial competence, that the

tort of conspiracy is committed by a defendant in British Columbia when, on

unchallenged pleadings or a good arguable case, that defendant participates

in a conspiracy and the conspiracy causes harm in British Columbia. Shah, in

a manner consistent with the basic principles of civil conspiracy, simply adds

that the defendant’s involvement in the conspiracy must be

causally connected to the harm suffered in the jurisdiction. Shah also

explains that a generalized pleading of conspiracy will not be enough when

the defendant specifically, with evidence, denies involvement in that

general conspiracy.

[87] The defendants argue that, even if being party to a conspiracy that causes

loss in British Columbia is a connecting factor at stage one, at stage two the

relationship between Canada and the subject matter of this litigation does not reach

a real and substantial connection. They point to the plaintiffs’ allegation in Höegh (at

para. 3) that the defendants, including those that were disputing jurisdiction,

“allocated sales, territories, customers or markets for the supply of vehicle carrier

services in furtherance of the conspiracy”.

[88] In my view, Höegh cannot be distinguished as the defendants suggest. The

Court of Appeal acknowledged that, although some additional connecting factors

were present in many of the price-fixing cases, they were unnecessary for the

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Page 25

assumption of jurisdiction. The Court emphasized that the mandatory presumption

“is likely to be determinative” and the burden to displace it is “very high”: para. 50.

Accordingly, the Court found participation in a conspiracy that caused economic

harm in British Columbia was sufficient for a real and substantial connection:

[87]

I accept that in Fairhurst, at the Supreme Court level, the fact the

defendants’ rough diamonds ultimately made their way through the

supply chain and into the British Columbia gem-grade diamond market may

have been material to the conclusion that a real and substantial connection

was established: see Fairhurst S.C. at para. 38. However, that fact does not

appear to have been central to this Court’s judgment on appeal, where

jurisdiction was rooted in the defendants’ participation in a conspiracy that

caused economic harm in British Columbia.

[88]

In any event, the appellants also fail to distinguish Imperial Tobacco.

The basis for the real and substantial connection in that case was that the

foreign defendants who did not manufacture anything that was sold in

British Columbia—through the normal channels of trade or otherwise—were

jointly liable as parties to the conspiracy.

[Emphasis in original.]

[89] Applying Höegh, I find that at stage two the defendants do not overcome the

strong stage one presumption of a real and substantial connection. The allegation

that the defendants’ conspiracy intentionally and foreseeably caused economic harm

to purchasers of products in British Columbia creates the requisite connection to this

jurisdiction.

[90] In my view, the unjust enrichment claim also has a real and substantial

connection to British Columbia. The alleged restitutionary obligations arose, to a

substantial extent, in British Columbia because that is where the deprivation of

British Columbia Class Members would have occurred. As stated by Rothstein J. in

Pro-Sys regarding restitutionary claims by indirect purchasers:

[50]

… In my view, allowing indirect purchaser actions is consistent with

the remediation objective of restitution law because it allows for

compensating the parties who have actually suffered the harm rather than

merely reserving these actions for direct purchasers who may have in fact

passed on the overcharge.

[91] Finally, I do not accept the defendants’ argument that jurisdiction should be

refused because the overcharge was too small to pass through the supply chain to

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Page 26

British Columbia purchasers. This is disputed in the Claim and by the plaintiffs’

expert Dr. Reutter. There is uncontested evidence that the defendants’ sales

exceeded US $1 billion annually over the 12-year Class Period, suggesting that total

losses in British Columbia may well be material.

[92] The defendants’ jurisdictional challenge is therefore dismissed.

Certification

[93] The underlying premise of a class proceeding is a class of persons with

claims against one or more defendants, issues common to all of these claims, and a

class proceeding being the preferable resolution: Ewert, para. 23.

[94] The certification hearing assesses whether the action should go forward as a

class proceeding, not the merits of the claim: Pro-Sys, para. 65.

[95] Under s. 4(1) of the CPA, a case must be certified if, and only if, it satisfies

five criteria:

4 (1) The court must certify a proceeding as a class proceeding on an

application under section 2 or 3 if all of the following requirements are met:

(a)

(b)

(c)

the pleadings disclose a cause of action;

there is an identifiable class of 2 or more persons;

the claims of the class members raise common issues,

whether or not those common issues predominate over issues

affecting only individual members;

(d)

a class proceeding would be the preferable procedure for the

fair and efficient resolution of the common issues;

(e) there is a representative plaintiff who

(i) would fairly and adequately represent the interests of

the class,

(ii)

has produced a plan for the proceeding that sets out a

workable method of advancing the proceeding on behalf of the

class and of notifying class members of the proceeding, and

(iii)

does not have, on the common issues, an interest that

is in conflict with the interests of other class members.

[96] The first criteria, whether the pleadings disclose a cause of action, is

assessed in the same manner as a motion to strike proceedings. Plaintiffs need only

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Page 27

show that, assuming the facts pleaded are true, it is not plain and obvious that the

claim will fail: Hollick v. Toronto (City), 2001 SCC 68, para. 25.

[97] The other four criteria require the plaintiff to show “some basis in fact” that

they are met: Hollick, para 25. This is not an onerous standard and requires only a

minimum evidentiary basis: Ewert, para. 109. This standard was recently

summarized in Sharp v. Royal Mutual Funds Inc., 2021 BCCA 307:

[27]

… The leading authorities establish that although the standard does

not entail an assessment of the merits of the action, there must also be more

than superficial scrutiny of the sufficiency of the evidence. It is clear that

‘some basis in fact’ must be demonstrated by the plaintiff on an evidentiary

basis. Such evidence need not be conclusive or satisfy the civil standard of a

balance of probabilities, and the particular level of evidence that will be

sufficient is highly fact-specific. Where a basis in fact is intended to be

established through an expert methodology, the methodology must be

‘sufficiently credible or plausible’ to raise some ‘realistic prospect of

establishing’ the relevant factor.

Section 4(1)(a) – Viable Cause of Action

[98] As mentioned, to satisfy s.4(1)(a) the claim must not be bound to fail

assuming the facts pleaded are true. The defendants argue that none of the

allegations in the Claim meet this low threshold.

[99] The case law recognizes the tension between a generous approach, erring on

the side of allowing novel or questionable claims to proceed, and the gatekeeping

function of resolving unmeritorious claims at an early stage. The Court of Appeal

provided guidance for navigating this tension in Trotman v. WestJet Airlines Ltd.,

2022 BCCA 22, where Chief Justice Bauman wrote:

[46]

This Court has been clear that the ultimate question when assessing

whether there is a cause of action is the Hunt v. Carey test: “assuming that

the facts as stated in the statement of claim can be proved, is it ‘plain and

obvious’ that the plaintiff's statement of claim discloses no reasonable cause

of action?” While the burden is on the plaintiff, the bar is not high. Where the

question turns on statutory interpretation, “if it is arguable,” the certification

judge should not engage in a merits-based analysis. The gate-keeping role of

the certification judge at this stage is to avoid squandering judicial resources

when it is clear that the correct statutory interpretation would leave the

pleadings bound to fail. This could be the case where there is previous

binding case law squarely on point or where the interpretive exercise is so

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Page 28

straightforward the answer is plain and obvious even without previous case

authority.

Sections 36 and 45

[100] The defendants argue that the plaintiffs’ claim for damages under s. 36 of the

Act is bound to fail because there is no arguable breach of s. 45 if the alleged price-

fixing agreements were neither made, nor implemented, in Canada.

[101] To repeat s. 45 for convenience:

Conspiracies, agreements or arrangements between competitors

45 (1) Every person commits an offence who, with a competitor of that person

with respect to a product, conspires, agrees or arranges

(a) to fix, maintain, increase or control the price for the supply of the

product;

(b) to allocate sales, territories, customers or markets for the

production or supply of the product; or

(c) to fix, maintain, control, prevent, lessen or eliminate the production

or supply of the product.

[102] Under s. 45(2), those convicted under s. 45(1) are guilty on an indictable

offence and liable to imprisonment for not more than 14 years and/or a fine not

exceeding $25 million.

[103] The defendants’ uncontested evidence is that they manufacture virtually all of

their Assemblies in Asia, no manufacturing occurred in Canada, and all direct sales

of their Assemblies occurred in Asia. They argue that the territorial jurisdiction of a

criminal provision like s. 45 does not extend to the foreign civil conspiracy pleaded in

the Claim, being an agreement: (a) made outside Canada; (b) by defendants with no

presence in Canada; and (c) fully performed outside Canada.

[104] The defendants rely on Justice La Forest’s judgment in Libman v. The Queen,

[1985] 2 S.C.R. 178, 1985 51, regarding the territoriality principle (now

enshrined in s. 6(2) of the Criminal Code, R.S.C. 1985, c. C-46), which states that no

person shall be convicted of an offence committed outside Canada.

Cheung v. NHK Spring Co., Ltd.

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[105] Libman concerned a telephone sales room (or “boiler room”) in Toronto. From

there, the accused directed sales personnel to make cold-calls to the United States,

misrepresenting their identities, location, and the facts about the gold-mining shares

being flogged. Buyers were asked to send their money to offices in Central America.

[106] Justice La Forest found the accused could be prosecuted in Canada for fraud

and conspiracy, as the fraudulent activities occurred here and the fruits of the

scheme eventually found their way here as part of the scheme. He summarized the

limits of our criminal territoriality (at 212–13):

I might summarize my approach to the limits of territoriality in this way. As I

see it, all that is necessary to make an offence subject to the jurisdiction of

our courts is that a significant portion of the activities constituting that offence

took place in Canada. As it is put by modern academics, it is sufficient that

there be a ‘real and substantial link’ between an offence and this country, a

test well known in public and private international law …

Just what may constitute a real and substantial link in a particular case, I

need not explore. There were ample links here. The outer limits of the test

may, however, be coterminous with the requirements of international comity.

[Emphasis added.]

[107] The defendants focus on the underlined words. They say that, on the

pleadings, all activities constituting the alleged s. 45 offence took place outside

Canada, namely, the price-fixing agreements and all sales of the price-fixed

Assemblies. They argue that the aspect of the claim that occurred in Canada – the

alleged harm to downstream Canadian purchasers – is not an essential element of

the s. 45 offence. In fact, on the wording of s. 45, it appears the offence is complete

even before anything is done to carry out the impugned agreement.

[108] The defendants rely on Latifi v. The TDL Group Corp., 2021 BCSC 2183,

para. 70, to argue that any ambiguity in s. 45 must be interpreted narrowly in their

favour because the provision is penal.

[109] Finally, the defendants say no Canadian court has extended the concept of

territoriality under s. 45(1) to an alleged agreement made wholly outside of Canada,

to fix the price of a product sold wholly outside of Canada, and where no parties

(defendant or otherwise) sold the product itself in Canada. They point to other

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Page 30

geographically complex price-fixing cases to show that some connection between

Canada and the essential elements of s. 45 were always present. See, for example,

Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., [2002] O.J. No. 298

(Ont. S.C.J.), para. 16; Rakuten Kobo Inc. v. Canada (Commissioner of

Competition), 2018 FC 64, paras. 8-11.

[110] The plaintiffs dispute this interpretation of s. 45’s territoriality. They focus on

they second paragraph from La Forest J. in Libman quoted above. They argue his

fundamental point is that the territorial reach of Canada’s criminal and quasi-criminal

laws is defined by the same “real and substantial connection” test applied in

assessing the territorial jurisdiction of our courts. As discussed above, when

applying that test in conspiracy cases to questions of territorial jurisdiction, a real

and substantial connection has been found where the loss occurred even if all other

wrongful conduct constituting the conspiracy occurred elsewhere.

[111] In my view, the defendants have not shown the plaintiffs are bound to lose

this issue. First, I agree with the plaintiffs that it appears La Forest J. is saying that

the same real and substantial connection test applies to both the jurisdiction of our

criminal laws and the territorial jurisdiction of our courts. I have found the plaintiffs’

Claim satisfies this test regarding territorial jurisdiction.

[112] Second, numerous statements in Libman arguably support a finding of

territoriality based solely on harm occurring in Canada, for example:

 “As well, along with other types of protective measures, states increasingly

exercise jurisdiction over criminal behaviour in other states that has

harmful consequences within their own territory or jurisdiction.” (184)

 “I might add that Canadian cases where a court will exercise jurisdiction

over an offence consisting of acts committed abroad that have adverse

effects here are not limited to conspiracy” (202)

 “However, as in England, the Canadian courts were prepared to move

beyond the gist of the offence test when the impact of a crime was felt in

Canada.” (206)

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 “This country has a legitimate interest in prosecuting persons for activities

that take place abroad but have an unlawful consequence here, (as

in Peters, for example). Indeed, from an early period the English courts

have recognized such an interest in other countries; see Jacobi and

Hiller, Nillins and Godfrey, supra. The protection of the public in this

country is widely acknowledged to be a legitimate purpose of criminal law,

and one moreover that another nation could not easily say offended the

dictates of comity.” (208)

[113] Third, Libman arguably endorses a flexible approach accounting for all

relevant facts that take place in Canada, as opposed to a strict test tied to the

elements of the offence as argued for by the defendants (at 211):

[The delivery of the funds into Canada] was an integral part of the scheme.

While it may not in strictness constitute part of the offence, it is, I think,

relevant in considering whether a transaction falls outside Canadian territory.

For in considering that question we must, in my view, take into account all

relevant facts that take place in Canada that may legitimately give this

country an interest in prosecuting the offence. One must then consider

whether there is anything in those facts that offends international comity.

[114] Fourth, the governing case law interpreting s. 45 arguably favours the

plaintiffs. The most relevant example is Infineon, in which several multinational

DRAM manufacturers pled guilty in the United States to a price-fixing conspiracy for

dynamic random-access memory (“DRAM”). A Québec consumer, having purchased

a Dell computer with DRAM over the internet from Ontario, sought to bring a class

action on behalf of direct and indirect DRAM purchasers in Québec. The plaintiffs

alleged the overcharge passed through the supply chain into Canada in violation of

s. 45, which amounted to fault giving rise to civil liability under the CCQ.

[115] The defendants argued that the evidence was limited to what occurred in

Europe and the United States, so there was no real and substantial connection with

Canada giving rise to a violation of s. 45: Infineon, para. 87. The Court disagreed,

accepting that s. 45 was arguably violated by this foreign price-fixing agreement

because the cartel was sufficiently powerful to affect consumers in Québec: paras.

91-92. It found a potential violation of s. 45 because “the impact of conduct in the

United States on prices of DRAM in the international market gives rise to an

inference of an impact in the Canadian market”: para 94.

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[116] See also Fairhurst v. De Beers Canada Inc., 2012 BCCA 257, where the

Court adopted the following from Vitapharm:

... there is a good arguable case that any conspiracy entered into abroad that

fixes prices or allocates markets in Canada so as to create losses through

artificially higher prices in Canada, gives rise to the tort of civil conspiracy in

Canada. It is arguable that a conspiracy that injures Canadians gives rise to

liability in Canada, even if the conspiracy was formed abroad. [Para. 58.]

[117] Another example is R. v. Rowbotham; R v. Roblin (1992), 76 C.C.C. (3d) 542

at 548, 1992 12824 (Ont. C.A.):

The respondents were not charged with trafficking. They were charged with

conspiracy to traffic. In the words of Meredith J.A. in R. v. Bachrack (1913),

21 C.C.C. 257 at 265, "It must be borne in mind always that the crime of

conspiracy may be complete without anything having been done to carry it

out". The delivery of the drugs and the receipt of the proceeds of the sale do

not constitute an element of the offence, although they may be relevant in

considering whether there is a relevant and substantial link or with respect to

the requirements of international comity: see Libman.

[118] Fifth, and finally, in my view, the cases relied on by the defendants to argue

that no real and substantial connection exists where the elements of the offence are

committed outside Canada are arguably distinguishable. These cases include R. v.

O.(B.) (1997), 116 C.C.C. (3d) 189, 1997 949 (Ont. C.A.) and R. v. Drakes,

2005 23683 (Ont. Sup. Ct.). In those cases, every aspect of the offence

occurred outside Canada, whereas in this case the alleged harm occurred here.

[119] I therefore find that the plaintiffs’ claims under the Act are not bound to fail

due to no arguable breach of s. 45.

Civil conspiracy

[120] The defendants argue the conspiracy claim fails under s. 4(1)(a) because it

does not specify the overt acts allegedly taken by each defendant.

[121] In my view, that defence has been rejected in the case law. As stated in

Godfrey, conspiracies such as the one alleged here “are invariably conducted

through secrecy and deception”: para. 46. Similarly, in Watson v. Bank of America

Corporation, 2014 BCSC 532, Chief Justice Bauman (as he then was) said:

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[142] I do not consider Can-Dive to impose those requirements so strictly.

They represent an ideal. The Court’s conclusion in Can-Dive was that

pleadings must be as specific as possible. The very nature of a claim in

conspiracy resists particularization at the early stages (North York Branson

Hospital v. Praxair Canada Inc., [1998] O.J. No. 5993, (Div. Ct.) at para. 22).

It may often not be possible to provide particulars as specific as the date of

an agreement in a conspiracy case. Given the nature of conspiracy claims, it

would be perverse if the failure to plead a specific date was fatal to a claim

that otherwise was not bound to fail.

[Emphasis in original.]

[122] The defendants argue the claim of predominant purpose conspiracy is bound

to fail because there are no material facts pleaded to suggest the defendants

intended to injure the plaintiffs or other Class Members.

[123] The Claim alleges it was intended and foreseeable that the overcharge would

be passed down the supply chain to Canadian consumers, amongst others. Dr.

Reutter says a price-fixing conspiracy such as this only works if the overcharge is

passed along the supply chain, the normal channels of which extended to Canada.

[124] In my view, in these circumstances, the case law supports the plaintiffs’

position. In Godfrey, the Court said that price-fixing effects on umbrella purchasers

are “not just a known and foreseeable consequence of what the defendants are

doing, it’s an intended consequence”: para. 73. See also Microsoft, paras. 74–78,

where the Court said regarding indirect purchasers “At this stage, I cannot rule out

Pro-Sys’s explanation that Microsoft’s primary intent was to injure the plaintiffs and

that unlawfully increasing its profits was a result of that intention.”

Unjust enrichment

[125] The defendants argue that s. 36 is a complete code for the damages

available to a plaintiff for conduct contrary to the Act, and therefore this restitutionary

remedy is bound to fail.

[126] They rely on the statement in Watson that “the plaintiff’s claims under the

[Act] cannot constitute the foundation for other causes of action. It is not open to the

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plaintiff to plead unjust enrichment or waiver of tort to the extent that those pleadings

rely on acts that are only unlawful as a result of the [Act]”: para. 189.

[127] In my view, the defendants’ argument was rejected at the certification stage in

Godfrey, where the Court said: “it is not plain and obvious that [a plaintiff] is

precluded from bringing common law and equitable causes of action alongside his s.

36(1)(a) claim”: para. 89. See also Fairhurst v. Anglo American PLC, 2014 BCSC

2270, paras. 33–38.

Direct purchasers

[128] The defendants argue the plaintiffs have no arguable case for claims by direct

purchasers. The Claim does not plead that anyone in Canada actually purchased

Assemblies, and the plaintiffs led no evidence that this occurred. The defendants’

evidence is that virtually all of their Assemblies were sold in Asia and there were no

direct sales in Canada during the Class Period.

[129] As I understood the plaintiffs’ response, it was that direct-purchaser claims

should nevertheless be certified because the court should take a “fluid and flexible”

approach to certification and so should allow them to pursue this issue at least

through examination for discovery. In my view, that approach would be contrary to

the threshold required for certification under s. 4(1)(a).

[130] The plaintiffs having neither pleaded, nor provided any evidence in support of,

such a claim, direct purchasers should be excluded from the definition of Class

Members.

Section 4(1)(b) – Identifiable Class

[131] Chief Justice Bauman explained the governing principles of s. 4(1)(b) in Jiang

v. Peoples Trust Company, 2017 BCCA 119, para. 82:

 the purposes of the identifiable class requirement are to determine who is

entitled to notice, who is entitled to relief, and who is bound by the final

judgment;

 the class must be defined with reference to objective criteria that do not

depend on the merits of the claim;

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 the class definition must bear a rational relationship to the common

issues—it should not be unnecessarily broad, but nor should it arbitrarily

exclude potential class members; and

 the evidence adduced by the plaintiff must be such that it establishes

some basis in fact that at least two persons could self-identify as class

members and could later prove they are members of the class.

[Emphasis in original.]

[132] In my view, in this case the Class is defined by the objective criteria,

independent of the merits, of having purchased a product in Canada containing an

Assembly in the Class Period. The definition bears a rational relationship to the

proposed common issues in that Class Members are those who may have been

financially harmed by the alleged conspiracy. The Class Period matches the timing

of the defendants’ guilty pleas or convictions, and those who may have been harmed

by the impugned conduct are included without any apparent exclusions. I did not

understand the defendants to dispute these points.

[133] The defendants do take issue, however, with self-identification. They argue

indirect purchasers cannot self-identify through objective criteria. They may no

longer have their devices or, even if they do, they would need to destroy them, as

Dr. Mayer did, to ascertain whether they contain Assemblies, how many, and who

manufactured them.

[134] They say the evidence from the plaintiffs indicates the following problems:

a) Mr. Cheung only testified that he purchased a MacBook Pro that

contained an HDD and that he understood from counsel that “all

HDDs contain an HDD suspension assembly”. He did not testify that

he was able to self-identify who manufactured the suspension

assembly in his device (or even that he still had the device).

b) Ms. De Bellefeuille only testified that she purchased a Dell Inspiron

laptop and that it contained a Toshiba hard drive which she

understood from counsel contains “at least one” HDD Suspension

Assembly. She did not testify that she was able to self-identify who

manufactured the HDD Suspension Assembly in her device (or even

that she still had the device).

c) Mr. Honeyman only testified that he purchased a Dell Inspiron 1520

laptop that has a Western Digital HDD and that he understood from

counsel that it contained “at least one” suspension assembly. He did

not testify that he was able to self-identify who manufactured the HDD

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Suspension Assembly in his device. (He also does not testify that he

still had the device, although he appeared to have provided it to

Dr. Mayer.)

[135] The defendants rely on Sun-Rype Products Ltd. v. Archer Daniels Midland

Company, 2013 SCC 58 [Sun-Rype], where the proposed class included purchasers

of any product containing high-fructose corn syrup manufactured by the defendants,

which was the subject of the alleged conspiracy. The Court found no basis in fact to

suggest purchasers would be able to differentiate whether their products contained

high-fructose corn syrup or sugar because the two were used interchangeably:

paras. 65–67.

[136] In my view, the plaintiffs have adequate responses to this self-identification

challenge. First, I accept that, to self-identify as Class Members, persons need not

identify the specific manufacturer of the Assemblies in their devices. With the

inclusion of umbrella purchasers, every person who purchased a product containing

an Assembly in Canada will be included in the Class. As a result, Class Members

need only identify whether they have a device containing an Assembly (or an HDD,

which necessarily contains an Assembly), but need not identify the specific

manufacturer.

[137] Self-identification of the specific Assembly manufacturer may still be

necessary however. Different damages might be awarded to indirect and umbrella

purchasers, or to indirect purchasers of Assemblies manufactured by different

defendants. Class Members will also need to self-identify the number of Assemblies

in the products they purchased.

[138] In my view, Dr. Mayer has provided some basis in fact to suggest that Class

Members will be able to self-identify the particular manufacturer of the Assemblies

simply by identifying the products they purchased. This may be achievable through

some combination of discovery of the defendants, records from other participants in

the supply chain, industry information, consultants or experts, and targeted teardown

of products.

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[139] The defendants advance numerous arguments in response to Dr. Mayer,

such as: (a) BoMs are only in the possession of HDD manufacturers, who are not

named as defendants in these proceedings; (b) there is no evidence that the

plaintiffs can obtain these BoMs for numerous different HDD products from different

HDD manufacturers; (c) Dr. Mayer or a third-party disassembling devices is not self-

identification; (d) Dr. Mayer’s evidence focusses on Assemblies in computers but not

other products such as gaming consoles, surveillance devices, automobiles.

[140] These are valid concerns that might, down the road, create difficulties for the

plaintiffs. In my view, however, at this stage they do not undermine Dr. Mayer’s

evidence as some basis in fact suggesting Class Members will be able to identify

specific manufacturers and numbers of Assemblies by reference to the particular

products they purchased. This differentiates our situation from Sun-Rype’s finding

that there was no way to ascertain whether a particular purchase contained the

impugned substance.

[141] In my view, the case law supports the sufficiency of Dr. Mayer’s evidence. In

Jiang, the Court noted that “[t]he definition must be such that they can self-identify,

and there may be records present to assist in that identification”: para. 81. Microsoft

says there “must be some evidence of the availability of the data to which the

methodology is to be applied”: para. 118.

[142] Also, in Pro-Sys v. Microsoft, 2010 BCSC 285, rev’d on other grounds 2011

BCCA 186, rev’d 2013 SCC 57, the defendant argued that the proposed class of

indirect purchasers of Microsoft software could not be objectively determined

because the market was plagued by pirated software. Justice Myers found the

evidence disclosed methods that would allow users to verify whether their software

was produced by Microsoft to determine their class membership: paras. 171–172. Of

the possible difficulties that may arise in self-identification, Myers J. said:

[175] No doubt there may be situations in this case that may present some

difficulty; however, I am not convinced that they rise to the level which merits

declining to certify this case.

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[143] A similar point was made by Justice Smith in Pro-Sys:

[76]

I do not minimize the potential difficulties of proof arising out of the

complexities involved in the marketing and distribution of DRAM. However,

the CPA is a powerful procedural statute. It gives the case management

judge flexible tools to deal with such complexities and if, despite this

flexibility, it should turn out that a common issues trial is unmanageable, it

gives the judge the power to decertify the action.

[144] For these reasons, I find the plaintiffs satisfy the requirements of s. 4(1)(b).

Section 4(1)(c) – Common Issues

[145] In Microsoft, para. 108, the Supreme Court of Canada provided the principles

for assessment of proposed common issues:

a) The commonality question should be approached purposively.

b) An issue will be common only where its resolution is necessary to the

resolution of each class member’s claim.

c) It is not essential that the class members be identically situated with respect

to the opposing party.

d) It is not necessary that common issues predominate over non-common

issues. However, the class members’ claims must share a substantial

common ingredient to justify a class action. The court will examine the

significance of the common issues in relation to individual issues.

e) Success for one class member must mean success for all. All members of the

class must benefit from the successful prosecution of the action, although not

necessarily to the same extent.

[146] A question is common if, from the perspective of the litigation as a whole, it

advances the resolution of every class member’s claim. Showing the loss reached

some level of the class advances a common issue, even if the loss varies amongst

the members at that level, or even if some are shown not to have suffered a loss at

all: Godfrey, paras. 102-108.

[147] The defendants do not challenge the commonality of the liability issues in the

Claim. In price-fixing conspiracy cases, liability involves common legal and factual

questions about the existence, scope and effect of the defendants’ alleged

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conspiracy. Similarly, the claims in unjust enrichment focus, in part, on the benefit

received by defendants for the overcharge to the detriment of the Class. Class

Members have a common interest in proving the facts constituting the defendants’

liability.

Causation and damages

[148] The defendants challenge the commonality of issues related to causation and

damages. They argue that the plaintiffs have no plausible methodology to show a

common impact on Class Members from the pass-through of any overcharge. That

is, they have no basis in fact suggesting the pass-through to indirect purchasers can

be assessed on common evidence using economic and statistical methods.

[149] The defendants’ written submissions listed the issues they said were not

common as follows:

 Class-wide loss or damage as a result of the breach of s. 45;

 Liability pursuant to s. 36;

 Costs of the investigation pursuant to s. 36;

 Whether the class suffered loss or damages as a result of any alleged

conspiratorial conduct;

 Unjust enrichment, restitution and disgorgement;

 Damages under s. 1457 of the CCQ; and

 Aggregate damages.

[150] In a price-fixing case, to establish causation and loss as common issues for

the purposes of s. 4(1)(c), the plaintiffs must show some basis in fact of a plausible

and realistic methodology to establish whether an overcharge was passed through

on a class-wide basis. Where the methodology consists of an econometric model, it

is not necessary to build the model or identify precisely what information will be used

so long as there is some evidence that information will be available to do so.

Whether the model will ultimately be accepted is for the common issues trial: Ewert,

para. 104.

[151] As explained in Microsoft:

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[118] … This means that the methodology must offer a realistic prospect of

establishing loss on a class-wide basis so that, if the overcharge is eventually

established at the trial of the common issues, there is a means by which to

demonstrate that it is common to the class (i.e. that passing on has

occurred). The methodology cannot be purely theoretical or hypothetical, but

must be grounded in the facts of the particular case in question. There must

be some evidence of the availability of the data to which the methodology is

to be applied.

[152] As described above, Dr. Reutter’s opinion was that a regression analysis can

be constructed to establish loss on a class-wide basis. This same econometric

regression method that he proposes has been accepted in the leading price-fixing

cases: see e.g., Pro-Sys, para. 68; Ewert, para. 105; Microsoft, paras. 116, 126;

Godfrey, para. 97. Dr. Reutter himself has been accepted as an expert in this regard

by the Supreme Court of Canada in Godfrey, paras. 95–111 and Shah, paras. 83–

102, and by the Ontario Supreme Court in Cygnus Electronics v. Panasonic, 2018

ONSC 2312, at paras. 46-52.

[153] In my view, Dr. Reutter’s evidence, including his responses to Dr. Winter’s

critiques as summarized in the evidentiary section above, have sufficient prima facie

plausibility to establish some basis in fact for a credible and plausible methodology

capable of measuring the pass-through of the overcharge to downstream purchasers

on a class-wide basis. Trying to resolve which of the two economists is correct, even

if it were possible on the current record, would be a battle of the experts exceeding

the “some basis in fact” standard at certification: Ewert, para. 7; Microsoft, paras.

102, 126.

[154] The defendants augment Dr. Winter’s critiques with additional arguments that

Dr. Reutter’s methodology: (a) is not grounded in the facts of the case; (b) relies

upon data that the plaintiffs have not shown exists or can reasonably be obtained;

and (c) cannot track and quantify the overcharge because it is too small and the

supply chain too complex.

[155] Regarding (a), the defendants argue that Dr. Reutter is using the same

method he recommended in other cases, such as Devries v. Espar Inc., 2021 ONSC

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4338, regarding alleged price-fixing of parking heaters. They say this “one-size-fits-

all” approach indicates his approach is not grounded in the facts of this case.

[156] I do not accept this argument. The methodology is the same because, as

Dr. Reutter says, the use of regression models to estimate overcharge and pass-

through in antitrust cases has been standard practice for economists for several

decades. His reports indicate a good understanding of the specifics of this particular

case and he explains why the regression methodology is applicable to this particular

task.

[157] Regarding (b), the defendants rely on Microsoft, para. 118, to argue that the

plaintiffs lack “some evidence of the availability of the data to which the methodology

is to be applied”. They say Dr. Reutter did not specify what kinds of data would be

relevant or whether it exists and is available.

[158] Dr. Reutter said the information necessary to analyze the overcharge and

pass-through includes cost of input, consumer tastes and preferences, and sales

data. Based on his experience in other cases, he expected this type of information

can be found from the defendants, industry intermediaries, third-party vendors who

collect such data, and government.

[159] In Ewert, the Court said, for purposes of certification, an expert need not

confirm or ascertain that the requisite data is indeed available:

[108] The underlying issue is the extent to which a plaintiff must prepare the

case at the time of the certification application. This issue arose in Infineon,

where the plaintiff’s expert had expressed a belief that the necessary data for

his analysis would be available from various sources. …

[109] In Infineon … [t]he expert’s “belief that the necessary data would be

available to him from the sources he identified” was sufficient: paras. 56, 67–

68. The action was certified.

…

[111] In my opinion, the certification judge erred in principle when he

rejected the plaintiff’s methodology on the ground that the plaintiff’s expert

had not ascertained whether the data he would need was in fact available.

The plaintiff provided some basis in fact that there was a methodology that

could demonstrate that overcharges had been passed through to the indirect

purchasers.

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[160] Regarding (c), the defendants argue that Dr. Reutter’s methodology cannot

reliably measure pass-through because the impact of any overcharge would be too

small compared to the price of the end products. They say it may in fact be

infinitesimal—as little as 0.01% of the price of an HDD and 0.001% of the price of

expensive products such as computers and cars.

[161] Dr. Reutter disagreed. He estimated that Assemblies are 5–10% of the cost of

HDDs, and during the Class Period their average annual sales exceeded

US $1 billion. He said that “[a]s a matter of both accounting and economics, changes

in upstream input prices, even for those inputs with a relatively low price per unit, get

passed through in downstream products.” He opined that his method could estimate

these pass-through charges.

[162] In my view, Dr. Reutter’s evidence provides some basis in fact for tracing the

overcharge’s pass-through even as a small proportion of product price. This

approach was taken in Pro-Sys, where the cost of the electronic component in issue

was less than 1% of most products that contained it: Pro-Sys, paras. 10, 74.

[163] Regarding complexity, in my view, the defendants have not demonstrated any

greater complexity than in other price-fixing cases such as Pro-Sys, Godfrey or

Microsoft. Dr. Reutter said that by 2012 there were only three direct purchasers of

HDDs worldwide. They sold their HDDs either as branded, external products or to

internal components to manufacturers of computer products.

[164] In Microsoft, the Supreme Court of Canada said:

[44]

Indirect purchaser actions, especially in the antitrust context, will often

involve large amounts of evidence, complex economic theories and multiple

parties in a chain of distribution, making the tracing of the overcharges to

their ultimate end an unenviable task. However, Brennan J., dissenting in

Illinois Brick, observed that these same concerns can be raised in most

antitrust cases, and should not stand in the way of allowing indirect

purchasers an opportunity to make their case. …

[165] Pro-Sys reached a similar conclusion. The defendants’ expert deposed that

assessing harm on a class-wide basis was “not possible as practical matter … given

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the complexities in the DRAM market”: para. 55. The Court nonetheless upheld the

trial judge’s decision to certify because the Act gives “the case management judge

flexible tools to deal with such complexities [as well as] the power to decertify the

action” if necessary: Pro-Sys, para. 76.

[166] In Sony Corporation, the certified class covered “thousands of highly

differentiated [optical disk drives] and [optical disk drive] products, sold through

multiple pricing mechanisms, at multiple levels of supply chains, into multiple

markets characterized by different competitive dynamics, and that reached members

of the proposed class through multinational, multilevel supply chains”: para. 162.

[167] I agree with the plaintiffs that: “Arguably, this case is less complex than others

previously certified insofar as it involves fewer defendants and the market is highly

concentrated at both the defendant and [direct] purchaser level.”

[168] For these reasons, I find that the plaintiffs have provided some basis in fact

for causation and damages being a common issue.

Aggregate damages

[169] The plaintiffs seek to certify as a common issue whether class damages can

be measured on an aggregate basis and, if so, what those damages are. The

defendants oppose this.

[170] The test for certifying aggregate damages as a common issue is whether

there is a reasonable likelihood that the conditions of CPA, s. 29(1) would be

satisfied if the plaintiffs were otherwise successful at the common issues trial:

Krishnan v. Jamieson Laboratories Inc., 2021 BCSC 1396, para. 156.

[171] Section 29 says:

29 (1) The court may make an order for an aggregate monetary award in

respect of all or any part of a defendant's liability to class members and may

give judgment accordingly if

(a) monetary relief is claimed on behalf of some or all class members,

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(b) no questions of fact or law other than those relating to the

Page 44

assessment of monetary relief remain to be determined in order to

establish the amount of the defendant's monetary liability, and

(c) the aggregate or a part of the defendant's liability to some or all

class members can reasonably be determined without proof by

individual class members.

[172] In Godfrey, the Court said:

[113] Because all other issues of fact and law must be decided before the

aggregate damages provisions could apply, it is plain that aggregate

damages under s. 29(1)(b) are purely remedial, available only after all other

common issues have been determined, including liability (see Microsoft, at

para. 134). Irrespective, then, of whether aggregate damages are certified as

a common issue, it is for the trial judge to determine, following the common

issues trial, whether the statutory criteria are met such that the aggregate

damages provisions can be applied to award damages (Microsoft, at para.

134; Winkler et al., at p. 121).

…

[118] To be clear, I agree that the Class Proceedings Act permits individual

members of the class to obtain a remedy where it may be difficult to

demonstrate the extent of individual loss. What the jurisprudence of this Court

maintains, however, is that, in order for individual class members to

participate in the award of damages, the trial judge must be satisfied that

each has actually suffered a loss where proof of loss is essential to a finding

of liability (as it is for liability under s. 36 of the Competition Act).

Therefore, ultimately, to use the aggregate damages provisions, the trial

judge must be satisfied, following the common issues trial, either that all class

members suffered loss, or that he or she can distinguish those who have not

suffered loss from those who have.

[Emphasis in original.]

[173] In my view, it is reasonably likely that, if the plaintiffs are otherwise successful

at a common issues trial, an aggregate assessment of damages would be made

regarding the restitutionary claim in unjust enrichment. I therefore find this to be a

common issue.

[174] Whether damages arising from the other claims will satisfy the aggregate

damages requirements in s. 29(1) should await the end of the common issues trial,

see Krishnan, para. 159.

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Punitive damages

[175] The defendants do not oppose punitive damages as a common issue.

[176] In my view, it is a common issue because the appropriateness of such

damages would be determined based on the defendants’ conduct, and the trial judge

will likely have the relevant record before them. See Chalmers v. AMO Canada

Company, 2010 BCCA 560, paras. 31–36.

S. 4(1)(d) – Preferability

[177] Once the common issues are determined, s. 4(1)(d) asks whether a class

proceeding is the preferable procedure for their fair and efficient resolution of the

common issues.

[178] In making this determination, s. 4(2) requires consideration of all relevant

matters, including whether:

(a) questions of fact or law common to the members of the class predominate

over any questions affecting only individual members;

(b) a significant number of the members of the class have a valid interest in

individually controlling the prosecution of separate actions;

(c) the class proceeding would involve claims that are or have been the

subject of any other proceedings;

(d) other means of resolving the claims are less practical or less efficient;

(e) the administration of the class proceeding would create greater difficulties

than those likely to be experienced if relief were sought by other means.

[179] These factors are considered through the lens of the three principal goals of

class actions: judicial economy, access to justice, and behavior modification.

[180] At a high level, the defendants say that certification is not preferable. The

fundamental class action objectives will not be achieved because of the minimal cost

of Assemblies contrasted with the great cost and complexity of the proposed

proceedings.

[181] In my view, the governing case law suggests the fundamental goals of class

proceedings will be served in these circumstances. Certification is in the overall

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interests of justice because price-fixing claims serve the important public purpose of

“insuring the continued effectiveness of the [antitrust] action and preventing

wrongdoers from retaining the spoils of their misdeeds”: Microsoft, para. 48.

[182] Minimal individual recovery suggests that class proceedings are the only

means of achieving these goals. As stated in Microsoft:

[75]

… Thus, the only apparent alternative to a class action is no action at

all. Therefore, if this action does not proceed as a class action there is the

potential for an unconscionable result – that the respondents will be allowed

to retain their unlawful gains. This potential unconscionability also weighs in

favour of certifying this action as a class proceeding.

…

[141] ... Accordingly, if the class action does not proceed, the objectives of

deterrence and behaviour modification will not be addressed at all. On this

issue, the class action is not only the preferable procedure but the only

procedure available to serve these objectives.

[183] Similar points are made in Pro-Sys:

[73]

… While the fines and the settlements may well serve to modify the

behaviour of the respondents and to deter them from further such conduct,

the chambers judge overlooked that the goal of behaviour modification also

considers other potential wrongdoers.

[74]

… The fact that individual recoveries would be small weighs in favour

of a class proceeding. It is unlikely that class members would pursue

individual actions since the costs of doing so would be out of all proportion to

the potential recovery.

[184] The preferability cases relied on by the defendants are distinguishable. In

Bennett v. Hydro One Inc., 2017 ONSC 7065, the reasons for declining certification

included that the determination of common issues left too much to be done at

individual issues trials and the Ontario Energy Board’s administrative process was

preferable to a class action: paras. 126, 130. In Penney v. Bell Canada, 2010 ONSC

2801, justice was served by deferring to the CRTC proceedings: para. 193. In

Setoguchi v. Uber B.V., 2021 ABQB 18, there was no evidence of class-wide

damages and every class member would likely require individual trials to assess

damages: paras. 93, 103. In Chow v. Facebook, Inc., 2022 BCSC 137, there was no

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Page 47

basis in fact indicating harm or loss resulting from the defendant’s alleged conduct:

para. 96.

[185] I turn now to the specific considerations in CPA s. 4(2).

Section 4(2)(a)

[186] Comparing the overall import of common issues with individual issues has

particular significance in indirect purchaser cases. As stated in Ewert:

[117] In these cases, there are normally some common issues relating to

the cause of action, and some individual issues relating to the individual

circumstances of the class members. Whether common issues predominate

over individual issues will often depend on whether loss on a class-wide basis

can be considered a common issue, which would support certification, or

whether loss will have to be established individually for the class members,

which will likely make a class proceeding unmanageable.

[187] The defendants argue the common issues in this matter do not dominate.

They cite Kett v. Mitsubishi Materials Corporation, 2020 BCSC 1879, paras. 180–

182, in which Justice Branch declined certification of the proposed price-fixing class

action by indirect purchasers against automobile part suppliers. He said:

[180] Even more individuality exists at the class member level. One class

member might have only one product from one defendant in their vehicle,

while another could have multiple products made by multiple defendants …

[182] Based on my review of the evidence, I expect the required analysis

would come very close to a vehicle-by-vehicle evaluation, in a case involving

millions of vehicles—a daunting prospect to be sure.

[188] At least at this stage, the evidence suggests the claims here do not face this

degree of individuality. My finding that liability, causation and loss are generally

common issues drives the conclusion that common issues predominate over the

remaining individual issues: Ewert, para. 118; Microsoft, para. 140. Furthermore, in

assessing the relationship between the resolution of common issues and the

management of individual interests, plaintiffs’ counsel quite properly emphasized the

broad powers under the CPA to effectively manage individual issues: Ewert,

paras. 119–121.

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Section 4(2)(b)

[189] There was no evidence to suggest that a significant number of Class

Members have a valid interest in individually prosecuting separate actions. The

evidence suggests that minimal individual damages and the cost and complexity of

prosecution make this highly unlikely.

Section 4(2)(c)

[190] The defendants submit they have already been the subject of various

international proceedings. Those proceedings did not, however, address how their

alleged conduct affected Canadian indirect and umbrella purchasers or the

compensatory and restitutionary remedies sought here. These prior proceedings do

not render the proposed class action unfair or inefficient.

Section 4(2)(d)

[191] Comparison with other methods of resolution will often favour certification,

although there may be instances where there are practical alternatives to class

proceedings or the nature of the individual interests overwhelm the common

interests.

[192] In this case, no practical alternative has been suggested. The comments of

the Court of Appeal in Pro-Sys apply:

[75]

… Thus, the only apparent alternative to a class action is no action at

all. Therefore, if this action does not proceed as a class action there is the

potential for an unconscionable result – that the respondents will be allowed

to retain their unlawful gains. This potential unconscionability also weighs in

favour of certifying this action as a class proceeding.