More Than 'Symbolic Scrutiny' Federal Court Of Appeal Clarifies Evidentiary Burden And Denies Certification

• Jurisdiction: Canada
• Law Firm: McCarthy Tétrault LLP
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Author: Canadian Class Actions Monitor, Nikiforos Iatrou, Casey Halladay, Akiva Stern and Olivia Trojko
• Published date: 19 May 2023

Canadian courts are increasingly tilting against simply accepting a plaintiff's pleading at face value at certification, instead ensuring that plaintiffs' allegations are a fair representation of the underlying evidence they rely on. Courts have historically walked a delicate balance to ensure they refrain from a full merits-analysis (prohibited at certification), while still ensuring claims have at least some minimal evidentiary basis to support them going forward. On April 28, 2023, the Federal Court of Appeal in Jensen v. Samsung Electronics Co. Ltd. ¹ ("Jensen") clarified this burden and put to rest the plaintiffs' frequent refrain that courts should not engage in a merits-based review of the evidence at this procedural juncture. As the Court clarified, reviewing the evidence is not the same as engaging in a merits-based review.

The appeal stems from the underlying Federal Court decision of Justice Gascon (the "Motion Judge"), summarized here, and follows its Québec counterpart Hazan c. Micron Technology Inc. ("Hazan"). There, the Québec Court of Appeal upheld the lower court's decision to scrutinize a class action at the authorization phase where the plaintiff's pleadings were "mere assertions".² Read our blog post about this decision here.

Background

The plaintiffs in Jensen commenced the proposed class action in May 2018, seeking $1,000,000,000 in damages from the defendants, three leading manufacturers of Dynamic Random Access Memory Chips ("DRAM"), a kind of semiconductor memory chip used in most computer products, including cell phones and laptops. The plaintiffs alleged that the defendants breached sections 45 and 46 of the Competition Act by conspiring through direct communications in private meetings and through public statements - or "signalling" - to each other, in order to suppress the global supply of DRAM and increase DRAM prices.

In February 2019, the plaintiffs brought a motion to certify the action as a class proceeding.

The Lower Court Decision: Federal Court of Canada

The Motion Judge dismissed the plaintiffs' motion on the basis that their claim disclosed no reasonable cause of action for breach of sections 45 or 46 of the Act.³ The Motion Judge concluded that, at best, the facts pleaded would support an allegation that the defendants had engaged in "conscious parallelism",⁴ which is not in and of itself unlawful, nor is it sufficient to establish the defendants entered into an unlawful agreement - an "essential and prominent"...