The Supreme Court Of Canada 'Levels' Class Certification

Class actions are often complex: thousands if not millions of putative class members may unite, seeking millions if not billions of dollars. ‎With so much at stake, there is often a fierce initial battle at the class certification stage over whether the diverse individual claims are sufficiently common to proceed together.

On September 20, 2019, the Supreme Court of Canada (“SCC”) released Pioneer Corp. v. Godfrey ‎1‎ an important and remarkable decision. By an 8:1 majority, the Court outlined a test for commonality of ‎loss at certification that diverges from what the plaintiff must show to establish liability at trial. While the ‎decision has direct implications for actions involving allegations of anticompetitive conduct, the Court's ‎approach to certification will undoubtedly impact the approach to commonality in other instances. ‎

Background

The case is similar to the many price-fixing class actions that have proliferated over the past decade in ‎Canada. The plaintiff alleged that between 2004 and 2010, the defendants - manufacturers or suppliers of ‎optical disc drives (“ODD”) - had unlawfully conspired to raise the prices of ODDs (and indirectly, prices ‎of products containing ODDs like computers) contrary to Section 45 of the Competition Act. The plaintiff relied on the statutory right of action in the Competition Act (Section 36), the tort of civil conspiracy, unlawful means tort, unjust enrichment and waiver of tort‎.

The plaintiff sued not only on behalf of purchasers who directly or indirectly purchased ODDs made by the defendants, but also on behalf of “umbrella purchasers” - persons who directly or indirectly bought ODDs made by others manufacturers not involved in the cartel who allegedly increased their prices in response to the defendants' pricing. While the ability of umbrella purchasers to sue had been litigated in the U.S., this case was one of the first where the defendants invited a Canadian court to decide the issue.

‎Mr. Justice Masuhara of the B.C. Supreme Court certified the action as a class proceeding, subject to certain exceptions and conditions.‎2 The B.C. Court of Appeal upheld the decision.3‎

Issues determined by the SCC

The SCC last addressed certification in competition class actions in its 2013 “Trilogy”.4‎ ‎ Since then, every competition case brought before the courts has been certified. Nevertheless, these cases raised a number of hotly debated issues, five of which were addressed in Godfrey:

‎At certification, sufficient if methodology can show loss reached ‎purchaser “level” ‎ The majority agreed with the two lower courts that “loss-related” issues would satisfy the ‎commonality criterion under the Class Proceedings Act if the plaintiff established that there is a ‎plausible methodology capable of showing “one or more” purchasers at the requisite purchaser ‎‎“level” suffered loss as a result of the defendants' conduct.‎ In dissent, Justice ‎Côté would have ‎required that the methodology be capable of sorting out at trial which purchasers did (or did not) ‎suffer loss.‎ ‎ ‎

At trial, each class member must show loss The SCC parted...