What To Expect In Class Action Law In 2019

The Supreme Court of Canada and other courts of appeal heard cases in 2018 that dealt with important issues in class action practice that are currently under reserve. We review key cases and the impact they may have in 2019, both on class action procedure and various areas of law.

Competition law: who gets to be part of the class?

Canadian courts are currently split over whether a category of claimants known as "umbrella purchasers" can be included in a class seeking damages from alleged conspirators in a class action. In mid-December, the Supreme Court heard arguments in Pioneer et al. v. Neil Godfrey,1 which gives the Court the opportunity to provide the definitive answer: are they in or are they out?

Plaintiffs in competition class actions usually seek damages from co-conspirators who are alleged to have raised prices of their goods, on behalf of both direct purchasers (those who bought the good directly from a defendant) and indirect purchasers (usually end-users, though there can be other intermediate purchasers in the supply chain). Umbrella purchasers are in a different category: they purchased the affected product from non-conspirators—however, they allege the conspiracy created a price "umbrella" allowing other firms to charge higher prices than they otherwise would have.

In Godfrey, the defendants are alleged to have fixed the prices of optical disk drives (ODDs). Direct purchasers bought ODDs from the defendants and assembled them into other products—like laptops—which were purchased by end users. The umbrella purchasers, included in the proposed class, did not purchase ODDs made by the defendants, or products containing them. Instead, they purchased their ODDs from non-conspirators. The umbrella purchasers allege the ODDs they purchased from the non-conspirators cost more than they would have in the absence of the conspiracy.

Godfrey has the potential to expand the size of plaintiff classes involved in competition class actions and thus the potential to increase exposure for defendants.

Some judges in Ontario have reasoned that principles of indeterminate liability justify refusing to certify umbrella claims, while British Columbia courts have expressly rejected the Ontario courts' analysis and found that those purchasers could be part of a class action. Although the Ontario Court of Appeal sided with the BC courts in its mid-October decision in Shah v. LG Chem Ltd.,2 the Supreme Court will have the final word when it releases...