SUPREME
COURT OF CANADA
Between:
Infineon
Technologies AG and
Infineon
Technologies North America Corp.
Appellants
and
Option
consommateurs and Claudette Cloutier
Respondents
-
and -
Canadian
Federation of Independent Grocers
Intervener
Coram: McLachlin C.J. and LeBel, Fish, Abella, Rothstein, Cromwell,
Moldaver, Karakatsanis and Wagner JJ.
Joint Reasons for
Judgment:
(paras. 1 to 155)
|
LeBel and Wagner JJ. (McLachlin C.J. and Fish, Abella,
Rothstein, Cromwell, Moldaver and Karakatsanis JJ. concurring)
|
Infineon Technologies AG v. Option consommateurs, 2013 SCC
59, [2013] 3 S.C.R. 600
Infineon Technologies AG and
Infineon Technologies North
America Corp. Appellants
v.
Option consommateurs
and Claudette Cloutier Respondents
and
Canadian Federation of
Independent Grocers Intervener
Indexed as: Infineon Technologies AG v. Option consommateurs
2013 SCC 59
File No.: 34617.
2012: October 17; 2013: October 31.
Present: McLachlin C.J. and LeBel, Fish, Abella, Rothstein,
Cromwell, Moldaver, Karakatsanis and Wagner JJ.
on appeal from the court of appeal for quebec
Civil
procedure — Class actions — Jurisdiction of Quebec court — Application for
authorization to institute class action in order to recover damages from
international manufacturers that had conspired to inflate price of microchips —
Whether Quebec courts have jurisdiction over dispute between international
manufacturers and group consisting of direct and indirect purchasers located in
Quebec given that alleged wrongdoing that forms basis of claim occurred outside
Quebec — Civil Code of Québec, S.Q. 1991, c. 64, art. 3148(3).
Civil
procedure — Class actions — Conditions for authorizing action — Direct and
indirect purchasers — Application for authorization to institute class action in
order to recover damages from international manufacturers that had conspired to
inflate price of microchips — Proposed group consisting of direct and indirect
purchasers who suffered losses by absorbing, in whole or in part, inflated
portion of price — Whether common questions arise — Whether cause of action can
be rooted in passing on of artificially inflated prices resulting from anti‑competitive
practices — Whether it is sufficient to prove aggregate loss at authorization
stage — Whether representative and designated member are qualified to
adequately represent members of proposed group — Whether class action should be
authorized — Code of Civil Procedure, R.S.Q., c. C‑25, arts. 1003,
1048.
The
appellant companies are manufacturers of DRAM, which is a microchip that allows
information to be electronically stored and rapidly retrieved. DRAM is
commonly used in a wide range of electronic devices. The appellants sell DRAM
through a number of distribution channels to original equipment manufacturers
(“OEMs”), such as Dell Inc. OEMs insert the chips into various electronic
products they manufacture, which are in turn sold either to intermediaries in
the distribution chain or directly to final consumers. The appellants have
acknowledged their participation in an international conspiracy to suppress and
eliminate competition by fixing the prices of DRAM to be sold to OEMs. They
were heavily fined both in the United States and in Europe for their respective
roles in the conspiracy.
Option
consommateurs applied to the Superior Court for authorization to institute a
class action against the appellants in order to recover damages in this regard
on behalf of the members of the affected class. The group comprises direct and
indirect purchasers who suffered losses by absorbing, in whole or in part, the
inflated portion of the price of DRAM sold in Quebec. Its claim is based upon
allegations that the appellants failed to discharge statutory obligations under
the Competition Act and that their conduct amounted to a fault giving
rise to civil liability under the Civil Code of Québec (“C.C.Q.”).
In its motion for authorization of the class action, Option consommateurs
designated C as a member of the group. C is a resident of Montréal who
purchased a personal computer containing DRAM on Dell’s website with her credit
card. The motion judge held that the Superior Court did not have territorial
jurisdiction to hear the class action. In any event, he would have dismissed
the motion for authorization on the merits, because he was of the view that the
requirements of arts. 1003(b), 1003(d) and 1048 of the Code
of Civil Procedure (“C.C.P.”) were not satisfied. On appeal, the
Court of Appeal set that decision aside and granted the motion for
authorization to institute the class action.
Held:
The appeal should be dismissed.
On
the basis of the facts as alleged, the Quebec courts have jurisdiction to
decide whether the class action should be authorized under art. 1003 of
the C.C.P. Article 3148(3) of the C.C.Q. confers jurisdiction
on a Quebec authority in a personal action of a patrimonial nature where “a
fault was committed in Québec, damage was suffered in Québec, an injurious act
occurred in Québec or one of the obligations arising from a contract was to be
performed in Québec”. Damage suffered in Quebec is an independent connecting
factor: the damage does not need to be tied to the locus of the injury or of
the fault. Also, the plain language of art. 3148(3) does not preclude
economic damage from serving as a connecting factor, nor is the recovery of a
purely economic loss prohibited in Quebec civil law.
In
the instant case, the economic damage was allegedly suffered by C — not merely
recorded — in Quebec. More specifically, the damage was allegedly suffered as
a result of the contract between Dell and C. Although the contract is not in
fact the source of the cause of action in this case, which is extracontractual
in nature, it is a juridical fact that establishes where the alleged economic
damage occurred: the conclusion of the contract is the event that fixes the “situs”
of the material damage suffered in Quebec. As a result, the contract is
relevant, regardless of the fact that none of the appellants were parties to
it, to the determination of whether the Quebec courts have jurisdiction in this
case. C’s pecuniary loss flowed directly from her contract with Dell, which is
deemed under Quebec’s Consumer Protection Act to have been made in
Quebec. The resulting economic damage did not merely have a remote effect on C’s
patrimony in Quebec; rather, she suffered it in Quebec upon entering into the
contract in that province, and this brought her claim within the scope of art. 3148(3)
of the C.C.Q.
At
the stage of authorization of a class action, the court plays the role of a
filter. It need only satisfy itself that the applicant has succeeded in
meeting the criteria set out in art. 1003 of the C.C.P., bearing in
mind that the threshold provided for in that article is a low one. The
authorization process does not amount to a trial on the merits. Although the
claim may in fact ultimately fail, the action should be allowed to proceed if
the applicant has an arguable case in light of the facts and the applicable
law. In this case, the motion for authorization alleges sufficient facts to
demonstrate the elements required under art. 1003 of the C.C.P.
Option
consommateurs has met the requirement that there be sufficient common questions
for the purposes of art. 1003(a). There are no differences between
the members of the proposed group at the authorization stage that adversely
affect the unity of the group. All the members, regardless of their individual
circumstances, have a common interest both in proving the existence of a price‑fixing
conspiracy and in maximizing the amount of the resulting unlawful overcharge.
Any disparity between the direct purchasers’ relationships with the appellants
and those of the indirect purchasers does not alter the fact that they have a
collective interest in the questions of fault and liability. Any conflicts of
interests can be addressed at trial.
With
respect to the requirement of art. 1003(b) of the C.C.P. that
“the facts alleged seem to justify the conclusions sought”, Option
consommateurs has made out an arguable case in support of its claim of the
appellants’ extracontractual liability. It has discharged its burden with
respect to the demonstration of fault, injury and causation. The allegations
set out in the motion for authorization are sufficient to support an inference
of fault, given the relatively low standard to be met at the authorization
stage. Although the allegations and supporting documentation do not explicitly
establish the commission of wrongful behaviour in Quebec, they certainly do
point to the international nature of the conspiracy to fix the price of DRAM
and to the suffering of damage outside the United States. It is not
unreasonable to infer that anti‑competitive practices in the United
States that have an impact on large multinational corporations and on a DRAM
market that is international in scope might — indeed are likely to — affect
consumers in Quebec. Further, Option consommateurs does not need to prove
liability under s. 45 of the Competition Act at this stage of the
proceedings, given the nature of the claim and the evidence that has already
been adduced. Its claim of undue economic impact under s. 45 is relevant
only to the extent that a violation of the statutory scheme can give rise to
extracontractual liability under art. 1457 of the C.C.Q.
Option
consommateurs has also discharged the burden of demonstrating that C and the
other members of the proposed group suffered an injury as a result of the
appellants’ anti‑competitive conduct. The passing on of price increases
can ground a class action where the members of the group include direct
purchasers. The policy considerations that militate against the defence of
passing on at common law should favour, in the civil law of Quebec,
compensation for a loss that has been passed on to a plaintiff. In the instant
case, there is no risk of double recovery, since the direct and indirect
purchasers would be combined in a single group that would make a single
collective claim of an aggregate loss. It is not necessary at the
authorization stage to prove that each member of the group suffered a loss. As
well, the evidentiary standard for demonstrating passing through is no
different than the one for demonstrating an aggregate loss. The applicant must
establish an arguable case that losses were passed on. Given this low
threshold, the applicant is neither expected nor required to adduce expert
testimony and advance a sophisticated methodology. At this early stage, the
aggregate loss alleged by Option consommateurs and supported by the exhibits is
enough to meet the burden of an arguable case. If at trial Option
consommateurs is unable to demonstrate how the loss was passed on to the
indirect purchasers and how it is to be calculated, the action might fail at
that stage.
To
establish causation under art. 1457 of the C.C.Q., the damage must
be shown to be a direct consequence of the injurious act, but the plaintiff
need not be the immediate victim of that act in order to recover. At the
authorization stage, the applicant needs only to present an arguable case that
the loss was a direct result of the alleged misconduct. In this case, although
the indirect purchasers may be indirect victims, the injury they allegedly
suffered was a direct result of the appellants’ anti‑competitive conduct.
Finally,
regarding the requirement of adequate representation, it would be contrary to
the spirit of art. 1003(d) of the C.C.P. to deny
authorization for the proposed group of purchasers of DRAM on the basis of a potential
conflict of interests between members of the group. The record does not
suggest that Option consommateurs and C are undertaking and conducting the
proceedings dishonestly or that they have failed to disclose material facts
that would reveal a conflict with other members. Further, the class members
clearly share a common interest in establishing the aggregate loss and in
maximizing the amount of this loss. Much like art. 1003, art. 1048
of the C.C.P. is intended to be a flexible gatekeeper. Where a legal
person applies to represent a class, art. 1048 directs that its mission be
connected not with the interests of all members of the class, but merely with
those of one of the members. Since C is a member of Option consommateurs and
of the proposed group, art. 1048 does not prohibit Option consommateurs
from representing the interests of the members in this case.
Cases Cited
Distinguished:
Harmegnies v. Toyota Canada inc., 2008 QCCA 380 (CanLII); Bou Malhab
v. Diffusion Métromédia CMR inc., 2011 SCC 9, [2011] 1 S.C.R. 214; approved:
Hubert v. Merck & Co. Inc., 2007 QCCS 3291 (CanLII); referred to:
Quebecor Printing Memphis Inc. v. Regenair Inc., [2001] R.J.Q. 966; Banque
de Montréal v. Hydro Aluminum Wells Inc., 2004 CanLII 12052; Thompson v.
Masson, [1993] R.J.Q. 69; Royal Bank of Canada v. Capital Factors Inc.,
[2004] Q.J. No. 11841 (QL); Spar Aerospace Ltd. v. American Mobile Satellite
Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; Sterling Combustion inc. v.
Roco Industrie inc., 2005 QCCA 662 (CanLII); Option Consommateurs v.
British Airways PLC, 2010 QCCS 140 (CanLII); Marcotte v. Longueuil
(City), 2009 SCC 43, [2009] 3 S.C.R. 65; Nault v. Canadian Consumer Co.
Ltd., [1981] 1 S.C.R. 553; Comité régional des usagers des transports en
commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1
S.C.R. 424; Comité d’environnement de La Baie Inc. v. Société d’électrolyse
et de chimie Alcan Ltée, [1990] R.J.Q. 655; Château v. Placements
Germarich Inc., [1990] R.D.J. 625; Tremaine v. A.H. Robins Canada Inc.,
[1990] R.D.J. 500; Nadon v. Ville d’Anjou, [1994] R.J.Q. 1823; Pharmascience
Inc. v. Option Consommateurs, 2005 QCCA 437 (CanLII); Martin v. Telus
Communications Co., 2010 QCCA 2376 (CanLII); Guimond v. Quebec (Attorney
General), [1996] 3 S.C.R. 347; Berdah v. Nolisair International Inc.,
[1991] R.D.J. 417; Breslaw v. Montreal (City), 2009 SCC 44, [2009] 3
S.C.R. 131; Option Consommateurs v. Novopharm Ltd., 2008 QCCA 949,
[2008] R.J.Q. 1350; Collectif de défense des droits de la Montérégie (CDDM)
v. Centre hospitalier régional du Suroît du Centre de santé et de services
sociaux du Suroît, 2011 QCCA 826 (CanLII); Western Canadian Shopping
Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534; Guilbert v.
Vacances sans Frontière Ltée, [1991] R.D.J. 513; R. v. Nova Scotia
Pharmaceutical Society, [1992] 2 S.C.R. 606; Pro‑Sys Consultants
Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477; Sun‑Rype
Products Ltd. v. Archer Daniels Midland Company, 2013 SCC 58, [2013] 3
S.C.R. 545; Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S.
481 (1968); British Columbia v. Canadian Forest Products Ltd., 2004 SCC
38, [2004] 2 S.C.R. 74; Kingstreet Investments Ltd. v. New Brunswick
(Finance), 2007 SCC 1, [2007] 1 S.C.R. 3; Illinois Brick Co. v. Illinois,
431 U.S. 720 (1977); Regroupement des citoyens contre la pollution v. Alex
Couture inc., 2007 QCCA 565, [2007] R.J.Q. 859; Hollick v. Toronto
(City), 2001 SCC 68, [2001] 3 S.C.R. 158; Croteau v. Air Transat A.T.
inc., 2007 QCCA 737, [2007] R.J.Q. 1175; Bouchard v. Agropur Coopérative,
2006 QCCA 1342, [2006] R.J.Q. 2349; Black v. Place Bonaventure inc. (2004), 41 C.C.P.B. 181; Comité syndical national de retraite
Bâtirente inc. v. Société financière Manuvie, 2011 QCCS 3446 (CanLII); Bourgoin
v. Bell Canada inc., 2007 QCCS 6087 (CanLII); Rosso v. Autorité des
marchés financiers, 2006 QCCS 5271, [2007] R.J.Q. 61; Sun‑Rype Products Ltd. v. Archer Daniels Midland Company, 2010 BCSC 922 (CanLII); Association des résidents riverains de la Lièvre inc. v. Canada
(Procureur général), 2006 QCCS 5661 (CanLII).
Statutes and Regulations Cited
Civil Code of Québec, S.Q. 1991,
c. 64, arts. 1385 to 1388, 1457, 1607,
3148(3), 3168.
Code of Civil Procedure, R.S.Q.,
c. C‑25, arts. 93, 999, 1002 [am. 2002, c. 7, s. 150],
1003, 1010, 1031 to 1033, 1048.
Competition Act, R.S.C. 1985, c. C‑34,
ss. 36 , 45 .
Consumer Protection Act, R.S.Q.,
c. P‑40.1, ss. 20 [rep. 2006, c. 56, s. 3], 21 [idem],
54.1, 54.2.
Authors Cited
Baudouin, Jean‑Louis, et Patrice Deslauriers. La responsabilité
civile, 7e éd., vol. I.
Cowansville, Qué.: Yvon Blais, 2007.
Emanuelli, Claude. Droit international privé québécois, 3e
éd. Montréal: Wilson & Lafleur, 2011.
L’Heureux, Nicole, et Marc Lacoursière. Droit de la consommation,
6e éd. Cowansville, Qué.: Yvon Blais, 2011.
Lafond, Pierre‑Claude. Le recours collectif comme voie d’accès
à la justice pour les consommateurs. Montréal:
Thémis, 1996.
Waddams, S. M. The Law of Damages, 5th ed. Toronto:
Canada Law Book, 2012.
APPEAL
from a judgment of the Quebec Court of Appeal (Forget, Pelletier and Kasirer
JJ.A.), 2011 QCCA 2116, [2011] Q.J. No. 16769 (QL), 2011 CarswellQue
12645, SOQUIJ AZ‑50805798, setting aside a decision of Mongeau J., 2008
QCCS 2781, [2008] R.J.Q. 1694, [2008] J.Q. no 5796 (QL), 2008
CarswellQue 5729, SOQUIJ AZ‑50498459. Appeal dismissed.
Yves Martineau, for
the appellants.
Daniel Belleau, Maxime
Nasr and Violette Leblanc, for the respondent Option consommateurs.
No
one appeared for the respondent Claudette Cloutier.
David Sterns and Jean‑Marc
Leclerc, for the intervener.
The
judgment of the Court was delivered by
LeBel and Wagner JJ. —
I. Introduction
[1]
At issue in this appeal is whether a proposed
class action based on allegations that the appellants conspired to inflate the
price of a broadly used product, the dynamic random-access memory chip
(“DRAM”), and caused damage to consumers should be authorized under the Quebec Code
of Civil Procedure, R.S.Q., c. C-25 (“C.C.P.”). The Quebec
Superior Court said no. The Court of Appeal disagreed and said yes. For the
reasons that follow, we agree with the Court of Appeal and would dismiss the
appeal.
II. Background
[2]
The appellant
companies are manufacturers of DRAM, which is a microchip that allows
information to be electronically stored and rapidly retrieved. DRAM is
commonly used in a wide range of electronic devices such as personal computers,
GPS equipment, cellular telephones and digital cameras.
[3]
The appellants sell DRAM through a number of complex
distribution channels to original equipment manufacturers (“OEMs”), such as
Dell Inc. and the Hewlett-Packard Company. OEMs insert the chips into various
electronic products they manufacture, which are in turn sold either to
intermediaries in the distribution chain or directly to final consumers.
[4]
For our purposes, individuals or companies that
acquired DRAM directly from the appellants are referred to as “direct
purchasers”. The term “indirect purchaser” is used to refer to individuals and
companies that acquired DRAM, or products containing DRAM, either from a direct
purchaser or from another indirect purchaser at a different level in the
distribution chain.
[5]
The appellants have acknowledged their
participation in an international price-fixing conspiracy in the multi-billion
dollar DRAM market during the relevant period, from 1999 to 2002. They and
their co-conspirators, with the exception of Micron Technology, Inc., pleaded
guilty in 2004, in the United States District Court for the Northern District
of California, to the following charges:
. . . participating in a conspiracy in the United
States and elsewhere to suppress and eliminate competition by fixing the prices
of Dynamic Random Access Memory (“DRAM”) to be sold to certain original
equipment manufacturers of personal computers and servers (“OEMs”) from on or
about July 1, 1999, to on or about June 15, 2002, in violation of the Sherman
Antitrust Act, 15 U.S.C. § 1. [A.R., vol. II, at p. 130]
[6]
The OEMs affected by the impugned sales were
Dell Inc., Compaq Computer Corporation, Hewlett-Packard Company, Apple Computer
Inc., International Business Machines Corporation and Gateway Inc.
[7]
All the conspirators were heavily fined for their
respective roles in the price-fixing conspiracy except for Micron Technology,
which was granted clemency because it had co-operated with the authorities.
However, Micron Technology also acknowledged that the U.S. Department of
Justice investigation had revealed that its employees had been involved in price-fixing
in the DRAM market.
[8]
In 2010, the appellants also acknowledged their
participation in a cartel to fix the prices of DRAM in Europe. They paid a fine
in a settlement of proceedings that had been undertaken against them there.
[9]
The respondent Option consommateurs alleges that
this price-fixing conspiracy artificially inflated the prices of DRAM and
products containing DRAM sold in Quebec between April 1999 and July 2002. Its
claim is based upon allegations that the appellants failed to discharge
statutory obligations under the Competition Act, R.S.C. 1985, c. C-34 ,
and that their conduct amounted to a fault giving rise to civil liability under
the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”).
[10]
Option consommateurs claims that, as a result of
the alleged price inflation, both the direct and the indirect purchasers
suffered damage in that they overpaid on purchases of DRAM or products
containing DRAM.
[11]
Option consommateurs applied to the Superior Court
for authorization to institute a class action against the appellants in order
to recover damages in this regard on behalf of the members of the affected
class. The group comprises direct and indirect purchasers who suffered losses
by absorbing, in whole or in part, the inflated portion of the price of DRAM
sold in Quebec. The group was described as follows in the respondent’s motion:
[translation] Any person who purchased,
in Quebec, dynamic random-access memory (DRAM) and/or one or more products containing
dynamic random-access memory (DRAM) . . . between April 1, 1999 and
June 30, 2002, inclusively.
However, a legal person established for a private
interest, a partnership or an association may be a member of the group, but
only if at all times since October 5, 2003, not more than fifty (50) persons
bound to it by contract of employment were under its direction or control, and
if it is dealing at arm’s length with the applicant. [A.R., vol. II, at
p. 57]
[12]
The class action applies to all devices containing
DRAM, including computers, servers, printers, hard drives, cellular telephones,
digital cameras and MP3 players.
[13]
In its motion for authorization of the class
action, Option consommateurs designated the respondent Claudette Cloutier as a
member of the group pursuant to art. 1048(a) of the C.C.P. Ms.
Cloutier is a resident of Montréal who purchased a personal computer containing
DRAM from Dell Computer Corporation (“Dell”) on October 9, 2001. She accessed
Dell’s website and made the purchase by credit card from her home in Montréal.
[14]
The standard-form terms for the online purchase
indicated that the sale was deemed to have occurred in Ontario and was subject
to Ontario law. The invoice indicated that Dell’s address for payment was in
Toronto, Ontario.
[15]
The appellants have their head offices in other
countries. Neither of them has a place of business in the province of Quebec.
III. Judicial History
A. Quebec Superior Court (Mongeau
J.), 2008 QCCS 2781, [2008] R.J.Q. 1694
[16]
The motion judge of the authorization proceeding
held that the Superior Court did not have territorial jurisdiction to hear the
class action, because no damage had been suffered in Quebec. Having found that
there was no contract between Ms. Cloutier and the appellants, that the fault
had been committed in the U.S. and that the appellants did not have a place of
business in Quebec, he concluded that a real and substantial connection with
Quebec that would be sufficient to ground jurisdiction did not exist.
[17]
The motion judge adopted the reasons of the
Quebec Court of Appeal in Quebecor Printing Memphis Inc. v. Regenair Inc.,
[2001] R.J.Q. 966, and in Banque de Montréal v. Hydro Aluminum Wells Inc.,
2004 CanLII 12052, in holding that the concept of damage under art. 3148(3) of
the C.C.Q. cannot be stretched to the point that the fact that the
person who suffered damage is domiciled in Quebec would suffice to confer
jurisdiction on the Quebec courts.
[18]
The judge then considered how he would have
ruled on the merits of the motion had he held that the Superior Court had
jurisdiction. In his opinion, Option consommateurs and Ms. Cloutier had not
shown that they met all the conditions set out in art. 1003 of the C.C.P.
for authorizing a class action.
[19]
Although the judge conceded that the motion adequately
established the existence of questions of law or fact common to the group for
the purposes of art. 1003(a) of the C.C.P., he held that the
motion failed on art. 1003(b) because the facts alleged did not support
the conclusions being sought. More specifically, he found insufficient evidence
that the appellants had breached s. 36 of the Competition Act or that an
injurious act, damage and a causal connection had been shown for the purposes
of s. 45 of the Competition Act . In any event, the judge found that the
action was barred by the limitation period provided for in s. 36 of the Competition
Act .
[20]
The motion judge also held that the requirements
of arts. 1003(d) and 1048 of the C.C.P. were not satisfied. In
his view, the interests of Option consommateurs and Ms. Cloutier conflicted
with those of the non-consumer members of the proposed group.
[21]
The motion judge accordingly dismissed the
motion for authorization to institute a class action. Option consommateurs appealed
to the Court of Appeal.
B. Quebec Court of Appeal
(Forget, Pelletier and Kasirer JJ.A.), 2011 QCCA 2115, 2011 QCCA 2116 (CanLII)
[22]
The Court of Appeal rendered two concurrent
judgments. In one, it granted in part a motion of Option consommateurs to
introduce new evidence in the appeal. More specifically, this decision
authorized the filing of evidence that the appellants had participated in
anti-competitive practices in Europe and had agreed to pay fines in a
settlement with the competent European authorities.
[23]
In the other judgment, the Court of Appeal
overturned the Superior Court’s judgment and authorized the class action.
Kasirer J.A., who wrote the Court of Appeal’s reasons, noted that the claims of
the direct and indirect purchaser group members were not rooted in distinct contractual
or extracontractual sources. Rather, he pointed out, the class action was
grounded on an allegation of a precontractual fault of conspiring to
artificially inflate the price of DRAM through a price-fixing scheme, which
gave rise to extracontractual liability under art. 1457 of the C.C.Q.
[24]
On the jurisdiction issue, Kasirer J.A. found
that the Quebec courts had jurisdiction over the claim pursuant to art. 3148(3)
of the C.C.Q. Under that provision, Quebec courts have jurisdiction in
personal actions of a patrimonial nature where “a fault was committed in
Québec, damage was suffered in Québec, an injurious act occurred in Québec or
one of the obligations arising from a contract was to be performed in Québec”.
The fact that a Quebec resident’s patrimony is located in that province is not
sufficient to ground jurisdiction.
[25]
Kasirer J.A. held that the damage was connected
with a contract that had been concluded in Quebec. Under ss. 20 and 21 of the Consumer
Protection Act, R.S.Q., c. P-40.1, a remote-parties contract is deemed to
be concluded at the consumer’s address if the parties are not in one another’s
presence at the time of the offer or of acceptance, and the offer was not
solicited by the consumer.
[26]
Kasirer J.A. found that these criteria were met
and that a remote-parties contract had in fact been formed between Ms. Cloutier
and Dell. Accordingly, the jurisdiction of the Quebec courts did not rest
merely on the existence of a Quebec patrimony, since the loss was suffered in
Quebec as the result of a material event that occurred in Quebec. This was
enough to ground jurisdiction pursuant to art. 3148(3) of the C.C.Q.
[27]
Having recognized the jurisdiction of the Quebec
courts, Kasirer J.A. turned to the requirements for authorization of a class
action set out in art. 1003 of the C.C.P. He held that the motion satisfied
each of the criteria.
[28]
On art. 1003(a) of the C.C.P.,
Kasirer J.A. agreed with the Superior Court’s finding that there were
sufficient common questions of law or fact.
[29]
On art. 1003(b), he found that the
allegations of the motion for authorization adequately established fault, the
harm suffered, and causation.
[30]
In Kasirer J.A.’s opinion, the allegations of
violations of s. 45 of the Competition Act , which gave rise to
extracontractual liability under art. 1457 of the C.C.Q., were
sufficient. Kasirer J.A. held that Option consommateurs was “far from having
established its case on the merits” (para. 84), but that the evidence of
plea agreements in the United States sufficed to discharge the low evidentiary
burden Option consommateurs faced at this stage in respect of its allegations
of undue restraint of trade. In his view, the lack of extraterritorial reach of
s. 45 of the Competition Act was not a bar to the class action. It would
not affect an action in civil liability under art. 1457 of the C.C.Q.,
the provision on which the claim was based (paras. 86-88).
[31]
Kasirer J.A. held that the alleged aggregate
loss suffered by the different members of the group constituted a sufficient prima
facie demonstration of the loss for the purposes of art. 1003(b) of
the C.C.P. In drawing this conclusion, he found that the losses of the
direct purchasers and those of the indirect purchasers need not be
distinguished at this stage. This issue would be properly resolved if and when
the class action succeeded on its merits.
[32]
Kasirer J.A. also found that at this stage,
Option consommateurs could ground its cause of action on the passing on of
inflated prices through the various layers of the distribution chain without there
being a risk of double recovery, since the group comprised both the direct and
the indirect purchasers of DRAM. Mindful of policy concerns in the area of
consumer protection, Kasirer J.A. stated that precluding an action where price
increases have been passed on could lead to the unjust enrichment of direct
purchasers should indirect purchasers fail to take legal action against
perpetrators of price-fixing conspiracies.
[33]
Significantly, Kasirer J.A. held that it is not
necessary to advance a sophisticated methodology of proof of loss at this
preliminary stage of the class action. It would be wrong to impose an overly
onerous evidentiary burden and prevent Option consommateurs from having its
case heard on its merits.
[34]
Kasirer J.A. found that the allegations relating
to causation were sufficient to satisfy the requirements of the authorization
stage, given the nature of the claim and the structure of the proposed group.
Proving that the price-fixing conspiracy had led to increased prices for DRAM
and products containing DRAM was a task to be undertaken at the trial itself.
[35]
Kasirer J.A. then found that the requirements of
art. 1003(d) were satisfied and that Ms. Cloutier could carry on as the
designated member of the proposed group. He held that Ms. Cloutier had
standing to represent the group on the basis of her online purchase of a
computer containing DRAM. What was relevant was not the type of device she had
purchased, but the fact that it contained DRAM that had been purchased at an
inflated price.
[36]
Finally, Kasirer J.A. found that neither Ms.
Cloutier nor Option consommateurs was in a conflict of interests with the
direct purchasers at this stage, since all members of the group had a common
objective of maximizing the total damages award.
[37]
The Court of Appeal accordingly allowed the
appeal, granted the motion for authorization to institute the class action and
let that action proceed to trial.
IV. Issues
[38]
There are two primary issues before the Court.
The first is whether a Quebec court has jurisdiction under art. 3148 of the C.C.Q.
to authorize a class action in the circumstances of this case. If it does, the
second issue is whether Option consommateurs meets the threshold requirement
for authorization under art. 1003 of the C.C.P.
V. Analysis
[39]
Before we delve into the substantive legal
issues, the standard of review must be addressed. The appellants submit that
the Court of Appeal erred in overturning the motion judge’s decision and
finding that Option consommateurs met the threshold requirement for
authorization under art. 1003 of the C.C.P.
[40]
Contrary to the appellants’ arguments, the Court
of Appeal did not need to find that the motion judge had made a “palpable and
overriding error” or that his reasons were “patently wrong” in order to
intervene. As will be seen in the reasons that follow, the motion judge
misapprehended the law as it relates to key components of the art. 1003
analysis: namely, the passing on of price increases as the basis for a cause of
action, the demonstration of an aggregate loss at the authorization stage, the
evidentiary and legal threshold requirements for authorization, and the need to
satisfy the criteria for a successful action under ss. 36 and 45 of the Competition
Act . These errors enabled the Court of Appeal to apply the appropriate
legal standards to the motion judge’s findings of fact and to draw the correct
legal conclusions from them.
A. Jurisdiction
[41]
The first issue is whether the Quebec courts
have jurisdiction over this dispute between international DRAM manufacturers
and a group consisting of direct and indirect purchasers located in Quebec,
given that the alleged wrongdoing that forms the basis of the claim — a conspiracy
to reduce competition and inflate the price of DRAM — occurred outside Quebec.
The appellants are challenging the jurisdiction of the province’s courts to
hear the claim at the earliest stage, that of the motion for authorization of
the class action.
[42]
According to a well-established jurisprudence of
the Quebec courts, challenges to Quebec’s jurisdiction can properly be made and
dealt with at the outset of a proceeding for authorization of a class action.
The judgment rendered at this stage will determine, on the basis of the
allegations, whether the matter appears to be properly before the court (see Thompson
v. Masson, [1993] R.J.Q. 69 (C.A.)). However, this does not mean that a
judgment dismissing a jurisdictional challenge at the authorization stage ends
the debate over the territorial jurisdiction of the Quebec courts. This issue
could be raised again later, because the judgment rendered at this stage is
only an interlocutory decision (art. 1010 of the C.C.P.). The court may
subsequently reconsider the issue in light of all the evidence, and decline
jurisdiction, at the trial on the merits (Thompson, at p. 73).
[43]
On the basis of the facts as alleged, we conclude that
the Quebec courts have jurisdiction over this matter under art. 3148 of the C.C.Q.
Article 3148 defines the scope of the jurisdiction of the Quebec courts under
private international law by providing for certain connecting factors in
respect of the jurisdiction of Quebec authorities. More specifically, art.
3148(3) confers jurisdiction on a Quebec authority in a personal action
of a patrimonial nature where “a fault was committed in
Québec, damage was suffered in Québec, an injurious act occurred in Québec or
one of the obligations arising from a contract was to be performed in Québec”.
[44]
As we mentioned above, Option consommateurs
argues that every member of the group on behalf of which it intends to act has
suffered economic damage as a result of the manufacturers’ unlawful
price-fixing scheme for DRAM. Ms. Cloutier, the designated member of the group,
is domiciled in Quebec. When she purchased a computer from Dell over the
Internet from her home in Montréal, she entered into a contract of sale that
required her to pay more than she should have for the computer on account of
the alleged conspiracy. Option consommateurs argues that the contract is deemed
to have been entered into in Quebec under the Consumer Protection Act
and that Ms. Cloutier accordingly suffered damage in Quebec. The appellants
counter that economic damage alone is not sufficient to ground jurisdiction
and, moreover, that the contract was not entered into in Quebec.
[45]
Damage suffered in Quebec is an independent
factor under art. 3148(3): the damage does not need to be tied to the locus of
the injury or of the fault, unlike in the case of art. 3168, to give one
example. Any one of the four individual factors listed in art. 3148(3) would
constitute a sufficient connection with the province to ground jurisdiction
(see Royal Bank of Canada v. Capital Factors Inc., [2004] Q.J. No. 11841
(QL) (C.A.), at para. 2; Spar Aerospace Ltd. v. American Mobile Satellite
Corp., 2002 SCC 78, [2002] 4 S.C.R. 205, at para. 56). In terms of the type
of damage covered by art. 3148(3), there is no principled reason to exclude
purely economic damage from its scope. The plain language of art. 3148(3) does
not preclude economic damage from serving as a connecting factor, nor is the
recovery of a purely economic loss prohibited in Quebec civil law (see C.
Emanuelli, Droit international privé québécois (3rd ed. 2011), at pp. 116-18). It is clear from the Quebec
jurisprudence that economic damage can serve as a connecting factor under art.
3148(3) (see, e.g., Sterling Combustion inc. v. Roco Industrie inc.,
2005 QCCA 662 (CanLII); Option Consommateurs v. British Airways PLC,
2010 QCCS 140 (CanLII)).
[46]
Quebecor Printing,
a case the appellants rely on, should not be read so broadly as to
systematically exclude a purely economic loss as a type of damage to which art.
3148(3) applies. Rather, that case indicates that where financial damage is
merely recorded in Quebec, that fact is not sufficient to ground
jurisdiction under art. 3148(3). To satisfy the requirement of art. 3148(3),
the damage must be suffered in Quebec. As Kasirer J.A. explained in
the judgment of the Court of Appeal in the case at bar, there is a distinction
between damage that is substantially suffered in Quebec and damage that is
simply recorded in Quebec on the basis of the location of the plaintiff’s
patrimony:
[Préjudice] is to be distinguished from
the “dommage/damage” that is the subjective consequence of the injury
relevant to the measure of reparation needed to make good the loss. As a
result, in specifying “damage was suffered in Québec/un préjudice y a été
subi” as the relevant connecting factor, article 3148(3) seeks to identify
the substantive situs of the “bodily, moral or material injury which is
the immediate and direct consequence of the debtor’s default” (article 1607
C.C.Q.) and not the situs of the patrimony in which the consequence of
that injury is recorded. [para. 65]
[47]
This application of the C.C.Q. is not, as
the appellants assert, a novel, or undue, extension of Quebec’s jurisdiction.
Rather, it is based on the language of art. 3148(3) and on the jurisprudence.
As this Court stated in Spar Aerospace, at para. 58, “[t]here is
abundant support for the proposition that art. 3148 sets out a broad basis for
jurisdiction.”
[48]
In the instant case, the economic damage was
allegedly suffered by Ms. Cloutier — not merely recorded — in Quebec. More
specifically, the damage was allegedly suffered as a result of the contract
between Dell and Ms. Cloutier. Although the contract is not in fact the source
of the cause of action in this case, which is extracontractual in nature, it is
a juridical fact that establishes where the alleged economic damage occurred:
the conclusion of the contract is the event that fixes the “situs” of
the material damage suffered in Quebec. As a result, the contract is relevant,
regardless of the fact that none of the appellants were parties to it, to the
determination of whether the Quebec courts have jurisdiction in this case. As
we will explain below, Ms. Cloutier’s pecuniary loss flowed directly from her
contract with Dell, which is deemed under Quebec’s Consumer Protection Act
to have been made in Quebec. The resulting economic damage did not merely have
a remote effect on Ms. Cloutier’s patrimony in Quebec; rather, she suffered it
in Quebec upon entering into the contract in that province, and this brought
her claim within the scope of art. 3148(3).
[49]
The contract between Ms. Cloutier and Dell for
the sale of a computer is a “remote-parties contract” within the meaning of the
former ss. 20 and 21 of the Consumer Protection Act (repealed S.Q. 2006,
c. 56, s. 3; now called a “distance contract” in ss. 54.1 and 54.2). These
provisions read as follows at the time Ms. Cloutier and Dell entered into their
contract:
20. A remote-parties contract is a contract entered into between a
merchant and a consumer who are in the presence of one another neither at the
time of the offer, which is addressed to one or more consumers, nor at the time
of acceptance, provided that the offer has not been solicited by a particular
consumer.
21. The
remote-parties contract is deemed to be entered into at the address of the
consumer.
[50]
On the facts as alleged, the offer was not
solicited by Ms. Cloutier when she visited Dell’s website and purchased the
computer online. Although it will be up to the trial judge to consider the
specifics of Dell’s website and the details of the interaction between Ms.
Cloutier and Dell, nothing currently on the record indicates that anything
other than an ordinary online purchase occurred.
[51]
A standard online sales page typically includes a
merchant’s “offer to contract . . . which contains all the essential elements
of the proposed contract” (art. 1388 of the C.C.Q.; see also arts. 1385
to 1387). As N. L’Heureux and M. Lacoursière write in Droit de la
consommation (6th ed. 2011), at p. 146, [translation] “[t]he online offer thus
contains the traditional elements of the offer to contract: to be binding on
the consumer, it must therefore be firm and unequivocal”.
[52]
There is little apparent difference between an
Internet transaction such as the one between Dell and Ms. Cloutier and the type
of transaction that occurs when a consumer walks into a traditional
neighbourhood store, sees an item for sale on a shelf and purchases that item
from the merchant. Of course, the Internet transaction is conducted remotely,
or virtually, and the “store” is not “in the neighbourhood” in a concrete
sense. Nevertheless, given the global reach of the Internet, the online store
is, in a way, even closer than a neighbourhood store, as the consumer does not
need to leave home to shop.
[53]
The Superior Court came to a similar conclusion
in British Airways, holding that ss. 20 and 21 of the Consumer
Protection Act applied to a contract entered into over the Internet by a
consumer who sent an email request to purchase airline tickets on a merchant’s
website. The court wrote the following, at paras. 57 and 59:
[translation] Indeed, it would be
possible to say that the server, when products are advertised on it, proceeds
systematically, and in every case, to make an offer.
. . .
Likewise,
if information in a catalogue constitutes an offer by the merchant and a sale
by catalogue constitutes a sale at a distance within the meaning of the C.P.A.
[Consumer Protection Act], can it be said that the C.P.A. does not apply
to a sale over the Internet?
[54]
On the facts of the instant case as alleged, an
offer to contract appears to have been made by Dell on its online sales page,
as opposed to being solicited by Ms. Cloutier, which means that ss. 20 and
21 of the Consumer Protection Act apply. By virtue of s. 20, Ms.
Cloutier’s contract with Dell is a remote-parties contract, and s. 21 provides
that a remote-parties contract is deemed to be entered into at the consumer’s
address. This contract was accordingly entered into in Quebec.
[55]
The appellants argue that such an interpretation
of online sale transactions would inappropriately subject all transaction sites
from around the world to the jurisdiction of the Quebec courts. However, a
merchant’s online sales page would have to contain all the essential elements
of contract formation for the Consumer Protection Act to apply.
Moreover, merchants who post their online sales pages on the Internet and do
not block access to their websites are aware that people from various
jurisdictions may visit their sites and consent to their offers. Consumers
purchase many large, expensive items online nowadays. Why should they fall
outside the scope of the legislation when they shop online in their homes as
opposed to driving to a store or picking up the telephone to make a purchase? To
interpret the Consumer Protection Act too narrowly would be incompatible
with the legislature’s protective intent and with contemporary commercial
realities.
[56]
In sum, we find that Ms. Cloutier, a Quebec
resident, suffered economic damage in Quebec as a result of a contract entered
into in that province. The principles of comity, order and fairness that
underlie private international law require that jurisdiction be properly assumed. Under Quebec law, if any one of the four factors listed in art.
3148(3) of the C.C.Q. is proven, a sufficient connection to the province
is established (see Spar Aerospace, at paras. 55-56). The Quebec
courts therefore have jurisdiction under art. 3148(3) to decide whether the
class action in the case at bar should be authorized under art. 1003 of the C.C.P.
B. Authorization of a Class Action Under Article 1003 of the
C.C.P.
[57]
The question at this stage of the analysis is
simply whether Option consommateurs meets both the evidentiary and the legal
threshold requirements for authorization of a class action under art. 1003 of
the C.C.P. Article 1003 reads as follows:
1003. The court authorizes the bringing of the class action and ascribes
the status of representative to the member it designates if of opinion that:
(a) the
recourses of the members raise identical, similar or related questions of law
or fact;
(b) the
facts alleged seem to justify the conclusions sought;
(c) the
composition of the group makes the application of article 59 or 67 difficult or
impracticable; and
(d) the member to whom the court intends
to ascribe the status of representative is in a position to represent the
members adequately.
[58]
When undertaking an analysis with respect to the
authorization of a class action, it is essential not to conflate or confound
the authorization process with the trial of an authorized action on its
merits. Each of these stages serves a different purpose, and any review must
be conducted accordingly.
[59]
At the authorization stage, the court plays the
role of a filter. It need only satisfy itself that the applicant has succeeded
in meeting the criteria set out in art. 1003 of the C.C.P., bearing in
mind that the threshold provided for in that article is a low one. The
authorizing court’s decision is procedural in nature, as it must decide whether
the class action may proceed.
[60]
As this Court pointed out in Marcotte v.
Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R. 65, at para. 22, the
requirements for authorization of a class action have on a consistent basis
been interpreted and applied broadly both by it and by the Quebec Court of
Appeal. As was noted in that case, the tenor of the jurisprudence clearly
favours easier access to the class action as a vehicle for achieving the twin
goals of deterrence and victim compensation (see also Nault v. Canadian
Consumer Co. Ltd., [1981] 1 S.C.R. 553; Comité régional des usagers des
transports en commun de Québec v. Quebec Urban Community Transit Commission,
[1981] 1 S.C.R. 424; Comité d’environnement de La Baie Inc. v. Société
d’électrolyse et de chimie Alcan Ltée, [1990] R.J.Q. 655 (C.A.); Château
v. Placements Germarich Inc., [1990] R.D.J. 625 (C.A.); Tremaine v. A.H.
Robins Canada Inc., [1990] R.D.J. 500 (C.A.)). The Court of Appeal
astutely summarized this as follows in Nadon v. Ville d’Anjou, [1994]
R.J.Q. 1823, at pp. 1827-28:
[translation]
. . . the courts have generally held that the conditions
of article 1003 must be interpreted broadly, that they leave a court little
discretion when they are met, and that the court is not to rule on the legal
merits of the conclusions in light of the alleged facts.
[61]
At this stage, the court’s role is merely to filter out
frivolous motions and grant those that meet the evidentiary and legal threshold
requirements of art. 1003. The objective is not to impose an onerous burden on
the applicant, but merely to ensure that parties are not being subjected unnecessarily
to litigation in which they must defend against untenable claims. The
Court of Appeal described the threshold requirement as follows: “le fardeau
en est un de démonstration et non de preuve” or, in English, [translation] “the burden is one of demonstration
and not of proof” (Pharmascience Inc. v. Option Consommateurs, 2005 QCCA
437 (CanLII), at para. 25; see also Martin v. Telus Communications Co.,
2010 QCCA 2376 (CanLII), at para. 32).
[62]
More specifically, in the context of the application of
art. 1003(b), this Court and the Court of Appeal have used varying
vocabulary, both in English and in French, to describe and characterize the
filtering function of a court hearing a motion for authorization to institute a
class action. In 1981, Chouinard J. wrote that, at the authorization stage, the
issue is “whether . . . the allegations support the conclusions prima facie
or disclose a colour of right” (Comité régional des usagers, at
p. 426). In his opinion, the court is “to reject entirely any frivolous or
manifestly improper action, and authorize only those in which the facts alleged
disclose a good colour of right” (p. 429).
[63]
In a later case, Gonthier J. explained that an applicant at the
authorization stage must establish “a good colour of right”, “a prima facie
right” or, in French, “une apparence sérieuse de droit”, “un droit
prima facie” (Guimond v. Quebec (Attorney General), [1996] 3
S.C.R. 347, at paras. 9-11). He pointed out that the Court of Appeal had been
using the same expressions, requiring that the applicant establish a [translation] “good colour of right” or “prima
facie right” (Berdah v. Nolisair International Inc., [1991]
R.D.J. 417 (C.A.), at pp. 420-21, per Brossard J.A.), or a “serious
colour of right” (Comité d’environnement de La Baie, at p. 661, per
Rothman J.A.).
[64]
A few years ago, in Marcotte, the majority and the dissent
agreed that the applicant had to meet a threshold test of a “prima facie case”,
of a “good colour of right” or, in French, of an “apparence de droit sérieuse”,
of a “preuve à première vue” (para. 23, per LeBel J., and
paras. 90 and 94, per Deschamps J.; see also Breslaw v. Montreal
(City), 2009 SCC 44, [2009] 3 S.C.R. 131, at para. 27; Option
Consommateurs v. Novopharm Ltd., 2008 QCCA 949, [2008] R.J.Q. 1350,
at paras. 8 and 23).
[65]
As can be seen, the vocabulary may change from one case to another. But
some well-established principles for the interpretation and application of art.
1003 of the C.C.P. can be drawn from the jurisprudence of this Court and
of the Court of Appeal. First, as we mentioned above, the authorization process
does not amount to a trial on the merits. It is a filtering mechanism. The
applicant does not have to show that his claim will probably succeed. Also, the
requirement that the applicant demonstrate a “good colour of right”, an “apparence
sérieuse de droit”, or a “prima facie case” implies that although
the claim may in fact ultimately fail, the action should be allowed to proceed
if the applicant has an arguable case in light of the facts and the applicable
law.
[66]
A review of legislative intent also confirms
this low threshold. It is clear from successive amendments to the C.C.P. that
Quebec’s legislature intended to facilitate class actions. For example, art.
1002 of the C.C.P. formerly required that the applicant file affidavit
evidence in support of the motion for authorization, which meant that he or she
had to submit to examination as a deponent at the authorization stage under
art. 93. The fact that the requirement of filing an affidavit was eliminated
and examinations were strictly limited at the authorization stage in the latest
reform of the class action provisions (S.Q. 2002, c. 7, s. 150) sends a strong
signal that it would be unreasonable to require an applicant to establish
anything more than an arguable case.
[67]
At the authorization stage, the facts alleged in
the applicant’s motion are assumed to be true. The applicant’s burden at this
stage is to establish an arguable case, although the factual allegations cannot
be [translation] “vague, general
[or] imprecise” (see Harmegnies v. Toyota Canada inc., 2008 QCCA 380
(CanLII), at para. 44).
[68]
Any review of the merits of the case should
properly be left for the trial, at which time the appropriate procedures can be
followed to adduce evidence and weigh it on the standard of the balance of
probabilities.
[69]
The appellants’ position is that Option
consommateurs’ motion for authorization fails to allege sufficient facts to
demonstrate the elements required under art. 1003(a), (b)
and (d) of the C.C.P. This position is untenable on the facts
before this Court, as our analysis will show. In our opinion, all the criteria
of art. 1003 are met.
(1) Article 1003(a) — Common
Questions
[70]
Article 1003(a) of the C.C.P.
requires that “the recourses of the members raise identical, similar or related
questions of law or fact”.
[71]
According to the appellants, the only question
common to the members of the proposed group is whether the appellants committed
a fault. They argue that, given the range of products containing DRAM, the
large number of distribution chains and their complexity, the inherent
differences between the direct and indirect purchasers, and the nature of the
aggregate claim, it would be impossible for the trial judge to establish an
injury or a causal connection on a group-wide basis.
[72]
This perspective is flawed. There is no
requirement of a fundamental identity of the individual claims of the proposed
group’s members. At the authorization stage, the threshold requirement for
common questions is low. As the Court of Appeal noted
in Collectif de défense des
droits de la Montérégie (CDDM) v. Centre hospitalier régional du Suroît du Centre de santé et de services
sociaux du Suroît, 2011 QCCA 826 (CanLII), at para. 22, even a single
identical, similar or related question of law would be sufficient to meet the
common questions requirement set out in art. 1003(a), provided that it
is significant enough to affect the outcome of the class action.
[73]
There is no requirement that each member of a
group be in an identical or even a similar position in relation to the
defendant or to the injury suffered. Such a requirement would be incompatible
with the concern for judicial economy which the class action serves by avoiding
duplicated or parallel proceedings (see Western Canadian Shopping Centres
Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, at para. 27). The Court
of Appeal summarized this as follows in Guilbert v. Vacances sans Frontière Ltée, [1991] R.D.J. 513:
[translation]
The fact that the situations of all members of the group are not perfectly
identical does not mean that the group does not exist or is not uniform. To be
excessively rigorous in defining the group would render the action useless . .
. in situations in which claims are often modest, there are many claimants and
dealing with cases on an individual basis would be difficult. [p. 517]
[74]
In applying these principles to the case at bar,
the motion judge and the Court of Appeal correctly held that there are no differences
between the members of the proposed group at the authorization stage that
adversely affect the unity of the group as regards the common questions
requirement. All the members, regardless of their individual circumstances,
have a common interest both in proving the existence of a price-fixing
conspiracy and in maximizing the amount of the resulting unlawful overcharge.
Any disparity between the direct purchasers’ relationships with the appellants
and those of the indirect purchasers does not alter the fact that they have a
collective interest in these questions of fault and liability. Any conflicts of
interests can be addressed at trial.
[75]
We agree with the motion judge’s finding that [translation] “[t]he existence of the
cartel, the alleged ‘fraud’, civil liability, the effect of the cartel on the
prices charged, the overall loss and costs are obviously similar or related
common questions” (para. 149). Mongeau J. also
correctly highlighted the procedural benefits that would flow from the authorization
of the class action, which would make it possible “to avoid duplication of
fact-finding or legal analysis” (para. 147). The respondent has met the
requirement that there be sufficient common questions. We will now turn to the
second requirement, that the alleged facts seem to justify the conclusions
sought.
(2) Article 1003(b) — Sufficiency of
the Alleged Facts
[76]
Article 1003(b) of the C.C.P.
requires that “the facts alleged seem to justify the conclusions sought”.
[77]
The class action proposed by Option consommateurs
is rooted in the alleged extracontractual liability of the appellants under
art. 1457 of the C.C.Q. Article 1457 reads as follows:
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.
. . .
[78]
Under this general provision governing delictual
and quasi-delictual liability in Quebec law, Option consommateurs must
establish the elements of civil liability. These elements are (i) that the
appellants committed a fault; (ii) that Ms. Cloutier and the other members of
the group suffered an injury; and (iii) that a causal connection exists between
the fault and the injury.
[79]
In his decision on the motion for authorization,
the motion judge found that the alleged facts were not sufficient to establish
these three elements. That decision was overturned on appeal. We agree with the
Court of Appeal that Option consommateurs had met the threshold requirement for
art. 1003(b) of the C.C.P. by making out an arguable case
in support of its claim of the appellants’ extracontractual liability. Let us
consider the three elements required by art. 1457 of the C.C.Q.
(a) Fault
[80]
The first requirement to meet in order to
successfully establish extracontractual liability in Quebec under art. 1457 of
the C.C.Q. is that of fault. For the purposes of the
authorization of a class action under art. 1003 of the C.C.P., the
applicant must allege facts that are sufficient to ground an arguable case that
a fault has been committed. To make this determination, the allegations of
Option consommateurs must be fully and well understood.
[81]
In para. 2.5 of the motion, the respondent made
a general allegation of a breach of the Competition Act :
[translation]
The Respondents generally failed to discharge their obligations, both legal and
statutory, and in particular their obligations with respect to competition
under the Competition Act (R.S.C. (1985), c. C‑34 ); [A.R.,
vol. II, at p. 58]
[82]
In para. 2.6 of the motion, the respondent
specified that the provisions that had allegedly been violated were ss. 36 and
45 of the Competition Act . Under s. 36, any person may bring a civil
action with respect to any loss suffered as the result of the commission of any
of the criminal offences provided for in s. 45 , which prohibits any agreement
to unduly prevent or lessen competition.
[83]
Although Option consommateurs has since then
abandoned its claim under s. 36, the allegation set out in para. 2.7
remains. In it, the respondent alleged that [translation] “the Respondents also
failed to discharge their general obligations under the Civil Code of Québec
and, more specifically, those related to their obligation to act in good
faith”. As Kasirer J.A. correctly pointed out in his
reasons, at para. 78, even though the claim is no longer rooted in the alleged
commission of an offence under s. 45 of the Competition Act , a violation
of that section remains relevant insofar as it might support the claim of
extracontractual liability under art. 1457 of the C.C.Q.
[84]
In para. 2.7.1 of the motion, the respondent
provided greater detail about the alleged civil faults relied upon in support
of authorization of the class action in Quebec by referring to the criminal
proceedings undertaken against the appellants in the United States. While not
explicitly advancing any meaningful connection between the U.S. proceedings and
a civil action in Quebec, the respondent filed 13 exhibits comprising various
articles and documents that attested to the appellants’ involvement in a
price-fixing conspiracy in the United States. Kasirer J.A. succinctly
summarized these exhibits, at para. 79:
They include press releases from the Antitrust
Division of the U.S. Department of Justice in which it is announced that named
respondents agreed to plead guilty to participating in an “international
conspiracy” to fix prices in the DRAM market and to pay fines; “informations”
which set forth the charges brought against certain of the respondents in United
States District Court; and “plea agreements” in which certain of the
respondents agreed to plead guilty to charges of “participating in a conspiracy
in the United States and elsewhere”. The exhibits contain no specific
reference to Quebec.
[85]
It is noteworthy that, as we mentioned above,
the respondent applied to the Court of Appeal for — and was granted — leave to
adduce additional evidence in the form of a European Commission press release
dated May 19, 2010 that outlined a settlement with 10 producers of DRAM,
including the appellants in this case, for violations of European antitrust
laws and for anti-competitive conduct in the European DRAM market.
[86]
In paras. 2.14, 2.15 and 2.15.1 of the motion,
the respondent went on to allege specific losses suffered by Ms. Cloutier and
the other members of the group:
[translation]
2.14 The Cartel had
the effect of unduly restricting competition, artificially inflating the price
of DRAM sold in Quebec and, in so doing, artificially inflating the sale prices
of products containing DRAM sold in Quebec;
2.15 As a result,
throughout the period of the Cartel, purchasers of DRAM sold in Quebec paid an
artificially inflated price;
2.15.1 The
same is true of subsequent purchasers of DRAM and/or products containing DRAM
sold in Quebec to whom the original purchasers allegedly passed on the
artificially inflated portion of the price of DRAM in whole or in part; [A.R.,
vol. II, at p. 69]
[87]
The appellants argue that these allegations fail
to meet the requirement that the respondent demonstrate fault, since the
evidence proffered in support of the claim is restricted to events and outcomes
that occurred in the United States and Europe. They submit that proof of an
offence committed outside Canada does not give rise to a right of civil action
under the Competition Act absent a “real and substantial” connection
with Canada. Accordingly, they argue, the exhibits show only that guilty pleas
were entered in relation to agreements to fix the price of DRAM in the United
States, which had an impact on the prices of products sold in the United States
and Europe. Absent a “real and substantial” connection with Canada, the
appellants maintain that fault cannot be demonstrated under ss. 36 and 45 of
the Competition Act .
[88]
The appellants further submit that the alleged
facts do not demonstrate liability under s. 45 of the Competition Act ,
since violations of the Sherman Act in the United States are not
equivalent to undue restraint of competition under Canadian law. They cite R.
v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606, for the
proposition that Canadian law requires an analysis of market structure and
market share, and this in turn requires evidence of commercial power capable of
having a palpable impact on the market in question. They add that, without
sufficient allegations and proof of market power and of the impact of a
price-fixing conspiracy reaching into Canada, the “undue” economic effect
required under the Competition Act was not established.
[89]
The appellants’ position is wrong, and the Court
of Appeal was right to reject these arguments. In our view, the respondent’s
allegations are sufficient to support an inference of fault, given the
relatively low standard to be met at the authorization stage. It must be borne
in mind that the applicable standard is that of showing an arguable case, not
the more onerous one of proof on a balance of probabilities.
[90]
The exhibits on which the respondent relies
demonstrate that the appellants participated in a price-fixing conspiracy.
Admittedly, the criminal charges and plea agreements were rooted in events in
the United States that had no explicitly demonstrated connection with Quebec.
But this does not attenuate the apparent international nature and impact of the
appellants’ anti-competitive conduct.
[91]
As Kasirer J.A. pointed out, at para. 84, “the
cartel was sufficiently powerful to shake the American market and to affect
major manufacturers such as Dell, IBM and Apple”. And the impact of the
anti-competitive price-fixing scheme was also felt in Europe, as can be seen
from the guilty pleas entered and settlements reached under European antitrust
laws. The European evidence is integral to the respondent’s case in that it
reveals the international ramifications of the cartel’s actions.
[92]
Although the respondent’s allegations and
supporting documentation do not explicitly establish the commission of wrongful
behaviour in Quebec, they certainly do point to the international nature of the
conspiracy to fix the price of DRAM and to the suffering of damage outside the
United States. Indeed, the respondent’s motion alleges that the effects of the
conspiracy — which, according to the information issued by the U.S. Department
of Justice (quoted in para. 2.10 of the motion (A.R., vol. II, at p. 61)), took
place “in the United States and elsewhere” — were felt in Quebec. It is not
unreasonable to infer that anti-competitive practices in the United States that
have an impact on large multinational corporations and on a DRAM market that is
international in scope might — indeed are likely to — affect consumers in
Quebec.
[93]
Failure to specifically allege a market
structure that would make an “undue” economic impact possible does not
adversely affect the claim at the authorization stage. The appellants
correctly stress that this Court has held that a detailed analysis of market
structure is needed in order to prove conduct restricting competition under the
Competition Act . A defendant that lacks sufficient market power cannot
be found to unduly affect competition or market pricing (see Nova Scotia
Pharmaceutical Society, at pp. 652-55).
[94]
However, the appellants’ argument disregards the
nature of a proceeding for authorization of a class action. The respondent
does not need to present absolute proof of the allegation, nor do they even
need to prove it on a balance of probabilities. At this stage, all it needs to
do is demonstrate an arguable case by means of allegations and supporting
evidence. The bare allegation of undue economic impact set out in
para. 2.14 of the motion for authorization, combined with the exhibits
demonstrating the impact of conduct in the United States on prices of DRAM in
the international market, gives rise to an inference of an impact on the
Canadian market that satisfies this low threshold requirement. Although it is
unclear whether the respondent will eventually be able to meet the standard of
proof on a balance of probabilities at trial, we cannot deny it the opportunity
to do so given the possibility of fault to which the exhibits attest.
[95]
Further, the respondent does not need to prove
liability under s. 45 of the Competition Act at this stage of the
proceedings, given the nature of the claim and the evidence that has already
been adduced. As we mentioned above, its action is rooted in art. 1457 of the C.C.Q.,
not s. 45 of the Competition Act . Since the respondent abandoned its
right to bring a civil action under the Competition Act , its claim of
undue economic impact under s. 45 remains relevant only to the extent that a
violation of the statutory scheme can give rise to extracontractual liability
under art. 1457 of the C.C.Q.
[96]
The appellants are correct in asserting that
compliance with statutory duties can inform questions with respect to civil law
duties. However, compliance with statutory obligations is not always
determinative of the issue of civil fault. As Kasirer J.A. rightly stated at
para. 88 of his reasons, “[c]are must be taken . . . not to conflate the
notion of civil fault and the violation of a statutory norm, whether in a
commercial setting or elsewhere.” He correctly pointed out that just because a
failure to discharge a statutory obligation leads to a demonstration of fault in
all but the most exceptional cases, it does not follow that a civil fault is
absolved where there is no such failure. As J.-L. Baudouin and P. Deslauriers
state in La responsabilité civile (7th ed. 2007), vol. I, at No. 1-188:
[translation] In principle, a failure to
discharge a specific obligation imposed by a statute or a regulation,
especially if it is intentional or serious, constitutes a civil fault, since it
amounts to the breach of a mandatory standard of conduct established by the
legislature. Nevertheless, adhering to such a standard does not in itself
exempt one from liability.
[97]
They go on to state the following, at No. 1-189:
[translation] . . . the mere fact that in
a given case the defendant adhered to statutory or regulatory standards does
not automatically rule out the possibility that he or she will nevertheless be
held liable on the basis of the general law. Statutory provisions therefore do
not have the effect of limiting the general obligation of good conduct in one’s
relations with others, and this means that it is not necessary to prove the
violation of a statutory or legal rule for another person to be held liable.
[98]
Applying this principle, we cannot accept that
the appellants are exempt from civil liability because their liability has not
been proven under s. 45 of the Competition Act . The Court must consider
the liability of the appellants under the broad standards of art. 1457 of
the C.C.Q., not the narrower standards of s. 45 of the Competition
Act , a penal provision.
[99]
Perhaps more importantly, to accept the
appellants’ argument on this point would be to import the standard of proof
applicable to a trial into this preliminary stage of an authorization
proceeding and permit a logical absurdity to win the day. As we mentioned
above, the respondent does not need to satisfy the criteria of s. 45 of the Competition
Act on a balance of probabilities, and a criminal standard of proof is even
less appropriate. It would be fallacious to conclude that the respondent’s
failure to meet the trial standard in advance leads to the conclusion that the
appellants did not contravene the Competition Act . An absence of
definitive proof of a violation does not constitute absolute proof of
compliance. Accordingly, we need not determine at this stage, that of
authorization, whether the appellants actually breached s. 45 .
[100]
In our opinion, the respondent has presented an
arguable case that the appellants committed a civil fault. We will now turn to
the analysis of the injury allegedly suffered under art. 1003(b) of the C.C.P.
(b) Injury Suffered
[101]
In order to justify the conclusions of civil
liability sought by Option consommateurs, the motion for authorization must
demonstrate an arguable case that Ms. Cloutier and the other members of the
proposed group suffered a loss as a result of the appellants’ anti-competitive
conduct.
[102]
We have already outlined paras. 2.14, 2.15 and 2.15.1
of the respondent’s motion, which are reproduced above. The allegations of
the motion asserted that the cartel artificially inflated the prices paid by
Quebec purchasers for DRAM and for products containing DRAM as a result. In
paras. 2.16 and 2.17, the respondent provided further information on the injury
allegedly suffered:
[translation]
2.16 As a result of
the foregoing, each and every one of the members of the group suffered injury
in that they assumed, in whole or in part, the artificially inflated portion of
the price of DRAM;
2.17 When
all is said and done, the injury collectively suffered by the Designated Person
and the other members of the group is equal to the artificially inflated
portion of the sales price of DRAM sold in Quebec and/or contained in products
sold in Quebec; [A.R., vol. II, at p. 69]
[103]
Essentially, the respondent is claiming that the
loss suffered by the direct purchasers was equivalent to the amount by which
the price of DRAM was artificially inflated. It argues that the indirect
purchasers’ losses were equal to the price increase passed on either by direct
purchasers or by other indirect purchasers higher up in the distribution
chain. The subgroup of indirect purchasers includes the designated member, Ms.
Cloutier, who, the respondent alleges, suffered a loss in paying the inflated
price passed on to her by Dell, from whom she purchased her computer. Thus,
the respondent claims that each member of the proposed group suffered an injury
by paying all or a portion of the amount by which the price of DRAM or of
products containing DRAM sold in Quebec was artificially inflated.
[104]
By setting out a single claim that the whole of
the impugned price increase was absorbed collectively by the members of the
proposed group, para. 2.17 points to the aggregate nature of the alleged
injury. The respondent seeks to prove a single loss amount for both the direct
and the indirect purchasers without distinguishing between these subgroups or
between individuals within each of these subgroups as regards the nature or the
degree of the loss they have suffered. The respondent would wait until a
subsequent stage of the proceedings to divide this aggregate loss amount
amongst the members of the proposed group on a yet-to-be-determined basis that
would reflect each individual’s loss.
[105]
These allegations by the respondent raise two
distinct issues with regard to the demonstration of injury. First,
since the respondent has included the indirect purchasers in the proposed
group, the question arises as to whether a cause of action can be rooted in the
passing on of artificially inflated prices resulting from anti-competitive practices.
Second, the Court must determine whether the respondent has discharged
the burden of demonstrating that each member of the group suffered an injury in
light of the complexity of the distribution channels. This second issue
requires the Court to inquire into whether it is sufficient to prove an
aggregate loss at this stage of the proceedings. The Court must also consider
the nature of the respondent’s evidentiary burden with regard to any
methodology advanced to prove the effects of the alleged misconduct. In other
words, to what extent must the respondent prove at the authorization stage that
the direct purchasers suffered and retained a portion of the loss and that a
portion of the loss was passed on to the indirect purchasers?
[106]
In our opinion, passing on can result in a
finding of a compensable injury in an action for extracontractual damages. We
are also of the view that the respondent has discharged its evidentiary burden
in respect of the loss resulting from the alleged passing on of the price
increases caused by the appellants’ anti-competitive conduct.
(i) Passing On as the Basis of a Cause of
Action
[107]
The question whether the passing on of price
increases can ground a class action where the members of the group include
direct purchasers is a threshold question. If the answer is no, the action
cannot be authorized and the respondent’s motion must fail.
[108]
The appellants submit that the indirect
purchasers cannot recover the losses that allegedly resulted from the passing
on of overcharges by the direct and subsequent indirect purchasers, since those
losses were not a direct consequence of the appellants’ actions, and that the
indirect purchasers accordingly lack standing. In support of this position,
the appellants rely on a number of decisions from both Canada and the United
States, and they raise the same arguments with regard to passing on as the
respondents in the cases of Pro-Sys Consultants Ltd. v. Microsoft
Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477, and Sun-Rype Products
Ltd. v. Archer Daniels Midland Company, 2013 SCC 58, [2013] 3 S.C.R. 545,
which were heard together with this appeal.
[109]
The root of this argument is the proposition
that passing on cannot be raised as a defence. The United States Supreme Court
explicitly accepted this proposition in the seminal decision of Hanover
Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), in which it
rejected the passing-on defence. The appellants contend that this same
principle applies in Canadian law, citing British Columbia v. Canadian
Forest Products Ltd., 2004 SCC 38, [2004] 2 S.C.R. 74, and Kingstreet
Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3,
in which this Court criticized the theory of passing on when raised as a
defence, stressing the policy consideration of ensuring that the twin goals of
deterrence and victim compensation are not eroded.
[110]
The appellants argue that if the defence of
passing on is not accepted in Canadian law, the corollary is that passing on
should not be accepted as the basis for a cause of action. They rely in
support of this position on the United States Supreme Court’s decision in Illinois
Brick Co. v. Illinois, 431 U.S. 720 (1977), in which that court explicitly
rejected passing on as the basis for a cause of action, citing concerns of an
excessively onerous burden of proof for plaintiffs and a risk of multiple
liability for defendant manufacturers against which direct and indirect
purchasers pursue separate claims.
[111]
We do not agree with the appellants. The policy
considerations that militate against the defence of passing on at common law
should favour, in the civil law of Quebec, compensation for a loss that has
been passed on to a plaintiff. In reaching this conclusion, we must point out
that the rejection of passing on as a defence does not preclude passing on as a
factual occurrence. The defence has been rejected not because passing on does
not exist, but primarily for policy reasons. In the instant case, acceptance of
the passing-on defence would adversely affect the Competition Act ’s
objectives of deterrence and compensation. It might enable wrongdoers to keep
ill-gotten gains if they could successfully demonstrate that artificial price
increases had not been absorbed by direct purchasers and if indirect purchasers
were unable or unwilling to mount their own action.
[112]
Courts were also concerned that acceptance of
the passing-on defence would unduly increase the evidentiary burden of direct
purchaser plaintiffs by requiring that they prove not only that they had
suffered a loss, but also that they would not be benefiting from a windfall
after having passed that loss on. This concern is particularly relevant since,
as Professor Waddams points out in The Law of Damages (5th ed. 2012), at
p. 15-38, direct purchasers can suffer losses even where anti-competitive
price increases are passed on, since, owing to market dynamics, higher prices
can have an impact on sales volumes and profitability. In order to preserve a
direct purchaser’s cause of action, it is necessary to crystallize the loss by
holding that the action against the defendants vests in the direct purchaser at
the time of the purchase.
[113]
By contrast, to reject the possibility, in the
Quebec law of civil liability, of claiming compensation for a loss that has
been passed on would be inconsistent with the twin objectives — deterrence and
compensation — of extracontractual liability. To allow for recovery of such a
loss would be compatible with those objectives.
[114]
The risk of double recovery for a single loss
should be assessed in light of the facts and circumstances specific to each
case, as opposed to being dealt with in the abstract by means of a blanket
application of inflexible rules. Every case will raise distinct evidentiary
issues, and these issues are appropriately addressed on a case-by-case basis.
[115]
In the instant case, there is no risk of double
recovery, since the direct and indirect purchasers would be combined in a
single group that would make a single collective claim of an aggregate loss.
This case does not involve separate claims, so there is quite simply no risk of
multiple liability for a single loss.
[116]
The appellants submit that a notional risk of
double recovery results from the application of art. 999 of the C.C.P.,
which precludes legal persons with more than 50 employees from participating as
members in a class action, thereby opening up the possibility of double
recovery should a larger corporation bring a separate action. However, this
risk is exactly as described: notional. There is no evidence before the Court
that a separate action has been filed. In light of the flexible approach we
have outlined above, a potentially valid action should not be barred on the
basis of a theoretical concern that has not in fact materialized.
[117]
In summary, therefore, passing on can serve as a
sword under the civil law of Quebec even though it cannot serve as a shield.
Accordingly, what remains for the respondent is to meet the threshold
requirement for the demonstration of passing on that applies at the
authorization stage.
(ii) Evidentiary Burden With Respect to
Injury
[118]
The appellants argue that the allegations made
in the respondent’s motion are not sufficiently detailed and specific to
discharge the burden of demonstrating that the loss was passed on to the
indirect purchasers. Their position is that if the artificially inflated
prices cannot be shown to have reached the indirect purchasers, those
purchasers can have suffered no loss and for that reason cannot form part of
the class. They claim that the respondent relies entirely on “speculative and
unspecified allegations” and that the class action should accordingly not be
authorized.
[119]
In support of their position, the appellants cite Toyota
and Regroupement des citoyens contre la pollution v. Alex Couture inc.,
2007 QCCA 565, [2007] R.J.Q. 859. In the latter case,
the Court of Appeal stated, at para. 32, that [translation] “the allegations of fact set out in a motion
for authorization to institute a class action must be sufficiently specific and
precise to support prima facie the right the applicant wishes to
assert”.
[120]
These assertions raise two challenges which the
respondent must overcome in order for the class action to be authorized. First,
it must satisfy the courts that the claim of an aggregate loss is sufficient to
meet the requirements of art. 1003(b) of the C.C.P. at this
preliminary stage. Second, it must present a sufficient arguable case
that the artificial price increases passed through the complex distribution
channels and were absorbed, at least in part, by the indirect purchasers. Both
these issues are intertwined with questions related to the evidentiary
threshold requirement to be met at this stage.
1. Aggregate
Loss
[121]
As we mentioned above, the appellants argue that
the respondent’s allegations that the indirect purchasers suffered a loss are
vague and imprecise. More specifically, they submit that the motion does not
clearly state what injury the indirect purchasers suffered, how the alleged
injury can be identified and quantified, or how misconduct in other
jurisdictions can cause an injury in Quebec. The appellants add that the
allegations set out in the motion are couched in language that is so vague as
to be of no help in determining whether any injury was in fact suffered. They
assert, citing Toyota, that allegations of loss which are [translation] “vague, general and imprecise”
are not sufficient.
[122]
Furthermore, the appellants submit that the
respondent, by alleging an aggregate loss, has failed to discharge the burden
of showing prima facie that all members of the group had suffered an
injury. They again cite Toyota for this proposition, and more
specifically the following comment made by the Court of Appeal in that case, at
para. 54:
[translation] It is in effect essential
to demonstrate the collective nature of the injury suffered, and a class action
is not appropriate if it would give rise, at the hearing on the merits, to a
multitude of small trials and if a major aspect of the dispute does not lend
itself to collective determination because of a multiplicity of subjective
factors.
[123]
The appellants also cite Bou Malhab v.
Diffusion Métromédia CMR inc., 2011 SCC 9, [2011] 1 S.C.R. 214, for the
proposition that an aggregate loss is not sufficient to meet the requirement
for authorization and that each member of the proposed group must be proven to
have sustained a loss for the claim to succeed. In that case, Deschamps J.
stated, at para. 53:
As
I mentioned above, for a class action to be allowed, the plaintiff must
establish the elements of fault, injury and causal connection in respect of each
member of the group . . . . [Emphasis added.]
[124]
We do not accept the appellants’ arguments. In
our opinion, the respondent has met the low evidentiary threshold requirement
for demonstrating an injury at this preliminary stage of the proceedings.
[125]
At the risk of being repetitive, we wish to
stress that the evidentiary burden applicants must discharge at the
authorization stage is that of establishing an arguable case. This means that
the respondent must show that the members of the group suffered an injury.
While it is true that a judge hearing a motion for authorization is responsible
for weeding out frivolous cases, a class action alleging an aggregate loss is
not, per se, frivolous. No provision of the C.C.P. bars such
claims, which meet the twin objectives of deterrence and compensation that
animate the class action system. Moreover, the C.C.P. itself provides
for collective recovery (arts. 1031 to 1033). If both indirect and direct
purchasers have in fact suffered losses, it would run counter to the
legislative intent with respect to the class action not to allow the case to
proceed to trial, where the merits can be appropriately weighed.
[126]
At this preliminary stage, allowing the
demonstration of an aggregate loss will provide flexibility for the proceedings
without requiring applicants to establish each member’s individual loss, which
would be an overly onerous burden. How the loss might be allocated and
compensated for can be left to the review of the merits of the case and to the
stage of execution of an eventual judgment. Moreover, we cannot accept any
argument that this would open the door to frivolous actions. If an aggregate
loss can be demonstrated, the question how that loss is to be divided among the
members of the proposed group does not change the fact that a loss was indeed
suffered. As a result, the demonstration of an aggregate loss is sufficient to
meet the requirements of art. 1003(b) of the C.C.P. at the
authorization stage, provided that the evidentiary threshold requirement is
met.
[127]
The threshold requirement for art. 1003 is that
the applicants present an arguable case that an injury was suffered. Although more
than bare allegations are required, this threshold falls comfortably below the
civil standard of proof on a balance of probabilities.
[128]
This evidentiary burden is less demanding than
the one that applies in other parts of Canada. As evidenced by this Court’s
decision in Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158,
indirect purchasers in other Canadian jurisdictions would, to obtain
certification of a class proceeding, have to show that their claim has a
sufficient basis in fact. An applicant in one of those jurisdictions would be
required to produce expert testimony and advance a methodology capable of
demonstrating an aggregate loss that would apply to both direct and indirect
purchasers. However, presentation of expert evidence is not the norm at the
authorization stage in Quebec. A requirement that applicants adduce such
evidence and advance a sophisticated methodology capable of demonstrating an
aggregate loss and how that loss was passed on through complex distribution
channels would be more onerous than the threshold requirement for art. 1003.
[129]
With regard to the appellants’ reliance on Toyota
for the proposition that an aggregate loss is not sufficient at the
authorization stage, we agree with Kasirer J.A. that the appellants have given
an overly broad reading to that case. The reasons of Baudouin J.A. in Toyota
do nothing to persuade us that the burden should be more onerous at the
authorization stage than the one we have outlined above. In fact, Baudouin
J.A. reiterated this point himself in Toyota, at paras. 43-44. Rather
than laying down sweeping principles that would apply to the case at bar, Toyota
was based on unique circumstances that are easily distinguished from those
of this case. In comments with which we agree, Kasirer J.A. aptly summarized
the relevant distinctions from that case as follows, at para. 99:
It was the very particular character of the
price-maintenance scheme, which put an end to price negotiation by new car
buyers, that explained why the motion for a class action failed in that case.
For able negotiators contending with the price-maintenance scheme in Toyota,
the fixed price created a loss. But for poor negotiators in the same class,
the fixed price resulted in a gain. There was accordingly no way of knowing,
based on the allegations made, whether losses outweighed gains and,
importantly, how the foregone opportunity to negotiate was to be quantified as
a loss. Contrary to Toyota, it cannot be said in the present case that
the allegations create an uncertainty as to whether there is an aggregate loss
to direct and indirect buyers of DRAM. The allegations are precise in that
respect. This is not a case that runs the risk, at trial, of disintegrating
into the multiple trials Baudouin, J.A. warned against in Toyota.
Indeed the motions judge himself recognized at paragraph 153 of the judgment a
quo.
[130]
We will now turn to the appellants’ assertion
that an injury must be made out for each member of the proposed group, a
proposition for which they cite Malhab. Much like the appellants’
argument with respect to Toyota, this argument is based on an overly
broad interpretation of the principles laid down in Malhab. Although Malhab
did address the issue of proof of injury for each individual member of the
group, it did so in the context of a trial on the merits. The plaintiffs in Malhab
therefore faced a much stricter burden of demonstrating an injury across
the group. In the instant case, which is at the authorization stage, the
respondent is merely required to establish an arguable case of an injury
suffered. It is therefore not necessary at this preliminary stage to prove
that each member of the group suffered a loss. As we indicated above, the
demonstration of an aggregate loss may be enough at the authorization stage.
[131]
Even if the difference between the stages of the
proceedings is disregarded, the requirements with respect to an aggregate
injury that were established in Malhab were adopted in a context
distinct from that of the case at bar. In that case, the Court had to
determine whether an entire ethnic group had suffered an injury from defamatory
comments made in the media. The tort of defamation is unique in that it
balances freedom of expression against the protection of reputation.
Establishing damage to reputation on a collective basis would require an
extraordinary set of circumstances. As Deschamps J. explained, at
para. 66, “the imputing of a single characteristic to all members of a
group that is highly heterogeneous, has no specific organization or has
flexible, broadly defined admission criteria would make an allegation of personal
injury implausible”. On the other hand, claims of losses resulting from
artificially inflated prices do not require an examination of the
characteristics of individual members aside from their having purchased a
particular product and paid an inflated price. Questions about visibility in
the community, historical stigmatization, the type and tone of defamatory
comments, societal perceptions, and the impact of a myriad of other traits of
the group on the alleged injury are irrelevant to the demonstration of losses
in a case involving an anti-competitive price-fixing scheme.
[132]
These marked differences limit a court’s ability
to draw inferences about injuries suffered on an individual basis. As
Deschamps J. explained, “the plaintiff must prove an injury shared by all
members of the group so the court can infer that personal injury was sustained
by each member” (Malhab, at para. 54).
[133]
On the nature of the specific allegations in the
instant case, we agree with the Court of Appeal’s conclusion that the
respondent has presented an arguable case of loss that is sufficient to meet
the requirements of art. 1003(b) of the C.C.P. As we
mentioned above, the respondent alleged the following in its motion for
authorization: (a) a price-fixing conspiracy had artificially inflated the
price of DRAM sold in Quebec (para. 2.14); (b) direct and indirect purchasers
of DRAM had collectively overpaid as a result of this anti-competitive
conspiracy (paras. 2.15 and 2.15.1); (c) all members of the group had assumed
the inflated portion of the price, either in whole or in part (para. 2.16); and
finally (d) the collective injury suffered by the entire group was equivalent
to the total overpayment by the direct and indirect purchasers (para. 2.17).
[134]
On their own, these bare allegations would be
insufficient to meet the threshold requirement of an arguable case. Although
that threshold is a relatively low bar, mere assertions are insufficient
without some form of factual underpinning. As we mentioned above, an
applicant’s allegations of fact are assumed to be true. But they must be
accompanied by some evidence to form an arguable case. The respondent has
provided evidence, limited though it may be, in support of its assertions,
namely the exhibits attesting to the existence of a price-fixing conspiracy and
to the international impact of that conspiracy, which had been felt in the
United States and Europe. At the authorization stage, the apparent
international impact of the appellants’ alleged anti-competitive conduct is
sufficient to support an inference that the members of the group did, arguably,
suffer the alleged injury.
[135]
Accordingly, we agree with Kasirer J.A.’s
conclusion that on the facts of this case, the aggregate loss alleged by the
respondent is sufficient in Quebec law to demonstrate an injury in accordance
with the evidentiary standard applicable at the authorization stage. The
arduous task of actually proving this loss for each member of the group is one
that would be more appropriately undertaken at trial.
2. Passing On
[136]
At the authorization stage, the evidentiary
standard for demonstrating passing through is no different than the one for
demonstrating an aggregate loss. The applicant must establish an arguable case
that losses were passed on.
[137]
Given this low threshold, the applicant is
neither expected nor required to adduce expert testimony and advance a
sophisticated methodology. Indeed, at this stage, the applicant need not even
propose a possible methodology for the trial. But the representative of the
class will need to be able to prove that losses were passed on to the indirect
purchasers in order to succeed at trial. The Court of Appeal set these
principles out succinctly in Pharmascience, at para. 52:
Although the legal argument described in the
proceedings is easily stated, there is still a marked want of proof behind the
allegations in the motion for authorization. At this stage, however, the
apparent complexity of the case is irrelevant under Quebec’s Act respecting
the class action. It does not fall to the judge hearing the motion for
authorization to assess the risks and pitfalls faced by the applicant. Indeed,
even if the judge did find that some of the claims were without merit, she
would not be authorized to immediately exclude them from the debate because the
motion for partial dismissal has been struck out of the Code of Civil
Procedure.
[138]
At this early stage, the aggregate loss alleged
by the respondent and supported by the exhibits referred to above is enough to
meet the burden of an arguable case. As Kasirer J.A. noted, the “challenge
will be a substantial one at trial but it would be inappropriate, once damage
is alleged, to say that the class action should not proceed past the
authorization stage because the challenge is too great” (para. 117). If at trial
the respondent is unable to demonstrate how the loss was passed on to the
indirect purchasers and how it is to be calculated, the action might fail at
that stage.
[139]
Subject to these reservations, we agree that the
respondent has met the threshold requirements of art. 1003 of the C.C.P. in
respect of the alleged injury. We will now turn to the problem of the causal
connection between the fault and the injury.
(c) Causation
[140]
To establish causation under art. 1457 of the C.C.Q.,
it is necessary to show that the injury suffered was an immediate and direct
consequence of the fault. As stated in art. 1607 of the C.C.Q.:
1607.
The creditor is entitled to damages for bodily, moral
or material injury which is an immediate and direct consequence of the debtor’s
default.
[141]
The appellants argue that any losses suffered by
indirect purchasers fail to meet this requirement of directness, because the
alleged injury is a “dommage par ricochet” ([translation] “indirect damage”). They assert that each
direct purchaser and each upstream indirect purchaser made the decision to pass
on some, all or none of the overcharge that allegedly stemmed from the
appellants’ anti-competitive conduct. According to the appellants, this choice
to pass on or absorb a price increase is enough to break the chain of
causation, since they did not retain control over the price of DRAM throughout
the distribution chain. They submit that the indirect purchasers cannot be
said to have suffered damage directly, since the actions of other parties
determined the price paid for DRAM by end users.
[142]
While the appellants correctly state that Quebec
civil law does not permit compensation for indirect damage, they fail to make
an important distinction between indirect damage and the “victime par
ricochet” ([translation]
“indirect victim”). The indirect victim is someone who suffers an autonomous
injury after the commission of a fault, where the damage suffered was the
logical, direct and immediate result of the fault. This is contrasted with
indirect damage where the damage itself is indirect, because its source is not
the immediate fault. Baudouin and Deslauriers comment on the application of
this distinction, at No. 1-327:
[translation]
In our opinion, the debate should focus not, as has been the case, in a
formalistic and artificial manner on whether a broad or a narrow interpretation
should be given to the word another, but on the real issue, that of the
causal connection. The courts must therefore determine, in each case,
independently of the claimant’s personality, whether the injury being
claimed is a direct consequence of the fault, rather than trying to determine
whether the applicant is the immediate victim.
[143]
This distinction was
ably explained by a Superior Court judge in Hubert v. Merck & Co. Inc.,
2007 QCCS 3291 (CanLII), a judgment on a motion in an authorization proceeding
that involved indirect victims, at paras. 12-13:
[translation] At law, an indirect victim
can have a cause of action against the person who caused the injury if he or
she can prove that the person in question committed a fault.
The indirect victim’s injury, although
distinct from that of the direct victim, is an immediate and direct result of
that fault.
[144]
We agree with this reasoning and accept the
distinction between an indirect victim and indirect damage. Thus, the damage
must be shown to be a direct consequence of the injurious act, but the
plaintiff need not be the immediate victim of that act in order to recover.
But at the authorization stage, the applicant needs only to present an arguable
case that the loss was a direct result of the alleged misconduct. In the
instant case, it would be wrong at this stage to find that only the direct
purchasers suffered a direct injury. Although the indirect purchasers may be
indirect victims, the injury they allegedly suffered was a direct result of the
appellants’ anti-competitive conduct.
[145]
In light of this distinction, we agree with the
Court of Appeal that the appellants’ argument based on art. 1607 of the C.C.Q.
must fail and that the demonstration of causation is sufficient to meet the
requirements of the authorization stage. Whether causality — a direct link
between the fault and the injury — can be proved on a balance of probabilities
is a question best addressed at trial.
(d) Article 1003(b) — Conclusion
[146]
In our opinion, the respondent has discharged
its burden with respect to the demonstration of fault, injury and causation at
the authorization stage. We will now turn to arts. 1003(d) and 1048 of
the C.C.P. to determine whether Ms. Cloutier and Option consommateurs
are in a position to adequately represent the members of the proposed group.
(3) Articles 1003(d) and 1048 —
Adequate Representation of the Group’s Members
[147]
The appellants make two arguments as to why Ms.
Cloutier does not meet the requirements for representing the members of the
proposed group under art. 1003(d) of the C.C.P. First, they
submit that Ms. Cloutier cannot represent a group whose members purchased DRAM
or products containing DRAM in Quebec, because she purchased her computer in
Ontario. As we mentioned above in discussing the issue of jurisdiction,
however, Ms. Cloutier’s computer is deemed under the Consumer Protection Act
to have been purchased in Montréal under a remote-parties contract.
[148]
Second, the appellants argue that there is an
inherent conflict of interests between Ms. Cloutier, as an indirect purchaser,
and the direct purchasers. More specifically, the appellants assert that the
direct and indirect purchasers have opposing interests in that each of these
subgroups will argue that its members absorbed the full amount of the
overcharge resulting from the price-fixing conspiracy. This argument has no
valid basis.
[149]
Article 1003(d) of the C.C.P.
provides that “the member to whom the court intends to ascribe the status of
representative [must be] in a position to represent the members adequately”.
In Le recours collectif comme voie d’accès à la justice pour les
consommateurs (1996), P.-C. Lafond posits that adequate representation
requires the consideration of three factors: [translation]
“. . . interest in the suit . . ., competence . . . and absence of conflict
with the group members . . .” (p. 419). In determining whether these
criteria have been met for the purposes of art. 1003(d), the court
should interpret them liberally. No proposed representative should be excluded
unless his or her interest or competence is such that the case could not
possibly proceed fairly.
[150]
Even if a conflict of interests can be
established, the court should be reluctant to take the extreme action of
denying authorization. As Lafond states, at p. 423, [translation] “[i]n the
event of a conflict, denying authorization is in our opinion an overly radical
step that would harm the absent members, especially given that the judge
sitting at the stage of the motion for authorization has the power to ascribe
the status of representative to a member other than the applicant or the
proposed member.” Given that the purpose of the authorization stage is
merely to screen out frivolous claims, it follows that the purpose of art.
1003(d) cannot be to deny authorization if there is
only a possibility of conflict. This position is supported by the case law, as
authorization appears to have been denied under art. 1003(d) on the
basis of a conflict of interests only where prospective representative
plaintiffs had failed to disclose material facts or were undertaking the legal
proceedings purely for personal gain. (See Croteau v. Air Transat A.T. inc.,
2007 QCCA 737, [2007] R.J.Q. 1175; Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349; Black v. Place Bonaventure inc. (2004), 41 C.C.P.B. 181 (Que. C.A.); Comité syndical national de
retraite Bâtirente inc. v. Société financière Manuvie, 2011 QCCS 3446
(CanLII); Bourgoin v. Bell Canada inc., 2007 QCCS 6087 (CanLII); and Rosso
v. Autorité des marchés financiers, 2006 QCCS 5271, [2007] R.J.Q. 61.)
[151]
It would accordingly be contrary to the spirit
of art. 1003(d) of the C.C.P. to deny authorization for the
proposed group of purchasers of DRAM on the basis of a potential conflict of
interests between members of the group. The record does not suggest that Option
consommateurs and Ms. Cloutier are undertaking and conducting the proceedings
dishonestly or that they have failed to disclose material facts that would
reveal a conflict with other members. Further, the class members clearly share
a common interest in establishing the aggregate loss and in maximizing the
amount of this loss. As the British Columbia Supreme Court astutely pointed
out in its decision at trial in Sun-Rype, “[t]he only parties at this
time that have an interest in having the direct and indirect purchasers in a
conflict of interest are the defendants” (2010 BCSC 922 (CanLII), at para.
194).
[152]
The appellants also submit, on the basis of art.
1048 of the C.C.P., that Option consommateurs should not be permitted to
represent both the direct and the indirect purchasers, because its mandate of
advocating for consumers runs counter to the interests of the direct
purchasers. Article 1048 reads as follows:
1048. A legal person established for a private interest, partnership or
association defined in the second paragraph of article 999 may apply for the
status of representative if
(a) one
of its members designated by it is a member of the group on behalf of which it
intends to bring a class action; and
(b) the
interest of that member is linked to the objects for which the legal person or
association has been constituted.
. . .
[153]
We see no reason to prevent Option consommateurs
from continuing to represent the interests of both the direct and the indirect
purchasers at this stage of the litigation. Much like art. 1003, art. 1048 is
intended to be a flexible gatekeeper. As the Superior
Court pointed out in Association des résidents riverains de la Lièvre inc.
v. Canada (Procureur général), 2006 QCCS 5661 (CanLII), at paras. 180-81, the purpose of art. 1048 is to enable a legal person
with no direct interest in an action to be granted the status of
representative. And as Kasirer J.A. correctly pointed out in his reasons in
the case at bar, at para. 133, “[t]he Code does not direct that the legal
person who applies to represent the class have a mission connected to all the
members of the class, but merely to the interest of one of its members.” Since
Ms. Cloutier is a member of Option consommateurs and of the proposed group,
art. 1048 does not prohibit Option consommateurs from representing the interests
of the members in this case.
[154]
In summary, we see no conflict between the
direct and indirect purchasers at this stage of the proceedings that would bar
either Ms. Cloutier or Option consommateurs from representing the interests of
the class. It would be more appropriate to deal with any actual conflict
between the direct and indirect purchasers at subsequent stages of the
proceedings, once any aggregate loss has been established.
VI. Disposition
[155]
For these reasons, we would dismiss the appeal.
Costs should be awarded in this Court against the appellants Infineon
Technologies AG and Infineon Technologies North America Corp. The motion to
strike part of the factum of the intervener Canadian Federation of Independent
Grocers is dismissed.
Appeal
dismissed with costs.
Solicitors
for the appellants: Stikeman Elliott, Montréal.
Solicitors for the respondent Option consommateurs: Belleau
Lapointe, Montréal.
Solicitors for the intervener: Sotos, Toronto.