Canada SC | Class Action Suit against Pioneer upheld; limitation period extended on ground that people could lose right to sue before even knowing that they were harmed

Supreme Court of Canada: The Coram of Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ. while allowing the appeal in part did not decide whether appellants did anything wrong.

In this instant case, the respondent, Godfrey had alleged that the appellants who manufacture Optical Disc Drives (ODDs) and ODD products, conspired to fix prices of ODDs and ODD products between 2004 and 2010 (“class period”). Godfrey had applied for certification of a class proceeding (class action suit) against 42 appellants (collectively, “Toshiba”) under the British Columbia Class Proceedings Act. A “class action” lawsuit is one in which a group of people with the same or similar injuries caused by the same product or action sue the defendant as a group. A judge has to agree for a class action to proceed. A “representative plaintiff” stands in for the group. Mr. Godfrey was the representative plaintiff in this case.

The proposed class (group of people who Godfrey represented) consisted of direct purchasers, indirect purchasers, and umbrella purchasers, that is, purchasers whose ODD or ODD product was manufactured and supplied by a non-defendant (herein appellant), which means the consumers who bought from other suppliers could also join in the ‘class’.

Although the action against most of the appellants was filed within two years of the end of the class period, the action against a subset of the appellants was filed more than two years after the end of the class period.

The certification judge certified the action as a class proceeding, subject to certain exceptions and conditions. One condition was that the definition of “class” is amended so as to satisfy Section 4(1)(b) of the Class Proceedings Act. The certification judge held that the definition of “class” (“persons resident in British Columbia who purchased ODDs and ODD products in the class period”) was insufficiently precise, as it was unclear which products were included.

The Defendants (here appellants) challenged the Court of Appeal’s order before this Court (in the “Toshiba Appeal”) and contended that both the Certification Judge and the Court of Appeal erred in three respects: (a) by permitting the Umbrella Purchasers to claim under the statutory cause of action in Section 36(1) of the Competition Act; (b) by allowing common law and equitable relief based on a breach of the anti-competitive prohibitions in Part VI of the Competition Act; and (c) by finding that loss-related issues were common among the indirect purchasers based on the expert methodology proposed by the Plaintiff.

The appeal brought by the Pioneer, defendants (herein appellants) (in the “Pioneer Appeal”) raises two more as well as unique issues pertaining to the treatment of the limitation defence by the courts below. The Pioneer, defendants (here appellants) argued that the Certification Judge erred in holding that the action against them can proceed — notwithstanding that it was commenced more than two years following the end of the Class Period — based on the application of the discoverability rule and the doctrine of fraudulent concealment.

In this Court, the Pioneer, defendants (here appellants) submitted (a) that the discoverability rule does not apply to postpone the commencement of the limitation period in Section 36(4)(a)(i) of the Competition Act, and (b) that the doctrine of fraudulent concealment cannot toll that limitation period unless the Plaintiff can establish that he and the other class members stand in a “special relationship” with the Pioneer, defendants.

The majority of this Court held that: The plaintiff’s (here respondent) claim against the Pioneer defendants will not fail on the basis that it was commenced after the two-year limitation period under Section 36 (4)(a)(i) of the Competition Act because the discoverability rule applies which extends the limitation period. The reason for which umbrella purchasers can be included in that, the pleadings against all the defendants disclose a cause of action for them under s. 36(1)(a) of the Competition Act, thereby satisfying the conditions under Section 4(1)(a) of the Class Proceedings Act for certification. Also, as Section 36(1) of the Competition Act does not bar common law or equitable claims, it is not plain and obvious that the plaintiff’s other claims cannot succeed. Secondly, under the theory of umbrella pricing, the entire market for the subject product is affected because anti-competitive cartel activity causes non-cartel manufacturers to also raise their prices. Similar circumstances existed here too. As Pioneer’s and Toshiba’s prices were higher, other companies also charged higher prices. People paid more than they should have. As a result, Pioneer and Toshiba made more money.

Furthermore, it was also observed that the doctrine of fraudulent concealment could delay the running of the limitation period, which the appellant here did.

As per Côté J. (dissenting in part): Both appeals were allowed in part. The Pioneer defendants had not demonstrated that the plaintiff’s claim for recovery under Section 36(1) of the Competition Act is time-barred by the limitation period in Section 36(4)(a)(i). While the discoverability rule does not apply to toll the limitation period, it is not plain and obvious that the fraudulent concealment doctrine has no application in this case. Pioneer and Toshiba hid what they were doing so Godfrey and the other consumers couldn’t find out. It wouldn’t make sense if people lost the right to sue before they had any way of even finding out they were harmed.

The discoverability rule does not apply to toll the limitation period in Section 36(4)(a)(i) of the Competition Act that is applicable to the plaintiff’s claim for recovery under Section 36(1) of that statute.[Pioneer Corpn. v. Neil Godfrey, 2019 SCC OnLine Can SC 16, decided on 20-09-2019]

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