From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA>
To: ENRICHMENT@LISTS.MCGILL.CA
Date: 08/12/2011 16:35:45 UTC
Subject: [RDG] class action news

I believe that there was some discussion when the Ontario Divisional Court gave its decision in Serhan Estate v. Johnson & Johnson (2006), 85 O.R. (3d) 665, 269 D.L.R. (4th) 279 (Div. Ct.). An application for leave to appeal was later dismissed (2007) 234 O.A.C. 398 (S.C.C.).
I noticed today that a settlement was approved: 2011 ONSC 128 (Ont. S.C.J.), at http://www.canlii.org/en/on/onsc/doc/2011/2011onsc128/2011onsc128.html. As I believe happens in almost all Canadian class actions, the settlement turned into a combination of a cy-près donation to a charity having something to do with the claim, payments to the public entities that assist people to bring class proceedings, and substantial counsel fees.
The Divisional Court had refused to rule on the pure question of law “whether waiver of tort is an independent cause of action", deciding, paradoxically, that it should be resolved in the context of factual findings. In approving the settlement, C. Horkins J. noted (at paras. 66-85) that while the plaintiffs thought that the disgorgement claim would be significant, the defendants argued that they had actually lost money.
Since the settlement was approved, not only the question of quantum but also that of the availability of a gain-based claim were not resolved. It strikes me as odd, however, that this was described (para. 70) as "uncharted territory", with references to the 16th century and legal fictions.

More recently, the BCCA gave judgment in two class actions. In Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2011 BCCA 187, at http://canlii.ca/en/bc/bcca/doc/2011/2011bcca187/2011bcca187.html , the defendants were suppliers of fructose syrup and the representative plaintiffs were direct purchasers (DPs) of the syrup, who used it to make drinks, and consumer purchasers (indirect purchasers or IPs) who bought the products. The plaintiffs alleged illegal price-fixing by the defendants and claimed "statutory, common law and equitable damages, restitution, and other relief". The motion judge certified. By a 2-1 majority, the court held that Kingstreet having abolished the defence of passing on in Canadian law, it followed that the claim of the DPs could be certified but not that of the IPs. Donald JA dissented, holding that just because "pass-through" has been rejected as a defence, it did not follow that a plaintiff could not establish a claim by showing that it had borne the burden of the overcharging. In his view, the "abstract principle" of proximity should not bar the plaintiff's claim. He also thought that the plaintiffs should be allowed to pursue a constructive trust claim.
The companion case Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2011 BCCA 186, at http://www.canlii.org/en/bc/bcca/doc/2011/2011bcca186/2011bcca186.html , also involved price-fixing allegations and DPs and IPs in the plaintiff class, and here the plaintiffs pleaded breach of the federal competition act, interference with economic interests, conspiracy and unjust enrichment, seeking restitution, disgorgement, constructive trust and punitive damages. In this case, Donald JA dissented for similar reasons. The majority again affirmed certification for the DP's but not for IP's:

[88] Given there is now no passing-on defence in Canadian law, there does not appear to me to be any sound basis upon which it could be said a claim can nonetheless be made for an illegal overcharge that may have been passed on: if a defendant cannot raise a passing-on defence, it can have no liability to other than a direct purchaser for what may have been passed on. The law must be consistent. Passing on cannot be denied in one context and recognized in another.

Lionel

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