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DRAM — Part II: BC Court of Appeal Certifies Class Proceeding for Purchasers of Products containing Electronic Memory Device

Date

March 26, 2010

AUTHOR(s)

Eric S. Block
Michael Feder
Eric Gertner
Warren B. Milman
F. Paul Morrison
Madeleine Renaud


Introduction

In what may become a landmark decision, the BC Court of Appeal in Pro-Sys Consultants Ltd. v. Infineon Technologies AG has certified a claim brought on behalf of purchasers of DRAM ("dynamic random access memory" — a kind of electronic memory used in everything from computers to cell phones). The plaintiff alleges that the price it paid for a laptop computer was improperly inflated due to a price-fixing conspiracy among the defendants — the main international manufacturers of DRAM.

DRAM as a Test Case

The DRAM litigation has been closely followed by specialists in the fields of class action and competition/anti-trust law, both in Canada and the United States, where several parallel actions are underway. Until recently, no Canadian court had ordered a price-fixing case certified for a proposed class, like this one, which comprises both direct and indirect purchasers (at least where certification was contested).

The main problem for plaintiffs in these cases has been the difficulty in showing that the class as a whole suffered harm. It is not clear how a plaintiff can prove which buyers actually paid for the alleged price increase, and which suffered only some or no loss at all (either because it was absorbed by someone else or passed on, in whole or in part, to another buyer). These issues threaten to complicate the trial with countless individual inquiries, rendering the case as a whole unmanageable as a class proceeding.

The BC Court of Appeal ordered the case to be certified despite these concerns, but in so doing resorted to some unconventional devices. First, it held that the plaintiff’s burden of proof on a certification motion should be relaxed, given the early stage of the proceedings. Second, the court held that the plaintiff need not face those individual issues if it pursued certain novel kinds of claims, such as "waiver of tort." Such claims purport to offer the prospect of liability focused on the defendant’s gain rather than the plaintiff’s loss. Despite the controversy surrounding the validity of such claims, the case was certified in the expectation that the problems would be addressed at trial.

McCarthy Tétrault Notes

This decision breaks new ground in a number of ways. For example:

  • No other appellate decision has gone so far as to say that the burden of proof applicable to a certification motion is unique.
  • Although there have been other certification orders that rely on claims like "waiver of tort," this decision goes further by finding that the defendants can be found liable under such gain-based claims simply by being found to have earned a wrongful gain, without any need to prove a connection between the class and the gain.

DRAM — Part III?

The jury on the DRAM certification question may still be out. The defendants have filed an application for leave to appeal to the Supreme Court of Canada.

Expertise