IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100630

Docket: L051456

Registry:
Vancouver

Brought
Under the Class Proceedings Act, R.S.B.C. 1996, c. 50

Between:

Sun-Rype Products
Ltd. and Wendy Weberg

Plaintiffs

And

Archer
Daniels Midland Company,
Tate & Lyle Ingredients Americas, Inc., formerly known as A.E. Staley
Manufacturing Company, Cargill, Incorporated, Cerestar USA, Inc. formerly known
as American Maize-Products Company, Corn Products International, Inc.,
Bestfoods, Inc., formerly known as CPC International, Inc.,
ADM Agri-Industries Company, Cargill Limited, Casco Inc., and Unilever PLC
doing business as Unilever Bestfoods North America

Defendants

Before:
The Honourable Mr. Justice Rice

Reasons for Judgment

TABLE OF CONTENTS

I. INTRODUCTION

[1]            
This is an application by the plaintiffs for certification of this case as
a class proceeding pursuant to the Class Proceedings Act, R.S.B.C. 1996,
c. 50 [CPA].

[2]            
The plaintiffs commenced this action in June 2005, purportedly on behalf
of all persons resident in British Columbia and elsewhere in Canada who
purchased HFCS or products containing HFCS manufactured by the defendants
(collectively, the “class”) from January 1, 1988 to June 30, 1995 (the “Class
Period”).  A parallel action arising out of the same alleged conspiracy was
commenced in the Ontario Superior Court of Justice.

[3]            
In this action the plaintiffs accuse the defendants of illegally engaging
in an intentional, secret conspiracy to fix the price of High-Fructose Corn
Syrup (“HFCS”), a sweetening agent widely used in the manufactured food
industry.

[4]            
This application by the plaintiffs is for certification of the case as a
class proceeding pursuant to the Class Proceedings Act, R.S.B.C. 1996,
c. 50 [CPA].

[5]            
The proposed class comprises “direct” HFCS purchasers, such as Sun-Rype
Products Ltd. (“Sun-Rype”), and “indirect” purchasers, such as manufacturers,
wholesales, retailers, and consumers of food and soft drinks containing HFCS.  Sun-Rype
applies as the direct purchaser’s representative plaintiff and Wendy Bredin
(formerly Wendy Weberg) applies as the indirect purchasers’ representative
plaintiff.

[6]            
The plaintiffs allege that the conduct of the defendants violated
criminal law provisions under the Competition Act, R.S.C. 1985, c. C-34
[Competition Act], by charging the Class Members more than they would
have charged but for their anti-competitive conduct.  The Class Members seek
damages equal to the total amount of this overcharge, or restitution of the
defendants’ ill-gotten gains. They also seek punitive damages.

[7]            
Complicating matters is the fact that HFCS is not usually, if ever, sold
directly to consumers, but is rather an ingredient in other products. There is
a complex distribution chain of products incorporated into other products that
are sold and resold such that the value of the HFCS in a final consumer product
may only be a small proportion of the total cost of the product. At every level
of the distribution chain, an opportunity arises for the manufacturer or
distributor to either absorb the increased cost of the HFCS (by keeping the
price they charge their customer for their product the same) or to “pass-on” or
“pass-through” the overcharge to the next level down by (increasing their price
in proportion to the increased cost.) Intermediate levels of “pass-through” are
also possible.

II. FACTS

[8]            
HFCS was developed as a replacement for liquid sugar and the two
products are sometimes functionally interchangeable.  HFCS is sold in bulk
liquid form in various standard concentrations.  Customers include manufacturers
of carbonated beverages, baked goods and processed foods, but by far, the
leading purchasers of HFCS are soft drink manufacturers.

[9]            
Prominent purchasers of HFCS have substituted HFCS and liquid sugar in
their products, including Coke, Pepsi, Ocean Spray and George Weston.

[10]        
In the early 1990s, the United States Federal Bureau of Investigation
began an undercover investigation centered on the defendant Archer Daniels
Midland Company (“ADM”) which scrutinized the sale of three different
corn-derived products: lysine, citric acid and HFCS.  This investigation ultimately
led to a U.S. federal grand jury being convened and various search warrants and
subpoenas being issued against some of the named defendants in this action

[11]        
In 1995 and 1996 a number of civil class action law suits were commenced
in various U.S. jurisdictions on behalf of direct and indirect purchasers that
were based on the alleged price-fixing conspiracy in sales of lysine, citric
acid and HFCS.  None of those cases claimed that the conspiracy impacted the Canadian
market and none of the Canadian defendants, such as Casco, were named as
parties in those cases.

[12]        
The proceedings over HFCS in the United States finally settled with an order
dated October 14, 2004 confirming the last settlement.  The settlements of all
the defendants alleged to be direct purchasers of HFCS totalled $531 million
dollars, including $400 million dollars from ADM, and that occurred before any
determination of civil liability.

[13]        
The plaintiffs say that the conspiracy in Canada was part of the same
"inexplicable lack of business ethics and … atmosphere of general
lawlessness that infected the very heart of" ADM, whose senior executives
"lied, cheated, embezzled, extorted and obstructed justice."

[14]        
The defendants deny these allegations and say that they have done
nothing wrong.  The U.S. grand jury did not return an indictment against ADM or
any other company in respect of HFCS. No indictment or charge has ever been
laid in respect of price-fixing for HFCS in either the U.S. or Canada.  In
settling the U.S. class action, ADM did not admit liability.  ADM consistently
denied that it engaged in price-fixing in respect of HFCS and there has never
been any finding of such price-fixing by ADM or any of the defendants by any court,
either civil or criminal, in any jurisdiction.

III. THE REQUIREMENTS FOR CERTIFICATION

A. General Principles

[15]        
A certification hearing is not, and should not be, a determination of
the underlying merits of the proposed action. It is procedural in nature.  McLachlin
J. (as she then was) stated in Hollick v. Toronto (City), [2001] 3
S.C.R. 158 at para. 16 [Hollick]:

 …[T]he certification stage is
decidedly not meant to be a test of the merits of the action… Rather, the
certification stage focuses on the form of the action. The question at the
certification stage is not whether the claim is likely to succeed, but whether
the suit is appropriately prosecuted as a class action…

[16]        
However, while the court on certification does not pass upon the merits
of the case, it may consider evidence going to the merits so long as that
evidence touches upon the relevant factors to certification. See Hoffman v.
Monsanto Canada Inc., 2003 SKQB 174, [2004] 4 W.W.R. 632 at para. 43 and Cole
v. Prairie Centre Credit Union Ltd., 2007 SKQB 330 at para. 4.

[17]        
In many cases, thanks to the mechanisms of the CPA, the combined action
of the class members serves as a means of asserting the rights of individuals
who, acting alone, would not have had the resources to pursue and protect those
rights.  The certification of individual plaintiffs into a class is intended to
level the playing field that was not level before.

[18]        
Certification may, accordingly, produce very desirable outcomes for the
plaintiffs (e.g. substantial damage awards).  By the same token it creates
significant risks such that a defendant who has committed no wrong may find
itself obliged to pay tremendous amounts in settlement to escape liability and
possible bankruptcy.  From the standpoint of a defendant, the process may be
seen as an extortion through the exercise of the power of strength in numbers. 
It is the duty of the Court, accordingly, to demand that there be at least a
minimal underlying basis in fact before the proceeding is certified as a class
action. See Fresco v. Canadian Imperial Bank of Commerce (2009), 71
C.P.C. (6^th) 97 (Ont. S.C.J.).

[19]        
.  See Cloud v. Canada (Attorney General) (2004), 73 O.R. (3d)
401 (C.A.), leave to appeal dismissed [2005] S.C.C.A. No. 50 [Cloud], where
it was stated at para. 50:

Hollick also makes clear
that this does not entail any assessment of the merits at the certification
stage.  Indeed, on a certification motion the court is ill-equipped to resolve
conflicts in the evidence or to engage in finely calibrated assessments of
evidentiary weight.  What it must find is some basis in fact for the
certification requirement in issue.

[20]        
Most class actions never proceed to trial on the merits.  (Gould v.
BMO Nesbitt Burns Inc. (2007), 45 C.P.C. (6th) 360 (Ont. S.C.J.) at para.
53, per Cullity J.). The reason is that the stakes are too high for the
parties to gamble on a desirable outcome.  By the same token, however, the
process creates a significant risk that an innocent defendant will be obliged
to join in the settlement to avoid the risk of tremendous damages that a case
on the merits entails.

B. Criteria for Certification

[21]        
The criteria for certification are set out in the CPA as follows:

4  (1)  The court must certify a proceeding as a
class proceeding on an application under section 2 or 3 if all of the
following requirements are met:

(a) the pleadings disclose a cause of action;

(b) there is an identifiable class of 2 or more persons;

(c) the claims of the class members raise common issues,
whether or not those common issues predominate over issues affecting only
individual members;

(d) a class proceeding would be the preferable procedure
for the fair and efficient resolution of the common issues;

(e) there is a representative plaintiff who

(i)  would fairly and
adequately represent the interests of the class,

(ii)  has produced a plan for
the proceeding that sets out a workable method of advancing the proceeding on
behalf of the class and of notifying class members of the proceeding, and

(iii)  does not have, on the common issues, an interest
that is in conflict with the interests of other class members.

[22]        
The general principles used in interpreting s. 4 of the CPA were
restated by our Court of Appeal in Knight v. Imperial Tobacco, 2006 BCCA
235, 54 B.C.L.R. (4th) 204 [Knight], where the Court noted at para. 20 that:

The Supreme Court of Canada has
discussed the approach that ought to be taken by a court to certification
issues in a number of recent cases, including Hollick v. Toronto (City),
[2001] 3 S.C.R. 158, 2001 SCC 68 [Hollick]; Rumley, supra;
and Western Canadian Shopping Centres Inc. v. Dutton, [2001] 2 S.C.R.
534, 2001 SCC 46. What I distill from those cases is that class proceedings
legislation ought to be construed generously. Class actions serve judicial
economy by avoiding unnecessary duplication in a multiplicity of actions,
improve access to justice and serve to modify wrongful behaviour. It is
necessary that the statement of claim disclose a cause of action, but the
certification stage is not a test of the merits of the action. What the
certification stage focuses on is the form of the action. The key question is
whether the suit or portions of it are appropriate for the trial of common
issues.

[23]        
These principles were reiterated by the Court of Appeal most recently in
Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503, 98
B.C.L.R. (4th) 272, at para. 64:

The provisions of the CPA should be construed generously in
order to achieve its objects: judicial economy (by combining similar actions
and avoiding unnecessary duplication in fact-finding and legal analysis);
access to justice (by spreading litigation costs over a large number of
plaintiffs, thereby making economical the prosecution of otherwise unaffordable
claims); and behaviour modification (by deterring wrongdoers and potential
wrongdoers through disabusing them of the assumption that minor but widespread harm
will not result in litigation): Western Canadian Shopping Centres Inc. v.
Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at paras. 26-29 … Hollick v.
Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 15 …

[24]        
With respect to the principles that have been put forth by the courts to
govern the interpretation of the individual subsections of s. 4, these will be
discussed below in the specific section of these reasons devoted to each of
them.

IV. DO THE PLEADINGS
DISCLOSE A CAUSE OF ACTION? – s. 4(1)(a)

A. General Principles

[25]        
According to Lynn Smith J. in McMillan v. Canada Mortgage and Housing
Corp., 2007 BCSC 1475, 75 B.C.L.R. (4th) 359 at para. 12, the test
for s. 4(1)(a) is the same as the test for Rule 19(24) of the Rules of Court,
B.C. Reg. 221/90, which allows a pleading to be struck out if it “discloses no
reasonable claim”. That test was articulated in Hunt v. Carey Canada Inc.,
[1990] 2 S.C.R. 959.

[26]        
In applying the test in the context of s. 4(1)(a) of the CPA, the
principles to be used are as follows, according to Lynn Smith J. in McMillan,
supra at paras. 12-18:

a)    no
evidence is admissible for the purposes of determining the s. 4(1)(a)
criterion;

b)    all
allegations of fact pleaded, unless patently ridiculous or incapable of proof,
must be accepted as proved and thus assumed to be true;

c)     the
pleading will be struck out only if it is plain, obvious and beyond doubt that
the plaintiff cannot succeed and only if the action is certain to fail because
it contains a radical defect;

d)    the
novelty of the cause of action will not militate against the plaintiff;

e)    the
potential for the defendant to present a strong defence should not prevent the
plaintiff from proceeding with his or her case;

f)     
matters of law not fully settled in the jurisprudence must be permitted
to proceed; and

g)    the statement of
claim must be read generously to allow for inadequacies due to drafting
frailties and the representative plaintiffs’ lack of access to key documents
and discovery information.

B. Causes of Action

[27]        
The representative plaintiffs allege the following causes of action:

a)    
a contravention of s. 45(1) of
Part VI of the Competition Act giving rise to a right of damages under
s. 36(1) of that Act;

b)    
tortious conspiracy and
intentional interference with economic interests;

c)     unjust enrichment, waiver of tort and constructive
trust; and

d)     punitive
damages.

[28]        
Mr. Mogerman, for the plaintiffs, submits that the requirements of section
4(1)(a) are satisfied because it is not plain and obvious or beyond doubt that
the plaintiffs cannot succeed in the causes of action pleaded.

[29]        
First, with respect to the pleading of the contravention of Part VI of
the Competition Act, Mr. Mogerman points out that the Statement of Claim
clearly pleads each element of the cause of action under ss. 45(1) and 36 of
the CPA.  The Statement of Claim alleges that during the Class Period,
the defendants wrongfully, unlawfully, maliciously and lacking bona fides
conspired to fix prices of HFCS and rig bids for HFCS. It goes on to allege
that this conduct is contrary to Part VI and that the Class Members suffered
loss or damage and:

(a)        by reason of the alleged violations of the Competition
Act and the common law, the plaintiff and the other Class Members paid more
for HFCS or products containing HFCS than they would have paid in the absence
of the illegal combination and conspiracy.  As a result, they have been injured
in their business and property and have suffered damages in an amount presently
undetermined; and

(b)        the combined loss to
itself and the other Class Members is capable of being quantified on an
aggregate basis as the difference between the prices actually obtained by the
defendants for HFCS and the prices which would have been obtained in the
absence of the illegal agreements.

[30]        
The plaintiffs submit, and I agree, that both direct and indirect
purchasers can plead a cause of action under s. 36, citing the motion to strike
in Chadha v. Bayer Inc. (1998), 82 C.P.R. (3d) 202 (Ont. Gen. Div.).

C. Can the plaintiffs plead constructive trust?

[31]        
The defendants accept that, with the exception of the claim for a
constructive trust, for the purposes of s. 4(1)(a), the pleadings in this case
disclose a cause of action.  The defendants submit that there is no legal
merit, on the facts as pleaded by the plaintiffs, to the claim for a
constructive trust.

[32]        
The previous proceedings concerning the limitations defence have
established that Sun-Rype can only succeed in its claim on the basis of a
constructive trust remedy.  Its claim for damages is statute-barred; see Sun-Rype
Products Ltd. v. Archer Daniels Midland Co., 2008 BCCA 278, 81 B.C.L.R.
(4th) 199. The defendants submit that like Sun-Rype, all the direct purchasers
had the same reasons to inquire in response to extensive media reporting of the
U.S. antitrust investigations.  Thus, they submit that all direct purchasers’
claims for damages must be equally statute barred.

[33]        
The defendants submit in any event that the claim for a constructive
trust is bound to fail. They say that in the circumstances pleaded, there is no
property to which a constructive trust could attach giving rise to trust
obligations with retrospective effect.  All the plaintiffs seek is disgorgement
of a notional accounting profit from the general revenues of each of the defendants
and that this is insufficient for proprietary relief.    It would be wrong to
award a proprietary remedy ‘as a ruse’ for the purpose of avoiding the
limitation problem of the direct purchasers.

[34]        
The defendants argue further that this is a case in which a constructive
trust is sought primarily on the basis of the defendants’ allegedly wrongful
conduct. There is no pleading of any kind of relationship – fiduciary or
commercial – between the class members and the defendants. In such a case, one
who acquires property by such conduct may be held a constructive trustee of the
misappropriated property. However, the defendants point out that the
misappropriated property must specifically be identified, citing Ontario
(Real Estate & Business Brokers Act, Director) v. NRS Mississauga Inc.
(2003), 64 O.R. (3d) 97 (C.A.) at para. 37 [NRS], where Doherty J.A.
explained:

There is merit to counsel for the Bank’s submission that
considerable commercial uncertainty would result if a constructive trust were
to be imposed on all business assets to the full extent of the trust claim upon
a showing only that some unspecified amount of trust funds were used at some
unspecified time in some unspecified way to assist to some unspecified degree
in maintaining the operation of the business. While McLachlin J., in Soulos,
supra, was careful to avoid any suggestion that any of the four conditions
she described were prerequisites to the finding of a constructive trust, I
think the nature of the connection between the misconduct of the trustee and
the assets over which it is sought to impose a constructive trust is of
significant importance in a commercial context.

This record reveals only the most
general of connections between the misappropriation of trust funds and the
accounts receivable over which the Director seeks to impose a constructive
trust. If a constructive trust is properly imposed on this record, it would
seem to me that a constructive trust is properly imposed on all business assets
whenever it is shown that trust funds of whatever amount were improperly used
in the conduct of the business. That result would shift the risk that the
trustee might act dishonestly entirely to the shoulders of the trustee’s
business creditors.

[35]        
In my view, NRS is distinguishable from the case at bar. In NRS,
the plaintiff was competing with other creditors (the Crown and a bank) to
recover funds from the defendant, an insolvent company. It sought to impose a
trust over accounts receivable of the defendant that had already been collected
by the bank. Not only is the case at bar not a bankruptcy case, but there are
no other “creditors” competing with the class for the allegedly ill-gotten
profits that the class seeks. The class does not seek the funds from a third
party, but from the defendants themselves. A similar argument distinguishes the
defendants’ other cited bankruptcy case: Barnabe v. Touhey (1995), 26
O.R. (3d) 477 (C.A.).

[36]        
With respect to the last case cited by the defendants, Peter v.
Beblow, [1993] 1 S.C.R. 980, and the specific passage to which my attention
was drawn at para. 22, in my view, this passage could arguably support either
the plaintiffs or the defendants on the pleadings as stated in this case.
McLachlin J. (as she then was) wrote:

In Canada the concept of the
constructive trust has been used as a vehicle for compensating for unjust
enrichment in appropriate cases. The constructive trust, based on analogy to
the formal trust of traditional equity, is a proprietary concept. The plaintiff
is found to have an interest in the property. A finding that a plaintiff is
entitled to a remedy for unjust enrichment does not imply that there is a
constructive trust. As I wrote in Rawluk, supra, for a
constructive trust to arise, the plaintiff must establish a direct link to the
property which is the subject of the trust by reason of the plaintiff’s
contribution. …

[37]        
If the plaintiffs are able, through econometric analysis, to determine
the average overcharge paid by the plaintiffs to the defendants, then arguably,
such overcharge formed part of the profits of the defendants. To put it
bluntly, the plaintiffs paid the money and the defendants received it. It
formed part of their profits. Short of tracing the physical bills, this would
be as direct a link to the trust property as one might hope to establish.

[38]        
In the result, although the defendants raise a possible argument, it is
not “plain and obvious” that the plaintiffs’ claim must fail, and thus s.
4(1)(a) is satisfied in this case.

D. Do the indirect purchasers have a cause of action?

[39]        
Three arguments were forcefully advanced by Mr. McEwan, on behalf of the
Cargill defendants. The first is that the indirect purchasers in this case have
no cause of action, and therefore cannot satisfy the requirement under s.
4(1)(a) of the CPA. That argument is addressed in this section. The
second, is that even if the indirect purchasers do have a cause of action, to
resolve that issue would place the indirect purchasers in an insuperable
conflict of interest with the direct purchasers. That issue is discussed under
section VIII below, where s. 4(1)(e) of the CPA is applied. The third
and final argument is that in light of the conflict of interest, and the
limitation period issues and the inherently individual nature of the
postponement inquiry that accompanies them, a class action does not represent
the preferable procedure for the determination of the proposed common issues.
That argument is discussed in section VII below, where s. 4(1)(d) of the CPA
is applied.

[40]        
The defendants contest the indirect purchasers’ ability to obtain relief
on the pleaded facts. They argue that recent jurisprudence from the Supreme
Court of Canada forecloses the possibility of the defendants’ making a
“pass-through” defence – the defence, if it ever existed, no longer exists at
law. As a corollary, they submit that the indirect purchasers do not have a
cause of action.

[41]        
By way of explanation, the “pass-through” defence can be summed up as
follows: A plaintiff sues a defendant. It is found that the plaintiff caused
losses to the defendant. The defendant nevertheless argues in defence that the
plaintiff should not receive compensation for those losses because the
plaintiff, in the end, did not suffer losses at all; rather, it passed on (or
“passed-through”) the losses to a third party (in a supply chain, this could be
accomplished by, for example, the plaintiff raising its prices to pass on the
loss to its customers.) In the restitutionary context, the argument is
basically the same, except that the defendants would argue that they were not
enriched at the expense of the plaintiffs because the plaintiffs passed-through
the overcharge to some third party or parties.

[42]        
The defendants rightly point out that, in some contexts, the Supreme
Court of Canada has rejected the pass-through defence. They rely primarily on
two cases for this proposition: British Columbia v. Canadian Forest Products
Ltd., 2004 SCC 38, [2004] 2 S.C.R. 74 [Canfor] and Kingstreet
Investments Ltd. v. New Brunswick, 2007 SCC 1, [2007] 1 S.C.R. 3 [Kingstreet].

[43]        
In Canfor, the Province brought an action against Canfor
following a forest fire for which Canfor was responsible in order to recover,
among other things, stumpage revenue from trees that would have been harvested
but for the fire. The majority of the Supreme Court held that, in light of the
“revenue neutral” stumpage system, the Province had suffered no loss, and
therefore could not recover from Canfor.

[44]        
In dissent, however, LeBel J. held that such a defence was essentially
the “passing-on” defence. He wrote, at para. 162, that the stumpage system was
“nothing more than a means of attempting to pass losses on to other forest licensees,
just as a store owner might attempt to recoup losses by charging higher prices
to other customers”.

[45]        
LeBel J. then went on to reject the defence, citing with approval at
para. 205 the judgment of White J. in the seminal U.S. Supreme Court case of Hanover
Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), who held
that because of insurmountable difficulties in the required econometric
calculations (including the difficulty in determining price changes in response
to changes in various other economic factors), the passing-on defence would not
be applicable and should not be recognized. LeBel J. left open the possibility
of applying the defence in the area of restitution.

[46]        
While LeBel J. was writing in dissent, the defendants in this case argue
that the majority’s reasons in Canfor are consistent with LeBel J’s
rejection of the defence. Whether or not that is the case, in any event, the
Supreme Court unanimously rejected the defence in the restitutionary context in
Kingstreet.

[47]        
In Kingstreet, the plaintiffs sought restitution of all amounts
they had paid to the province in respect of a “user charge” levied by
provincial liquor stores, after the charge was held to be ultra vires
the province. The defendant argued that the plaintiffs had in fact passed on
the cost of the user charge to their customers by increasing their prices.
Bastarache J., for the Court, rejected the defence in the restitutionary
context, stating at paras. 45 and 47 that restitutionary law “is not concerned
by the possibility of the plaintiff obtaining a windfall precisely because it
is not founded on the concept of compensation for loss” and “[a]s between the
taxpayer and the Crown, the question of whether the taxpayer has been able to
recoup its loss from some other source is simply irrelevant”.

[48]        
The defendants urge me to decline to follow the decision of Rady J. in Irving
Paper Ltd. v. Atofina Chemicals Inc., [2009] O.J. No. 4021 (S.C.J.) [Irving
Paper], where she considered both Canfor and Kingstreet at
paras. 144-149 and determined at para. 150 that both cases, not being concerned
with price-fixing conspiracies, were distinguishable enough as to at least
leave the pass-through issue open at the certification stage. The case at bar,
also a price-fixing conspiracy class-action case, is in that respect similar to
Irving Paper and I agree with the reasoning of Madame Justice Rady. A
trial judge, on the basis of a full evidentiary record, will be in a far better
position to determine whether Canfor and Kingstreet, as a matter
of law, should apply in the context of price-fixing conspiracy class-actions,
or whether they should be distinguished. But certainly it is not plain and
obvious that the defence does not apply.

[49]        
More importantly, even if the pass-through defence were not available,
the “corollary” submitted by the defendants does not follow necessarily from
the premise. They state that because the defendants cannot use the defence to
say that the plaintiffs “passed-through” their losses to third parties, the
other side of the coin is that those third parties (in this case, the indirect
purchasers) cannot in turn claim against the defendants by saying that the
overcharge and losses were passed through to them.

[50]        
The defendants argue that the reasons advanced by the Supreme Court of
Canada for rejecting the pass-through defence are equally applicable to reject the
use of pass-through as a “sword”. They ground this “corollary” in the
prohibition on double recovery – that a plaintiff should not be able to recover
twice for the same loss, and a defendant should not be made to pay twice for
the same civil wrong.  It offends restitutionary principles for a defendant to
be made to reimburse more than 100% of what it wrongly received.

[51]        
The defendants reason that if pass-through is not a defence, then the
direct purchasers can recover 100% of the overcharge.  To then allow the
indirect purchasers to use pass-through as a sword on top of this would allow a
greater than 100% recovery.

[52]        
As I see it, the argument breaks down on the premise submitted in the
defendants written argument that “once it is recognized that pass-through is
not a defence at law, the defendants face potential liability to direct
purchasers for 100% of any overcharge that is proven.”

[53]        
There are two mistakes in this premise.  Firstly, it is a mistake to equate
pass-through as a defence at law with pass-through as a factual occurrence.  It
could be that pass-through actually occurred in fact, even if the court does
not allow the defendants to use this fact as a defence to the plaintiffs’
claims. The second mistake is that the defendants face potential liability not
to “direct purchasers” but to the class as a whole. Using the “top-down” approach
outlined in 2038724 Ontario Ltd. v. Quizno’s Canada Restaurant Corp.
(2009), 96 O.R. (3d) 252, 250 O.A.C. 87 (Div. Ct.) at para. 67, and employed in
this province in both DRAM and Microsoft, the focus is not
on which part of the class ended up with the loss. At this stage, it does not
matter. Rather, it is how much, if anything, was wrongfully taken by the
defendants. By including both the direct and indirect purchasers in the class, i.e.,
all those who potentially suffered a loss, and by using econometric methods
that the plaintiffs claim will ascertain the entire amount and only that amount
overcharged by the defendants to the class as a whole, there will be no
possibility of overrecovery.

[54]        
The possibility of overrecovery was the reason for the United States
Supreme Court’s rejection of the use of pass-through as a sword in Illinois
Brick Co. v. Illinois, 431 U.S. 720 (1977), essentially ending, at the
federal level, any indirect purchaser class action claims.

[55]        
In my view, the two arguments made by White J. in Illinois Brick
are not applicable to the case at bar, and thus I am not persuaded by the
decision. The first argument, that a greater-than-100% recovery is possible, is
not a possibility in this case for the reasons mentioned above.

[56]        
The second argument was premised on the evidential difficulties and
uncertainties in calculating pass-through due to the limits of economists’
hypothetical models at the time that Illinois Brick was decided. Because
of these difficulties, the Supreme Court argued that the already protracted
proceedings in price-fixing cases would be greatly complicated and would have
their effectiveness greatly reduced.

[57]        
However, what the Supreme Court did not have in Illinois Brick in
1977 was a “credible and plausible methodology” for calculating pass-through.
If one has such a method (which is, not surprisingly, the requirement set out
in the Canadian jurisprudence that has developed more recently), then the
second concern that White J. had with pass-through becomes eliminated.

[58]        
Having found that Illinois Brick is inapplicable in the case at
bar, it is not plain and obvious that the indirect purchasers do not have a
cause of action. Thus, the plaintiffs have satisfied the requirement under s.
4(1)(a) of the CPA.

V. IS THERE AN IDENTIFIABLE CLASS? – s. 4(1)(b)

A. Is the class identifiable?

[59]        
Class definition identifies the persons who are entitled to notice,
entitled to relief, if relief is awarded, and who are bound by the judgment.  A
class must be “defined … by reference to objective
criteria.” (Western Canadian Shopping Centre Inc. v. Dutton, [2001] 2
S.C.R. 534 at para. 38 [Dutton]) A class definition dependent upon a
determination of an issue in the action is unacceptable because the merits are
not to be decided at the certification stage (Hollick, at para. 17.)
A class definition must also bear a rational relationship to the common issues
(Hollick, at para. 19.)

[60]        
The plaintiffs argue that in both contested and non-contested
certification decisions relating to competition law claims, courts have found
that class definitions similar or identical to that proposed in this case were
appropriate.  These decisions include a number of cases involving food
additives which were, in the plaintiffs’ submission, at least as complicated as
the case at bar.  They point out that courts have concluded that these global
direct/indirect class definitions are appropriate, even where it is difficult
or impossible to determine who falls within the indirect class, and how much
each indirect purchaser may have lost because of the alleged wrongful conduct.

[61]        
The plaintiffs cite several examples for this proposition: DRAM; Microsoft;
Irving Paper; Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd.
(2005), 74 O.R. (3d) 758 (S.C.J.); Bona Foods Ltd. v. Ajinomoto U.S.A. Inc., [2004]
O.T.C. 226, 2 C.P.C. (6th) 15 (S.C.J.); Nutech Brands Inc. v. Air Canada,
2008 CarswellOnt 1494, 59 C.P.C. (6th) 166 (S.C.J.); Alfresh Beverages
Canada Corp. v. Hoechst AG, [2002] O.T.C. 19, 16 C.P.C. (5th) 301 (S.C.J.);
McKay v. Air Canada (25 March 2008), Vancouver No. S067490 (B.C.S.C.)
[unreported]; and Irving Paper v. Atofina Chemicals Inc. (15 October
2008), London Registry Court File No. 47025 (Ont. S.C.J.) [unreported].

[62]        
The class definition in this case, according to the plaintiffs, is
appropriate in principle. They argue that the principle that a class definition
should not be under inclusive “must be approached with considerable caution.” (Pearson
v. Inco Ltd. (2005), 78 O.R. (3d) 641 (C.A.)) They submit that the same
applies for over-inclusivity, citing Markson v. MBNA Canada Bank, 2007
ONCA 334, 224 O.A.C. 71 at para. 4.  In this case all class members have a
cause of action, they say, but even if that were not the case, they submit that
it is clearly appropriate to certify a class where all members of the class may
have a cause of action, but only some, a smaller segment of the class,
were actually victims of the defendant’s wrongdoing, and thus entitled to
damages and restitution.

[63]        
This is true, according to Heward v. Eli Lilly & Co., (2007)
39 C.P.C. (6th) 153 (S.C.J.) [Eli Lilly] at paras. 69-71 (citing Hollick
and Cloud), but only if the class is not unnecessarily broad in that
it “could not be defined more narrowly without arbitrarily excluding some
people who share the same interest in the resolution of the common issues.” (Cloud,
at para. 45.) If the class could be defined more narrowly, “the court should
either disallow certification or allow certification on condition that the
definition of the class be amended.” (Eli Lilly, at para. 69).

[64]        
A second principle that the plaintiffs say they have met, is as stated
by Justice Cullity in Eli Lilly at para. 11:

The task of defining the class
appropriately is often a fluid exercise in fine tuning.  Where, as is usually
the case, a definition is contained in the pleading, it is quite commonly not
identical to that proposed in the notice of motion [as in the case at bar]. 
The latter will often be disputed by defendants’ counsel at the hearing, and
the exact description of the class will remain uncertain until the successful
conclusion of the motion when, pursuant to section 8 of the CPA [also s.
8 in British Columbia], the class definition is to be included in the order of
the court.”

If subsequent to certification, differences among class
members become material, they can be dealt with either through sub-classes or
as individual issues. See Reid v. Ford Motor Co., 2003 BCSC 1632
at para. 37.

[65]        
Third, the plaintiffs cite the principle set out in Sauer v. Canada
(Attorney General), 2008 CarswellOnt 5081 (S.C.J.), leave to appeal ref’d 246
O.A.C. 256, at para. 28:

At the margins, there may be some
questions about class membership, but the CPA permits the Court to enter
upon a "relatively elaborate factual investigation in order to determine
class membership": Serhan v. Johnson and Johnson, [2004] O.J. No.
2904 (S.C.J.) at para. 52. As Cullity J. said, "The fact that particular
persons may have difficulty in proving that they satisfy the conditions for
membership is often the case in class proceedings and is not, by itself, a
reason for finding that the class is not identifiable": Risorto v. Farm
Mutual Automobile Insurance Co., [2007] O.J. No. 676 (S.C.J.) at para. 31.

[66]        
The defendants respond that the class in this case is ill-defined. They
argue that it is impossible for indirect purchasers to self-identify, as
consumers do not retain records of their food purchases 15 to 22 years ago.
Even if they did, because of labelling laws in Canada which in some cases allow
for both liquid sugar and HFCS to be labelled the same, it would be impossible
for consumers to know which version they purchased. This point was emphasized
in the cross-examination of Ms. Bredin, who was unaware which food and beverage
products she purchased were sweetened, and for those that were sweetened, which
contained HFCS.

[67]        
The defendants submit, and I agree with the principle, that class
definition is critical to certification and, absent objective criteria to
ascertain who is a member of the class, the proposed class is not identifiable
and cannot be certified: Bywater v. Toronto Transit Commission (1998),
27 C.P.C. (4^th) 172, 83 O.T.C. 1 at paras. 10-11 (Gen. Div.); Ragoonanan
Estate v. Imperial Tobacco Canada Ltd. (2008), 54 C.P.C. (6^th)
167, 236 O.A.C. 199 at paras. 15 and 45 (Div. Ct.) [Ragoonanan].

[68]        
The defendants also point to deficiencies in the evidence led by the
direct purchaser plaintiff Sun-Rype as to which of its products contained HFCS,
where they were sold, and in what quantities. They also raise the issue of
inconsistencies in the class definition proposed by the plaintiffs between
various documents filed in support of this litigation. I am not convinced by
these latter two arguments. I am satisfied on the evidence before me that
direct purchasers, like Sun-Rype, purchased HFCS from the defendants, and
included it in some products which were then sold to consumers in B.C. With
respect to the inconsistencies in class definition, some fluidity in class
definition is to be expected as the litigation proceeds and it is ultimately up
to the trial judge to determine what the final class definition will be.

[69]        
The defendants cite three examples of cases where the Courts refused to
find an identifiable class because it was too difficult for individuals to
ascertain whether or not they were in the proposed class: Gariepy v. Shell
Oil Co., [2002] O.T.C. 459, 23 C.P.C. (5th) 360 (S.C.J.); Ragoonanan;
and Chadha v. Bayer Inc. (2001), 54 O.R. (3d) 520 (Div. Ct.), aff’d
(2003), 63 O.R. (3d) 22 (C.A.).

[70]        
In Gariepy, a products liability action was brought in which two
of the defendants were alleged to have sold defective plumbing fittings.  One
of the defendants manufactured the fittings with “Celcon”, while another used
“Dalrin”.  The Court held that a visual inspection by an individual of their
plumbing system (in an attempt to determine whether they were a member of the
proposed class) would not necessarily determine whether the fitting was made of
Celcon, Delrin or some other plastic material.  Where it was unclear from a
visual inspection, each fitting would have to be removed and chemically tested
to determine whether it was made from Celcon.    There would, therefore, be
situations where a given homeowner would be unable to tell from a visual
inspection whether he or she had a plumbing system employing plastic fittings
made of Celcon, and thus whether he or she was a member of the proposed class.

[71]        
Nordheimer J. reviewed the importance of the class definition and
concluded at paras. 47-48 that there was no identifiable class with respect to
the defendant who manufactured the fittings with Celcon:

Although not expressly stated by the Chief Justice, a clearly
defined class is also required in order that persons will know that they are
members of the class so that they may, in turn, decide if they wish to have
their rights determined within the class proceeding, or if they would prefer to
opt out of the class proceeding and have their rights determined in another fashion,
or not at all. It is extremely important, therefore, that the class
definition be one where any person can tell, with a minimum of effort, whether
he or she is a member of the proposed class.

… It does not provide a clearly
identifiable class if each homeowner is required to have the fittings removed
from their plumbing systems and chemically tested in order to determine if the
fittings are ones covered by the claims advanced. There is no evidence before
me as to the costs of removing and testing these fixtures but, in any event, it
would seem unlikely that, absent an existing problem with the plumbing system,
any homeowner would be prepared to go through the expense and inconvenience of
having such testing done nor should they be required to do so in order to
determine if they are part of this action and, if so, whether they wish to have
their rights dealt with in this action.

[72]        
It should be noted, however, that in this province, in the case of Olsen
v. Behr Process Corp., 2003 BCSC 1252, 17 B.C.L.R. (4^th) 315,
Oppal J. found at para. 33 that “the decision in Gariepy simply cannot
be reconciled with the general trend towards certification.” This sentiment was
also repeated by Myers J. in Microsoft at para. 169.

[73]        
Ragoonanan was a proposed class action on behalf of persons who
suffered injury or loss due to a fire caused by one of the defendant’s
cigarettes igniting furniture. In that case, at the original certification
hearing, reasons indexed at (2005), 78 O.R. (3d) 98, 20 C.P.C. (6th) 262
(S.C.J.), Cullity J. rejected a proposed class definition which was defined as
“persons in Canada who… claim that the fire was caused by an ITCL brand
cigarette igniting upholstered furniture…”.   Among a number of reasons for
rejecting the proposed class definition, Cullity J. commented at para. 37 as
follows:

I believe I am compelled by
authorities such as Chadha to conclude that is unacceptably merits-based
and must be rejected.  It is merits-based because its application depends on
proof of damage caused by fire and… whether the ignition source of the fire was
a cigarette; and if so, whether it was manufactured by the defendant. […]
Questions of credibility are also likely to be in issue in such cases and, in
particular, on whether the cigarette was an ITCL brand.  For these reasons, I
find that the membership of such a class would not be sufficiently
“identifiable” within the meaning of section 5(1)(b).

The Divisional Court affirmed
Justice Cullity on appeal, noting at para. 45 that the proposed class
definitions were “unacceptably subjective.”

[74]        
In Chadha, a price fixing action involving iron oxide used in
concrete bricks, a majority of the Divisional Court refused to admit evidence
from a proposed representative plaintiff merely indicating a tangential belief
that he had experienced harm due to the inflated cost of the bricks. The
defendants submit that the evidence of Ms. Bredin in this case is virtually
identical – she simply states that “…I purchased food and beverages which I
believe contained high fructose corn syrup…”  The defendants submit that Ms.
Bredin cannot be a member of the proposed class for the same reasons that Mr.
Chadha could not.

[75]        
Two other recent decisions from this province, DRAM and Microsoft,
seem to take a less doctrinate view of the difficulties in ascertaining class
membership.

[76]        
The defendants raise a distinction between DRAM and the case at
bar.  decision. In the DRAM case it was argued that proposed class
members could not in many cases objectively self-identify themselves as being in
the class.  There was evidence that a consumer of an end-product which
contained DRAM might not know which manufacturer supplied the DRAM.  The Court found that despite the technical difficulties, the identity of the manufacturer
could be determined by opening the device, removing the DRAM and looking for
the manufacturer’s mark. In the case at bar, the defendants submit, it is far
more difficult or impossible for indirect purchasers to self-identify.

[77]        
In the more recent Microsoft decision, Myers J. certified an
indirect purchaser class proceeding alleging anti-competitive activities with
respect to Microsoft’s Operating Systems and Applications software.  The class
was defined as British Columbia residents who, on or after January 1, 1994, indirectly acquired a license for the impugned products.  The “identifiable class”
issue before the Court was whether a class member could identify whether their
computer contained a licensed or a pirated version of the software.  The Court
noted at paras. 171-172 that Microsoft’s own evidence showed that an
experienced computer person could tell whether pirated software was installed,
and there was further evidence that there were a number of ways in which a user
could verify the authenticity of the software.

[78]        
The concerns in DRAM (which were not the subject of discussion in
the Court of Appeal’s decision) and in the Microsoft decision can be
distinguished from the concerns in this action, say the defendants.  In the
case at bar, it is not simply a matter of determining whether the HFCS was
manufactured by the defendants, which, of itself, might or might not even be a
factor in defining the class.  In the case of consumers of sweetened goods, the
question is whether any particular good actually contained sugar, HFCS or some
other form of sweetener.

[79]        
More importantly, it is not simply the case that the presence of HFCS
would be difficult to determine or that such determination could entail a risk
of damaging the item in which it may be contained.  In this case, the
defendants submit that it is simply impossible to make a determination of the
presence of HFCS in goods a consumer may have purchased between 1988 and 1995. 
The goods themselves will have long since been consumed.  It is highly unlikely
that the average, or any, consumer would have a record of purchases which would
allow him or her to determine what was purchased.  Even if this record existed,
it would not lead to any confirmation of whether the food or beverage item
contained HFCS, especially since it was not necessarily identified by labelling
in Canada.

[80]        
I do not accept the submissions of the defendants. The comments of Myers
J. are instructive on the point.  In Microsoft at paras. 173-76 he distinguished
Chadha and Ragoonanan:

The other cases relied on by Microsoft present far greater
levels of difficulty in identifying class members than here. Ragoonanan
… was a case where the class sought to be certified was "all persons in
Canada who suffered injury, or loss, as a result of a fire that occurred after
October 1, 1987, where the fire was caused by a cigarette manufactured by the
defendant igniting upholstered furniture or a mattress." That definition
involved a number of factual determinations that were not only difficult, but
also depended on the merits of the case, namely causation. The class definition
in the case at bar is predicated on the assumption that, for the tort claims,
Pro-Sys will demonstrate at trial that harm was suffered by all of the class
members.

In Chadha, the determination as to class membership
would have involved the determination of whether a homeowner had brick that
contained the defendants’ iron oxide pigments.

No doubt there may be situations in this case that may
present some difficulty; however, I am not convinced that they rise to the
level which merits declining to certify this case.

Finally, while not necessary for my decision, I note that the
issue of piracy would not appear to affect the calculation of damages which
will be based in part on the volumes of each type of product sold by Microsoft:
those sales volumes will be generated from Microsoft’s data with respect to
legitimate products. The same can be said with respect to the restitutionary
claim. Therefore, if there is a problem with respect to piracy it will likely
manifest itself at the stage of distributing the proposed aggregate damage or
restitutionary award, as opposed to calculating the quantum of such damages or
awards. That would not be a concern for Microsoft. As the Ontario Court of
Appeal said at para. 49 of Markson with respect to the aggregate damage
provisions of the Ontario CPA:

It may be that in the result some class members who did not
actually suffer damage will receive a share of the award. However, that is
exactly the result contemplated by s. 24(2) and (3) because "it would be
impractical or inefficient to identify the class members entitled to share in
the award".

[81]        
Thus, while it may be difficult or even impossible for some indirect
purchaser class members to self-identify in this case, this need not affect the
ability of the plaintiffs, assuming their claims to be true, to calculate the
amount of wrongful gains of the defendants.

B.  Is the proposed class
definition contrary to the policy objectives of the CPA?

[82]        
The defendants submit that the class definition proposed by the plaintiffs
is not only contrary to the strict requirements of the legislation, but that it
is also contrary to the underlying policy objectives of class proceedings
legislation.

[83]        
The courts have recognized that by aggregating multiple individual
claims into a single proceeding, a properly certified class proceeding promotes
the three principal objectives of class proceedings: access to justice,
judicial economy and behaviour modification. The courts have further held that
the application of the certification criteria under the CPA should be
construed in accordance with these three objectives: DRAM at para. 64; Hollick
at para. 15.

[84]        
A class proceeding brought on behalf of a class that
is not identifiable would not serve any of the recognized
objectives of the CPA, according to the defendants.  Where the
class is unidentifiable and class membership is indeterminate, a class
proceeding can no longer be said to be an aggregate of individual claims. 
An unidentifiable class effectively renders meaningless any
comparative analysis of the potential benefits of a class proceeding over
individual claims given that it is impossible to determine whose
individual claims the class proceeding might resolve.

[85]        
The defendants submit further that a class that is not
identifiable is inimical to the goal of access to justice.
Prospective class members who have no way of determining whether or not
they are in a defined class and whether they can (or
should) opt out of, or participate in, a
class proceeding, have not been given "access to justice"
in any meaningful way. In fact, such prospective class members may well
have been denied access to justice if they later find themselves
unwittingly bound by the results of a lawsuit that they had no way of
knowing they were a part of.    

[86]        
The defendants cite Parsons v. McDonald’s Restaurants
(sub nom. Currie v. McDonald’s Restaurants of Canada Ltd.), [2004] O.T.C.
23, 45 C.P.C. (5th) 304 (S.C.J.), aff’d (2005), 74 O.R. (3d) 321 (C.A.), in
which the court considered the procedural rights of class members to make an
informed opt-out decision in the context of competing and overlapping class
actions in Canada and the U.S. brought on behalf of all customers of McDonald’s
restaurants.  The case involved alleged misrepresentations about free
promotional games and contests run by McDonald’s over a 25-year period. 
Cullity J. held at paras. 45 and 58-61 that the failure to provide prospective
class members with reasonable notice and opportunity to make an informed
decision as to whether to participate as class members in a class proceeding
constituted a "denial of natural justice".   In
upholding Justice Cullity’s decision, the Ontario Court of Appeal
held at para. 28:

The right to opt out is an
important procedural protection afforded to unnamed class action plaintiffs.
Taking appropriate steps to opt out and remove themselves from the action
allows unnamed class action plaintiffs to preserve legal rights that would
otherwise be determined or compromised in the class proceeding. Although she
was not referring to inter-jurisdictional issues, in Western Canadian
Shopping Centres Inc. v. Dutton, [2001] 2 S.C.R. 534 at para. 49, McLachlin
C.J.C. identified the importance of notice as it relates to the right to opt
out: "A judgment is binding on a class member only if the class member is
notified of the suit and given an opportunity to exclude himself or herself
from the proceeding."

[87]        
The defendants agree that in cases where the class membership is innumerable,
and the claims are small and difficult to calculate, the courts have procedures
available to them under the provisions of the CPA that allow for the
calculation of damages in the aggregate without reference to individual class
members’ claims or to pay a settlement award to a single organization (often a
charity) as a proxy for paying out nominal claims to numerous individual class
members. See Ford v. Hoffman La Roche Ltd. (2005), 74 O.R. (3d) 758
(S.C.J.) at paras. 132-3.

[88]        
However, they submit that the fact that it may be difficult in this
case to locate and identify unnamed indirect purchaser class members for the
purpose of distributing any judgment or settlement does not abrogate the
fundamental procedural right of those unnamed class members to make an informed
and effective decision to participate in this proceeding, or not. The
defendants argue that the plaintiffs’ proposed class definition effectively
denies such class members that right.

[89]        
In my view, there are unique facts before the court on this motion that
would justify a less stringent requirement for the class definition. There is
the widespread use of HFCS in products that are also widely purchased by
consumers, and over a certain length of time that a large number of B.C.
residents may be said to have purchased them. There is also the fact that only
a small amount of the cost of the final products was made up of the cost of the
HFCS. Thus, individual indirect purchasers’ claims, while widespread, might
only be measured in cents or at most a few dollars each. The concerns with
opt-out and the class action being binding on all its members will be muted
somewhat, while the behaviour modification and judicial economy concerns are coincidentally
heightened.

[90]        
The defendants respond by pointing out that in this case, the potential
claims of certain of the indirect purchaser class members could be financially
significant.  Commercial indirect purchasers such as retail stores,
restaurants and movie theatres would have purchased significant volumes
of product that might or might not have contained HFCS.  The decision
of these class members to participate in the class action would engage not only
their fundamental procedural rights but could entail significant financial
considerations in relation to potentially economically viable individual
claims. The defendants argue that many of these commercial class members
will be no better positioned than the average consumer to know whether the
products they purchased more than 15 years ago actually contained HFCS.

[91]        
That may be so, but on the evidence before me at this stage, I am satisfied
that there is an ability to identify specific products that contained HFCS
during the Class Period and the amount of HFCS that was used in their
production. There will be opportunity enough to give sufficient notice to the
widespread groups of direct and indirect purchasers, both commercial and
consumer, in order to afford any class member who was potentially harmed and who
wishes to opt out of the proceedings the opportunity to exercise their right to
do so. This is not the same situation as in the McDonald’s case, where
Canadian consumers were not given proper notice that they had been bound by a
class action in Illinois. Additionally, the concern about the lack of potential
for opt-out and lack of sufficient notice arises more with an underinclusive
class definition than an overinclusive one such as the one in this case.

[92]        
In my view, the concern for commercial food and beverage buyers is not
well-founded. If any such commercial entity did not have sufficient evidence to
know whether it was a member of the class or not, then it seems unlikely that
it would have sufficient evidence to succeed in its own individual action
against the defendants. In that case, this action would be its only possibility
for recovery.

[93]        
Finally, I find sufficient flexibility in the CPA such that if
necessary, at a later stage, once further evidence comes to light of what
specific products contained HFCS, and which manufacturers used it and in what
amounts, subclasses can be created. If the defendants are then found to be
liable, residual subclasses could be created to distribute that portion of the
wrongful gains that remains to the part of the class having difficulty determining
class membership.

[94]        
In the result, I find that the class is sufficiently well-defined
so as to satisfy the requirement of s. 4(1)(b) of the CPA.

VI. DO THE CLAIMS OF THE CLASS MEMBERS RAISE COMMON
ISSUES? – s. 4(1)(c)

A. Plaintiffs’ Submissions

[95]        
In Campbell v. Flexwatt Corp. (1997), 44 B.C.L.R. (3d) 343
(C.A.), leave to appeal ref’d [1998] S.C.C.A. No. 13, the Court of Appeal set
out some of the guiding principles for applying this subsection as follows at
para. 53:

When examining the existence of common issues it is important
to understand that the common issues do not have to be issues which are
determinative of liability; they need only be issues of fact or law that move
the litigation forward.  The resolution of a common issue does not have to be,
in and of itself, sufficient to support relief.  To require every common issue
to be determinative of liability for every plaintiff and every defendant would
make class proceedings with more than one defendant virtually impossible.

[96]        
The Supreme Court of Canada has held that in framing the common issues,
the guiding question should be “whether allowing the suit to proceed as a
representative one would avoid duplication of fact finding or legal analysis.”
(Dutton, at para. 39)  The common issues question should be approached
purposively.

[97]        
Based on the pleadings and the certification record, all of the key
issues in this case are common, according to the plaintiffs.  The action
focuses on a price fixing conspiracy in which the dominant issues of liability
are common:

Did the defendants’ conspire to fix the price of HFCS?

What was the scope of the conspiracy?

What was the effect of that
conspiracy?

[98]        
The plaintiffs say that price-fixing conspiracy cases by their nature
deal with common legal and factual questions about the existence, scope and
effect of the alleged conspiracy.  They argue that putative class members have
a common interest in proving the facts and circumstances pertaining to the
causes of action pleaded, citing Vitapharm at para. 34.

[99]        
In the Vitapharm case, Cumming J. at para. 35 cited the
well-known US text Newberg on Class Actions, 3^rd ed.
(Colorado: Sheppards/McGraw-Hill, 1992) at 18-15 to 18-21, as follows:

[An] allegation of
price-fixing…will be viewed as a central or single overriding issue or a
common nucleus of operative fact and will establish a common question.

[100]     The
plaintiffs assert that once the court resolves the dominant common issue
relating to the existence of the conspiracy, there are class-wide, and
therefore common, ways of determining causation and damages, including the
following questions:

a)    Was the
conspiracy effective in raising prices to direct purchasers, including some of
the class members?

b)    Did indirect
purchasers, including the remaining class members, pay more because of the
conspiracy?

c)     Did the
defendants profit because of the conspiracy?

d)    Are the class
members entitled to punitive damages and, if so, in what amount?

[101]    
The CPA contains specific provisions allowing for aggregate
awards of monetary relief and the use of statistical evidence.  Section 29 of
the CPA states that:

29  (1)  The court may make an order for an
aggregate monetary award in respect of all or any part of a defendant’s
liability to class members and may give judgment accordingly if

(a) monetary relief is claimed
on behalf of some or all class members,

(b) no questions of fact or
law other than those relating to the assessment of monetary relief remain to be
determined in order to establish the amount of the defendant’s monetary
liability, and

(c) the aggregate or a part of
the defendant’s liability to some or all class members can reasonably be
determined without proof by individual class members.

(2)  Before making an order under subsection (1),
the court must provide the defendant with an opportunity to make submissions to
the court in respect of any matter touching on the proposed order including,
without limitation,

(a) submissions that contest
the merits or amount of an award under that subsection, and

(b) submissions that individual proof of monetary
relief is required due to the individual nature of the relief.

[102]     Section 30
of the CPA goes on to provide that “for the purposes of determining
issues relating to the amount or distribution of an aggregate monetary award
under this Act, the court may admit as evidence statistical information that
would not otherwise be admissible as evidence, including information derived
from sampling, if the information was compiled in accordance with principles
that are generally accepted by experts in the field of statistics.”

[103]     Section 34
of the CPA says that “[t]he court may order that all or any part of an
award under this division that has not been distributed within a time set by
the court be applied in any manner that may reasonably be expected to benefit
class or subclass members, even though the order does not provide for monetary
relief to individual class or subclass members” and that the court may make
such an order “whether or not all the class or subclass members can be
identified or all their shares can be exactly determined” and even if the order
would benefit persons who are not class or subclass members, or persons who may
otherwise receive monetary relief as a result of the class proceeding.

[104]    
In previous price-fixing class actions similar to the case at bar, one
of the major battlegrounds was the extent to which the aggregation sections of
the CPA could be used prior to or concurrently with the establishment of
liability. Previous plaintiffs proposed to use statistical evidence and
econometric analysis in order to establish, on an aggregate basis, the fact and
extent of the defendants’ liability. Previous defendants argued that ss. 29 and
30 of the CPA, which allowed for the use of statistical evidence and aggregate
calculations of damage awards, could only be used after the plaintiffs
had established liability on a class-wide basis. Myers J. set out a
comprehensive history of the court’s consideration of this question, as well as
the question of how to treat conflicting expert economic evidence, in Microsoft
at paras. 50-95, 103-106, and 110-128.

[105]    
One of the leading British Columbia cases on aggregation is Knight. 
In that case the plaintiffs sought to certify a class of hundreds of thousands
of people who purchased so-called “light” or “mild” cigarettes from the
defendant.  Both the British Columbia Supreme Court and the British Columbia
Court of Appeal sided with the plaintiffs, certifying aggregate restitution and
damages claims.  The Court of Appeal’s analysis was as follows, at paras. 37-41:

Concerning the issue of a damages award pursuant to
heading (viii) of the judge’s order, the respondent submits that this is
an appropriate case for an aggregate award pursuant to Division 2 of the CPA. 
One difficulty with this submission has already been adverted to, namely that
this takes no account of the problem with respect to limitation periods. 
That particular issue should be susceptible of resolution by the same
methodology I have suggested to limit the time period concerning punitive
damages.   The other difficulty with this submission is the
relative novelty of this mechanism for determining damages.  However, I do
not find that novelty constitutes a bar to certification.

Although there may be elements of novelty and difficulty
with the proposed methodology of damages calculation advanced by the
respondent, it seems to me that it is appropriate for this issue to be left to
be worked out in the laboratory of the trial court.  Then, if and when
the issue reaches this Court, we will have the benefit of a full record upon
which to assess the appropriateness of any damages award that may be made
pursuant to the proposed methodology. 

I would be reluctant at this
stage of this proceeding to foreclose the respondent from litigating this issue
as he proposes before the trial court.  Accordingly, I would afford
deference to the decision of the learned chambers judge to permit this damages
issue to be litigated as a common issue.  I would not accede to the
arguments advanced under this head by the appellants.  [Emphasis added.]

[106]    
The representative plaintiffs propose common issues that they say are
similar to those approved in DRAM, Microsoft, and Irving Paper. The
courts in DRAM and Microsoft held that the plaintiff is only
required to show “a credible or plausible methodology” for proving class-wide
issues such as aggregate harm or aggregate wrongful gain. Like in those cases,
it is common ground that statistical regression analysis is in theory capable
of providing reasonable estimates of gain or aggregate harm and the extent of
pass-through in price-fixing cases.  The plaintiffs submit that the true issue
in this case, like in DRAM and Microsoft, is not whether the
methods are plausible, but rather whether the methods can actually lead to
final conclusions at trial.

[107]    
On the issue of aggregation, in Microsoft, Myers J. explained at
para. 116 that the DRAM court “did sanction the use of economic and
statistical evidence to determine the benefit obtained by the defendants from
their wrongful acts, which would be the measure of recovery by the plaintiff
class under its waiver of tort claim.” Myers J. then cited DRAM at
paras. 34-35:

The appellant contends it can prove on common statistical
evidence that the respondents obtained a benefit attributable to this class
from their unlawful conduct.  It proposes to rely on expert economic
evidence based on economic theory and statistical analysis to establish the
prices the respondents would have received for DRAM absent their unlawful
conspiracy.  Then, by deducting what the respondents actually received
from members of this class as determined from the respondents’ records, the
appellant submits it will derive the amount of the unlawful gain attributable
to this class.  Accordingly, in the appellant’s submission, it will prove
the respondents benefited from their conspiracy, thus establishing liability in
the restitutionary claims, and, at the same time, it will prove the amount of
the benefit.

This approach to proof of
causation on a class-wide basis has been approved in this province.

[108]    
The plaintiffs submit that by applying this analysis with a large and
liberal interpretation of the CPA, the result must be certification in
this case.  Mr. Mogerman argues that the plaintiffs have done much more than
advance a “novel” methodology.  They have provided their opinion evidence of
Dr. Leitzinger, allegedly a leading economist, indicating that he has studied
the HFCS market and knows class-wide methods of dealing with causation, damages
and restitution.

[109]    
These, say Mr. Mogerman, are scientifically sound methods that are well
recognized by the Courts.  At the same time, while acknowledging that the
defendants’ expert claims that Dr. Leitzinger’s methods will not work, the
plaintiffs answer that now is not the time to resolve the battle of the
experts.  Addressing the result, Mr. Mogerman submits that causation, damages
and restitution are common issues, leading to the inescapable conclusion that
this case should be certified.

[110]    
The conclusion urged by Mr. Mogerman finds support, he says, in the
recent DRAM and Microsoft decisions and in the recent Ontario
decisions of Markson and Irving Paper. Markson was a
class proceeding about whether a financial institution received interest on
cash advances in violation of s. 347 of the Criminal Code.  The Ontario
Court of Appeal reversed two lower court decisions refusing to certify the case
as a class proceeding and relied on the aggregation provisions in the Ontario Class
Proceedings Act, S.O. 1992, c. 6 (worded the same as British Columbia’s) to
state common issues relating to aggregate restitution.  In the plaintiff’s
view, the court’s analysis applies equally in British Columbia and makes
it clear that individual circumstances will not arise in this case because of
the aggregation provisions of the CPA.

[111]    
The fundamental question raised by the appeal in Markson was
“whether a class proceeding was appropriate where all members of the
class are at risk of being charged a criminal interest rate, and thus,
potential beneficiaries of the declarative and injunctive relief sought, but only
some of the members – a much smaller number of the class – were actually
victims of the defendant’s practice and thus, entitled to damages and
restitution” (para. 4.) The court held at para. 48 that the aggregation
provisions of the Ontario Class Proceedings Act applied “where potential
liability can be established on a class wide basis, but entitlement to monetary
relief may depend on individual assessments.”  The Court of Appeal at para. 49 found
that the aggregation provisions could be used to calculate a global damages
figure and find a way to distribute the aggregate sum to class members, even
where the amounts distributed did not purport to compensate class members in
terms of actual amounts owing or compensate only class members with valid
claims.

[112]    
In Irving Paper, a price-fixing conspiracy class-action like the
case at bar, on the issue of the use of the aggregate assessment provisions,
Rady J. said the following, at para. 118:

I am of the view that Markson
and Cassano signal a different approach to be taken to certification
whether it be in breach of contract or other types of cases. Justice Rosenberg
spoke of the need to establish "potential liability" before resort to
the aggregation provisions could be had. That being so, it seems to me that the
plaintiffs here need only prove potential liability — in other words, that the
defendants acted unlawfully. This would trigger the aggregate assessment
provisions. Further, Markson establishes that not every class member
need have suffered a loss and so it is not necessary to show damages on a
class-wide basis.

[113]    
On the expert evidence issue, Rady J. wrote, at para. 119:

It is necessary to next examine
the evidence of Drs. Beyer and Schwindt. Before doing so, however, it bears
remembering that it is not necessary to reconcile the conflicting opinions at
this stage of the proceeding. Indeed, it has been said that at the
certification motion, "the court is ill-equipped to resolve conflicts in
the evidence or to engage in finely calibrated assessments of evidentiary
weight. What it must find is some basis, in fact, for the certification
requirement in issue": Hague v. Liberty Mutual Insurance Co.,
[2004] O.J. No. 3057 (S.C.J.)

[114]    
The plaintiffs say that each element of the alleged causes of action can
be determined on a common, class wide basis for all class members using
the well-established economic models put forth by Dr. Leitzinger.  However,
even if that proves not to be the case and only some of the class
members have valid claims, then they argue that the DRAM/Microsoft/Irving
Paper analysis would apply and the individual issues could be avoided using
the aggregation provisions of the CPA.  All the representative
plaintiffs need to do is show that they have a common way of proving that some
(not all) of the Class Members are entitled to damages or restitution,
according to Microsoft, at paras. 125-127.

[115]    
Finally, in cases like the case at bar, where the Class Members have
successfully stated a case for waiver of tort, the plaintiffs submit that courts
in British Columbia and Ontario have repeatedly stated in the foregoing cases that
disgorgement of illegally obtained profits is a common issue and that
distribution can be addressed as a common issue through the aggregation
provisions of the CPA. The measure of restitution is the defendants’
gain and there are no individual issues tied up in calculating the defendants’
gain.

[116]     The
plaintiffs submit that even without the aggregation provisions in the CPA this
case would support an aggregate assessment of causation and damages.  The
defendants are alleged to have participated in a criminal conspiracy that
impacted millions of dollars of commerce.  The plaintiffs say they have led
evidence that there are well established, class wide, methods of showing that
this conduct injured the class members and calculating the amount of that
injury.  They have also shown that there are well established, class wide,
methods of calculating the defendants’ ill-gotten gains.

[117]    
The plaintiffs would distinguish Chadha, where the Ontario Court
of Appeal refused to certify an indirect purchaser class action because, unlike
in the case at bar, the plaintiffs did not provide evidence that causation and
damages could be proven on a class-wide basis, but instead presumed that pass-through
had in fact occurred.  As the Court of Appeal later explained in Markson at
para. 55, “[i]n Chadha, the plaintiff adduced no evidence that the
result of the defendant’s allegedly illegal acts were passed through to the
consumers who made up the proposed class.”  That is manifestly not true in the
case at bar, says Mr. Mogerman, where the representative plaintiffs have led
significant evidence that pass-through can be established on a class wide basis
and, indeed, that it actually occurred in this case.

B. Issues raised by the
defendants

[118]    
The core of the defendants’ position with respect to the requirement of
s. 4(1)(c) of the CPA is that, on the facts of the case, it is
impossible to demonstrate class-wide harm without the need for individual
inquiries. Thus, liability to the class is not a common issue and the
litigation will not be moved forward in any meaningful way by proceeding as a
class action.

[119]    
The defendants back up their position with the expert evidence of Ms.
Sanderson, an economist who wrote a report rebutting the economic analysis
undertaken by the plaintiffs’ own expert economist, Dr. Leitzinger.

[120]    
The starting point, according to the defendants, is the questions asked
of the experts by counsel. Dr. Leitzinger, the plaintiff’s expert, was asked
these three questions:

i.          Will it be possible to demonstrate the fact of
antitrust injury on the part of members of the proposed class (including both
direct and indirect purchasers) on a class-wide basis, without need for
individualized studies of ‘class member circumstances?

ii.         In that regard, how will the extent of
passthrough of the overcharge from direct purchaser class members to indirect
purchaser class members be determined?

iii.         Can the overcharge
incurred collectively by members of the proposed class be quantified on a
class-wide basis?

[121]     The
defendants state that it is important to note that in para. 3 of his first
report, Dr. Leitzinger was instructed to assume that the allegations were true –
essentially that it was true that the defendants had agreed to inflate prices –
but he was not instructed to assume in his first report and he did not assume
that the alleged conspiracy impacted members of the class generally.   He noted
in footnote 2 that he had “analysed that question as part of my investigation”.

[122]    
In para. 6 of his first report, Dr. Leitzinger set out his conclusions. 
The first three conclusions support the fourth (which is that class-wide harm
can be demonstrated) and represent logical steps in a process of reasoning. 
The first step is to define the relevant market.  The second step is to
determine whether the defendants had monopoly power in that relevant market. 
The third step is whether the suppliers in that relevant market compete
primarily on price.  These three steps led Dr. Leitzinger to the following
conclusion:

iv.        Under these
circumstances, and in light of certain other facts described below, conspiracy
of the sort alleged in this case (intended, among other things, to inflate list
prices) would be expected to inflate prices paid generally by direct purchasers
in British Columbia and Canada

The fifth and sixth steps in Dr. Leitzinger’s conclusions
concern the calculation of the aggregate overcharge and pass-through.

[123]     According
to the defendants, the analysis advanced in Dr. Leitzinger’s first report
entails that each of the first three steps is critical to the conclusion
concerning class-wide harm.  At the first step, Dr. Leitzinger concludes that
the relevant market is a market for the sale of HFCS only in North America. 
This conclusion is fleshed out later in his report, but they argue that it
plainly turns on his view that liquid sugar was not a substitute for HFCS in
the US or in Canada.  This conclusion leads him with relative ease to the
conclusion that the defendants have monopoly power, since they control over 90%
of the HFCS production in North America and HFCS suppliers compete on price
(not product characteristics).  The key step for Dr. Leitzinger in reaching his
conclusion in his first report that class-wide harm can be demonstrated, is
that the relevant market for anti-trust purposes is an HFCS-only market in
North America; in other words, that liquid sugar was not a substitute for HFCS
in either Canada or the US.

[124]     In short,
the defendants say that if there is no credible basis for finding an HFCS-only
market in Canada, purchasers could have avoided price increases by switching to
liquid sugar or threatening to do so.  This means that a finding of anti-trust
injury could not be demonstrated other than through individual inquiries, and
that therefore, class-wide harm is not a common issue in this case.

The relevant market

[125]    
It is common ground that the goal of market definition is to identify
alternatives available to purchasers “which would have constrained the ability
of the defendants to maintain prices for HFCS above a competitive level”.

[126]     It is also
common ground that the “relevant market” is described as that in which a
hypothetical monopolist, who controlled the supply of the products in those
locations, could profitably raise prices above a competitive level.   The scope
of the relevant market is the narrowest combination of product and geography
which would permit this to be done.

[127]    
The defendants placed great emphasis on the effect of the U.S. price
support program for sugar and the consequent differences between the markets in
the U.S. and Canada as they were highlighted in United States v.
Archer-Daniels-Midland Company, 866 F.2d 242 (8th Cir. 1988) [US v. ADM]
a U.S. appellate decision.  The court allowed the appeal, holding that, as
a consequence of the U.S. price support program, sugar was not (for anti-trust
purposes) part of the relevant product market in the U.S.   Addressing market
conditions in the years 1983-85, the court held at paras. 20-22, in part:

We accept the finding that sugar and HFCS are functionally
interchangeable for all uses for which HFCS is suitable, but we cannot ignore
the fact that Congress has enacted a sugar program that has artificially
inflated the price of sugar.   As  a result, the domestic price of HFCS has
been 10%-30% lower than the price of sugar.  Because of the lower price, many
buyers of sugar have turned to HFCS.   As long as an effective price support
program is in existence, a monopolist of HFCS will be able to raise price of
HFCS to just below the supported price of sugar before being constrained by the
competitive forces of sugar

If, at some time in the future, the government decides to
eliminate the price supports, the price of sugar at that time may or may not
constrain the price of HFCS, and we may have to take another look at this
product market.

While sugar and HFCS are
functionally interchangeable, they are not reasonably [economically]
interchangeable because of the price differential between the two products.

[128]     To
summarize the defendants’ position on this issue, it was forcefully contended
on their behalf that the relevant product market included both liquid sugar and
HFCS (because of the functional substitutability of liquid sugar and HFCS), and
was confined to Canada only (by reason of the U.S. price supports, and
evidenced by the tendency in a transparent market for prices to tend to a
single price, through arbitrage, which the defendants claim between the U.S.
and Canada.)

[129]     The
defendants then argue that in Dr. Leitzinger’s first report, he made virtually
no reference to any Canadian market information or data concerning the
substitution between HFCS and liquid sugar, apart from references in para. 27
to the Canadian soft drink industry. This failure to address the specific
Canadian situation, they say, fundamentally flaws his methodology.

[130]     Ms.
Sanderson responded to Dr. Leitzinger’s report in relation to this issue of economic
substitution in her first report.  In that regard, she asked essentially the
same first question concerning class-wide harm and began her inquiry with a
consideration of the relevant market.

[131]     Ms.
Sanderson referred to the differences between the U.S. and Canada and the fact
that HFCS prices in Canada followed world sugar prices and that Canadian sugar
prices were among the lowest in the industrialized world.  As a result, she
noted that reliance upon U.S. data in ascertaining the relevant market for
anti-trust purposes would not be appropriate because demand and supply
conditions are very different in Canada.

[132]     Ms.
Sanderson referred to a Canadian International Trade Tribunal (CITT) report,
which described sales of liquid sugar in the “HFCS substitutable market” at
lower prices than other sugar products.  Ms. Sanderson also referred to other
evidence, such as reports of the Canadian sugar refiners who accepted lower
margins on their liquid sugar sales in order to compete with HFCS producers. 
She also referred to a Statistics Canada report in 2008 that Canadian bottlers
made their decision about whether to use HFCS or liquid sugar on the basis of
relative price.  She referred to the differences in product labelling in the U.S.
and Canada, which reflected the differing economic conditions in the two
countries. In sum, she thought the evidence to be plain that price competition
and substitution between HFCS and liquid sugar occurred in Canada during the
alleged conspiracy period and afterwards.

[133]    
In the CITT staff report, a graph was produced to show the relative
market share of HFCS and liquid sugar in the caloric liquid sweetener market in
Canada.    This graph is produced as Figure 7 at p. 33 of Ms. Sanderson’s first
report.  It shows that the HFCS share of the caloric sweetener market was
around 50% (between 44% and 54% per the first report of Ms. Sanderson)  In
reference to this sweetener market, the CITT staff report stated at p. 17:

Together, liquid sugar and HFCS
account for approximately 54% of the industrial caloric sweetener market [which
includes granulated sugar].   Growth in the use of liquid caloric sweeteners
relative to granulated sugar and the high degree of substitutability between
liquid sugar and HFCS have made the demand for refined sugar increasingly
sensitive to the relative price of HFCS.

[134]    
And further at p. 18 of that report:

HFCS production and use in Canada
tend to shift with world sugar price.  Lower refined sugar prices in Canada
(than the US) have therefore helped contain the growth of HFCS consumption in
Canada.   The relative value of sugar and other sweeteners places a ceiling on
HFCS prices, while its costs of production set a floor price.  If the price of
HFCS exceeds the price of sugar, HFCS users would consider switching to sugar. 
Between this floor and ceiling, the supply and demand balance determines prices
for HFCS.  According to Rogers Sugar, HFCS and sugar compete when sugar is in
the price range from US 10 cents per lb. to U.S. 13 cents per lb raw basis. 
Below the 10 cents threshold, sugar generally prevails, while above 13 cents,
HFCS prevails.

[135]     During the
alleged conspiracy period, the world raw sugar prices on a calendar basis were
in the range of 9.04 cents to 13.44 cents per pound.    The price was only
above 13 cents in one year, 1994 (13.44).    On a fiscal basis, there were two
years in which prices were slightly above 13 cents per pound (13.67 and 13.68).

[136]    
And at p. 29 of the CITT staff report:

Most respondents reported HFCS as
being currently cost competitive vis-à-vis refined sugar, or requiring as
little as a 5% to 10% change in relatives prices to be cost competitive.  Since
HFCS is primarily a liquid sweetener, however, its substitutability is limited
to liquid applications, predominately in the beverage segment, and to a lesser
extent in canning, baking and dairy uses.

[137]    
The defendants also cited other sources such as the staff report
accompanying the CITT report, and the reports of the sugar refiners available
in the public domain, which seemed to suggest that HFCS producers competed with
sugar refiners in Canada, in contrast with the U.S.

[138]    
The defendants submit that this evidence of price competition in the
Canadian market entirely undermined the market analysis in Dr. Leitzinger’s
first report and his conclusion that sugar was not a substitute for HFCS in
Canada.  There was, they say, no “credible or plausible basis” for asserting
class-wide harm or impact and the first question posed by both experts would be
answered in the negative.

[139]    
The defendants then criticize Dr. Leitzinger’s second report, in which
he responded to the criticisms of Ms. Sanderson in her reply to his first
report. They submit that when confronted with evidence challenging the premises
upon which Dr. Leitzinger’s first report rested, he simply dismissed these
challenges as “merits issues”. For example, with respect to the relevant market
issue, the role of the court on class certification, according to Dr.
Leitzinger, is simply to decide if the relevant market issue can be determined
with common or formulaic evidence.

[140]     The
defendants also argue that Dr. Leitzinger embarked upon a circular journey of
reasoning. They say he wrongly assumed that the legal framework of the case
required an assumption of joint conduct affecting Canadian prices, and wrongly
assumed that the market must include the U.S. because to assume
otherwise would mean that the claim would fail.  However, individual claims may
continue to have a legal basis.  It is a credible assertion of class-wide harm
underlying this certification application that cannot be made out on the
evidence, the defendants say.

[141]     Dr.
Leitzinger, though he dismissed many of the arguments of Ms. Sanderson as going
to the merits, did address some of them on a substantive level. He stated that one
of the defendants priced HFCS against the price of sugar, regardless of the
cost of corn and that it earned an operating margin on its HFCS sales; that is,
it priced HFCS above its marginal cost of production.  Although it is not
expressly stated, the inference is that ignoring the price of corn or earning a
profit is somehow suggestive of conspiratorial pricing.

[142]     In Dr. Leitzinger’s
second report, he referred to the ‘cellophane fallacy’ as a possible
explanation of the price competition observed between HFCS and liquid sugar. The
cellophane fallacy is so named because it played a role in a price-fixing case
involving DuPont, a major manufacturer of that product. If a conspiracy had not
been afoot, then cellophane would have been priced far lower than tinfoil or
wax paper. However, during the time of the conspiracy, cellophane was priced
close to those other products and so consumers would switch between them. Thus,
it appeared that the products all formed a competitive single market, even
though the only reason for this was the conspiracy. The fallacy is a warning to
economists to exercise care in analysing price and demand relationships during
an alleged conspiracy, as the conspiracy may have distorted them.

[143]     Ms.
Sanderson addressed this issue at paras. 13-17 of her second report and in her
cross examination.    In her cross examination,  she stated that she should
have referred expressly to the fallacy and noted, by reference to the evidence
in her first report, that the price and demand relationships were no different
prior to or after the alleged conspiracy than they were during it.  Put another
way, when the alleged conspiracy ended, the sugar refiners were still competing
with the HFCS producers, as they had during the alleged conspiracy.   This, she
says, is the obvious and simple test to determine if the fallacy was at work
during the alleged conspiracy period.

[144]     The defendants
submit that there is ample public information from the sugar refiners (in
annual statements and other required reporting) that shows that the sugar
refiners competed with the HFCS producers, more or less effectively, depending
upon the world price of sugar, before, during and after the alleged conspiracy,
and thus the cellophane fallacy was not at work.

Other aspects of the expert reports bearing on the relevant market

[145]    
At paragraphs 28 to 35 of his first report, Dr. Leitzinger addressed whether
the relevant geographic market should include the U.S.   As noted above, this
part of his opinion is premised on his prior conclusion that liquid sugar is
not part of the relevant product market. If liquid sugar is not part of
the relevant product market, Dr. Leitzinger concluded that the relevant
geographic market must include the U.S., arguing that U.S. producers of HFCS
could compete with Canadian producers of HFCS in such a market.

[146]     At
paragraphs 32 to 37 of his second report, Dr. Leitzinger returned to the issue
of the relevant geographic market. It was submitted by the defendants that, as
in his first report, his comments in these paragraphs are not relevant if the
product market in Canada includes liquid sugar.

[147]     My view is
that these arguments fall too far on the merits side of the spectrum. On the
evidence before me, it certainly seems possible that the cellophane fallacy was
distorting the market to a sufficient degree such that liquid sugar appeared to
be competing with HFCS, making it appear that the market in Canada included
liquid sugar. Dr. Leitzinger has exhibited a credible and plausible methodology
(the “but-for” method which would look at the difference between the prices as
they would have been but for the conspiracy, and what they actually were) in
order to calculate the defendants’ wrongful gains.

[148]     The
defendants’ other argument regarding transportation costs is purely a merits
argument that simply presents conflicting evidence to that asserted by the
plaintiffs. It is not the time to address such conflicts in the evidence.

Monopoly power

[149]    
The arguments presented by the defendants with respect to whether and to
what extent market share can be evidence of monopoly power amount, in my view,
to a so-called “battle of the experts”. On the evidence before me, there is
enough to satisfy me that the low threshold required at the certification stage
(as reiterated in DRAM by the Court of Appeal) has been met by the
plaintiffs on the issue of monopoly power.

Aggregate overcharge – lack of data issue

[150]    
The defendants raise one important problem with the plaintiffs’ proposed
methodology for determining aggregate overcharge without the need for
individual inquiries. They assert that there is a lack of data to populate the
plaintiffs’ proposed econometric models so as to give them statistically
meaningful results.

[151]     The
alleged conspiracy began 22 years ago, and that raises a serious question as to
whether the necessary data still exists.  Ms. Sanderson states that, by reason
of her experience, she considers it to be highly unlikely that the necessary data
will be available.

[152]     In para.
69 of his first report, Dr. Leitzinger stated that some data could be extracted
“from Defendants’ sales data”.   This is the starting point for the use of
statistical techniques to ascertain the prices that would have prevailed but
for the conspiracy. The evidence of Casco (with over 80% of the Canadian
market) is that it no longer has transactional records; that is, records of
what was sold to particular customers, in what amounts, at what prices and
when. The evidence, according to the Kee and Van Altena affidavits, is that a
comprehensive search was made for this data, but none was recovered. The situation
is the same for Staley according to the Ruff affidavit.  (The plaintiffs have
full access to Staley’s evidence under their settlement agreement with Tate
& Lyle.)  The transactional records of the remaining defendants represent a
tiny fraction of the overall sales of HFCS in the Canadian market during the
alleged conspiracy; according to Ms. Sanderson’s first report.

[153]    
Could one obtain the transactional data from customers of the
defendants?  Ms. Sanderson stated in her first report that it is “highly
unlikely” that customers would have retained any transaction level data for the
period 1988 to 1995.

[154]     The
defendants submit that it is not enough for Dr. Leitzinger to respond to Ms.
Sanderson’s evidence concerning the availability of necessary data,
corroborated by the defendants’ affirmative evidence that the data does not
exist, with bald speculation that it may be found on discovery.

[155]     Mistakenly,
Dr. Leitzinger also contends in his second report that if a regression analysis
does not produce a statistically significant result, it does not mean that the
court would reject it.   He suggested that the standard economic measure of reliability
(a 90% or 95% confidence level) is not the standard the court applies (balance
of probabilities). The defendants submit, and I agree, that he was here
confusing his role as an economist with the role of the court as a finder of
fact.

[156]    
The decision of this Court in Steele v. Toyota Canada Inc., 2008
BCSC 1063 is helpful in illustrating the role of an expert economist on a
certification application.   In that case, the court had to deal with the
commonly accepted confidence levels used by economists in statistical
analysis.   The case concerned a Toyota marketing campaign which was allegedly
anti-competitive.    The plaintiff sought to certify a class with respect to
the sale of almost 40,000 new cars by 33 dealers in British Columbia.   Ehrcke
J. referred to the evidence of the experts:

[43]           The issue
of statistical significance was vigorously debated back and forth in a series
of reply reports prepared by Dr. Brander and Dr. Woodcock.  In his reply
report dated March 7, 2008, Dr. Woodcock acknowledged that “the 95 percent
confidence level is the most commonly applied in econometric studies” and that
his analyses never reached that level.  However, he offered the view that
it is simply a convention to treat 95% as the confidence level required for
statistical significance.

[44]     
     In reply, Dr. Brander was critical of Dr. Woodcock’s
approach.  He criticised Dr. Woodcock’s regression analysis as an exercise
in “specification search”, which has the effect of distorting results.  He
said it was inappropriate to use a one-sided test in this case, which
artificially inflates the apparent confidence level.  He also maintained
that using the 95% standard ordinarily used by statisticians, one could not say
that Dr. Woodcock’s results were statistically significant.

[157]    
The court addressed the expert evidence in relation to class-wide harm
and the inquiry into preferability:

[122]      As the plaintiffs’ claims in
the case at bar are not based in contract, and as proof of liability for the
causes of action which they have pleaded require proof of loss or damage, I do
not agree with their submission that the defendants’ liability can be
established by proving loss on a class-wide basis through econometric evidence.

[123]      Moreover, even if, as a matter
of law, liability could be established by class-wide econometric evidence as
the plaintiffs propose, I do not agree that the evidence they have led on this
application shows that such proof would in fact be possible in this case.

[124]      While I agree with the
plaintiffs that it is not appropriate on this application to attempt to resolve
the conflicts between the opinions of the various experts, the onus
nevertheless is on the plaintiff to lead some evidence to show that proof of
loss on a class-wide basis may be possible.  I do not believe that they
have succeeded in doing so.

[125]      Dr. Brander’s expert opinion
is that it is very unlikely the Access Program caused any aggregate price
increase in Toyota Corollas.

[126]     
Dr. Woodcock’s opinion is that the Access Program increased transaction prices
for eight of twelve sub-models of Toyota Corolla.  Using a one-sided test
he found a confidence level of 94.91%.  Both Dr. Brander and Dr. Woodcock
agree that the ordinarily used standard for statistical significance is
95%.  Even without trying to resolve the differences of opinion between
the experts, therefore, there is agreement that Dr. Woodcock’s analysis does
not reach the standard of statistical significance that is commonly employed in
the profession.

[158]     Economists
develop statistical models in order to estimate various results.   These models
are treated by them as producing a reliable result if the commonly accepted
confidence level is achieved.   This has nothing to do with the civil burden of
proof on the balance of probabilities. It is up to the trier of fact to
determine the weight that he or she wishes to place upon the economic evidence,
given a certain percentage confidence level as calculated.

[159]     The
defendants submit that Dr. Leitzinger gives no opinion that, if most purchasers
of HFCS can substitute or credibly threaten to do so, a regression analysis
will produce a statistically reliable overcharge.   Ms. Sanderson’s evidence is
that it will not. The defendants also contend that Dr. Leitzinger’s suggestion
that if there is no transactional data from Canada, “useful guidance” may be
provided from overcharge analyses in the U.S. is no answer to a data deficiency
in relation to the Canadian market.

[160]     However,
these two criticisms are both based on statements of fact that the defendants contend
are different than what the plaintiffs say they are. The first is the fact that
HFCS and sugar were in the same market, and the second is that the Canadian
market was separate from the U.S. These are merits issues. On my reading of Steele,
the plaintiff and defendant agreed that the statistical significance of the
analysis performed was 94.91%. In this case, there is no agreement as to what
the statistical significance of the data will be – it has not even been
measured yet. The time to determine the statistical significance of the
analysis will be after the data has been collected and analyzed. The
conclusions, and their statistical significance, can then be weighed against
all the other evidence by the trial judge with the full confidence that all possible
avenues of data collection were explored.

[161]     At this
point, I am not convinced on the evidence presented by both parties that there
will not be enough data to provide a statistically significant analysis of the
overcharge.

C. Final analysis and conclusions

[162]     The main question
upon which the experts disagree is whether it is possible to assess loss, harm,
damage, or deprivation on a class-wide basis, without regard to the individual
circumstances of class members. The difficulty of this question is that in the
context of this particular case, it straddles the line between a “merits
question” and what I would call a “methodology question”. According to the
jurisprudence as it has developed so far, at the certification stage, questions
in the former category are not to be determined by the judge, whereas questions
in the latter category must be decided in order to determine whether the
plaintiff has shown a “credible or plausible methodology” for demonstrating
class-wide harm, including pass-through to indirect purchasers.

[163]    
At times, the defendants seem to confuse these two types of questions.
In their submissions, they often refer to a requirement that the plaintiffs
show a “credible and plausible basis” for class-wide harm. This is an incorrect
statement of the test. The jurisprudence is clear that what is required is a
“credible and plausible methodology” for showing class-wide harm and
pass-through. If the methodology takes as inputs certain facts or data (such
as, for example, the relevant market) then the court is not in a position at
the certification stage to weigh conflicting expert opinion establishing these
facts or data.

[164]    
What is to be done when the question of whether a plaintiff has shown a
credible or plausible methodology depends on finding some fact that is clearly
a merits question that would otherwise be determined only at trial on a full
evidentiary record? In my view the standard that must be applied at the
certification stage for facts upon which a methodology for determining class-wide
harm or pass-through is based must be the same as that of the facts alleged in
the pleadings and it must be a standard which the certification judge accepts
as disclosing a cause of action ─ unless patently ridiculous or incapable
of proof, such facts should be accepted as proved and assumed to be true.

[165]    
With respect to the price supports in the U.S., the 8^th Circuit
decision that the defendants cited (US v. ADM, supra) specifically
said that without price supports, the price of sugar may or may not
constrain the price of HFCS. Thus it is not as clear as the defendants suggest
that the defendants were not able to maintain monopoly power in the HFCS market
and conspire to maintain the prices of HFCS at just below the market rate of
sugar. As long as there were some differential in the costs of producing these
two products, the HFCS suppliers would have room to artificially raise prices.
Evidence and allegations have been presented by the plaintiffs that this is the
case. It is not for the certification motion judge to finely weigh conflicting
evidence on what is clearly a merits issue.

[166]    
In my view, the criticism put forth by the defendants of Dr.
Leitzinger’s second report is not completely well-placed. On my reading of the
second report, he was not attempting to side-step the issue of the
determination of the relevant market by assuming facts he set out to prove in
his first report. He was attempting to argue that Ms. Sanderson’s criticism of
those facts was a matter for the courts to determine at trial, and that the
only appropriate criticism would be that his methodology was unsound, not his
facts.

[167]     Neither
Dr. Leitzinger’s allegations of fact nor his methodology were patently unsound
as a means of proving pass-through and class-wide harm on a class-wide basis.
Thus, the requirement under s. 4(1)(c) of the CPA has been satisfied by
the plaintiffs.

VII. IS A CLASS PROCEEDING THE PREFERABLE PROCEDURE – s.
4(1)(d)

[168]     The
preferability requirement has two aspects.  (See Court of Appeal in DRAM
at para. 71.)  The first is whether the class action is a fair, efficient and
manageable method of advancing the claim.  The second is whether the class
action is preferable to other reasonably available means for resolving the
claims of class members.

[169]    
According to s. 4(2) of the CPA, to determine whether a class
proceeding would be the preferable procedure for the fair and efficient
resolution of the common issues, the court must consider all relevant matters, including:

(a)        whether
questions of fact or law common to the members of the class predominate over
any questions affecting only individual members;

(b)        whether
a significant number of the members of the class have a valid interest in
individually controlling the prosecution of separate actions;

(c)        whether
the class proceeding would involve claims that are or have been the subject of
any other proceedings;

(d)        whether
other means of resolving the claims are less practical or less efficient;

(e)        whether the administration of
the class proceeding would create greater difficulties than those likely to be
experienced if relief were sought by other means;

[170]     The
plaintiffs submit that, as in DRAM, Microsoft, and Irving
Paper, the common issues in this case are the predominant liability issues
facing any claim by the defendants.  The existence and duration of the alleged
conspiracy is fundamental to a successful claim. Mr. Mogerman submits that the
plaintiffs are not aware of any actions in Canada other than this action and
its Ontario companion, and they submit that if any other proceeding is
commenced, it may be managed in the opt-out process in any event.

[171]     The
plaintiffs submit that private actions may be, but are unlikely to be economic
for any indirect purchaser, and for any but the largest of direct purchasers of
HFCS.  The cost of pursuing any such claim individually would be wasteful of
judicial resources.  The cost of such litigation to the parties could exceed
damages.

[172]     One reason
cited by the plaintiffs as to why individual claims are rendered uneconomical
is the complexity of the Competition Act, along with the claims in tort,
restitution, and constructive trust issues, leading to high legal costs and
also including costly expert reports and other disbursements, often far exceeding
the value of any one class member’s claim.

[173]     The
plaintiffs extoll the heightened role of behaviour modification in a case such
as this.   It is a goal of both the CPA and the Competition Act to
deter illegal conduct harmful to consumers and the economy, and a class action
is the most effective way and often the only way to ensure that defendants with
huge resources will be deterred from wrongdoing by the financial consequences
of an adverse judgment.

[174]     In General
Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641, the
Court held that private civil damages in general, and the enforcement
provisions of the Combines Investigation Act, R.S.C. 1970, c. C-23 (the
predecessor to the Competition Act) together form “a bulwark of
antitrust enforcement” and “one of the arsenal of remedies created … to
discourage anti-competitive practices”. The problem is that aggrieved persons are
empowered to use such arsenals only if there is an effective class proceeding
vehicle to facilitate their actions.

[175]     The
plaintiffs submit that, as was the case in DRAM, everything but the
allocation and distribution of monetary awards in this case can be decided on
common evidence and, therefore, questions of distribution of the disgorged
profits can be determined without the participation of the respondents. The
result represents a contribution to the goal of judicial economy.  On the other
hand, where a common issue turns out to be unmanageable, the judge has the
power to decertify the action.

A. Limitation Periods

[176]    
Mr. McEwan, for the defendant Cargill, whose submissions were adopted by
the other co-defendants argues that the potential for individual limitation
period issues in this case will split the litigation into an unmanageable
series of individual inquiries that make a class action not the preferable
procedure in the circumstances. Mr. McEwan submits that even if the
plaintiffs are ultimately successful, with respect to the common issues related
to damages, only Ms. Bredin herself and not the rest of the indirect purchasers
in the class will have established a right to relief. This is because only Ms.
Bredin’s individual circumstances are known and the limitation period may be
declared to have been postponed.

[177]     The
defendants cite Knight at para. 34 for the general proposition that a limitation
period postponement cannot be determined collectively as a common issue.

[178]     In my
view, Knight does not go as far as the defendants would wish.  The
chambers judge found, and the Court of Appeal agreed, that postponement could
not be determined as a common issue. However, he found at para. 56 of his
decision that one sub-issue of the limitations issue, i.e., whether or
not the defendant willfully concealed material facts, could be a common issue.

[179]    
The Court of Appeal, in its discussion of the limitation issue at 33-36,
relied to some extent on Novak v. Bond, [1999] 1 S.C.R. 808, 172 D.L.R.
(4th) 385 [Novak], where McLachlin J. (as she then was) noted at para.
86:

Whether a particular
circumstance or interest has the practical effect of preventing the plaintiff from
being able to commence the action must be assessed in each individual case.
Section 6(4)(b) requires that the circumstances and interests of the individual
plaintiff be taken into account. What is a serious, substantial, and
compelling interest in one case may not be so in another case. Purely tactical
concerns play no role in this analysis because they do not relate to the
practical ability of the plaintiff to bring an action, as assessed by a
reasonable person who takes into account all his or her circumstances and
interests. See Trueman v. Ripley, [1998] B.C.J. No. 2060 (S.C.).
[Emphasis in original.]

[180]     However, Novak
was not a class action and it is a great leap to say that McLachlin J. meant to
foreclose the possibility of any class action being certified where the
plaintiffs were relying on postponement of a limitation period. One can
certainly think of many situations where the facts establish that the
circumstances and interests of an entire class of plaintiffs are common and are
enough to satisfy s. 6(4) such that the limitation period may be postponed for
all of them. In other words, it is possible to still have one’s individual
circumstances taken into account but at the same time also recognize that one’s
individual circumstances are the same as many other individuals.

[181]     In my
view, the chambers judge and the Court of Appeal judges in Knight only
relied on Novak to the extent that the facts as presented there were
limitation postponement sub-issues that were not common to the class members,
and then they found that individual class members needed to have their
individual circumstances taken into account because of the rule in Novak.

[182]     I find
that the circumstances of this case, on the evidence before me, are different
than those in Knight, with respect to the limitation period issues. For
the indirect purchasers it is still an open question as to whether there exist
certain facts or circumstances such that postponement is a common finding for
them, or in the alternative, whether the class can be split into sub-classes,
each with their own common limitation circumstances. At this point, I am not
prepared to say that the limitations question is not a common or collective
issue.  The defendants’ submission that the bulk of the class (the indirect
purchasers) has no cause of action irrespective of how the other common issues
are determined cannot stand in my view.

B. Conflict of interest issue between direct and indirect
purchasers

[183]    
In light of my finding below in section VIII.A that at this stage, there
is no conflict of interest between direct and indirect purchasers with respect
to pass-through, there is therefore no further issue with respect to whether or
not a class proceeding is the preferable procedure with which to proceed with
this litigation. The plaintiffs have thus satisfied their burden in relation to
s. 4(1)(d) of the CPA.

VIII. IS THERE A REPRESENTATIVE PLAINTIFF? – s. 4(1)(e)

[184]    
Sun-Rype Products is a direct purchaser of HFCS. Wendy Bredin is an
indirect purchaser of HFCS. The plaintiffs submit that the proposed
representative plaintiffs have no conflict with other members of the proposed
class and would fairly and adequately represent the interests of the proposed class.

[185]     The
plaintiffs cite DRAM at para. 78 and Vitapharm at para. 44 for
the proposition that because this action involves a conspiracy claim, all the
members of the proposed class have a common interest in proving the existence
of the conspiracy and in maximizing the amount of class wide damages. It would
only be after the defendants alleged wrongful gains are calculated that a
conflict of interest may arise between the plaintiffs (when, to put it
colloquially, they would begin to fight over the spoils).

[186]     With
regard to the litigation plan, the plaintiffs submit that the proposed
litigation plan sufficiently addresses the requisite issues and demonstrates
that the representative plaintiff and class counsel have thought through the
process of the proceeding.

A. Are the direct and indirect purchasers in a conflict
of interest?

[187]    
The existence of the pass-through defence is a proposed common issue. 
The defendants submit that there is a conflict of interest between the direct
purchasers and the indirect purchasers in respect of pass-through.

[188]     This is a
follow-on to the argument that was presented by the defendants under section
IV.D above. The defendants argue that the court can only reach one of three
possible conclusions:

a) pass-through may be a legally
recognized defence. In this case, the defendants would potentially be liable to
direct purchasers only to the extent the overcharge was not passed on. Then as
a corollary their potential liability to indirect purchasers would correspond
to the extent that the overcharge was passed on.

b) pass-through may not be a
defence. In this case, the defendants would be potentially liable to direct
purchasers for 100% of the overcharge and either:

i. the defendants may bear
additional liability to indirect purchasers for any passed-on overcharge,
making them liable to disgorge more than 100% of the wrongful gains; or

ii. the defendants may have a
defence to any additional claims of indirect purchasers, on the basis that one
cannot be required to disgorge more than one has gained.

[189]     The
conflict, according to the defendants, is that direct purchasers would prefer
option (b), while indirect purchasers would prefer option (a) or (b)(i). To the
extent that the indirect purchasers prefer option (a), say the defendants, this
will put them in direct opposition to the direct purchasers in the legal
arguments they will wish to advance in relation to the pass-through defence /
cause of action issue.

[190]     The
defendants submit that the law is clear that the answer is (b)(ii). However,
they say that the very existence of the issues means that the proposed class
consists of persons who are diametrically opposed in interest as to whether
there is a cause of action.

[191]     The
defendants acknowledge that a similar argument was rejected by the Court of
Appeal in DRAM, at para. 78. However, they dismiss the similarities as
“superficial”, saying that the conflict in that case did not engage s. 4(1)(a)
of the CPA as it does in this case (see section IV.D above.)

[192]     In my
opinion, while the argument has been presented in a slightly different context,
the argument is largely the same and should be rejected here as well. I am of
this opinion, even taking into consideration the defendants’ submission that s.
4(1)(a) is engaged.

[193]     As I
discussed in section IV.D above, the defendants’ view that “if pass-through is
not a defence then the indirect purchasers have no cause of action” is not a
legal certainty. Firstly, it is not even clear that the common issue regarding
pass through proposed by the plaintiffs even refers to direct versus indirect
purchasers. It could also refer to the argument made by the defendants
regarding the “leakage” of HFCS or HFCS-containing products to outside British
Columbia and the extent to which the defendants can use this “leakage” to argue
that the losses were “passed-on” to consumers outside British Columbia.

[194]     Even
assuming that this is an arguable issue that needs to be determined at trial, I
disagree with the defendants’ contention that the resolution of the issue
places the direct and indirect purchasers in conflict at this stage. At the
certification stage, both direct and indirect purchasers have an interest in
moving the litigation forward to trial. They both have the same interest in not
engaging s. 4(1)(a) by not arguing that the other has no cause of action. It is
like the classic “prisoner’s dillemma”, where two prisoners can only escape
from their cell if they co-operate, even though both may have an incentive to
turn the other in. The only parties at this time that have an interest in
having the direct and indirect purchasers in a conflict of interest are the
defendants.

[195]     The
“options” set out above are not the only possible conclusions that this court may
draw.  As I discussed in section IV.D above, it is possible for pass-through to
have occurred in fact (giving the indirect purchasers a cause of action) but
pass-through not to be accepted as a defence at law (meaning the defendants
cannot say that some of the losses were passed on to extraprovincial
purchasers, or from one part of the class to another part.) In such a
situation, the defendants would have to disgorge exactly 100% of their wrongful
gains to the class as a whole. At a later stage, the direct and indirect purchasers
may be in a conflict when the time comes to divide the money (if a court
determines it is to be paid), but that time is not now. Both “prisoners” at
this point simply wish to help each other “escape”.

B. Are Sun-Rype and Ms. Bredin
appropriate representative plaintiffs?

[196]    
The CPA requires a representative plaintiff who is a member of
the class he or she purports to represent (ss. 2(1) and (2)) and who would
fairly and adequately represent the interests of the class (s. 4(1)(e)(i)).

[197]     The
defendants argue that Ms. Bredin has failed in her evidence to demonstrate that
she is a member of the class she purports to represent.  They argue that both
Sun-Rype and Ms. Bredin were “recruited” by plaintiff’s counsel, have acted as
representative plaintiffs in other cases before, and are in a conflict of
interest.

[198]     The
defendants submit, and I agree to a great extent, that a class action must have
a representative who has a real interest in the dispute and will provide fair
representation to the class. The representative must be able to instruct
counsel and to exercise independent judgment concerning the important issues
that will arise during the progress of the litigation. The representative
plaintiff cannot be a mere benchwarmer or a puppet manipulated by counsel. They
cite Singer v. Schering-Plough Canada Inc., 2010 ONSC 42 at para. 216;
and also Chartrand v. General Motors Corp., 2008 BCSC 1781, at paras.
47, 99, and 102.

[199]     While
recruitment by counsel is not necessarily fatal, it is a factor to be
considered in determining whether the plaintiff has the necessary interest,
independence and incentive to fulfill his or her duties to the class. It is
also a factor to be considered in assessing whether there is indeed an
underlying class with an actual grievance, as opposed to an issue “identified
by the industry of counsel” (Singer at para. 221.)

[200]     The
plaintiffs respond that the proposed representative plaintiffs have shown they
have exactly what it takes to be representative plaintiffs. The fact that Ms.
Bredin does not understand the factual or legal intricacies of a massive,
international price-fixing conspiracy should come as no surprise, they say, and
certainly does not stand in the way of her capacity to represent the class.

[201]    
Rather, they argue that her case is similar to that of the
representative plaintiff in Segnitz v. Royal & Sun Alliance Insurance
Company of Canada, 2003 CanLII 36378 (Ont. S.C.J.), where Hines J. observed
at para. 14:

… It should perhaps be
remembered in cases such as these that no representative plaintiff will have
much of a stake in the ultimate outcome since the potential recoveries are so
modest.  Therefore reality dictates that the test for adequacy of the
representative plaintiff is in large part a test of the capacity of class counsel
to properly pursue the action in the best interests of the members of the
class.  I am satisfied that that requirement is fulfilled in these
actions.

[202]    
Similarly, in Momi v. Canada (Minister of Citizenship and
Immigration), 2006 FC 738, [2007] 2 F.C.R. 291, a class proceeding seeking
restitution of fees charged for immigrant visas, authorizations, or Minister’s
permits, the Federal Court stated at para. 75:

One would hardly expect lay
persons, including immigrants to Canada, to have professional knowledge of immigration
law and class action procedure. Indeed, most lawyers do not. The Hintons
consider there was a basic unfairness in the process. I am satisfied that they
would fairly and adequately present the interests of the class.

[203]     With
respect to the fact that some of Sun-Rype’s claims have been struck because of
limitation defences, the plaintiffs submit that this does not stand in the way
of Sun-Rype’s ability to be a representative plaintiff, as the representative
plaintiff can assert causes of action that he does not have, according to MacKinnon
v. National Money Mart Co., 2004 BCCA 472, 33 B.C.L.R. (4th) 21 at para.
51.

[204]     Finally,
the plaintiffs point out that the argument that Sun-Rype and Ms. Bredin are
“shelf” plaintiffs was made and rejected in Microsoft, at paras. 186-7.

[205]     I find the
circumstances of this case to be such that the court’s observations in Segnitz
and Momi are more applicable than those in Singer or Chartrand.
Further, as I have come to the conclusion that the direct and indirect purchasers
are not in a conflict of interest for the purposes of this certification
motion, the two representative plaintiffs are not in a conflict of interest
with each other at this point. Finally, Sun-Rype can assert causes of action on
behalf of the class that it may not have itself, per MacKinnon, and I do
not consider the fact that both representative plaintiffs have acted as
representative plaintiffs in other class actions to be an overwhelming strike
against them.

[206]     For these
reasons, I find that the plaintiffs have satisfied the requirement under s.
4(1)(e) of the CPA.

IX. AIR OF REALITY ISSUE

[207]    
The defendants raise one more issue with respect to both the existence
of an identifiable class and the preferability of a class proceeding. Citing
the judgment of Bauman J. (as he then was) in Samos v. Pattison, 2001
BCSC 1790, 22 B.L.R. (3d) 46 at para. 166, they argue that this is “the type of
case where an identifiable class of persons with common issues is not obvious”
and that therefore “the putative representative must show that the proposed
class is defined sufficiently narrowly by leading evidence on the certification
application.” This is “an air of reality test of a sort”.

[208]     The
defendants then state that because there is no evidence of any complaint from any
soft drink producer about the alleged fixing of prices for HFCS, and a large
proportion of the HFCS market consists of soft drink manufacturers, there is
therefore a lack of an air of reality in the case at bar. Further, they say
that because the premise of the plaintiffs’ case is fundamentally flawed (in
the market definition aspect), there is no air of reality to the case.

[209]     Firstly,
evidence of complaints of other class members, while adjudged to be necessary
for an air of reality to have existed in both Hollick and Samos,
is not an appropriate general test for all class actions. The air of reality
test must have a relation to the causes of action pleaded. For example, if the
cause of action is nuisance, as it was in Hollick, or economic
intimidation and misrepresentation, as it was in Samos, then the
air of reality test may very well be complaints from putative class members.
However, this is not a claim in nuisance. The conspiracy in this case is
alleged to have been secret. Thus it is not surprising that there is no
evidence of complaints having been made.

[210]     It seems
to me from an overview of the jurisprudence in the area of price-fixing class
actions that involve indirect purchasers, that the required “air of reality”
for these special types of class action certifications consists of a credible
and plausible methodology for establishing pass-through of losses to the
indirect purchasers, a credible and plausible methodology for calculating the
defendants’ alleged wrongful gains, and pleaded facts which, if later judged to
be true, would establish the defendants’ wrongful conduct and would provide
sufficient data such that these methodologies would work. I have found all of
these to be present in this case. I note that this is not the only requirement
for certification, the requirements of the CPA must still be met.

X. CONCLUSION

[211]     Having
found that the proposed action satisfies all the elements under s. 4(1) of the CPA,
the case will be certified as requested by the plaintiffs in their Notices of
Motion dated March 23, 2010 and March 24, 2010.

“The Honourable Mr.
Justice Rice”