Fair(er) Weather Ahead for Canadian Competition Class Action Defendants?

Decision Rejecting Proposed Canned Tuna Class Action May Portend Fair(er) Weather
Ahead for Canadian Competition Class Action Defendants

Canadian competition class action jurisprudence has been plaintiff-friendly for many years, with defendants facing stiff headwinds and other inclement weather at the certification stage. Recently, however, the Ontario Superior Court declined to certify to two proposed price-fixing class actions, brought by representative plaintiff Vanessa Lilleyman, alleging that several canned tuna companies had conspired to fix the price of canned tuna in Canada.

Like many Canadian price-fixing class actions, Ms. Lilleyman’s proposed class actions followed guilty pleas obtained by US Department of Justice, Antitrust Division. Extrapolating from the facts underpinning the US plea agreements (i.e., that Bumble Bee, COSI and Starkist Company had conspired from 2011 to 2013 to fix the prices of their respective tuna products sold in the United States), Ms. Lilleyman filed a proposed class action alleging that Bumble Bee Foods, COSI, Starkist Company, and certain associated corporations, partnerships and equity owners engaged in a twenty-year price-fixing conspiracy in Canada.

The standard for class certification in Canada is less rigorous than in the US. The first criterion in Canada is that the proposed representative plaintiff’s pleadings must disclose a reasonable cause of action. In determining whether the pleading discloses a reasonable cause of action, no evidence is admissible and the material facts pleaded are accepted as true, unless patently ridiculous or incapable of proof.

The plaintiff must also show “some basis in fact” each of the following four certification criteria: (1) there is an identifiable class of two or more persons that would be represented by the representative plaintiff; (2) the claims of the class members raise common issues; (3) a class proceeding would be the preferable procedure for the resolution of the common issues and (4) there is a representative plaintiff who would fairly and adequately represent the interests of the class.

The court found that the plaintiff did not meet the cause of action criterion or satisfy the common issues or preferable procedure criteria, with the result that “her class action battleship sank like the Bismarck”. The decision is notable for at least three reasons. First, it applies well-settled rules of pleading in determining whether the reasonable cause of action criterion has been met. In adhering to and meaningfully applying those rules, the court found that there were at least fourteen (14) substantive pleading deficiencies that were ultimately fatal to the plaintiff’s request for certification, including a failure to plead specific acts to specific defendants. Second, it confirms that under the common issues criterion, a proposed representative plaintiff is “obliged at least to show that there is some evidentiary foundation to conclude that the alleged conspiracy with attendant harm to the Class Members could or might have occurred in Canada”. The Court found that there was no basis in fact for the existence of the alleged conspiracy. Finally, as can be seen from the foregoing, the decision applies the Supreme Court of Canada’s direction that certification is meant to be a meaningful screening device.

Lilleyman is one of several recent decisions in which Canadian courts have applied a meaningful (and appropriate) level of analysis of proposed competition class actions. These decisions may collectively represent a proverbial red sky at night portending fair(er) weather ahead for Canadian competition class action defendants.