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Complex Distribution Chain Kills DRAM Class Action – Pro-Sys Consultants Ltd. v. Infineon Technologies AG

Citation: (2009) 23:2 Can. Comp. Record. 46

A proposed class action by purchasers of electronic goods containing DRAM memory chips would degenerate into a series of individual trials, the British Columbia Supreme Court has held in Pro-Sys Consultants Ltd. v. Infineon Technologies AG.2 Key issues, including whether the plaintiffs paid more because of price-fixing by manufacturers of the chips, could not be determined on a class-wide basis. The court thus refused to certify the action as a class proceeding.

This decision confirms that class actions for price fixing by indirect purchasers3 that are at the end of a long distribution chain are virtually impossible in Canada. This principle was first established by Ontario courts in Chadha v. Bayer,4 but has since been challenged by two recent cases that accepted the use of aggregate measures of damages,5 and undermined by courts’ acceptance of attempts to get around Chadha.6 The BC court reaffirmed Chadha’s holding that aggregate assessment of damages cannot be used to establish liability.

The BC court’s decision also establishes the following important principles:

  • The goal of behaviour modification, which underlies class action legislation, can be satisfi ed through enforcement action and settlements with direct purchasers in the United States.
  • A proposal for cy-près distribution of damages (that is, payments to charities rather than to the consumers who lost money) suggests that the goal of access to justice is not served by the class action.
  • There are irreconcilable conflicts between class members in a class that includes direct and indirect purchasers at different distribution levels.
  • Waiver of tort still requires a causal link between the unlawful conduct and harm to the plaintiff. Thus it does not avoid the central problem that harm to indirect purchasers cannot be demonstrated on a class-wide basis.

Read the entire article (PDF) and footnote references.

W. Michael G. Osborne
Affleck Greene McMurtry LLP

W. Michael G. Osborne

Michael Osborne is a former Partner of Affleck Greene McMurtry LLP

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