2011 QCCA 2116, 2011 QCCA 2116

Option Consommateurs c. Infineon Technologies, a.g. 2011 QCCA 2116 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-018872-085 (500-06-000251-047) DATE: NOVEMBER 16, 2011 CORAM: THE HONOURABLE ANDRÉ FORGET, J.A. FRANÇOIS PELLETIER, J.A. NICHOLAS KASIRER, J.A. OPTION CONSOMMATEURS APPELLANT – petitioner and CLAUDETTE CLOUTIER Designated person v. INFINEON TECHNOLOGIES AG and INFINEON TECHNOLOGIES NORTH AMERICA CORP. and MICRON TECHNOLOGY, INC. and HYNIX SEMICONDUCTOR INC. and SAMSUNG ELECTRONICS CO., LTD. and SAMSUNG SEMICONDUCTOR INC. and ELPIDA MEMORY, INC.

RESPONDENTS – respondent JUDGMENT [ 1 ] On appeal from a judgment of the Superior Court, District of Montreal (the Honourable Richard Mongeau), dated June 17, 2008 that granted the respondents' declinatory exceptions and dismissed the appellant's motion for authorization to institute class action proceedings; [ 2 ] For the reasons of Kasirer, J.A., with which Forget and Pelletier, JJ.A. agree, THE COURT : [ 3 ] ALLOWS the appeal and sets aside the judgment of the Superior Court; [ 4 ] DECLARES that Elpida Memory, Inc., having desisted from the appeal, is no longer party to these proceedings and DECLARES FURTHER that Elpida Memory, Inc.'s liability for costs, should costs be awarded against the respondents in the final judgment on the merits, is limited to costs in the proceedings before Mongeau J. prior to this appeal; [ 5 ] GRANTS the appellant's motion seeking authorization to institute the class action;

[ 6 ] ASCRIBES to Option Consommateurs the status of representative for the purpose of exercising the class action on behalf of the following group: Toute personne qui a acheté au Québec de la mémoire vive dynamique (DRAM) et/ou un ou des produits équipés de mémoire vive dynamique (DRAM) (…) entre le premier avril 1999 et le 30 juin 2002 inclusivement.

Toutefois, une personne morale de droit privé, une société ou une association n'est membre du groupe que si, en tout temps depuis le 5 octobre 2003 elle comptait sous sa direction ou sous son contrôle au plus cinquante (50) personnes liées à elle par contrat de travail, et qu'elle n'est pas liée avec la requérante. [ 7 ] DECLARES the nature of the action to be one of extracontractual civil liability; [ 8 ] IDENTIFIES the following as the principal questions of fact and of law to be treated collectively in the action: • Les Intimées ont-elles comploté, se sont-elles coalisées ou ont-elles conclu un accord ou un arrangement ayant pour effet de restreindre indûment la concurrence dans la vente de la mémoire vive dynamique (DRAM) et, dans l'affirmative, durant quelle période ce cartel a-t-il produit ses effets sur les membres du groupe? • La participation des Intimés au cartel constitue-t-elle une faute engageant leur responsabilité solidaire envers les membres du groupe? • Le cartel a-t-il eu pour effet d'occasionner une augmentation du prix payé au Québec à l'achat de DRAM et/ou de produits équipés de DRAM et, dans l'affirmative, cette augmentation constitue-t-elle un dommage pour chacun des membres du groupe? • Quel est le montant total des dommages subis par l'ensemble des membres du groupe? • La responsabilité solidaire des Intimées est-elle engagée à l'égard des frais suivants encourus ou à encourir pour le compte des membres du groupe dans la présente affaire :

a) les frais d'enquête;

b) le coût des honoraires extrajudiciaires des procureurs de la Requérante, de la Personne désignée et des membres du groupe; et

c) le coût des déboursés extrajudiciaires des procureurs de la Requérante, de la Personne désignée et des membres du groupe? ; [ 9 ] IDENTIFIES the following as the principal conclusions that relate to the aforementioned questions : ACCUEILLIR l’action en recours collectif de la Représentante et des membres du groupe contre les Défenderesses; CONDAMNER les Défenderesses solidairement à payer à la Personne désignée et aux membres du groupe un montant égal à la somme des revenus des Défenderesses et des autres membres du Cartel générés par la portion artificiellement gonflée des prix de vente de la mémoire vive dynamique (DRAM) vendue au Québec et/ou équipant des produits vendus au Québec et ordonner le recouvrement collectif de ces sommes; CONDAMNER les Défenderesses solidairement à acquitter les coûts encourus pour toute enquête nécessaire afin d'établir leur responsabilité en l'instance, incluant les honoraires extrajudiciaires des procureurs et les déboursés extrajudiciaires, y compris les frais d'expert et ordonner le recouvrement collectif de ces sommes; CONDAMNER les Défenderesses solidairement à payer sur toutes les sommes susdites l'intérêt légal ainsi que l'indemnité additionnelle prévue au Code civil du Québec à compter de la date de signification de la présente requête; Ordonner aux Défenderesses solidairement de déposer au greffe de cette Cour, la totalité des sommes susdites, ainsi que les intérêts et l'indemnité additionnelle; Ordonner que la réclamation de chacun des membres du groupe fasse l'objet d'une liquidation individuelle ou, si ce procédé s'avère inefficace ou impraticable, ordonner aux Défenderesses solidairement de payer une somme correspondant au montant de l'ordonnance de recouvrement collectif aux fins d'être utilisée pour introduire des mesures qui bénéficieront aux membres du groupe et dont la nature sera déterminée par le tribunal; Le tout avec dépens, y compris les frais d'expert et d'avis; [ 10 ] DECLARES that, except in the case of exclusion, members of the group will be bound by any and all judgments relating to the class action in the manner provided by law; [ 11 ] FIXES the time limit for requesting exclusion from the group at sixty (60) days from the date of publication of the notice to members, from which time the members of the group who have not requested exclusion therefrom will be bound by any and all judgments that are rendered in the class action; [ 12 ] ORDERS the publication of the notice to members within sixty (60) days from this judgment in the La Presse , Le Soleil and The [Montreal] Gazette newspapers. [ 13 ] REMANDS the file to the Chief Justice of the Superior Court for determination of the judicial district in which the class action will proceed and for appointment of the judge charged with hearing the case;

[ 14 ] With costs on appeal against the respondents, except Elpida Memory, Inc. Costs in first instance to follow suit . ANDRÉ FORGET, J.A. FRANÇOIS PELLETIER, J.A. NICHOLAS KASIRER, J.A. Mtre Daniel Belleau Mtre Maxime Nasr BELLEAU LAPOINTE For the appellant Mtre Yves Martineau STIKEMAN ELLIOTT For Infineon Technologies AG and Infineon Technologies North America Corp. Mtre Éric Vallières Mtre David Martin Low (Ontario) McMILLAN s.e.n.c.r.l., s.r.l. For Micron Technology, Inc. Mtre Madeleine Renaud Mtre Céline Legendre McCARTHY TÉTRAULT For Hynix Semiconductor Inc.

Mtre Francis Rouleau BLAKE, CASSELS & GRAYDON For Samsung Electronics Co., Ltd. and Samsung Semiconductor Inc. Mtre Sylvain Lussier Mtre Christopher Panet Naudie (Ontario) OSLER, HOSKIN & HARCOURT For Elpida Memory, Inc. Date of hearing: August 31, 2010 REASONS OF KASIRER, J.A. [ 15 ] Dynamic random access memory, generally referred to as "DRAM", is a semiconductor memory product that provides high- speed storage and retrieval of electronic information.

It is found in many commonly-used electronic devices including computers and servers. [ 16 ] The respondent companies were all manufacturers of DRAM between 1999 and 2002. They have all admitted to participation in a conspiracy to fix prices in the multi-billion dollar DRAM market during a part of that period.

In 2004, all of the respondents, except Micron Technology, Inc., agreed to plead guilty in the United States District Court for the Northern District of California to the following charges: […] participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of Dynamic Random Access Memory ("DRAM") to be sold to certain original equipment manufacturers of personal computers and servers ("OEMs") from on or about July 1, 1999, to on or about June 15, 2002 in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

The charges referred to sales of DRAM directly affecting the following OEMs in the United States: Dell Inc., Compaq Computer Corporation, Hewlett-Packard Company, Apple Computer Inc., International Business Machines Corporation and Gateway Inc. Following their guilty pleas, the respondents were fined substantial amounts. In exchange for certain measures of clemency, Micron Technology, Inc. decided to cooperate with the authorities. Micron acknowledged, however, that the U.S. Department of Justice

investigation revealed price fixing by its employees in the DRAM market. [ 17 ] On October 9, 2001, Claudette Cloutier, who lives in Montreal, purchased a personal computer outfitted with DRAM from the Dell Computer Corporation from her home by computer over the Internet. She placed the order on Dell’s website and paid the price in full with a credit card. The invoice of the sale recorded Dell's address for payment to be in Toronto and the standard-form contractual terms stipulated that the sale was deemed to have taken place in Ontario and was subject to Ontario law. [ 18 ] Ms.

Cloutier claims to have paid an artificially inflated price for her computer as a result of the respondents’ wrongful conspiracy to fix the price of DRAM. She says she is a member of a class of purchasers of DRAM in Quebec to whom the respondents are civilly liable.

She seeks status as the designated representative in class action proceedings brought against the respondents for which the petitioner in the Superior Court, Option consommateurs, seeks authorization to bring the class action. [ 19 ] The class is described in the motion as follows: Toute personne qui a acheté au Québec de la mémoire vive dynamique (DRAM) et/ou un ou des produits équipés de mémoire vive dynamique (DRAM) (…) entre le premier avril 1999 et le 30 juin 2002 inclusivement.

Toutefois, une personne morale de droit privé, une société ou une association n’est membre du groupe que si, en tout temps depuis le 5 octobre 2003 elle comptait sous sa direction ou sous son contrôle au plus cinquante (50) personnes liées à elle par contrat de travail, et qu’elle n’est pas liée avec la requérante. [ 20 ] In its motion to institute these proceedings, Option consommateurs alleges that the respondents' conduct served to inflate artificially the price of DRAM, and devices containing DRAM, sold in Quebec from April 1999 to July 2002.

In so doing, the respondents failed to respect statutory obligations under the Competition Act [1] and breached the general extracontractual duties imposed upon them by the Civil Code of Québec . The effects of the unfair price-fixing purportedly extends not only to computers and servers sold in Quebec, but to all devices outfitted with DRAM, including printers, hard drives, cellular telephones, digital cameras, MP3 players and more. Members of the class include direct and indirect purchasers of DRAM who suffered losses by assuming, in whole or in part, the inflated portion of the price of DRAM sold in Quebec.

Direct purchasers are those persons who acquired DRAM directly from the respondents. An indirect purchaser is a person who bought DRAM or products containing DRAM from either a direct purchaser or from another person, himself or herself also an indirect purchaser, at a different level in one of the multiple chains of distribution of the product en route to the eventual end-user. [ 21 ] The headquarters of all of the respondents are in countries other than Canada. None of them has a place of business in Quebec.

From the start of the proceedings, they have said that Quebec courts have no jurisdiction to hear the matter and that, in any event, the requirements for the authorization to institute a class action have not been met. [ 22 ] In deciding the appellant’s motion to authorize the proceedings, the presiding judge declared that the Superior Court did not have proper territorial jurisdiction to hear the class action because no damage was suffered in Quebec. The judge also held that even if the Superior Court had proper jurisdiction, he would have dismissed the motion to authorize the bringing of the class action.

While the motion did disclose questions of law or fact common to the class, he decided that the facts alleged did not seem to justify the conclusions sought pursuant to

article 1003(

b) C.C.P. because, in particular, the losses alleged were not passed on from direct to indirect purchasers of DRAM. Moreover, Option consommateurs and Ms. Cloutier did not satisfy the requirements to represent the class under articles 1003(

d) and 1048 C.C.P. because their interests conflicted with the non-consumer members of the proposed class. [ 23 ] Option consommateurs and Ms. Cloutier appeal, arguing that the motions judge was wrong to decline jurisdiction ratione loci and that the requirements for authorization in

article 1003 C.C.P. were satisfied in the circumstances.

Elpida Memory, Inc., one of the respondents before the Superior Court, has settled with the appellants and is no longer party to the appeal. [ 24 ] An application by the appellant to adduce new evidence in respect of participation of the respondents in a price-fixing cartel pertaining to DRAM sold in Europe has been granted by this Court in a judgment released concurrently with these reasons. [ 25 ] With great respect for the motions judge’s contrary opinion, I am of the view that the Superior Court does have jurisdiction to decide this matter and that the class action should have been authorized to proceed.

I will treat the three major issues on appeal in turn: (

I) the source in law of the claims made by members of the class; ( II ) territorial jurisdiction over financial losses of members of the class under article 3148(3) C.C.Q.; and ( III ) the authorization of the class action pursuant to articles 1002 and 1003 C.C.P. This latter issue can be subdivided into three further parts: ( III .1) whether the motion discloses facts that justify the conclusions sought by the appellant under

article 1003(

b) C.C.P.; ( III. 2) the adequacy of Option consommateurs and Ms. Cloutier as representatives of the class under articles 1003(

d) and 1048 C.C.Q.; and ( III .3) whether the motion discloses common questions sufficient to meet the requirement of

article 1003(

a) C.C.P. I Sources in law of claims made by the different members of the class [ 26 ] As a preliminary matter, it is important to dispel the notion that the direct and indirect purchasers of DRAM in the class base their claims of distinct contractual and extracontractual sources. [ 27 ] At first blush one might suppose that the direct purchasers of DRAM have a contractual claim against one or another of the respondents from whom they procured DRAM as well as an extracontractual claim against all of the respondents involved in the conspiracy. Accordingly,

article 1458, paragraph 2 C.C.Q. – which precludes the exercise by a plaintiff of an option between contractual and extracontractual recourses – might well be thought to require the direct purchasers to take action in contract. On the other hand, the indirect purchasers in this class, including consumers like Ms. Cloutier, have only an extracontractual claim. This in turn might be thought as a threat to Ms. Cloutier’s role as representative of the class, given that, unlike that of the direct purchasers, her own claim against the respondents is necessarily extracontractual in origin.

This could even undermine the common questions that give unity to the class. In other words, inherently different claims of direct and indirect purchasers, by reason of the effect of

article 1458, paragraph 2 C.C.Q., could pose a barrier to meeting the common questions and adequate representation requirements of articles 1003(

a) and 1003(

d) C.C.P. [ 28 ] In point of fact, the class action rests on a single, extracontractual source for all members of the class. All of the direct and indirect purchasers invoke the same extracontractual fault as the basis for their respective causes of action: the conspiracy to inflate artificially the price of DRAM among the six respondents. The conspiracy would ordinarily have given rise to a civil remedy pursuant to

section 36 of the Competition Act but for the fact that, as all the parties acknowledge, the prescription period in the Act has expired. The same conspiracy can, however, properly ground an action in extracontractual liability pursuant to

article 1457 C.C.Q. for all members of the class. [2] [ 29 ] The fact that the respondents also contracted individually with the direct purchasers does not mean that they are obliged, by reason of the prohibition against the exercise of an option, to conform to the rules governing contractual liability as members of the class.

Article 1458, paragraph 2 C.C.Q. does not apply in the present circumstances because the direct purchasers have not based their claim, as class members, on the non-performance of a contractual obligation. In fact, the direct purchasers do not ground their claim in contract at all but on the existence of the conspiracy – an extracontractual fault involving all six of the respondents – that occurred in the period prior to the conclusion of their individual contracts to purchase DRAM. [ 30 ]

Article 1458, paragraph 2 C.C.Q. only applies to remedies based on the failure to perform a contract. [3] Writing on the "respect du régime contractuel", the authors Baudouin and Jobin [4] explain that the codal rule precluding option applies to non- performance of a contract but not to an extracontractual fault that predates the contract: 787 – Observations générales – Le problème de l'option se pose lorsqu'une victime,

partie à un contrat valablement formé qui est applicable à la situation, décide de porter son litige sur le plan extracontractuel. […] […] 797 – Situations limites – […] Pour qu'il y ait responsabilité contractuelle, certaines conditions doivent être satisfaites. Il doit premièrement exister un contrat valable entre les parties. Si le contrat est nul […], alors on ne peut pas invoquer la responsabilité contractuelle. […] Le problème se pose aussi quant à la responsabilité découlant d'un fait fautif qui a lieu dans la phase précontractuelle.

Dans ce dernier cas, il est clair que la responsabilité doit être extracontractuelle, puisque, justement, aucun contrat n'a été formé. [ 31 ] The conspiracy complained of here by which the six respondents sought to fix the price of DRAM took place in this precontractual period. It is the conspiracy upon which the direct purchasers' legal action is based, not the non-performance of the individual contracts to purchase DRAM concluded later. As legal scholars have made plain, a fault committed in the precontractual period is, in principle, a delictual one. [5]

Article 1458, paragraph 2 C.C.Q. does not apply to the conspiracy undertaken in period prior to the conclusion of the individual contracts to purchase DRAM. [ 32 ] One might draw an analogy – albeit an imperfect one – between the conspiracy to fix prices here and fraud or a failure to satisfy the requirements of good faith arising in the precontractual period.

This sort of conduct, where it amounts to a precontractual fault, is best characterized as having an extracontractual source. [6] [ 33 ] The motion for authorization of the class action, at paragraphs 2.7 and 2.7.1, invokes the wrongful conspiracy among the six respondents as the basis for the recourses of direct and indirect purchasers. We know from the exhibits filed in support of the motion that certain of the respondents have admitted to participating in a conspiracy to fix the price of DRAM in the United States and elsewhere.

The conspiracy is, in Quebec law, the act giving rise to liability (or the fait générateur de responsabilité ) which, according to the allegations in the claim, is an extracontractual fault in respect of all the members of the class. As a result, one cannot say that a difference in source of liability as between direct and indirect purchasers, considered alone, creates an obstacle to the class action under

article 1003 C.C.P. * * * II Territorial jurisdiction of the Superior Court [ 34 ] Each of the respondents presented motions asking the Superior Court to decline jurisdiction to hear the case pursuant to

article 163 C.C.P. in almost identical and equally laconic terms: they argued that the appellants failed to allege any fact that would give the Quebec Superior Court territorial jurisdiction over them, as foreign defendants, in the motion to authorize class action proceedings. [ 35 ] The motions judge agreed. After recalling that the burden of establishing a basis for jurisdiction fell to the appellant, the judge held that the loss suffered by the designated representative Ms.

Cloutier did not constitute "damage [...] suffered in Québec", within the meaning of article 3148(3) C.C.Q., as a basis for jurisdiction ratione loci (para. [106]). Specifically, he was of the view that Ms. Cloutier suffered a financial loss arising out of a contract concluded in Ontario with the Dell, a third party to the action. This financial loss was only connected to Quebec by reason of her domicile being here.

After a review of the decided cases on point, the judge held that the circumstances were similar to those considered in judgments of this Court in Quebecor Printing [7] and Hydro Aluminum Wells . [8] Accordingly, he held that Ms. Cloutier’s financial loss could not be said to have been suffered in Quebec. [ 36 ] The appellant argues that the issue of territorial jurisdiction should not have been decided at this stage of the proceedings. In any event, says the appellant, the judge was mistaken to decline jurisdiction under article 3148(3) C.C.Q. Ms.

Cloutier had concluded a remote-parties contract with Dell that was deemed by statute to have been made at her address in Montreal. Her financial loss was thus suffered in Quebec in a manner that properly grounds jurisdiction of the Quebec courts over the class action. [ 37 ] With respect, I find myself unable to agree with the judge that Ms. Cloutier did not suffer damage in Quebec. I propose to consider, in turn, the timeliness of the debate on jurisdiction, the place at which the contract was concluded and the nature of Ms.

Cloutier’s loss as the basis of territorial jurisdiction. II .1 Timeliness of the motion to dismiss [ 38 ] Citing Thompson , [9] the appellant argues that there are insufficient materials in the record to decide properly on territorial jurisdiction at this stage of the proceedings. The motions judge – who is the designated judge charged with management of the class action – considered this argument and decided otherwise. He noted, first, that the parties had agreed to proceed on the ratione loci exception at the same time as the motion for authorization of the class action (para. [17]).

He then held that, in the circumstances of this case, it would be appropriate to proceed on the matter at this early stage (para. [22]). [ 39 ] I agree with the judge that it was appropriate to decide on the declinatory exception at the authorization stage rather than on the merits in this case. [ 40 ] Territorial jurisdiction here turns largely on the circumstances of Ms. Cloutier as representative of the class in her dealings with the respondents. It is not, strictly speaking, a matter that needs to be treated collectively. The facts necessary to dispose of the matter are in the record now.

The appellant’s proposal opens the door to the unwelcome possibility that the class action would continue unnecessarily past the authorization stage without a disposition of the question of territorial jurisdiction. Not only does Thompson , properly construed, not require this manner of proceeding, [10] but the better view is that the general principles of economy of judicial resources and deference owed to the views of the judge managing the class action dictate the opposite approach.

II .2 Basis for territorial jurisdiction under article 3148(3) C.C.Q. [ 41 ] The respondents are not domiciled in Quebec nor do they have a place of business here. The alleged conspiracy is said to have transpired in the "United States and elsewhere", although none of the facts alleged suggests that the wrongdoing actually took place in the province.

Taking the allegations in the motion as true, as we are bound to at this stage of the proceedings, the analysis of jurisdiction will proceed on the assumption that the fault took place outside of Quebec. [11] Jurisdiction for this personal action taken against foreign defendants and involving wrongdoing outside of Quebec must rest on another connecting factor. By exception to the general rule that an action of this nature is brought before the court of the domicile of the defendant, Ms.

Cloutier relies on the international jurisdiction of Quebec courts based on the damage she suffered in Quebec pursuant to article 3148 (3) C.C.Q. [ 42 ] Ms. Cloutier is not suing in contract but on the basis of an alleged extracontractual fault committed by the respondents. [12] Ms. Cloutier says that the respondents are extracontractually liable for the loss she sustained in Quebec because the price of the computer she bought was artificially inflated as a result of the respondents’ conspiracy. [ 43 ] The position of the respondents is a simple one.

As foreign defendants who admitted to wrongdoing under the Sherman Act in the United States, they cannot be called before the Superior Court to answer to Ms. Cloutier’s complaint. That complaint, they say, arises out of a contract made under Ontario law, with a third party, in respect of which she suffered no damage in Quebec that can give jurisdiction to courts here. [ 44 ]

Article 3148 C.C.Q. sets forth a series of alternative bases to establish jurisdiction apart from the domicile or place of business of the defendant. In the present case, jurisdiction can only be based on the fact that the damage was suffered in Quebec: 3148. Dans les actions personnelles à caractère patrimonial, les autorités québécoises sont compétentes dans les cas suivants: […] 3° Une faute a été commise au Québec, un préjudice y a été subi , un fait dommageable s'y est produit ou l'une des obligations découlant d'un contrat devait y être exécutée; […]. 3148.

In personal actions of a patrimonial nature, a Québec authority has jurisdiction where […] (3) a fault was committed in Québec, damage was suffered in Québec , an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec; […]. [ 45 ] In Spar Aerospace Ltd. , [13] the Supreme Court held that the notion of "real and substantial connection" between the facts of a case and the Quebec courts is subsumed under article 3148(3) C.C.Q. which sets forth, to use the language of this Court in another case, "facteurs individuels de rattachement". [14] Can it be said in the present circumstances that the damage was suffered by Ms.

Cloutier in Quebec so as to provide this connection? [ 46 ] Ms. Cloutier suffered no bodily or moral injury, of course, nor did she suffer a loss to corporeal property situated in Quebec. But it is alleged that, however incorporeal, her financial loss suffered upon the purchase of the computer from Dell is included in what

article 1607 C.C.Q. calls a "material" injury. [15] The appellant says she paid too much for the personal computer she bought from her home in Montreal because of the inflated price of the DRAM it contained. Given that the unfair price was the result of the wrongful conspiracy engaged in by the respondents, the appellant says she has suffered damage in Quebec. Thus, even if the extracontractual fault associated with the conspiracy took place elsewhere, the appellant insists that Ms. Cloutier’s financial loss is sufficient to draw the

foreign defendants within the jurisdiction of the Quebec courts, when the facts alleged in the motion are taken as true, pursuant to article 3148(3) C.C.Q. [ 47 ] Respondents answer that her financial loss alone is not enough to ground jurisdiction in the circumstances. They point to a line of cases decided by this Court, notably Quebecor Printing , which underscores a danger – perhaps the better word is inconvenience – of courts assuming jurisdiction on the basis of a plaintiff's financial loss said to have been suffered in Quebec by reason only of his or her domicile being located in the province.

Such a loss cannot be the basis for jurisdiction under article 3148(3) C.C.Q. as it risks giving too wide a definition to "damage […] suffered in Québec". A purely financial loss cannot ground jurisdiction based only on the fact that the plaintiff’s patrimony is located in Quebec. In the instant case, they argue, the financial loss took place outside of Quebec because that is where Ms. Cloutier’s contract with Dell was concluded as a matter of law.

And even if the contract was construed to have been agreed to in Quebec, say the respondents, the courts have decided that financial loss alone is insufficient to establish jurisdiction under article 3148(3) C.C.Q. II .2.1 Was the contract entered into at Ms. Cloutier's Montreal address? [ 48 ] Ms. Cloutier's contract with Dell is not, strictly speaking, the basis for the cause of action against the respondents who were not a party to it. While it is true that the respondents did not sell the computer in question to Ms.

Cloutier, the appellant argues that the contract is relevant in determining the respondents’ possible extracontractual liability to her for the loss she suffered on the occasion of its purchase. The appellant contends that the contract was concluded in Montreal and, accordingly, the damage was suffered in Quebec for the purposes of article 3148(3) C.C.Q. [ 49 ] The relevance of the contract to the extracontractual cause of action is as a "juridical fact" [16] rather than as a "juridical act" per se. The contract is not the alleged source of the respondents' obligation to Ms.

Cloutier as a juridical act, nor is it to be confused with the juridical fact of the wrongful conspiracy – the alleged fait générateur de responsabilité – upon which Ms. Cloutier relies to establish liability. But the contract is a relevant juridical fact for identifying when and where the alleged financial loss – the overpayment for the computer because of the price fixing of the DRAM – was suffered by Ms. Cloutier at the hands of the respondents.

Under the general law of civil liability in Quebec, a contract taken as a juridical fact can be the occasion upon which damage crystallizes for the purposes of an action in extracontractual liability brought by one of the contracting parties against a third-party wrongdoer under

article 1457 C.C.Q. Accordingly, the place at which the contract was entered into will be relevant to localizing the damage that arose as a result therefrom. [ 50 ] All parties have acknowledged that had Ms. Cloutier been called, she would have testified that she purchased the computer and related property on October 9, 2001 from her home in Montreal, by computer, via the website "dell.ca". [17] But the respondents are quick to point out that the contract was not so plainly agreed to in Quebec.

On the invoice of sale, the address of the Dell Computer Corporation to which payment is to be remitted is a post office box in Toronto, Ontario. The respondents argue that the contract was formed in Ontario because that was the place in which the offeror received Ms. Cloutier’s acceptance. Moreover, the terms and conditions accompanying the invoice applicable to on-line purchases include a clause stipulating that the sale is deemed to have been entered into in Ontario and is to be interpreted according to the laws of Ontario. Additionally, say the respondents, Ms.

Cloutier solicited an offer from Dell when she initiated her purchase of the computer via the Dell website, such that the transaction is not a remote-parties contract pursuant to the then applicable provisions of the Consumer Protection Act . [18] [ 51 ] Ms. Cloutier contends that the contract with Dell was a consumer contract subject to the Consumer Protection Act and that, according to the applicable rules, contract was deemed to have been entered into at her address in Montreal. [ 52 ] The motions judge decided the contract between Ms. Cloutier and Dell was entered into in Ontario (para. [74]).

The judge was of the view that the allegations in the motion were insufficient to establish that the sale took place after a solicitation by Dell and, as a result, the contract was not a remote-parties contract under the Consumer Protection Act . [ 53 ] Was the judge right to exclude the application of the Consumer Protection Act here and, as a result, hold that the provision that deems the transaction as having been entered into at the Quebec address of Ms.

Cloutier to be inapplicable? [ 54 ] At the relevant time, sections 20 and 21 of the Consumer Protection Act [19] included a definition of a remote-parties contract and a rule that fixed the place at which those contracts were deemed to have been concluded: 20. Un contrat à distance est un contrat conclu entre un commerçant et un consommateur qui ne sont en présence l'un de l'autre ni lors de l'offre, qui s'adresse à un ou plusieurs consommateurs, ni lors de l'acceptation, à la condition que l'offre n'ait pas été sollicitée par un consommateur déterminé. 21.

Le contrat à distance est réputé conclu à l'adresse du consommateur. 20. A remote-parties contract is a contract entered into between a merchant and a consumer who are in the presence of one another neither at the time of the offer, which is addressed to one or more consumers, nor at the time of acceptance, provided that the offer has not been solicited by a particular consumer. 21. The remote-parties contract is deemed to be entered into at the address of the consumer. [ 55 ] In my view,

section 20 of the Consumer Protection Act applies and, under

section 21 , the contract between Ms. Cloutier and Dell was deemed to have been entered into at the consumer’s Montreal address. The exception in

section 20 – "provided that the offer has not been solicited by a particular consumer" – does not apply here to defeat the claim of Ms. Cloutier. [ 56 ] I am of the respectful opinion that the judge erred in law, at para. [75], when he decided that Ms. Cloutier failed to establish that the sale took place after a solicitation by Dell. The non-solicitation caveat is an exception to a general rule of public order designed

to protect consumers. Ms. Cloutier did have the burden of showing that she fell under the general rule at

section 20. But according to general principles of statutory

interpretation, the burden of showing that the exception applied to exclude the contract from the application of

section 20 fell to the person invoking it. [20] This is no less true – on the contrary, the application of this rule appears to me to be all the more compelling – by reason of the public order character of the rule in question.

To throw the burden of proving the application of the non-solicitation rule on the consumer would wrongly thwart the legislative policy it is designed to serve, i.e . to protect consumers from the untoward effects of the usual application of the private law rules that would have had the contract concluded at the place at which the acceptance was received. [21] Finally, the Boulay , [22] case upon which the respondents rely to shift the burden of proving the exception onto Ms. Cloutier, provides no real comfort to their position.

In a 4-paragraph opinion reported with sparse facts, Deschamps, J.A., as she then was, noted that nothing in the record before her indicated that the merchant had solicited the consumer. In holding that the Consumer Protection Act did not apply, Deschamps, J.A. observed in a paragraph not cited by the respondents that solicitation by the merchant was highly unlikely on the facts. [23] Nothing in Boulay indicates a basis for comparing what transpired there with the relationship between Dell and Ms.

Cloutier in their internet transaction in the case at bar. [ 57 ] In any event, quite apart from the burden of proof, it is difficult to see what would suggest that the offer to which Ms. Cloutier responded in making the purchase from the website was "solicited" by her within the meaning of

section 20 of the Act. In the various allegations of the motion and the exhibits filed, nothing indicates the arrangement was something other than an ordinary purchase made by a person from amongst the products on standing offer on a vendor’s website. From the allegations and the exhibits, it would seem that the operation that transpired between Ms. Cloutier and Dell is the virtual equivalent of a purchase by mail or telephone, by a consumer, of a product advertised for sale at a sticker price in a catalogue published by merchant who makes the catalogue readily available to the public.

The better view is that the offer made by Dell on its website was not solicited by Ms. Cloutier but merely accepted by her and, as such, the remote-parties definition in

section 20 applies rather than the general rule on contract formation at

article 1387 C.C.Q. [ 58 ] The respondents argue, in the alternative, that even if the transaction was a remote-parties contract, it would be wrong to apply the Consumer Protection Act to their relationship with Ms. Cloutier which is neither contractual nor is it one between a merchant and a consumer as those terms are defined in the Act. Citing this Court’s judgment in Novapharm , [24] they argue that the Act should not apply to them because they are not merchants.

Applying the Consumer Protection Act to the respondents would amount to giving the Act an implausible extraterritorial application and inappropriately extend its purview to a non-consumer sale between two foreign businesses, i.e. between the manufacturers of DRAM and Dell. The definition of remote-parties contracts and the deeming rule in

section 21 can only be of use, they say, in a consumer-merchant context in Quebec. [ 59 ] Novapharm is of no assistance to the respondents here. Ms. Cloutier is not suing the respondents as merchants under the Consumer Protection Act : the rule in

section 21 that deems the contract to have been concluded in Montreal is not being invoked to ground an action in contract against the respondents, as merchants, by Ms. Cloutier, as a consumer. The operating premise of the motion to authorize the class action is that the respondents’ delictual conduct caused damage to Ms. Cloutier on the occasion that she purchased the computer with DRAM from Dell in Quebec. The circumstance is different from Novapharm in which the Court refused to allow a consumer to sue a merchant in the absence of a consumer contract between them.

Here, the respondents are sued in delict, not as merchants, but as third parties whose conduct allegedly resulted in a consumer paying too much for a computer outfitted with price- inflated DRAM. [ 60 ] Finally,

section 2 of the Consumer Protection Act makes plain that the Act "applies to every contract" between a consumer and a merchant, and not simply to the relationship between the consumer and the merchant. The contract between Dell and Ms. Cloutier is subject to the Act. This being the case, the contract between Dell and Ms. Cloutier is deemed to have been entered into at her address in Montreal and the choice of law clause in the standard form is inapplicable. The remote-parties consumer contract between Ms.

Cloutier and Dell is rightly advanced here as a judicial fact to show that she suffered damage in Quebec for the purposes of determining jurisdiction ratione loci under article 3148(3) C.C.Q. I turn now to a consideration of this point. II .2.2 Financial loss as "damage [...] suffered in Québec" under article 3148(3) C.C.Q. [ 61 ] The respondents take the position, as an alternative argument, that even if the contract is deemed to have been concluded in Quebec, the nature of the loss suffered by Ms. Cloutier is an insufficient basis for territorial jurisdiction under article 3148(3) C.C.Q.

Her loss is purely a financial one. According to the respondents' reading of the applicable jurisprudence, a financial loss by a Quebec resident is not a connecting factor that can give the Superior Court jurisdiction over a suit against foreign defendants for a conspiracy that took place outside of Quebec. To conclude otherwise, they say, would suggest that Quebec courts have proper territorial jurisdiction in all cases where a plaintiff is domiciled in Quebec. [ 62 ] The motions judge was of this view.

After quoting at length from decisions of this Court in Quebecor Printing and Hydro Aluminum Wells , as well as distinguishing cases cited by the appellants, he decided that the financial loss suffered by Ms. Cloutier was insufficient for establishing jurisdiction pursuant to article 3148(3) C.C.Q. (paras. [88] to [103] of the judgement a quo ). [ 63 ] I respectfully disagree. Ms. Cloutier’s damage was suffered in Quebec within the meaning of article 3148(3) C.C.Q. The respondents have given too wide an

interpretation to Quebecor Printing and, in particular, to the reason this Court decided that financial damage alone cannot ground territorial jurisdiction in that case. [ 64 ] In my view, Quebecor Printing stands for the principle that when financial damage is only recorded in Quebec (in French I would say " comptabilisé "), that alone is insufficient to ground territorial jurisdiction for the purposes of article 3148(3) C.C.Q.

To confer jurisdiction on the sole basis of where the plaintiff records his or her patrimonial damage, irrespective of where the injury took place, would undermine the idea that the substantive locus of injury is a freestanding connecting factor, alongside the others spoken to in article 3148(3) C.C.Q. (which include the place where the fault was "committed/ commise ", where the injurious act "occurred/ s’[est] produit " and where the obligation was to be "performed/ exécutée ").

In other words, where the only sign of damage in Quebec turns on the presence of the plaintiff’s patrimony being here, the Superior Court cannot rely on article 3148(3) C.C.Q. as the basis for its jurisdiction ratione loci . On the other hand, where there is evidence that the financial loss has been suffered in Quebec (in French I would say " subi "), based on a material event that has occurred here, then article 3148(3) C.C.Q. provides that Quebec courts have

jurisdiction, subject to forum non conveniens considerations pursuant to

article 3135 C.C.Q. [65] The text of the Code lends itself best to this reading: the French term "préjudice" in article 3148(3) C.C.Q. mirrors the termused to describe the injury caused to another person by an extracontractual or contractual fault in articles 1457 and 1458 C.C.Q., whichwould be the usual bases for these "personal actions of a patrimonial nature".[25] In my view, "préjudice/damage" referred to in article3148 C.C.Q. refers to the injury that is an essential element, along with fault and causation, for establishing civil liability.

As aconnecting factor, it is placed alongside "faute/fault" and "fait dommageable/injurious act" which are also basic elements of causes ofaction in civil liability where applicable. Used in this sense, "préjudice" also echoes the language used in

article 1607 C.C.Q. inspeaking to the objective fact of bodily, moral integrity or material injury required as an element of an action in civil liability.[26] It is tobe distinguished from the "dommage/damage" that is the subjective consequence of the injury relevant to the measure of reparationneeded to make good the loss.[27] As a result, in specifying "damage was suffered in Québec/un préjudice y a été subi" as the relevantconnecting factor, article 3148(3) seeks to identify the substantive situs of the "bodily, moral or material injury which is the immediateand direct consequence of the debtor's default" (article 1607 C.C.Q.) and not the situs of the patrimony in which the consequence of thatinjury is recorded. [66] In Quebecor Printing, a Quebec plaintiff claimed jurisdiction based on its economic loss recorded in Quebec in respect of acontract to be performed elsewhere and for a debt to be paid elsewhere.

I take it as central to my colleague Beauregard, J.A.’s reasonsthat the obligation was to be performed, as he said, "totalement à Memphis" and that the debt was to be paid "à Memphis". He wrotethat "[...] le fait que Regenair, dont le siège social est au Québec, ne reçoit pas le paiement de sa créance, laquelle est payable àMemphis, ne fait pas qu’un préjudice a été subi au Québec".[28] In other words, the loss was suffered in Memphis but the damage wasrecorded in Quebec.

This was not enough to ground jurisdiction in Quebecor Printing. [67] This distinction between financial damage that is merely recorded in Quebec, on the basis of the location of the plaintiff’sdomicile, and injury that is otherwise suffered in Quebec, is a strong theme running through the cases. In Foster,[29] for example, it isthis feature of Quebecor Printing that is emphasized by the Court: CONSIDERING that the mere fact that Respondent has its head office in Montreal and that any monetary loss would presumably berecorded in Montreal, is not attributive of jurisdiction within the meaning of

article 3148 paragraph 3 C.C.Q. (Quebecor PrintingMemphis Inc. v. Regenair Inc., (QC CA), [2001] R.J.Q. 966 (C.A.). (Emphasis added.) [68] Hydro Aluminum Wells is cited by the respondents as authority for its submission that Ms. Cloutier's financial damage doesnot suffice as a connecting factor under article 3148(3) C.C.Q. They rely on the following explanation offered by my colleagueBrossard, J.A.: "Si le simple préjudice financier, nécessairement subi au lieu du domicile de la

partie demanderesse, suffisait pour donnerouverture à l’application de l’article 3148 C.c.Q., il faudrait alors nécessairement conclure que les articles 3149 et 3150 C.c.Q. sontredondants et inutiles."[30] But they neglect to cite Brossard, J.A.’s analysis of where the obligations were to be performed in that case –completely in the United States – and his view that locating the financial damage suffered by the plaintiff in Quebec was an accountingexercise based on domicile alone.[31] Accordingly, in Hydro Aluminum Wells, as in Quebecor Printing and Foster, the locus of theplaintiff’s patrimony on its own was held to be insufficient to attribute jurisdiction as that would only be the place where damage wasrecorded.

In those cases, however, the injury was sustained outside of Quebec unlike the circumstance of Ms. Cloutier. [69] The distinction between financial injury materially suffered in Quebec and financial damage merely recorded here isimportant in respect of a balanced policy of establishing appropriate "international jurisdiction" for Quebec courts, in the absence of anexceptional grounds for holding the courts to be a forum non conveniens.

If the legislature had been inclined to establish jurisdiction onthe basis of damage recorded in Quebec, why did it not recognize the plaintiff’s domicile alone in the connecting factors listed in article3148 C.C.Q.? [70] On the other hand, financial loss substantively suffered in Quebec based on material facts arising in the province, as opposedto damage that is merely recorded in the patrimony of a Quebec plaintiff, is a sufficient basis for establishing jurisdiction for the Quebeccourts under article 3148(3) C.C.Q. This best explains the circumstances of Ms.

Cloutier in the present case. [71] Where the injury is materially suffered in Quebec, as opposed to damage merely being recorded here based on the plaintiff’sdomicile, courts have been less hesitant to find jurisdiction on the basis of financial loss. In Sterling,[32] a case in which the Court wasdivided, Rochon, J.A. held that the fact that Quebec was the place of the performance of the contract meant that the plaintiff in a distinctaction for latent defects could properly be said to have suffered damage there. The recent case of British Airways p.l.c.[33] providesuseful guidance for the case at bar.

Two airlines had conspired outside Quebec to raise prices on certain airline tickets. In seekingauthorization for a class action against them, the plaintiff argued that there was both a contractual recourse against the airline from whomthe ticket was purchased and an extracontractual recourse against the co-conspirator. In the Superior Court, it was held that theconspiracy took shape, as it affected the consumers, at the time the tickets were purchased in Quebec.

Unlike Quebecor Printing, saidPayette J., the financial loss in this case was suffered in Quebec.[34] When the motion for leave to this Court was dismissed, mycolleague Dalphond, J.A. wrote the following: "[…] les résidants du Québec qui ont contracté avec British Airways et qui ont alors payéun prix artificiellement gonflé par suite de manœuvres illégales impliquant Virgin, ces personnes ont subi au Québec un préjudice (art.3148(3) C.c.Q.), dont la cause est reliée aux gestes de Virgin."[35] [72] Applying the foregoing analysis to the facts alleged in the motion to bring the class action proceedings, I am of the view thatthe Superior Court has jurisdiction to hear the matter.

Ms. Cloutier suffered an economic loss to be sure, but it is of a different characterthan the one spoken to by the Court in respect of the plaintiff in Quebecor Printing. She alleges that she paid too high a price for thecomputer she purchased because of the unfairly priced DRAM it contained. That remote-parties contract between Ms. Cloutier and Dellwas deemed by the Consumer Protection Act to have been concluded in Montreal. The loss that she suffered on the occasion ofconcluding that contract grounds jurisdiction for the Quebec courts here.

That loss is a "préjudice/damage" within the meaning of article3148(3) notwithstanding its purely financial character. Taking the facts alleged in the motion to be true, it constitutes a material injury,suffered in Quebec, that was caused by the price-fixing conspiracy. The loss was not just recorded here because of the locus of Ms.

Cloutier's patrimony but it was substantively suffered here and, as a result, grounds jurisdiction for the class action. III Authorization of the class action pursuant to articles 1002 and 1003 C.C.P. [ 73 ] Leaving to one side his conclusion that the declinatory exception justified the dismissal of the motion, the judge proceeded to consider whether the class action should be authorized pursuant to the rules set forth in articles 1002 et seq . of the Code of Civil Procedure .

He was mindful that the tenor of the proceedings at this early stage limited his task to that of a "filter" for recourses that, prior to any debate on the merits, do not qualify as class actions. The judge analyzed each of the four requirements of

article 1003 prior to concluding that the class action should not be authorized. He decided that the facts alleged by the appellants do not appear to justify the conclusions sought pursuant to

article 1003(

b) C.C.P. Moreover, Ms. Cloutier, as a consumer, was not in a position to represent the members of the class composed of direct and indirect purchasers of DRAM adequately as required under

article 1003(

d) C.C.P. and the appellant was an inappropriate representative under

article 1048 C.C.P. The judge did find, however, that the recourses of the members raised sufficient common questions to meet the requirement of

article 1003(

a) and he observed that the motion met the formal requirements of

article 1002 C.C.P. [ 74 ] All of the above findings were contested on appeal. I propose to treat articles 1003(

b) and (

d) first, as they were the principal matters in dispute, before considering the judge's other findings that led him to the conclusion that the class action should not be authorized. III .1

Article 1003(

b) C.C.P. [ 75 ] The appellant submits that the judge erred in deciding that the essential elements of a cause of action in extracontractual liability were not properly made out in the motion to satisfy the requirements for authorization. For the judge, the facts alleged failed to justify the conclusion that an actionable fault had been committed by the respondents and, in particular, that the motion was insufficient to demonstrate prima facie conduct that would violate the Competition Act (paras. [171] et seq . of the judgment a quo ).

He decided that the allegations relating to the passing-on of the loss down to the indirect purchasers were not part of Quebec law (paras. [169] et seq. ). Finally, the causal link between the alleged fault and losses was not established as it need be at the authorization stage (paras. [177] et seq .). [ 76 ] Mindful as I am of the deference an appellate court owes to the views of the motions judge under

article 1003(

b) C.C.P., I am respectfully of the contrary view. Casting the net as widely as it has to cover alleged losses of direct and indirect purchasers of DRAM, the appellant does run the risk of obscuring the elements of its cause of action in civil liability under Quebec law. However the facts alleged are sufficient, in my view, to meet the test in

article 1003(

b) and allow for the matter to proceed on the merits. III .1.1 Fault [ 77 ] Paragraph 2.6 of the motion to institute class action proceedings alleges that the respondents failed to respect their statutory obligations under sections 36 and 45 of the Competition Act .

Section 45 sets forth the criminal offences relating to competition and

section 36 provides that a person who suffers a loss as a result of a violation of

section 45 has a civil action to obtain compensation. It should be said from the start that the appellant abandoned its civil claim under

section 36 at the hearing in the Superior Court because the action was prescribed, as the judge recorded at paragraph [198] of his reasons. [ 78 ] What remained was the claim under the general law of civil liability. Paragraph 2.7 alleges that the respondents' conduct failed to meet the requirements imposed by the duty not to harm others by reason of wrongful conduct under the Civil Code of Québec . The alleged commission of an offence under

section 45 , while no longer the basis of a civil action under the Competition Act , remains relevant insofar as it may or may not reveal the violation of a statutory norm giving rise to extracontractual liability under

article 1457 C.C.Q. [ 79 ] In paragraph 2.7.1 the appellants provide detail of the alleged civil wrongs upon which the class action in Quebec is based by reference to the criminal proceedings undertaken in the United States against the respondents. Thirteen exhibits are incorporated by reference into the motion. They include press releases from the Antitrust Division of the U.S.

Department of Justice in which it is announced that named respondents agreed to plead guilty to participating in an "international conspiracy" to fix prices in the DRAM market and to pay fines; [36] "informations" which set forth the charges brought against certain of the respondents in United States District Court; [37] and "plea agreements" in which certain of the respondents agreed to plead guilty to charges of "participating in a conspiracy in the United States and elsewhere […]". [38] The exhibits contain no specific reference to Quebec. [ 80 ] The motion also includes allegations relating to Ms.

Cloutier, as well as to losses she and other members of the class allegedly suffered. In paragraph 2.14, the appellant states "[l]e Cartel a eu pour effet de restreindre indûment la concurrence, de gonfler artificiellement le prix du DRAM vendue au Québec et par le fait même de gonfler artificiellement le prix de vente des produits équipés de DRAM vendus au Québec". Paragraph 2.15 asserts that during the time period in which the cartel was active, Quebec buyers paid "un prix artificiellement gonflé" for DRAM sold in the province.

"Il en va de même des acheteurs subséquents de DRAM et/ou de produits équipés de DRAM vendus au Québec à qui les premiers acheteurs auraient, en tout ou en partie, refilé la portion artificiellement gonflé du prix de la DRAM": paragraph 2.15.1 thus contains a reference to the passing-on of the loss from direct to indirect purchasers of DRAM in Quebec.

The appellant states in paragraphs 2.16, 2.17 and 3 that the losses collectively suffered by the members of the class are equal to the portion of the sale price of DRAM in Quebec that was artificially inflated as a result of the conduct of the cartel. [ 81 ] Did the petitioner properly allege fault for the purposes of an action in extracontractual liability under Quebec law? [ 82 ] The exhibits from the U.S. Department of Justice and the U.S. courts allude to the respondents’ conduct pursued "in the United States and elsewhere" and speak to an "international conspiracy" for price-fixing of DRAM.

As the respondents point out in argument, none of these documents discloses conduct undertaken in Canada that would suggest, in itself, a crime or a civil fault was committed here. Not only does the motion fail to allege wrongful conduct that was committed in Canada, say the respondents, but the applicable provisions of Canadian competition law have not been satisfied. They contend that a violation of the Sherman Act for conduct pursued outside of Canada does not necessarily imply that there has been undue restraint of competition under Canadian law. In

particular, subsection 45(1) of the Competition Act [39] requires that a conspiracy "unduly" (in French "indûment") restrain competition, and this undue character of restraint of trade is not properly alleged here. [ 83 ] The respondents are right to say that the factors identified as necessary to determine whether there is undue restraint of competition by the Supreme Court of Canada in Nova Scotia Pharmaceutical Society [40] are difficult to discern in the motion. In that case, the Court underscored the importance of undertaking an analysis of market structure, including a measure of the commercial power of the cartel in question to a finding that restraint of competition is undue under

section 45 . While the motion invokes the undue character of the conduct at paragraph 2.14 without detail, it relies primarily on the exhibits for details of how the cartel achieved its ends. The respondents say these materials contain little or no information on market share and market structure – key requirements under

section 45 as interpreted by the courts – and provide no sense on how that conduct affected the Canadian market. [ 84 ] I am not inclined to the respondents’ narrow reading of the motion and the exhibits. However spare the facts alleged in respect of the usual criteria used to measure undue restraint of trade in Canadian law, it would seem to me fair to infer, at this early stage, that the commercial power of the cartel and the structure of the DRAM market are such that the conspiracy satisfies the undue requirement in the Act.

According to the materials submitted as exhibits, the cartel was sufficiently powerful to shake the American market and to affect major manufacturers such as Dell, IBM and Apple. The cartel materially affected the European market for DRAM as well. The conspiracy is of course admitted to the extent of the pleas agreements.

The appellant is far from having established its case on the merits, but it is fair to say that the extent of the conspiracy as made plain by the plea agreements is sufficient, at this stage, to conclude that the allegations of undue restraint of trade are made out. [ 85 ] The respondents raise the further problem that the facts alleged, including the materials in the exhibits, only provide a factual basis for wrongful behaviour that took place in the United States. They contend that to invoke this conduct as the basis for an offence under

section 45 of the Competition Act would result in extraterritorial application of Canadian competition law. Given that the Act does not, as a general matter, allow for the prosecution of wrongful behaviour that is committed outside of Canada, the judge was right to conclude that

section 45 did not provide a basis for a civil action in the present case. [41] [ 86 ] The debate as to the extraterritorial reach of

section 45 raised by the respondents is not helpful to decide the matter as to whether a civil fault has been properly alleged. Accepting, for the purposes of argument, that the Canadian authorities were precluded from prosecuting the conduct of the respondents as a crime under the Competition Act , that does not answer the question as to whether there is a civil cause of action in Quebec law for wrongful conduct, committed elsewhere, that causes a loss to a Quebec plaintiff. Moreover the focus on wrongful conduct in the United States distorts the claim made by the appellant.

First, the motion does not restrict the alleged misconduct to the United States – it is alleged that the wrong took place "in the United States and elsewhere", and indeed that is reflected in the general tenor of the exhibits. This is not just because the respondents are not all American corporations.

In this Court, the appellant was allowed to adduce new evidence of a press release bearing on a settlement decision of the European Commission relating to antitrust conduct by producers of DRAM in the European Economic Area. [42] That settlement, which involves companies related to the respondents, tends to show the international character of the conspiracy. The appellant’s theory of the case is that the conspiracy affected the sale of DRAM in the United States and elsewhere, including Europe, but also in the market for DRAM in Quebec.

That behaviour resulted in an actionable civil wrong in Quebec law even if the respondents were not, themselves, in Canada when the wrong was committed. Whatever the relevance of the locus of the conspiracy for a prosecution under

section 45 of the Act, the fact that the conspiracy was committed outside of this country is not decisive for an action in civil liability under

article 1457 C.C.Q. [ 87 ] I would go further. Whatever the relevance of territoriality and of the strict definition of undue competition for criminal liability under

section 45, those concerns fail to speak to the cause of action in civil liability in Quebec which is the basis of the class action here. The debate surrounding whether or not the specific requirements are properly alleged under

section 45 of the Competition Act – a penal provision that does not seek to correct a civil wrong – deflects attention from the freestanding allegation in paragraph 2.7 of the motion that civil liability rests here on

article 1457 C.C.Q. [ 88 ] The respondents contend that they cannot be held liable under

article 1457 C.C.Q. if they have respected the requirements

section 45 of the Competition Act . In support of this position, they cite Acier d’armature Rô [43] in which this Court observed that statutory duty under the Competition Act and the generally applicable norm in civil liability are very closely connected. There is no denying that the laws bearing on commercial activity shape, in some measure, our understanding of the duties commercial actors have under the general law of civil liability.

Care must be taken, however, not to conflate the notion of civil fault and the violation of a statutory norm, whether in a commercial setting or elsewhere. [44] While it is true – although not invariably – that the failure to respect a duty imposed by statute can be an extracontractual fault under the Civil Code , the inverse proposition – that a person’s conduct that is not shown to violate a statute absolves him or her from civil fault – does not always stand to reason. [45]

Article 1457 C.C.Q. gives expression to an ancient idea in stating that a person must abide by the rules of conduct that bind him or her "according to circumstances, usage or law/ suivant les circonstances, les usages ou la loi ". To read the reference to "law" narrowly as a reference to a single statute, or to contend that commercial circumstances and usage are necessarily codified by

section 45 in the present situation, does a disservice to

article 1457 C.C.Q. as an expression of the droit commun . The content of

article 1457 C.C.Q. may be informed by statutory duty but one cannot assume that it is defined or exhausted thereby. Moreover,

section 45 of the Competition Act is penal law in its principal scope and ambitions; on its own,

section 45 cannot possibly speak to the considerations that underlie an action in civil liability with its corrective justice orientation. [46] Taken alone,

section 45 punishes conduct viewed as a wrong against the state;

article 1457 C.C.Q. has other burdens and purposes. These include, in the present case, that of requiring the respondents to compensate victims for injury caused by conduct shown to be in violation of the general private law duty of diligence owed to the members of the class in the circumstances. III .1.2 Allegations of harm suffered [ 89 ] Since injury is an essential element of the cause of action in civil liability brought against the respondents, the motion for authorization must allege facts that set forth the loss suffered by Ms.

Cloutier and the other members of the class in order to justify the conclusions sought. [ 90 ] In paragraphs 2.14 to 2.17 of its motion, the appellant asserts that the wrongful conduct of the respondents had the effect of artificially inflating the price of all DRAM sold in Quebec. The artificially inflated price meant that those who purchased DRAM

directly from the respondents suffered a loss equivalent to a portion of the inflated price assumed by them as a result of the conspiracy. The same is said of indirect purchasers, including Ms. Cloutier, the designated representative, who bought her computer from Dell. The losses of the indirect purchasers would be predicated on some or all of the losses suffered being "passed on" through the chain of distribution, either by the direct purchasers or by other indirect purchasers from whom the aggrieved party acquired the DRAM.

If the direct purchasers absorb all the loss, there are no losses to "pass on" to the indirect purchasers who acquire DRAM or devices outfitted with DRAM from them. By the same token, if the direct purchasers pass on the entire amount of the overcharge, they suffer no losses themselves and the indirect purchasers assume the full consequences of the wrong. [ 91 ] According to the appellant in paragraph 2.16, all members of the class suffered harm in that they assumed, in whole or in part, a portion of the artificially inflated price of DRAM sold here.

"En bout de piste", writes the appellant in paragraph 2.17 of the motion, "les dommages subis collectivement par la Personne désignée et les autres membres du groupe sont égaux à la portion artificiellement gonflée des prix de vente de la DRAM vendue au Québec et/ou équipant des produits vendus au Québec". The appellant thus claims a single, aggregate amount of losses on behalf of all direct and indirect purchasers in the class.

That amount, it says, will be divided up between the members of the class, according to the extent of their individualized loss, to be determined at a later stage in the proceedings. [ 92 ] The judge clearly understood that the class is made up of direct and indirect purchasers of DRAM. He was of the view that the failure to allege precisely the losses suffered by indirect purchasers, including by the designated representative who herself is an indirect acquirer of DRAM, meant the action must fail. In respect of the harm suffered, he decided that the motion failed to meet the requirements of

article 1003(

b) C.C.P. in two respects. First, citing this Court’s decision in Toyota [47] , the judge wrote "les faits allégués d’une requête en autorisation doivent permettre d’établir prima facie l’existence d’une perte due à l’existence du cartel. En l’espèce, ce n’est pas le cas." (para. [194]). Second, citing the United States Supreme Court case in Hanover Shoe , [48] he decided that, in law, the losses are considered to be those of direct purchasers only and not passed on to the indirect purchasers (para. [169]). [ 93 ] The appellant argues the judge erred on both points. It says the allegations in the motion met the prima facie test applicable under

article 1003(

b) C.C.P. and, furthermore, that there should be no bar in Quebec law precluding indirect purchasers from claiming losses resulting from the alleged price-fixing conspiracy. These distinct arguments shall be treated in turn. [ 94 ] Were the allegations sufficiently precise so that they met the test in

article 1003(

b) C.C.P.? [ 95 ] The respondents submit that the allegations of losses by indirect purchasers in the motion are couched in language that is lacking in both precision and assertiveness. The motion does not make plain what harm, if any, the indirect purchasers have suffered. There is no detail on how the appellant knows the loss exists, nor any explanation on how it is to be calculated.

The appellant even uses the conditional tense in the pleadings in a manner that suggests the speculative character of the loss: according to paragraph 2.15.1 of the motion, the indirect purchasers who paid an inflated price are those "à qui les premiers acheteurs auraient , en tout ou en partie, refilé la portion artificiellement gonflée du prix de la DRAM" (emphasis added). For the respondents, this lack of precision and assertiveness in the allegations means the judge was right to dismiss the motion under

article 1003(b). [ 96 ] The allegations relating to losses in the motion are indeed bare-boned. There is good authority for the principle that

article 1003(

b) C.C.P. requires more than a mere affirmation that a loss was suffered and that a plaintiff in a class action cannot rely on a an allegation of fault by the defendant to carry the motion past the authorization stage. [49] As Baudouin, J.A. observed in Toyota , the fact that the burden at this stage is a light one does not mean that the petitioner can allege losses in a manner that is "vague, générale et imprécise". [50] Moreover, the respondents say that the appellant failed to meet the burden of establishing, prima facie , the existence of a loss suffered by all members of the class set by this Court in Toyota .

They cite Baudouin, J.A. on this point who explained that "[i]l est, en effet, essentiel de démontrer le caractère collectif du dommage subi et le recours collectif n’est pas approprié lorsqu’il donnerait naissance, lors de l’audition au fond, à une multitude de petits procès et qu’un aspect important de la contestation engagée ne se prête pas à une détermination collective en raison d’une multiplication de facteurs subjectifs. [...]". [51] [ 97 ] I disagree with the overbroad reading the respondents give to Toyota . [ 98 ] However spare the allegations may be, they constitute a prima facie demonstration of the loss sufficient for the purposes of meeting the requirements of

article 1003(

b) C.C.P. Paragraph 2.14 fixes on the "prix artificiellement gonflé" of DRAM sold to both direct and indirect purchasers. Paragraph 2.15 alleges that they collectively paid too high a price for DRAM as a result of the alleged conspiracy. It is indeed unfortunate that paragraph 2.15.1 appears to cast the indirect acquirers' loss in the conditional tense, but that cannot be fatal to the whole cause of action. Paragraph 2.16 asserts affirmatively that all members of the class, including per force indirect purchasers, assumed a portion of the inflated price.

In my view paragraph 2.17, quoted above, is critical to the appellant’s theory of the case: the collective losses suffered by the direct and indirect purchasers are claimed together as the aggregate amount of the overcharge. In other words, the class seeks recovery for a single, fixed amount of loss which, irrespective of how much of that single amount was or was not passed on from direct to indirect purchasers. That aggregate corresponds to the amount overcharged to the class as a whole.

Whether or not the overcharge was passed on, the aggregate loss therefore remains the same. [ 99 ] The respondents do not give sufficient regard to the manner in which the dicta in Toyota is confined to its particular facts. Baudouin, J.A. was insistent that his reasons did not change the usual burden faced by class action petitioners at the authorization stage. [52] It was the very particular character of the price-maintenance scheme, which put an end to price negotiation by new car buyers, that explained why the motion for a class action failed in that case.

For able negotiators contending with the price-maintenance scheme in Toyota , the fixed price created a loss. But for poor negotiators in the same class, the fixed price resulted in a gain. There was accordingly no way of knowing, based on the allegations made, whether losses outweighed gains and, importantly, how the foregone opportunity to negotiate was to be quantified as a loss. [53] Contrary to Toyota , it cannot be said in the present case that the allegations create an uncertainty as to whether there is an aggregate loss to direct and indirect buyers of DRAM. The allegations are precise in that respect.

This is not a case that runs the risk, at trial, of disintegrating into the multiple trials Baudouin, J.A. warned against in Toyota . Indeed the motions judge himself recognized at paragraph [153] of the judgment a quo . [ 100 ] Whether the appellant succeeds in the substantial business of proving this loss at trial remains to be seen. Even the means for proving that loss, especially complicated given the presence of multiple chains of direct and indirect purchasers, is not clear at this stage.

But for the purposes of authorization under Quebec law, the loss is properly alleged, however fleetingly. As the respondents themselves acknowledge, the presentation of expert evidence is not the norm at the authorization stage in Quebec under the Code of Civil Procedure and, where rules applicable elsewhere might require a sophisticated methodology of proof of loss to be advanced before certification of a class action, the absence of such a methodology is not fatal here. [ 101 ] But it is not enough to have merely alleged the loss.

Respondents argue that the losses suffered by indirect purchasers, including the representative, are legally deemed not to be losses susceptible of compensation by reason of the state of the law in Canada in respect of the passing-on defence. [ 102 ] The appellant must establish, says the respondent, that some of the illegal overcharge was passed on to Ms. Cloutier and the other indirect purchasers of DRAM. If no such passing-on occurred, the indirect purchasers have no place in the class and the proceedings cannot be authorized. They say that the judge was right to dismiss the action on this point.

Without an analysis of every transaction along the distribution chain from the direct purchaser to others "downstream", one cannot simply assume that the alleged overcharge flowed through the various levels of indirect purchasers leaving them each with a part of the loss. Without the ability to prove that the loss was passed on, there is no reason to believe that the indirect purchasers belong in the class. They invoke Hanover Shoe , in which the U.S.

Supreme Court explained that the variables affecting prices in different economic settings mean the task of showing the passing on of losses "would normally prove insurmountable". [54] Moreover, say the respondents, passing-on presents the serious risk of multiple liability for defendants for the same loss if it is allowed to be invoked by indirect purchasers offensively. The direct purchaser would likely recover all or part of an overcharge that one or more indirect purchasers also claimed.

For these reasons, the U.S. federal courts have generally deemed the losses to have been suffered only by the direct purchasers.

Defendants have been prevented from invoking passing-on as a defence in actions by direct purchasers and, as a result, indirect purchasers are generally precluded from suing under federal antitrust law. [55] [ 103 ] In support of this view, the respondents cite in particular the recent decision of the British Columbia Court of Appeal in Sun- Rype . [56] In this appeal from an order certifying a class action involving a claim from a combined class of direct and indirect purchasers, the majority of the Court of Appeal declared that the pleadings did not disclose a cause of action against defendants accused of price- fixing high fructose corn syrup used in soft drinks.

The majority relied on dicta from the Supreme Court of Canada, written in a different context, that suggest that Canadian law does not recognize the theory of passing-on when raised in defence. [57] The passing-on (or "passing-through") defence, where permitted, would allow the alleged wrongdoer to defeat the claim of a direct purchaser for an overcharge resulting from price-fixing on the grounds that the direct purchaser merely passed on that overcharge to indirect purchasers and therefore suffered no loss as a result of the price-fixing. [ 104 ] As the respondents point out, this defence has traditionally been refused in federal antitrust law in the United States.

They say that on the same basis as was decided in Hanover Shoe , Canadian law does not permit wrongdoers to avoid liability to direct purchasers of property at inflated price by hiding behind the passing-on defence. For the respondents – indeed this is central to the reasoning of the majority of the B.C.

Court of Appeal in Sun-Rype – the non-availability of the defence of passing-on to the wrongdoers in an action by direct purchasers potentially renders those wrongdoers fully liable for the loss to the direct purchaser arising from the price fixing. [58] It follows logically, in keeping with this view, that the indirect purchasers of DRAM cannot sue for losses that were passed on because they would be seeking to recover the same losses as the direct purchasers to whom 100% are due.

A class made up of direct and indirect purchasers, all claiming a portion of the overcharge, creates the distinctly unfair probability of double recovery. [ 105 ] According to the respondents, the principle against double recovery that governs the law of tort and restitution in the common law should also apply in the Quebec law of extracontractual liability to defeat the claim of indirect purchasers and undo the class. In short, because of the non-availability of the passing-on defence for direct purchasers of DRAM, the indirect purchasers such as Ms. Cloutier are deemed to have suffered no loss and, under artic

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