The Supreme Court of
Canada has ruled that a class action commenced against Microsoft Corporation and
Microsoft Canada (Microsoft) for allegedly overcharging for their operating systems may proceed in
British Columbia ( Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 )
The representative plaintiff in the class action
alleged that, beginning in 1988, Microsoft engaged in unlawful conduct by
overcharging for its Intel-compatible PC operating systems and Intel-compatible
PC applications software. The plaintiff sought certification of the class action under the British Columbia
Class Proceedings Act ("Act"). The proposed class is
made up of ultimate consumers, known as "Indirect Purchasers" who acquired
Microsoft products from re-sellers.
The British Columbia
Supreme Court certified the proceeding as a class action. Microsoft appealed from that decision.
The British Columbia Court of Appeal allowed Microsoft's appeal and dismissed the action,
ruling that indirect purchaser actions were not available as a matter of law in
Canada and therefore the class members had no cause of action.
The plaintiff
appealed that decision to the Supreme Court of Canada (SCC) which allowed the appeal.
The SCC
held that indirect purchasers do have a cause of action
against the party who has caused the overcharge to occur at the top of the
distribution chain and who has injured the indirect purchasers as a result of
the overcharge being passed on to them". The Court acknowledged that it had rejected the "passing-on" defence in the context of the imposition of
ultra vires taxes. However, the fact that the
passing-on defence had been rejected did not lead to a corresponding rejection
of the offensive use of passing on. Accordingly, indirect purchasers should not
be foreclosed from claiming "losses" passed on to them. The risk of double or
multiple recovery where actions by both direct and indirect purchasers are
pursued at the same time or where parallel suits are pending in other
jurisdictions can be managed by the court.
The SCC further held that In bringing the action, indirect purchasers willingly assumed the burden of establishing that
they have suffered a loss. Whether they meet their burden is a factual
question to be decided on a case by case basis. Indirect purchaser action may,
in some circumstances, be the only means by which overcharges are claimed and
deterrence is promoted. Allowing such an action is consistent with the
remediation objectives of restitution law because it allows for compensating the
parties who have actually suffered the harm rather than reserving those actions
for direct purchasers who may have in fact passed on the
overcharge.
As to meeting the
test for certification under the Act, the SCC held that the pleadings
disclosed causes of action that should not be struck out at the certification
stage. No such remedy should be given by the courts unless it was "plain and
obvious" that the plaintiff's claim could not succeed. The class
representative must show some basis in fact for each of the certification
requirements set out in the Act, other than the requirement that the pleadings
disclose a cause of action. However, the certification stage is not meant to be a test
of the merits of the action, rather it is concerned with forum and with whether
the action can properly proceed as a class action.
Regards,
Blair
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