The Self-Identification of Indirect Purchasers

October 31, 2013

While the Supreme Court held today that courts can certify indirect purchaser class actions (we discuss the cases in great detail here), the Court also held that indirect purchaser must be able to "self-identify" themselves as members of the proposed class. If they cannot, courts will refuse to certify the action. While the implications of "self-identification" remain to be seen, defence counsel will be wracking their brains to consider how they can leverage this criterion to achieve a favourable result for their clients.

In Sun-Rype Products Ltd. et al. v Archer Daniels Midland Company et al., 2013 SCC 58, Rothstein J. refused to certify a class of indirect purchasers of high fructose corn syrup (HFCS). He did so, not because indirect purchasers cannot prove they suffered harm, but because they could not self-identify themselves as members of the proposed class.

HFCS is a ubiquitous food sweetener. All Canadians have almost certainly purchased a product with HFCS (e.g., juices, candies, jams, etc.). But Rothstein J. held that having probably purchased a product with HFCS was not good enough. Plaintiffs needed to establish in evidence that two or more persons actually did purchase HFCS products. That evidence did not exist. Even the representative plaintiff did not know what products she had purchased which contained HFCS and which ones contained another sweetener, like liquid sugar. Rothstein J. noted that "[t]he problem in this case lies in the fact that indirect purchasers, even knowing the names of the products affected, will not be able to know whether the particular item that they purchased did in fact contain HFCS. The appellants have not offered evidence that could help to overcome the identification problem created by the fact that HFCS and liquid sugar were used interchangeably." Accordingly, he refused to certify the indirect purchaser class. Karakatsanis and Cromwell JJ dissented on this point.

Not every indirect purchase case will be vulnerable on this point. Even Rothstein J. noted that these concerns did not arise in the companion appeal, Pro-Sys Consultants Ltd. et al. v Microsoft Corporation et al., 2013 SCC 57, because purchase records or possession of the product in question would permit a consumer to self-identify as part of the proposed class.

But some class actions involve products, like HFCS, that are ubiquitous and whose presence in finished products is very likely but not guaranteed. Because they're everywhere, they're nowhere. In those cases, and ones close to that line, we can expect defendants to point to Rothstein J's decision in Sun-Rype and argue that the court must refuse certification because indirect purchasers cannot self-identify as class members. Defendants may subject plaintiffs' evidence on these points to greater scrutiny hoping to hit a home run and eliminate the action all together. How many indirect purchaser class actions are vulnerable to this argument remains to be seen.

For a full summary of the decision, read the Bennett Jones Update, Canada's Supreme Court Opens the Door to Indirect Purchaser Class Actions.

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