Breckon v. Cermaq Canada Ltd.

Breckon v. Cermaq Canada Ltd.
Court (s) Database
Federal Court Decisions
Date
2024-02-09
Neutral citation
2024 FC 225
File numbers
T-1664-19
Decision Content
Date: 20240209
Docket: T-1664-19
Citation: 2024 FC 225
Montréal, Quebec, February 9, 2024
PRESENT: Mr. Justice Gascon
PROPOSED CLASS PROCEEDING
BETWEEN:
IRENE BRECKON and GREGORY SILLS
Plaintiffs
and
CERMAQ CANADA LTD., CERMAQ GROUP AS, CERMAQ NORWAY AS, CERMAQ US LLC, GRIEG SEAFOOD ASA, GRIEG SEAFOOD B.C. LTD., LERØY SEAFOOD GROUP ASA, LERØY SEAFOOD USA, INC., MARINE HARVEST ATLANTIC CANADA INC., MOWI ASA, MOWI CANADA WEST INC., MOWI DUCKTRAP, LLC, MOWI USA, LLC, NOVA SEA AS, OCEAN QUALITY AS, OCEAN QUALITY NORTH AMERICA INCORPORATED, OCEAN QUALITY PREMIUM BRANDS, INC., OCEAN QUALITY USA INC., and SALMAR ASA
Defendants
ORDER AND REASONS
I. Overview [1] The plaintiffs, Mr. Gregory Sills and Ms. Irene Breckon [Plaintiffs], bring two separate motions under sections 334.29 and 334.4 of the Federal Courts Rules, SOR/98-106 [Rules]. The first motion seeks the judicial approval of a class action settlement [Settlement Agreement] while the second one asks the Court to approve the payment of three related expenses, namely: i) the legal fees and disbursements sought by class counsel Koskie Minsky LLP, Sotos LLP, and Siskinds LLP [Class Counsel Fees]; ii) the commission of a litigation funder [Commission] under a Litigation Advance Agreement [LAA]; and iii) an honorarium to each of the two representative Plaintiffs [Honorarium].
[2] The Settlement Agreement, a copy of which is attached as Annex “A” to this Order, was executed on September 22, 2023, between the Plaintiffs and the defendants, Cermaq Canada Ltd., Cermaq Group AS, Cermaq Norway AS, Cermaq US LLC, Grieg Seafood ASA, Grieg Seafood BC Ltd., Grieg Seafood Sales North America Incorporated (formerly known as Ocean Quality North America Inc.), Grieg Seafood Sales Premium Brands, Inc. (formerly known as Ocean Quality Premium Brands Inc.), and Grieg Seafood Sales USA Inc. (formerly known as Ocean Quality USA Inc.), Lerøy Seafood AS, Lerøy Seafood USA Inc., Marine Harvest Atlantic Canada Inc., Mowi ASA, Mowi Canada West Inc., Mowi Ducktrap, LLC, Mowi USA, LLC, Nova Sea AS, SalMar ASA, and Sjór AS (formerly known as Ocean Quality AS) [together, the Defendants]. The proposed settlement was reached in the context of a class action proceeding [Class Action] filed by the Plaintiffs in relation to an alleged conspiracy between the Defendants to fix, maintain, increase, or control the price of farmed Atlantic salmon, contrary to Part VI of the Competition Act, RSC 1985, c C-34 [Competition Act].
[3] For the reasons that follow, I will approve the Settlement Agreement, I will approve in part the proposed Class Counsel Fees, and I will decline to approve the LAA and the Honorarium.
II. Background A. Procedural context [4] The Class Action was initiated by a statement of claim filed on October 11, 2019, in Court file no. T-1664-19 [Statement of Claim]. A second statement of claim was filed on January 3, 2020, in file no. T-8-20. The two claims were subsequently consolidated on April 26, 2021, by order of this Court, under file no. T-1664-19.
[5] The Statement of Claim arises from allegations of price-fixing in the market for farmed Atlantic salmon. In essence, the Plaintiffs allege that the Defendants conspired to increase the spot market for farmed Atlantic salmon in Oslo, Norway with the intention of increasing prices in North America and elsewhere. They maintain that the Defendants’ unlawful conspiracy constitutes offences under Part VI of the Competition Act, in particular sections 45 and 46, and they seek damages pursuant to subsection 36(1) of the Competition Act.
[6] In the consolidated Statement of Claim, the class is defined as follows: “[a]ll persons in Canada who purchased [farmed Atlantic salmon and products containing or derived from farmed Atlantic salmon purchased or sold in Canada] from April 10, 2013 to [February 20, 2019]” [Class]. The Class therefore includes both direct and indirect purchasers of farmed Atlantic salmon.
[7] The Class Action was commenced following an investigation into the pricing of farmed Atlantic salmon by the European Commission. In February 2019, the European Commission announced in a press release that it had carried out unannounced inspections at the premises of several salmon companies, which were unnamed, based on concerns that the inspected companies may have violated the European Union [EU] competition rules prohibiting cartels and restrictive business practices. A few months later, in November 2019, the Antitrust Division of the United States Department of Justice [US DOJ] opened its own criminal investigation into allegations of collusion between the Defendants. The Defendants Mowi ASA, SalMar ASA, Lerøy Seafood Group ASA, and Grieg Seafood ASA each filed notices with the Oslo Børs — the Oslo Stock Exchange — disclosing that they or their subsidiaries had received, or were advised they would receive, subpoenas from the US DOJ.
[8] In addition to this Class Action, parallel class action proceedings have been commenced in British Columbia and Quebec in relation to the same alleged conspiracy. Counsel in the three Canadian class actions are working on a coordinated basis, with this Class Action being the “lead action.” These parallel proceedings are Chin v Cermaq Canada Ltd et al (Supreme Court of British Columbia Vancouver, Registry No. 211995) [BC Action] and Langis et al v Grieg Seafood ASA et al (Cour Supérieure du Québec, District de Québec No. 200-06-000245-202) [Quebec Action].
[9] Similar class proceedings have also been commenced in the United States in the following matters: In Re: Farm-Raised Salmon and Salmon Products Antitrust Litigation (United States District Court Southern District of Florida Miami Division, File No. 19-21551-CV-Altonaga) [US Direct Purchaser Action] and Wood Mountain Fish LLC et al v Mowi et al, (United States District Court Southern District of Florida Fort Lauderdale Division, File No. 19-22128-CIV-Smith/Louis) [US Indirect Purchaser Action].
[10] The US Direct Purchaser Action was settled in May 2022 for USD$85 million and was approved by the US courts in September 2022. The US Indirect Purchaser Action was also settled a few months later, in December 2022, for an amount of USD$33 million, and was approved by the US courts at the end of February 2023.
[11] On October 6, 2023, this Court rendered an order certifying the Class Action for settlement purposes only [October 6 Order]. The October 6 Order further approved the Notice of Certification and Settlement Approval Hearing [Notice] as well as the plan to disseminate the Notice [Notice Plan] to the members of the Class [Class Members].
[12] The motions for approval of the Settlement Agreement and for the approval of related payments were heard together by the Court on November 20, 2023.
B. Overview of the Settlement Agreement [13] The parties entered into the Settlement Agreement on September 22, 2023, subject to this Court’s approval. The Plaintiffs’ legal counsel, Koskie Minsky LLP, Sotos LLP, and Siskinds LLP [together, Class Counsel], have concluded that the Settlement Agreement is fair, reasonable, and in the best interests of the Plaintiffs and the Class Members.
[14] The material terms of the Settlement Agreement include the following:
The settlement is valued at $5,250,000 [Settlement Amount], which will be paid into a settlement fund [Settlement Fund]. Class Counsel have prepared a protocol for the distribution of the Settlement Fund, after deducting administration expenses, Class Counsel Fees, disbursements, and amounts owing to the litigation funder under the LAA [Funding Fees].
The Settlement Agreement defines the class for the purposes of the settlement [Settlement Class] as follows: “all Persons in Canada who purchased farmed Atlantic salmon and products containing or derived from farmed Atlantic salmon purchased or sold in Canada from April 10, 2013 to the date of this Order, except the Excluded Persons and any Opt-Out” [Settlement Class Members]. This Settlement Class definition is nearly identical to the definition of the Class in the Statement of Claim.
The Settlement Fund will be distributed to eligible Settlement Class Members with purchases totaling at least $1 million of farmed Atlantic salmon between April 10, 2013 (the start of the class period), and February 28, 2019 (the date of the European Commission’s raids on the Defendants’ premises) [Qualifying Settlement Class Members].
To account for consumer and other claims that will not qualify for the $1 million threshold, the distribution protocol proposes a cy‑près payment in the amount of $250,000 to Food Banks Canada [Cy‑près Payment]. For the Quebec portion, the Cy‑près Payment shall be lowered by any amounts payable to the Fonds d’aide aux actions collectives [Fonds d’aide], pursuant to section 42 of the Act respecting the Fonds d’aide aux actions collectives, CQLR, c F-3.2.0.1.1 and calculated in accordance with Article 1. (2°) of the Regulation respecting the percentage withheld by the Fonds d’aide aux actions collectives, RSQ, c F-3.2.0.1.1, r 2. For the purposes of calculating the amount payable to the Fonds d’aide, 23% of the Cy‑près Payment will be notionally allocated to Quebec.
The direct settlement benefits will be distributed to Qualifying Settlement Class Members on a pro rata basis (i.e., proportionally), based on the volume of the Qualifying Settlement Class Member’s salmon purchases as against the total volume of all Qualifying Settlement Class Members’ salmon purchases. The amount of Qualifying Settlement Class Members’ salmon purchases will be finally determined by Class Counsel, with no right of appeal or review, based on purchase information submitted by the Qualifying Settlement Class Member, or where available, sales data provided by the Defendants pursuant to the terms of the Settlement Agreement.
The Settlement Agreement is an all-party settlement agreement and would resolve the litigation in its entirety. This includes the discontinuance of the BC Action and the Quebec Action.
[15] With respect to Class Counsel Fees, Section 11.1 of the Settlement Agreement provides that Class Counsel may seek approval of the Court for the payment of Class Counsel Fees contemporaneously with seeking approval of the Settlement Agreement. In June 2020, Class Counsel had entered into a fee agreement with the Plaintiffs, which provides for a contingency fee not exceeding 33% of the total amounts recovered by the Class, plus any amounts awarded by the Court in respect of costs, as well as disbursements and applicable taxes [Retainer Agreement].
[16] Class Counsel have prepared a protocol for the distribution of the “net” settlement funds that will remain in the Settlement Fund after deducting administration expenses, Class Counsel Fees, disbursements, and Funding Fees.
[17] Class Counsel estimates that, subject to this Court’s approval, after deductions of $1,483,125 for Class Counsel Fees representing 25% of the Settlement Fund plus applicable taxes, $144,231.64 (inclusive of taxes) for disbursements, $1,000 for Honorarium payments, and $1,250,000 for the Funding Fees, there would be approximately $2,362,643 left for distribution. Once the Cy‑près Payment in the amount of $250,000 is made to Food Banks Canada, there will be $2,112,643 left in the Settlement Fund, which will be distributed to Qualifying Settlement Class Members proportionally.
[18] Furthermore, Food Banks Canada has proposed to share the cy‑près funds proportionally with their provincial associations for the purchase of food for food banks in their communities. In the event the net Settlement Fund is not paid out completely, either due to uncashed cheques, residual interest or other reasons, a further donation will be made to Food Banks Canada if the amount is less than $20,000. In the event the residual amount is greater than $20,000, further direction will be sought from the Court.
[19] As far as the Honorarium is concerned, the Settlement Agreement provides that Class Counsel may ask the Court for the approval of an Honorarium of $500 to each of Mr. Sills and Ms. Breckon, totalling $1,000.
[20] I pause to observe that, in section 3.1, the Settlement Agreement provides that the “Settlement Amount represents the full amount to be paid pursuant to this Settlement Agreement and shall be all-inclusive of all amounts, including without limitation, Class Counsel Fees, Class Counsel Disbursements, any honoraria for the Plaintiffs, any distributed amounts to the Settlement Class, any cy pres donations, and Administration Expenses,” and thus contains no direct reference to the Funding Fees or to the LAA. It is only in the draft Notice attached as a schedule to the Settlement Agreement that the litigation funder and the LAA are specifically mentioned.
[21] The Defendants do not oppose the terms of the Settlement Agreement relating to Class Counsel Fees nor the request made for an honorarium to the Plaintiffs. They have also agreed to pay the Class Counsel Fees, the Honorarium, and applicable taxes that are approved by the Court. As indicated above, all of these amounts will be deducted from the Settlement Amount.
C. Notices to Class Members [22] On October 18, 2023, in accordance with the Notice Plan and the October 6 Order, Class Counsel commenced the distribution of notices via social media (Facebook and Instagram). As of November 16, 2023 (one day prior to the end of the two-month social media campaign), the number of impressions received from the social media notices was 2,827,272.
[23] Furthermore, in accordance with the Notice Plan and the October 6 Order, Class Counsel emailed the Notice to the direct purchaser customers of the Defendants based on the mailing list provided by them to Class Counsel. While most of the Defendants provided a list of emails, one did not. For that Defendant, Class Counsel mailed copies of the Notice to all of its customers. Subsequently, Class Counsel received emails for that Defendant’s customers. Emails were then sent. A number of email bounce backs were received. Class Counsel conducted searches to try to find updated contacts for those customers, failing which it followed up with defence counsel. They advised that some clients may be past clients, given the class period. The implication is that some may no longer be in business. Ultimately, there were only four customers with email bounce backs that could not be contacted through alternative backup emails. For those customers, letters attaching the Notice were mailed on October 25, 2023.
[24] Additionally, in accordance with the Notice Plan and the October 6 Order, Class Counsel mailed out the Notice to the 1,067 companies identified in the mailing list from Data Axle. Class Counsel also emailed the Notice to their respective mailing lists of individuals who have registered with Class Counsel to receive updates on the status of the litigation and to the following industry associations, requesting distribution to their membership: Canadian Federation of Independent Grocers, Food, Health and Consumer Products of Canada, Restaurants Canada, and Food Processors of Canada.
[25] Finally, the press release jointly drafted and agreed to by the parties was distributed to media outlets and publications through publication on Canadian Newswire on October 30, 2023.
III. Analysis [26] The motions are seeking the Court’s approval for the Settlement Agreement, Class Counsel Fees, the LAA, and the Plaintiffs’ Honorarium. Each of these requests will be dealt with in turn. In conducting its assessment, the Court must first determine whether the Settlement Agreement should be approved. In the affirmative, the Court must then determine whether to approve the Class Counsel Fees, the LAA, and the Honorarium.
A. The Settlement Agreement (1) The test for the approval of class action settlements [27] Rule 334.29 provides that a class proceeding settlement must be approved by the Court. The legal test to be applied is whether the proposed settlement is “fair, reasonable and in the best interests of the class as a whole” (Lin v Airbnb, Inc, 2021 FC 1260 at para 21 [Lin]; Bernlohr v Former Employees of Aveos Fleet Performance Inc, 2021 FC 113 at para 12 [Bernlohr]; Wenham v Canada (Attorney General), 2020 FC 588 at para 48 [Wenham]; McLean v Canada, 2019 FC 1075 at paras 64–65 [McLean]).
[28] The factors to be considered in the analysis have been reiterated by the Court on several occasions (Moushoom v Canada (Attorney General), 2023 FC 1739 at para 83 [Moushoom]; Lin at para 22; Bernlohr at para 13; Wenham at para 50; McLean at paras 64–66; Condon v Canada, 2018 FC 522 at para 19 [Condon]). They are similar to the factors retained by the courts across Canada. These factors are non‑exhaustive, and their weight will vary according to the circumstances and to the factual matrix of each proceeding. They can be summarized as follows:
The terms and conditions of the settlement;
The likelihood of recovery or success;
The expressions of support, and the number and nature of objections;
The degree and nature of communications between class counsel and class members;
The amount and nature of pre-trial activities including investigation, assessment of evidence, and discovery;
The future expense and likely duration of litigation;
The presence of arm’s length bargaining between the parties and the absence of collusion during negotiations;
The recommendation and experience of class counsel; and,
Any other relevant factor or circumstance.
[29] A proposed settlement must be considered as a whole and in context. Settlements require trade‑offs on both sides and are rarely perfect, but they must nevertheless fall within a “zone or range of reasonableness” (Lin at para 23; Bernlohr at para 14; McLean at para 76; Condon at para 18). Reasonableness allows for a spectrum of possible resolutions and is an objective standard that can vary depending upon the subject matter of the litigation and the nature of the damages for which the settlement is to provide compensation to class members. However, not every disposition of a proposed settlement agreement must be reasonable, and it is not open to the Court to rewrite the substantive terms of a proposed agreement (Wenham at para 51). The function of the Court in reviewing a proposed class action settlement is not to reopen and enter into negotiations with litigants in the hope of improving the terms of the agreement (Condon at para 44). In the end, the proposed settlement is a “take it or leave it” proposition (Moushoom at para 57; McLean v Canada (Attorney General), 2023 FC 1093 at para 37; Lin at para 23).
[30] In mandating that both the class action settlements and the payment of class counsel fees be subject to the Court’s approval (i.e., Rules 334.29 and 334.4), the Rules place an onerous responsibility on the Court to ensure that the class members’ interests are not being sacrificed to the interests of class counsel, who have typically taken on a substantial risk and who have a great deal to gain not only in removing that risk but in recovering a significant reward from their contingency fee arrangement (Lin at para 24, citing Shah v LG Chem, Ltd, 2021 ONSC 396 at para 40 [Shah]). The incentives and the interests of class counsel may not always align with the best interests of the class members. It thus falls on the Court to scrutinize both the proposed settlement agreement and the proposed class counsel fees and administrative expenses, as they will typically be interrelated (Lin at para 24). I pause to observe that the Court has a similar responsibility with respect to litigation funding agreements entered into by the plaintiffs in relation to proposed class proceedings (Ingarra et al v Dye & Durham Limited et al, 2024 FC 152 at para 23 [Ingarra]; Difederico v Amazon.com Inc, 2021 FC 311 at para 29 [Difederico]).
[31] This is especially important where, as is the case here, the net amount that will remain in the Settlement Fund for Qualifying Settlement Class Members is markedly lower than the Settlement Amount after deduction of the Class Counsel Fees and other expenses such as the Funding Fees.
(2) Application to this case (a) Terms and conditions of the settlement [32] Under the terms and conditions of the Settlement Agreement, the question to be determined is whether the proposed Settlement Agreement, when considered in its overall context, provides significant advantages to the Class Members, compared to what would have been an expected result of litigation on the merits (Lin at para 25).
[33] The key terms of the Settlement Agreement, as seen by the parties, revolve around a Settlement Amount valued at $5,250,000, which includes payment of the following elements: compensation to Qualifying Settlement Class Members; the Cy‑près Payment of $250,000; Class Counsel Fees and disbursements; Funding Fees; administration expenses; and the Honorarium payments. Furthermore, the Settlement Agreement’s release clause [Release Clause] provides that the Defendants will be forever and absolutely released from any claims in relation to the present action or to any claims related in any way to the released claims, and that the release shall remain in effect notwithstanding the discovery or existence of additional or different facts and evidence. The Release Clause applies to all Class Members, and not only to the Qualifying Settlement Class Members.
[34] As discussed at the hearing before the Court, three major issues arise in relation to the terms and conditions of the Settlement Agreement. First, the scope and extent of the Release Clause, which requires all Class Members to waive their rights — despite the limited benefits provided by the settlement — and indemnifies the Defendants for any future claims regardless of what new evidence or information might be discovered. Second, the fact that the Settlement Agreement, when considered in its overall context, provides minimal advantages to the Class Members as a whole — especially the indirect purchasers —, compared to a reasonably expected result of following through with the litigation on the merits. Third, the consideration of the Cy‑près Payment as a benefit to the Class Members other than the Qualifying Settlement Class Members.
(i) The Release Clause [35] Pursuant to the Release Clause, the Defendants will receive a full and final release in relation to the subject matter of the Class Action, namely, allegations of price-fixing amongst the Defendants resulting in purchasers of farmed Atlantic salmon allegedly paying supra-competitive prices.
[36] The Release Clause raises some concerns for numerous reasons. First, based on the wording of the Release Clause, any future actions “related in any way to Released Claims” are barred from being raised. Given that the Class definition includes every Canadian consumer, this Release Clause will bar all future action from anyone who purchased farmed Atlantic salmon from the Defendants for any possible similar future case. As such, the scope of the Release Clause is very broad.
[37] Indeed, upon encountering a similar release clause in 2038724 Ontario Ltd v Quizno’s Canada Restaurant Corporation, 2014 ONSC 5812 [Quizno’s], Justice Perell highlighted the following problems with such a clause, at paragraphs 55 and 56 of his decision:
[55] The scope of the release is too broad. In my opinion, it is fair to have Class Members release their existing claims against the Defendants. And it would have been fair to bar claims that are a continuation of the particular existing claims. However, in my opinion, it is unfair to categorically bar all future claims of the types identified in the Statement of Claim, which is a possible interpretation of the proposed release.
[56] Interpreting how the release would apply in the future is, of course, speculative at best because the factual nexus for the application of release is unknown. However, by way of analogy, if the Plaintiffs’ current claim against the Defendants was a nuisance claim, it would be fair to bar future claims based on the existing nuisance or it might be fair to bar future claims based on a continuation of the existing nuisance, but, in my opinion, it would not be fair or reasonable to bar all future claims based on presently unknown new nuisances perpetrated by the Defendants in the future.
[38] Given that the Release Clause in this case explicitly requires the Class Members to “agree and covenant not to sue any of the Releasees on the basis of any Released Claims or to assist any third party in commencing or maintaining any suit against any Releasees related in any way to Released Claims” [emphasis added], it would appear that the Release Clause is overly broad in the same sense as the release clause in Quizno’s.
[39] Second, the Release Clause requires all Class Members to waive their rights of action, despite the fact that the consumer members of the Class will only receive the indirect benefit of a cy‑près donation from the Settlement Fund, and no direct individual benefit.
[40] In Quizno’s, Justice Perell singled out this problem as well, in the following terms: “[i]t is one thing for Class Members to not have gained anything by a class action, it is another thing to give up rights as the price for settling the Class Action, and such a settlement would not be in the Class Members’ best interests” (Quizno’s at para 61, citing Waldman v Thomson Reuters Canada Limited, 2014 ONSC 1288 [Waldman]). Indeed, in Waldman, the court was seized of a situation similar to the case at bar, where a cy‑près trust would be established in lieu of the class members receiving an individual benefit. In that case, Justice Perell concluded that, “I, however, do not find that the Settlement Agreement is substantively, circumstantially, or institutionally fair to Class Members. In this regard, I agree with the general sentiment of the objectors to the Settlement that the Settlement Agreement brings the administration of justice and class actions into disrepute because: (a) the Settlement is more beneficial to Class Counsel than it is to the Class Members; and (b) in its practical effect, the Settlement expropriates the Class Members’ property rights in exchange for a charitable donation from Thomson” [emphasis added] (Waldman at para 95). Ultimately, Justice Perell’s decision in Waldman was overturned by the Divisional Court for mischaracterizing the licenses as an expropriation of a property right (Waldman v Thomson Reuters Canada Limited, 2016 ONSC 2622 (Div Ct) at para 18).
[41] In their supplementary submissions filed after the hearing at the request of the Court, the Plaintiffs emphasized that the Release Clause is appropriately circumscribed and remains limited to the allegations raised in the Statement of Claim, and that the language used was modelled on similar releases approved by various Canadian courts in “auto parts” price-fixing class actions. In addition, the Plaintiffs claimed that the Quizno’s precedent could be distinguished on the basis that the release clause in that case sought to release all future claims in relation to conduct that was not a continuation of the conduct covered by the underlying claim (Quizno’s at para 55). The concerns with future problems with the Release Clause do not arise in this case, say the Plaintiffs.
[42] The Plaintiffs also pointed to other court decisions where settlement agreements were approved with release clauses even in cases where the class members only received indirect benefits provided through a proposed cy‑près distribution (Loewenthal v Sirius XM Holdings, Inc, 2021 ONSC 4482 at para 39 [Loewenthal]). In approving the proposed settlement in that case, the Ontario court explicitly addressed a concern raised by an objector, who argued that the release in the settlement was too broad given that the class was being asked to give up something of value in exchange for indirect benefits provided through the proposed cy‑près distribution. The court reviewed the terms of the release and was satisfied that the release was not overbroad, and ultimately noted that settlements are a compromise (Loewenthal at para 39).
[43] The Release Clause contained in the Settlement Agreement certainly raises some concerns, as it is broadly drafted and could be interpreted to bar future claims against any form of anticompetitive conduct committed by the Defendants, even though it does not purport to release claims involving negligence, personal injury, failure to deliver goods, damaged or delayed goods, product defects, securities, or other similar claims. That said, after carefully considering the arguments raised by the Plaintiffs and the authorities they cited, I am ready to accept that the Release Clause does not fit among those release clauses that the Court should be reluctant to approve, and I am satisfied that the Defendants do not unfairly obtain an overbroad release in the circumstances.
(ii) Benefits to Class Members [44] Turning to the benefits provided by the Settlement Agreement, one cannot help but note that the Statement of Claim in this case alleged damages of up to $1 billion. Therefore, the Settlement Amount represents a tiny fraction — merely 0.525% — of that claim, and can certainly be qualified as extremely modest. While litigation conditions can change and parties can settle at varying amounts based on the strength of their claims, the Settlement Amount in this case is a far cry from the initially alleged damages, to the point where one might question the acceptability of such a marginal recovery. This is particularly true given the present context, where the Settlement Amount is so low that the vast majority of Class Members (who likely would have anticipated receiving something from the settlement) will not receive anything from the settlement, apart from the moral satisfaction of making the Cy‑près Payment to Food Banks Canada.
[45] Indeed, based solely on the Class definition, which describes the class as all persons in Canada who purchased farmed Atlantic salmon and products containing or derived from farmed Atlantic salmon purchased or sold in Canada from April 10, 2013 to February 20, 2019, it would be fair to assume that all Class Members, particularly the indirect consumer purchasers, were intended to participate in a possible settlement. The two Plaintiffs are themselves regular consumers and indirect purchasers of farmed Atlantic salmon from the Defendants.
[46] However, the Settlement Agreement does not offer any benefit for its consumer members, outside of the cy‑près contribution. This raises concerns, given the fact that the consumer Class Members are likely the smaller purchasers of farmed Atlantic salmon and thus arguably those who are most reliant on the class action procedural vehicle to advance their claims. Conversely, the Qualifying Settlement Class Members — being large direct purchasers with more than $1 million in annual salmon purchases — arguably possess the requisite resources to lodge their own individual claims against the Defendants, whereas this is likely the only reasonable option for the consumer Class Members to advance their claims.
[47] In short, it appears that, further to the Settlement Agreement, it is the consumer Class Members who are being deprived of access to the Settlement Fund, while the Qualifying Settlement Class Members will divide up the benefits that remain after deductions. In other words, when considered in its overall context, the Settlement Agreement provides extremely timid advantages to the Class Members as a whole — especially the indirect purchasers, compared to a potential reasonably expected result of following through with the litigation on the merits.
[48] In their supplementary submissions, the Plaintiffs indicated that many precedents exist where settlement agreements in the class action context result in differentiated treatment of class members at the distribution stage. Furthermore, they observed that, while the proposed Settlement Agreement is certainly modest, there is no realistic alternative for a satisfactory resolution of the Class Action for the Class Members. I acknowledge these points, but the fact remains that the limited actual benefits to the Class Members are a negative factor undermining the approval of the Settlement Agreement.
(iii) Cy‑près distribution [49] A key term of the Settlement Agreement is the Cy‑près Payment, as it represents the sole benefit of the agreement for indirect purchasers. The Plaintiffs contend that Class Members who do not qualify for direct compensation will receive indirect benefits, through this cy‑près donation to Food Banks Canada in the amount of $250,000. They submit that in Sun‑Rype Products Ltd v Archer Daniels Midland Company, 2013 SCC 58 [Sun‑Rype], the Supreme Court of Canada held that “the precedent for cy‑près distribution is well established” and is “a method the courts have used in indirect purchaser price-fixing cases” (Sun-Rype at paras 25–26).
[50] It is worth noting that the Supreme Court itself highlighted that a cy‑près distribution by “its very name, meaning ‘as near as possible’, implie[s] that it is not the ideal mode of distribution, [but] it allows the court to distribute the money to an appropriate substitute for the class members themselves” [emphasis added] (Sun‑Rype at para 26).
[51] I recognize that Sun‑Rype is a helpful precedent in the current matter. However, in Sun‑Rype, the Supreme Court was contemplating the compensation of an unidentifiable class of indirect purchasers for a claim arising under British Columbia’s Class Proceedings Act, RSBC 1996, c 50 [CPA]. These facts do not entirely align with the facts in the present matter. First, this Class Action is not subject to British Columbia’s CPA, where subsection 34(1) expressly contemplates the possibility of cy‑près distributions. Moreover, Class Counsel have identified no cases from this Court having specifically considered cy‑près payments. It is also worth noting that Sun‑Rype was a case dealing with class certification, not with the approval of a settlement agreement.
[52] The Waldman case discussed above dealt with the approval of a settlement agreement and a cy‑près distribution, and it determined that the cy‑près distribution did not justify the approval of the proposed settlement agreement (Waldman at para 100). Indeed, according to Waldman, which was rendered after the Supreme Court had issued its judgment in Sun‑Rype (Waldman at paras 100–101):
[100] The cy‑près trust fund is a public good, but it does not justify approving the Settlement Agreement. Many, but not necessarily all, Class Members as members of the legal profession may be pleased to see the establishment of a trust to support public interest litigation and the training of law students, but the purpose of class actions is not to fund worthy projects but to provide procedural and substantive access to justice to Class Members.
[101] In my opinion, in the case at bar, there is no access to substantive justice for the claims of Class Members and no meaningful behaviour modification for Thomson.
[Emphasis added.]
[53] However, as pointed out by the Plaintiffs, it is well accepted that, in some cases, receiving indirect cy‑près compensation instead of direct monetary compensation can nevertheless meet the objectives of class proceedings, namely, access to justice and behaviour modification (Harper v American Medical Systems Canada Inc, 2019 ONSC 5723 at para 47; Sorenson v easyhome Ltd, 2013 ONSC 4017 at para 28). In other words, in circumstances where an aggregate settlement recovery cannot be economically distributed to individual class members, the Court can approve a cy‑près distribution to credible organizations or institutions that will indirectly benefit class members. In their supplementary submissions, the Plaintiffs referred the Court to several class action proceedings where courts have approved settlements involving cy‑près distributions for certain class members or all class members who would not receive direct compensation (see, for example, Emond v Google LLC, 2021 ONSC 302 at para 37 and Alfresh Beverages Canada Corp v Hoechst AG, [2002] OTC 19, [2002] OJ No 79 (QL) (SC) at para 16).
[54] Here, further to my analysis and after consideration of the Plaintiffs’ submissions and materials, I am satisfied that, while not being ideal, the cy‑près distribution is appropriate given the small magnitude of the Settlement Amount and the practical and economic difficulties to provide direct compensation to all Class Members. It certainly does not alleviate the fact that the Settlement Agreement offers strictly no financial gains for the vast majority of Class Members, but it is not enough to justify refusing the approval of the Settlement Agreement.
(iv) Conclusion on the terms and conditions [55] In light of the foregoing, I am satisfied that, when considered in their overall context and taking the agreement as a whole, the terms and conditions of the Settlement Agreement can be considered fair, reasonable, and in the best interests of the Class Members. I accept, with some reserve, that they provide advantages to the Class Members, which might not have been achieved with the continued litigation, and are a positive factor supporting the approval of the Settlement Agreement.
(b) The likelihood of recovery or success [56] The next factor to consider is the likelihood of recovery or success. This factor refers to the likelihood of success of the Plaintiffs’ Class Action if it were to proceed on the merits. It must be assessed at the time when the parties choose between proceeding with the litigation and settling the matter. Under this factor, the Court must determine whether the proposed Settlement Agreement is an attractive viable alternative to continued litigation (Lin at para 39).
[57] Here, the Plaintiffs put forward many risk factors related to proceeding with the litigation that, in their view, limit the likelihood of recovery or success altogether. Notably, the Plaintiffs identify the risk that this Court might determine that the pleadings do not disclose a “sufficient description of the formation of an unlawful conspiracy” and therefore do not disclose a reasonable cause of action. Indeed, citing Jensen v Samsung Electronics Co Ltd, 2021 FC 1185 [Jensen], conf’d 2023 FCA 89, leave to appeal to the Supreme Court dismissed, Chelsea Jensen, et al v Samsung Electronics Co Ltd, et al, 2024 CanLII 543 (SCC)), the Plaintiffs indicate that, because of this recent development in the jurisprudence, there is now a much higher risk that the Court might find no basis for the alleged conspiracy. They also note that the discontinuance of the US DOJ’s investigation and the subsequent absence of guilty pleas render the contested prosecution of this Class Action more difficult from a pragmatic standpoint. Moreover, the Plaintiffs submit that the Defendants asserted that the expert economic evidence they put forward does not provide a workable methodology for establishing harm on a class-wide basis. The Court has not yet tested the expert evidence and there is no way of knowing how a trier of fact would weigh this evidence. Finally, as was the case in Lin, the Plaintiffs also identify the risk with having to enforce a judgment against non-Canadian defendants, as is the case for many of the Defendants (Lin at para 44).
[58] I accept that there are increased risks with proceeding with litigation at a merits trial, and that there does not appear to be a high likelihood of success in this case. All of these observations reflect the fact that the Plaintiffs’ likelihood of success at the common issues trial, or even at certification, remains uncertain and