Pass Herald Ltd v. Google Llc

Pass Herald Ltd. v. Google LLC
Court (s) Database
Federal Court Decisions
Date
2024-10-11
Neutral citation
2024 FC 1623
File numbers
T-589-22
Decision Content
Date: 20241011
Docket: T-589-22
Citation: 2024 FC 1623
Ottawa, Ontario, October 11, 2024
PRESENT: THE CHIEF JUSTICE
PROPOSED CLASS PROCEEDING
BETWEEN:
PASS HERALD LTD.
Plaintiff
and
GOOGLE LLC, GOOGLE IRELAND LIMITED, GOOGLE CANADA
CORPORATION, META PLATFORMS INC., FACEBOOK IRELAND
LIMITED, and FACEBOOK CANADA LTD.
Defendants
ORDER AND REASONS
Table of Contents
I. The Parties 5
A. Pass Herald 5
B. The Defendants 5
II. Background — Online Advertising 7
III. The Alleged Arrangement 8
IV. Issues 10
V. Analysis 10
A. Does the Court have personal jurisdiction over Google Ireland and Meta Ireland? 10
(1) Applicable legal standard 10
(2) Presence in Canada 12
(3) Consent or attornment 15
(4) Real and substantial connection 20
(5) Conclusion 21
B. Does the Court have territorial and subject matter jurisdiction over the claims? 21
(1) Introduction and Summary of the Parties’ Positions 21
(2) Subsection 6(2) of the Criminal Code 24
(3) The “real and substantial link” test 27
(4) Has Parliament granted this Court jurisdiction to apply sections 45 and 47 to agreements entered into entirely outside of Canada? 34
(5) Conclusion — territorial and subject matter jurisdiction 45
C. Should the Claim be struck for failure to disclose a reasonable cause of action? 47
(1) General principles on a Motion to Strike 47
(2) Section 45 49
(3) Section 46(1) 78
(4) Section 47 79
(5) Section 52 83
VI. Conclusion 101
VII. Pass Herald’s Request for Leave to Amend 103
A. Introduction and applicable principles 103
B. The section 45 claims 106
C. The section 46 claims 108
D. The section 47 claims 109
VIII. Costs 110
ANNEX 1 (pre-2010 version of section 45) 114
ANNEX 2 (current version of section 45) 115
Overview
[1] These reasons concern two similar Motions in this proposed class proceeding. One of the Motions is brought by the defendants Google LLC, Google Ireland Limited and Google Canada Corporation (collectively “Google” or the “Google Defendants”). The other Motion is brought by Meta Platforms Inc., Facebook Ireland Limited, and Facebook Canada Ltd. (collectively, “Facebook” or the “Facebook Defendants”).
[2] Each of the two Motions claims three similar types of relief. Specifically, the Motion brought by the Google Defendants seeks an Order (i) staying or dismissing the claims made against Google Ireland Limited for lack of personal jurisdiction, (ii) staying or dismissing the claims made against all three of the Google Defendants for lack of subject matter jurisdiction, and/or (iii) striking the Fresh as Amended Statement of Claim (the “Claim”) in the underlying proceeding, for failure to disclose a reasonable cause of action.
[3] The Motion brought by the Facebook Defendants seeks essentially the same relief, although the first head of relief pertains to Facebook Ireland Limited, now known as Meta Platforms Ireland Inc.
[4] In the underlying action, the plaintiff, Pass Herald Ltd. (“Pass Herald”), represents two classes of publishers (collectively, the “Class Members”). The first class (the “Conspiracy Class”) consists of publishers, other than the defendants (collectively, the “Defendants”), who sold an impression for display on a website or application between September 27, 2018 and the date this action may be certified as a class proceeding (the “Certification Date”). The second class (the “Misrepresentation Class”) consists of publishers, other than the Defendants, who used a digital display advertising product or service (“Google Tools”) supplied by Google between February 9, 2010 and the Certification Date.
[5] In its capacity as representative plaintiff, Pass Herald claims various types of relief, including $4 billion in damages against the defendants, jointly and severally, for breach of sections 45, 46 and 47 of the Competition Act, RSC 1985, c C-34 (the “Act”). Pass Herald also claims a further $4 billion in damages against Google for breach of section 52 of the Act. These four principal categories of claims are brought pursuant to section 36 of the Act.
[6] With respect to section 45, Pass Herald alleges three distinct contraventions. First, it claims that the Defendants conspired, agreed or arranged to fix, maintain, increase, or control the price for services to transact the right to show a specific type of advertisement called a Display Ad (an “Impression”), contrary to paragraph 45(1)(a) of the Act. Second, Pass Herald claims that the Defendants conspired, agreed or arranged to allocate sales or markets for the supply of Impressions, contrary to paragraph 45(1)(b) of the Act. Third, Pass Herald claims that the Defendants conspired, agreed or arranged to fix, maintain, control, prevent, lessen, or eliminate the supply of services to exchange Impressions, contrary to paragraph 45(1)(c) of the Act.
[7] Among other things, Pass Herald maintains that in the absence of these alleged contraventions of section 45, Facebook would have bought or built a product that competed directly with certain Google Tools, and that this likely would have reduced the fees charged by Google and Facebook for their services.
[8] The alleged breach of section 46 consists of the implementation by Google Canada Corporation and Facebook Canada Ltd. (the “Canadian Defendants”) of certain directives, instructions, intimations of policy or other communications from the other four Defendants, as contemplated by section 46.
[9] Regarding section 47, Pass Herald alleges bid-rigging agreements or arrangements between Google and Facebook, contrary to each of paragraphs 47(1)(a) and 47(1)(b), respectively.
[10] The alleged breach of section 52 consists of certain misrepresentations by Google to the public for the purpose of promoting the use of Google Tools, even though it knew or was reckless to the possibility that such statements were false or misleading in a material respect.
I. The Parties A. Pass Herald [11] Pass Herald is a corporation incorporated under the laws of Alberta. It operates Crowsnest Pass Herald, which is a local newspaper in Crowsnest Pass, Alberta.
B. The Defendants [12] The following descriptions are taken from the Claim.
[13] Google LLC is a corporation incorporated under the laws of Delaware. Its headquarters are in Mountain View, California.
[14] Google Ireland Limited is a corporation incorporated under the laws of Ireland. Its headquarters are in Dublin, Ireland. It is part of the same corporate group as Google LLC.
[15] Google Canada Corporation is a corporation incorporated under the laws of Nova Scotia. It has multiple offices in Ontario, including one in downtown Toronto. It is a second-level subsidiary of Google LLC.
[16] Collectively, the three entities described immediately above are claimed to directly or indirectly offer the services of Google Tools in Canada.
[17] Meta Platforms Inc. is a corporation incorporated under the laws of Delaware. Its headquarters are in Menlo Park, California. It is the successor corporation of Facebook, Inc., which was also incorporated under the laws of Delaware and had the same headquarters.
[18] Facebook Ireland Limited is a corporation incorporated under the laws of Ireland. Its headquarters are in Dublin, Ireland. It is part of the same corporate group as Meta Platforms Inc.
[19] Facebook Canada Ltd. is a corporation incorporated under the laws of Canada. It has an office in downtown Toronto. It is part of the same corporate group as Facebook Inc. It is a second-level subsidiary of Meta Platforms Inc.
II. Background — Online Advertising [20] The focus of the Claim is stated to be “on the marketplace for the exchange of Impressions.” The Claim explains that, in the fraction of a second between when a user opens a website or an application and when it finishes loading, publishers request bids for the right to display an advertisement (i.e., an Impression) to that user on that website or application. These requests are processed by tools known as Publisher Layer Tools, which act on behalf of publishers in two principal ways. First, they solicit bids for Impressions. Second, they sell those Impressions through what is known as Middle Layer Tools. The latter tools run auctions or otherwise intermediate between the Publisher Layer and the Advertising Layer. They do so by taking bids from Advertiser Layer Tools, choosing the one they consider best, and submitting that one to the Publisher Layer Tool. Middle Layer tools do not act on behalf of Publishers or Advertisers directly. In the industry, they are commonly referred to as ad exchanges or ad networks.
[21] Advertiser Layer Tools act on behalf of advertisers. Their purpose is to help Advertisers buy the highest value Impressions at the lowest price.
[22] Pass Herald’s claims are focused primarily on Publisher Layer Tools, and to a lesser extent on Middle Layer Tools.
[23] In particular, a central focus of Pass Herald’s claims is on its allegation that Google and Facebook entered into an arrangement pursuant to which Facebook agreed to abandon (i) its support for a particular type of Publisher Layer Tool, called Header Bidding, and (ii) its plans to build or buy a tool in the Publisher Layer that would compete head-on with certain Google Tools. Facebook is alleged to have entered this arrangement in exchange for certain advantages that it negotiated with Google. Among other things, the Claim maintains that some of those advantages enabled Facebook to reduce its bids for Impressions but still win the auctions for them.
[24] For the purposes of these Motions, it is unnecessary to discuss the details of how Header Bidding works. It will suffice to note that the Claim alleges that Header Bidding is so called because it uses code embedded in the header of a website or an application, to solicit bids from multiple Middle Layer Tools at once, and then select the highest offer.
III. The Alleged Arrangement [25] The alleged arrangement between Defendants consists of a written agreement and various unwritten terms (collectively, the “Arrangement”).
[26] The written agreement is referred to throughout the Claim as “Jedi Blue,” which is allegedly the internal code name given to the agreement within Google. It is common ground between the parties that this agreement is the agreement entitled “Network Bidding Agreement” (the “NBA”).
[27] The NBA was executed on September 24, 2018 by Facebook, Inc. and Facebook Ireland Ltd. It was then signed by Google LLC on September 27, 2018 and by Google Ireland Ltd. the following day. The NBA will be further discussed in part VI.C.(2)(b)(i) of these reasons below.
[28] The alleged unwritten terms include:
Facebook’s abandonment of its support for Header Bidding and its plans to build or buy a Publisher Layer Tool that would compete with Google Publisher Layer Tools;
Secret bidding advantages over competitor Middle Layer Tools, including (a) privileged access by Facebook to Google’s “trove of personal data to help Facebook identify viewers of Impressions,” and (b) additional time to submit bid responses;
Unified pricing, which was achieved by preventing publishers from setting any reserve prices; and
Facebook’s withdrawal from the “website segment” of the online advertising business, which “effectively ced[ed] that market segment to Google Middle Layer Tools,” and led to a significant reduction in the average price pad for Impressions on websites. (For greater certainty, Facebook continued to bid on Impressions in the “applications segment,” where it enjoyed the alleged advantages conferred on it pursuant to the NBA.)
[29] As with the NBA, the above-mentioned alleged unwritten terms will be further discussed in part VI.C(2)(b)(i) of these reasons below.
IV. Issues [30] These Motions raise three principal issues. The parties have each characterized those issues in somewhat different terms. In my view, they can conveniently be restated as follows:
Does the Court have personal jurisdiction over Google Ireland Limited (“Google Ireland”) and Facebook Ireland Limited (now known as Meta Platforms Ireland Ltd. – “Meta Ireland”)?
Does the Court have territorial and subject matter jurisdiction over the claims?
Should the Claim be struck for failure to disclose a reasonable cause of action?
V. Analysis A. Does the Court have personal jurisdiction over Google Ireland and Meta Ireland? (1) Applicable legal standard [31] Facebook maintains that the standard applicable in determining whether to stay or dismiss a claim for lack of personal jurisdiction is whether the plaintiff has demonstrated a “good arguable case," which is sometimes described as a “prima facie case.”
[32] In advancing this position, Facebook relies on Rule 4 of the Federal Courts Rules, SOR/98-106 (the “Rules”), which is commonly referred to as the “gap rule.” Facebook then cites to jurisprudence from Ontario, British Columbia and Alberta that applied the “good arguable case” standard.
[33] However, the Federal Court of Appeal (the “FCA”) has applied the “plain and obvious” standard in this context: Canada v Toney, 2012 FCA 167 (CanLII) [Toney] at para 5. So has this Court: Canada (Ship-Source Oil Pollution Fund) v British Columbia (Finance), 2012 FC 725 at paras 31 and 42–43; Safe Gaming Systems Inc v Atlantic Lottery Corporation, 2013 FC 217 [Safe Gaming] at para 26. By analogy to the application of that test in the traditional motion to strike context under Rule 221(1)(a), a defendant asserting that the Court does not have personal jurisdiction over it must demonstrate that it is plain and obvious, assuming the facts pleaded to be true, that the Court has no such jurisdiction. This essentially requires the defendant to demonstrate that the case against it is “doomed to fail”: Atlantic Lottery Corp Inc v Babstock, 2020 SCC 19 [Atlantic Lottery] at para 90. In this context, the Court’s focus would be on the issue of personal jurisdiction.
[34] The “plain and obvious” standard is also used in assessing territorial matter jurisdiction over ex juris defendants: Sun Rype Products Ltd v Archer Daniels Midland Company, 2013 SCC 58 [Sun Rype] at paras 46–47.
[35] I note that a somewhat similar standard is applied outside the Rule 221(1)(c) context, in connection with motions to strike applications filed in this Court: JP Morgan Asset Management (Canada) Inc v Canada (National Revenue), 2013 FCA 250 (CanLII) [JP Morgan] at para 47; Wenham v Canada (Attorney General), 2018 FCA 199 [Wenham] at para 33, leave to appeal to SCC refused, 39518 (10 June 2021); Empire Company Limited v Canada (Attorney General), 2024 FC 810 at para 20.
[36] Given all of the foregoing, I am inclined to consider that the appropriate standard to be applied by this Court is the “plain and obvious” standard. Nothing turns on this, as I consider that Pass Herald has in any event established a “good arguable case” that this Court has personal jurisdiction over Google Ireland and Meta Ireland (collectively, the “Irish Defendants”).
[37] Although the classic formulation of the plain and obvious standard assumes the pleaded facts to be true, the Court may consider evidence filed by the defendant(s) on issues of jurisdiction: Adelberg v Canada, 2024 FCA 106 at para 40; Mil Davie Inc v Société d'Exploitation et de Développement d'Hibernia Ltée, 1998 CanLII 7789 (FCA) at paras 8–9; Safe Gaming at para 4; General MPP Carriers Ltd v SCL Bern AG, 2014 FC 571 at para 34.
[38] The Court may assert personal jurisdiction over a foreign party based on (i) its presence in Canada; (ii) its consent or attornment to the jurisdiction of this Court, or (iii) the “real and substantial connection” test: Chevron Corp v Yaiguaje, 2015 SCC 42 [Chevron] at para 82; Club Resorts Ltd v Van Breda, 2013 SCC 17 [Van Breda] at para 79. I will address each of these alternatives immediately below.
(2) Presence in Canada [39] At paragraph 16 of the Claim, Pass Herald baldly alleges that the business of Google Ireland “is inextricably interwoven with the business of the [other Google Defendants],” and that, collectively, all three of the Google Defendants “directly or indirectly offered the services of Google Tools in Canada” during the relevant period.
[40] At paragraph 20 of the Claim, Pass Herald makes the same allegation with respect to Meta Ireland and the other Facebook Defendants.
[41] The only other specific allegations made with respect to the Irish Defendants in particular is that they “entered into” the NBA.
[42] However, representatives of each of Google Ireland and Meta Ireland filed affidavits that contradict the above-mentioned allegations.
[43] Specifically, Mr. Peter O’Neill, a Director and Associate General Counsel, Commercial, of Facebook Ireland stated in his affidavit that Facebook Ireland does not maintain any corporate presence in Canada. He explained that Facebook Ireland:
is not authorized, registered, or licensed to do business in Canada;
does not make any management or operational decisions in Canada or undertake any related activities in Canada;
does not maintain any offices, telephone listings, or mailing addresses in Canada;
does not own, lease, or rent any property or any other assets in Canada;
does not hold any bank accounts in Canada;
does not maintain any corporate books or records in Canada;
does not file any tax returns in Canada;
does not sell advertisements in Canada; and
does not have any employees in Canada.
[44] Mr. O’Neill added that Facebook Ireland:
[. . .] does not offer any advertising or publishing services in Canada. The Company offers services only in jurisdictions outside of North America. It does not deliver any services or have any business dealings with advertisers or publishers in Canada. It does not process or collect any advertising or publishing data from Canada.
[45] Turning to Google Ireland, Mr. Neil McHale, a Managing Director with that entity, provided the following affidavit evidence regarding Google Ireland:
it does not have any offices in Canada or own any property in Canada;
it does not file Canadian corporate tax returns;
its executive personnel who make decisions for the company are not located in Canada;
it does not provide services to users and customers located in Canada. Rather, it provides services to users and customers located in Europe, the Middle East and Africa;
it provides the online advertising services referenced in the Claim to business customers in Europe, the Middle East and Africa; and
it does not provide those online Advertising services to business customers in Canada.
[46] Pass Herald did not file any evidence in response to the evidence provided by Messrs. O’Neill and McHale. Indeed, it appears that Pass Herald did not cross-examine those individuals on their evidence. Consequently, their evidence is unchallenged.
[47] Based on that evidence, I find that neither Google Ireland nor Meta Ireland (formerly Facebook Ireland) has any presence in Canada.
(3) Consent or attornment [48] Neither of the Irish Defendants has consented to the jurisdiction of this Court.
[49] Moreover, those entities maintain that they have not attorned to the jurisdiction of the Court.
[50] Pass Herald asserts that the Irish Defendants attorned to the Court’s jurisdiction when they each brought a Motion to Strike for failure to disclose a reasonable cause of action.
[51] I agree.
[52] The bringing of a Motion to Strike for failure to disclose a reasonable cause of action constitutes attornment to the jurisdiction of this Court, even where such relief is only sought in the alternative to a request for an Order dismissing or permanently staying the proceeding for lack of personal jurisdiction: see Mid-Ohio Imported Car Co v Tri-K Investments Ltd, 1995 CanLII 2084 (BC CA) [Mid-Ohio] at paras 7–16; Nadi Inc v Montazemi-Safari, 2012 ONSC 4723 at paras 27 and 38; and Dovenmuehle v Rocca Group Ltd, 1981 CanLII 3564 (NB CA) at para 14, aff’d 1982 CanLII 206 (SCC). Unless the Court, in advance, permits defendants to seek such alternative relief in a single Motion, proceeding in such a manner will constitute attornment.
[53] In the Notice of Motion filed by the Google Defendants, the first head of relief sought is for an Order permanently staying or dismissing Pass Herald’s claims “for lack of jurisdiction.” It is clear from the statement of grounds for the Motion that this is a request for an Order that section 45 of the Act has no application to alleged foreign conspiracies that are entered into entirely outside Canada, without any participation of a Canadian entity. This is a request for an Order on the merits of the case.
[54] Google’s Notice of Motion then requested “in addition, to or in the alternative” an Order striking the Claim for failure to disclose a reasonable cause of action. It was only in the further alternative that the Google Defendants sought an Order staying the Claim against Google Ireland for lack of in personam jurisdiction.
[55] Turning to the Facebook Defendants, their Notice of Motion requests (in the first head of relief sought) an Order dismissing or permanently staying this proceeding as against Facebook Ireland, for lack of personal jurisdiction. In the alternative, the Facebook Defendants sought an Order dismissing or permanently staying this proceeding against Facebook Ireland and Meta Platforms Inc. for lack of subject matter jurisdiction. In the further alternative, the Facebook Defendants sought an Order dismissing this proceeding against all of them, for failure to disclose a reasonable cause of action.
[56] In these circumstances, I find that it is not plain and obvious that Google Ireland and Facebook Ireland have not voluntarily attorned to the jurisdiction of this Court. Indeed, I find that Pass Herald has advanced a “good arguable case” in this regard.
[57] If I proceed to find in favour of the Irish Defendants with respect to the two other principal issues that they and the other defendants have raised in this proceeding, it is readily apparent that they will want to rely on those findings. However, they can’t have it both ways: they cannot seek and rely upon the Court’s findings on the merits while maintaining that they have not attorned to the Court’s jurisdiction. As the saying goes, “they can’t have their cake and eat it too.”
[58] Google Ireland relies on Rule 208(b)(iv) of the Federal Courts Rules, SOR/98-106 [Rules] to argue that it did not attorn to the jurisdiction of the Court by bringing a motion objecting to the jurisdiction of the Court. However, as discussed above, Google Ireland did more than simply object to the jurisdiction of the Court.
[59] I recognize that, in some cases, it may be consistent with the spirit of Rule 3(a) for a request for relief on grounds of a lack of personal jurisdiction to be sought together with a request for other types of relief, such as under Rule 221(1)(a).
[60] Rule 3(a) requires that the Rules be interpreted and applied “so as to secure the just, most expeditious and least expensive outcome of every proceeding.”
[61] Including alternative grounds for relief in a single Motion can sometimes significantly reduce the litigation costs likely to be incurred by the parties. It can also be consistent with the interests of judicial economy, and with this Court’s efforts to find more efficient ways to use scarce public resources. When they are present, these considerations can weigh in favour of the Court being open to granting a request to proceed in this manner, while enabling the defendants in question to avoid being found to have attorned to the jurisdiction of the Court. Ultimately, the exercise of the Court’s discretion will depend on the particular facts in each case. However, a request must first be made.
[62] In any event, if such a request is granted, and a ruling is made in favour of the defendants on the issue of personal jurisdiction, they should not expect to also receive a ruling on the other issues they have raised.
[63] I acknowledge that Associate Judge Horne issued a Direction, dated June 7, 2023, stating that the Defendants’ Motions to strike and to challenge jurisdiction would be heard together on a particular date. However, Google Ireland did not seek the consent of the Court before joining its name to the single Notice of Motion requesting relief on both the issue of personal jurisdiction and on issues going to the merits. The same is true of Meta Ireland. At the case management conference that took place on June 7, 2023, the Defendants did not indicate that the Irish Defendants wished to preserve their ability to avoid attorning to the Court’s jurisdiction. After the Court expressed an interest in hearing the motion to strike before any other motions, it was agreed that the motion to strike would be heard on the same date as the motions on jurisdiction.
[64] Ultimately, the three distinct requests for relief made by the Google Defendants were made in a single Notice of Motion. The same is true for the Facebook Defendants. There were not multiple Motions filed by each of those groups of Defendants that were directed to be heard together. Stated differently, contrary to Facebook Ireland’s contention, the Defendants’ arguments with respect to in personam jurisdiction, subject matter jurisdiction and the failure to plead a reasonable cause of action were not heard together simply due to “scheduling mechanics.” They were heard together because the Defendants requested that they be heard together, without making it clear that they wished to preserve their ability to refrain from attorning to this Court’s jurisdiction.[1]
[65] I also acknowledge that the Irish Defendants refrained from responding to Pass Herald’s Motion for an Order approving a draft litigation funding agreement. However, the Canadian Defendants responded to the motion approving a draft litigation funding agreement after the Irish Defendants had already attorned to this Court’s jurisdiction.[2]
[66] I further acknowledge that the Facebook Defendants filed with the Court correspondence with Pass Herald dated July 5, 2022 in which they advised Pass Herald that the Defendants did not intend, through the delivery of that letter, to “a) attorn to the jurisdiction of this Court, b) waive their rights to contest any one or more of service, jurisdiction or forum, or c) waive their rights to seek a stay of the action.” Likewise, the Google Defendants filed a letter dated April 21, 2022 in which they advised Pass Herald that they “reserve[d] all of their rights in response to this action, including with respect to jurisdiction.” However, each of the Facebook Defendants and the Google Defendants then proceeded to file the Notices of Motions discussed above, without engaging with the Court regarding the issue of attornment.
[67] In summary, for the reasons set forth above, I find it is not plain and obvious that the Irish Defendants have not voluntarily attorned to the jurisdiction of this Court by joining their names to the Notices of Motion described above. Indeed, I consider that Pass Herald has raised a “good arguable case” in this regard. Consequently, I reject the Defendants’ request to permanently stay or dismiss Pass Herald’s claims against the Irish Defendants for lack of personal jurisdiction.
(4) Real and substantial connection [68] Given the foregoing conclusion, it is unnecessary to address whether there is a real and substantial connection between the Irish Defendants and this forum, for the purposes of assessing the personal jurisdiction issue: Chevron at paras 81, 84 and 87; Van Breda at para 79; Morgan v Guimond Boats Limited, 2006 FCA 401 (CanLII) at paras 27–28; Mid-Ohio at para 17.
[69] However, I will observe in passing that uncontested evidence of the type provided by Messrs. O’Neill and McHale will not necessarily preclude a finding of a “real and substantial connection” between a foreign defendant and the jurisdiction of this Court, where that defendant is a party to an agreement contemplated by section 45 or section 47 of the Act. It will depend on the facts of each case. In this regard, the demonstration of the existence of a single presumptive connecting factor would appear to be sufficient, unless the presumption of jurisdiction based on that factor is rebutted by the defendant(s): Van Breda at paras 94, 96 and 100; Haaretz v Goldhar, 2018 SCC 28 [Haaretz] at para 34; NHK Spring Co Ltd v Cheung, 2024 BCCA 236 [Cheung 2] at paras 38, 44 and 53. Such rebuttal may be achieved by demonstrating “a weak relationship between the subject matter of the litigation and the forum”: Haaretz at para 40.
(5) Conclusion [70] Given my conclusion in Part VI.A.(3) above that the Irish Defendants voluntarily attorned to the jurisdiction of this Court by joining their names to the Notices of Motion described at paragraphs 53–55 above, this Court has personal jurisdiction over those Defendants.
B. Does the Court have territorial and subject matter jurisdiction over the claims? (1) Introduction and Summary of the Parties’ Positions [71] The Defendants submit that this Court lacks subject matter jurisdiction over the claims made against them by Pass Herald under sections 45 and 47 of the Act, in relation to their alleged foreign Arrangement (i.e., the NBA and the alleged unwritten terms summarized at paragraph 28 above). In support of this position, the Defendants rely on three principal arguments.
[72] First, they maintain that subsection 6(2) of the Criminal Code, RSC 1985, c C-46 [Criminal Code], limits the territorial reach of criminal offences to offences committed in Canada. They note that the offences contemplated by sections 45 and 47 of the Act are complete upon the entry of an alleged arrangement outside Canada, and that none of the constituent elements of those offences occurs within Canada.
[73] Second, and given the foregoing, the Defendants assert that there can be no “real and substantial link” between those offences and Canada, even if an impugned agreement or arrangement has anti-competitive effects in Canada.
[74] Third, the Defendants state that, as a statutory court, this Court has no subject matter jurisdiction over the Claims with respect to sections 45 and 47, because the federal Parliament has not granted this Court jurisdiction to apply those provisions to alleged agreements or arrangements entered into entirely outside of Canada. In support of this position, the Defendants assert that the plain wording of sections 45 and 47 reflects that they do not apply to conspiracies, agreements or arrangements entered into outside Canada. The Defendants add that the scheme of the Act, the object of the Act and the intention of Parliament also support this interpretation.
[75] Pass Herald rejects each of the foregoing submissions and maintains that they have been repeatedly rejected in the jurisprudence.
[76] For the reasons set forth below, I reject the Defendants’ submissions. In my view, this Court has both territorial and subject matter jurisdiction over the Claims made under sections 45 and 47 of the Act, in relation to the impugned foreign Arrangement between the Defendants.
[77] The Defendants maintain that this jurisdictional issue is “ripe for determination” and ought to be definitively resolved on this Motion, rather than simply being assessed under either the “plain and obvious” standard or the “good arguable case” standard (see paragraphs 31–36 above). For greater certainty, the Defendants encouraged me to resolve this legal issue now, rather than deferring a definitive determination on it to a later point in these proceedings.
[78] I consider it appropriate to grant the Defendants’ request. Among other things, this issue has given rise to considerable, longstanding and persistent uncertainty within the bar and the business community. In addition, this issue is central to the underlying action and significant costs would likely be associated with deferring its resolution to a later point in the action, in the event that this issue would otherwise be resolved in the Defendants’ favour: Atlantic Lottery at paras 18–22. Moreover, I agree with the Defendants that the submissions made in relation to this issue are purely legal in nature.
[79] I recognize that, in Mohr v National Hockey League, 2022 FCA 145 [Mohr FCA] at para 52, the FCA cautioned that “[a]s a general proposition, definitive legal pronouncements on the meaning of legislation should not be made on a motion to strike where there are competing, credible interpretations.” However, that caution is in tension with certain teachings of the Supreme Court of Canada (“SCC”) in Atlantic Lottery. These include that “[w]here possible, courts should resolve legal disputes promptly, rather than referring them to a full trial,” and that “perpetuat[ing] an undesirable state of uncertainty” should be avoided: Atlantic Lottery at paras 18 and 21. To this end, the SCC recognized that it is “not uncommon for courts to resolve complex questions of law and policy” on a motion to strike: Atlantic Lottery at para 19. As I read the entire paragraph in which the latter statement was made, this teaching was intended to apply both to novel and to non-novel claims.
[80] Moreover, in this particular case, I agree with the Defendants that the issue regarding the jurisdiction of courts in Canada to adjudicate claims made under sections 45 and 47 of the Act in relation to a foreign agreement is “ripe for a decision.” It has been the subject of commentary in numerous decisions, without ever having been definitively resolved. An additional consideration that is particular to the present case is that the conclusion I have reached on this legal issue does not preclude the claims that have been made in relation to the impugned foreign Arrangement from proceeding. Given my conclusion below regarding the interplay between the factual claims, this legal issue and the plain and obvious standard applicable on this Motion, the claims will proceed. However, they will do so without the cost and uncertainty that would otherwise have been associated with them, had I simply dealt with the legal issue on one of the alternative standards discussed at paragraph 77 above. Pass Herald has not identified any sound reason why this issue ought to be deferred to a later stage of this proceeding, and has not suggested that it did not have a full opportunity to put its best foot forward in relation to this issue, in the present Motions.
[81] I will now turn to the three principal arguments raised by the Defendants.
(2) Subsection 6(2) of the Criminal Code [82] Subsection 6(2) of the Criminal Code provides as follows:
6(2) Subject to this Act or any other Act of Parliament, no person shall be convicted or discharged under section 730 of an offence committed outside Canada.
[83] The Defendants maintain that this provision prohibits the application of criminal laws to conduct outside Canada, absent a provision to the contrary in the Criminal Code or in “any other Act of Parliament.” They assert that their impugned foreign Arrangement (i.e., the NBA and the various alleged unwritten terms summarized at paragraph 28 above) falls within the scope of this provision, because none of the constituent elements of sections 45 and 47 of the Act occurred within Canada. In brief, they state that the conduct contemplated by those provisions is complete upon the entering into of an agreement described therein. In the case of the NBA, it is common ground between the parties that it was entered into outside Canada. Pass Herald has not alleged that the alleged unwritten terms were entered into in Canada.
[84] The Defendants further maintain that because there is nothing in the Criminal Code or the Act that purports to override subsection 6(2) of that legislation, sections 45 and 47 of the Act cannot be read to apply to foreign conspiracies, agreements or arrangements. Regarding the Criminal Code, they note that several provisions in section 7 of that legislation deem certain conduct committed outside Canada to be offences in Canada. In each case, the provision in question includes the words “that if committed in Canada.” This includes paragraph 7(2)(e), which addresses “act[s] or omission[s] outside Canada that if committed in Canada would constitute a conspiracy or an attempt to commit an offence referred to in this subsection” [emphasis added]. The Defendants suggest that this language makes it clear that the foreign conduct in question would not constitute an offence in the absence of the deeming provision.
[85] I disagree with the Defendants’ position that subsection 6(2) of the Criminal Code prohibits the application of subsections 45 and 47 of the Act to their alleged foreign Arrangement.
[86] This provision of the Criminal Code was discussed in Libman v The Queen, 1985 CanLII 51 (SCC) [Libman]. At that time, it appeared in essentially the same form, in subsection 5(2). Speaking for the Court, Justice La Forest described that subsection as a codification of the common law “presumption against the application of laws beyond the realm”: Libman at para 65. He proceeded to observe as follows:
Interestingly, s. 5(2) of the Code expresses the territorial principle in a manner that rather reflects its purpose. That provision does not say that criminal law is confined to Canadian territory; it says rather that no person “shall be convicted in Canada for an offence committed outside of Canada.”
Libman at para 66.
[87] It follows that what is now subsection 6(2) of the Criminal Code should not be read as stating or contemplating that conduct occurring outside Canada’s territorial boundaries cannot constitute a criminal offence in Canada. Additional analysis is required to determine whether courts in Canada, including this Court, have territorial jurisdiction over the conduct: see also R v Oler, 2018 BCCA 323 [Oler] at paras 32–44; Cheung v NHK Spring Co, Ltd, 2022 BCSC 1738 [Cheung] at paras 104–112; Cheung 2 at paras 80–85 and 93–103.
[88] This view is consistent with the observation in Cygnus Electronics Corporation v Panasonic Corporation, 2023 ONSC 2559 [Cygnus] at paras 73–74 (unreported) that the “no person shall be convicted” language in subsection 6(2) “does not expressly or impliedly limit the availability of any civil remedy” under section 36 of the Act, for conduct that is contrary to a provision in Part VI of the Act.
(3) The “real and substantial link” test [89] The territorial reach of sections 45 and 47 of the Act, and by implication the applicability of subsection 6(2) of the Criminal Code to the claims that have been made in relation to those offences, is determined by applying the “real and substantial link” test.
[90] The Defendants assert that there can be no “real and substantial link” between those offences and Canada, even if an impugned agreement or arrangement has anti-competitive effects in Canada. They state that this is so because those offences are complete upon the entry into of any agreement or arrangement described in those sections.
[91] I disagree with the first of those assertions.
[92] The real and substantial link test is part of a family of tests. Those tests include versions of the “real and substantial connection” test that are applied in different contexts, including in determining the reach of the court to persons located abroad (personal jurisdiction), and the reach of Canadian law to conduct that occurs outside this country (territorial jurisdiction): Sharp v Autorité des marchés financiers, 2023 SCC 29 at paragraphs 116–122; Van Breda at paras 80–100; and paragraph 38 above.
[93] Where the “real and substantial link” test is satisfied, subsection 6(2) does not prevent courts in Canada from assuming territorial jurisdiction over the conduct in question: Oler at paras 41 and 43; R v Coban, 2022 BCSC 1441 [Coban] at paras 8–9. This also appears to