Dismissal of Iron Oxide Price-fixing Class Action Upheld

On January 14, 2003, the Ontario Court of Appeal released its decision in Chadha v. Bayer Inc., dismissing the appeal of the plaintiffs, Avininder and Renu Chadha. The plaintiffs had appealed the Divisional Court’s 2001 decision, which had reversed an order certifying the action as a class proceeding in 1999 in which the plaintiffs claimed damages of over $100 million.

The decision is the first contested class proceeding certification motion to deal with the issues arising from the statutory cause of action available under the federal Competition Act for alleged anti-competitive conduct, specifically, price-fixing. The plaintiffs, on behalf of a proposed class of 1.1 million homeowners, alleged that the defendants had engaged in a conspiracy aimed at increasing the price of iron oxide, an ingredient in some brick and paving stones.

The court determined that the action could not proceed as a class action because there was an insufficient evidentiary record to establish that liability could be determined on a class-wide basis. The court held that in the absence of such evidence, a class proceeding was not the preferable procedure in that the action would be unmanageable if liability had to be established individually for each class member.

The defandants were represented by J.L. McDougall, Q.C., of Fraser Milner Casgrain LLP, and Kent Thomson of Davies Ward Phillips & Vineberg LLP. Paul Pape in Toronto acted for the plaintiffs.