





CITATION:
Treat
          America Limited v. Nestlé Canada Inc., 2011 ONCA 560



DATE: 20110824



DOCKET: C53415



COURT OF APPEAL FOR ONTARIO



Feldman, Blair and Watt JJ.A.



BETWEEN:



Treat America Limited



Applicant
(Respondent in Appeal)




and



Nestl
é
          Canada, Inc.



Respondent (Appellant)




Robert E. Kwinter and Daniel J. Stern for the appellant,
          Nestlé Canada, Inc.



Darryl T. Mann for the respondent, Treat America Limited



Heard: July 26, 2011



On appeal from the order of C. Campbell J. of the Superior
          Court of Justice (Commercial List), dated February 25, 2011.



R.A. Blair J.A.:

Background

[1]

Nestlé Canada, Inc. seeks to set aside the order of
    Justice C. Campbell, dated February 25, 2011.  In that order, Campbell J. allowed the application of Treat America
    Limited to enforce a Letter of Request (LOR) from Judge Christopher C. Conner
    of the United States District Court for the Middle District of
    Pennsylvania.

[2]

The LOR asked for the assistance of the Superior Court
    of Justice in requiring Nestlé Canada to produce documents maintained by or for
    three of its former or current employees and to produce a representative to be
    examined in relation to the documents and to the issues raised in the pleadings
    in proceedings pending in the U.S. District Court.  Those proceedings (the U.S. Proceedings)
    consist of a number of class actions against several large producers and
    distributors of candy products alleging violations of U.S. antitrust laws by
    conspiring to fix prices of chocolate candy sold in the United States.  These actions have been consolidated for
    pre-trial purposes and are now proceeding as a Multi-District Litigation in the
    U.S. District Court.  Judge Conner is
    supervising them.  A certification
    hearing is pending.

[3]

The U.S. Proceedings target various corporate entities relating
    to well-known candy brands  Hershey, Mars, and Cadbury, as well as
    Nestlé.  Nestlé Canada is part of the
    world-wide group of Nestlé companies which, together, form the largest food and
    beverage enterprise in the world.  Nestlé
    S.A., a Swiss corporation, is the parent company.  Nestlé U.S.A., like its Canadian sibling, is
    also a subsidiary.

[4]

The U.S. Proceedings appear to spring from an earlier
    2007 investigation by the Canadian Competition Bureau into alleged price fixing
    relating to the supply of chocolate confectionery products in Canada between
    2002 and 2007.  Those allegations
    involved Nestlé Canada and the Canadian entities from the Hershey, Mars and
    Cadbury enterprises.  Search warrants
    were executed and records seized based on affidavits sworn by Daniel Wilcock,
    an officer of the Competition Bureau  affidavits that set out in some detail
    various price fixing conversations, meetings and email exchanges involving
    the three targeted individuals at Nestlé Canada and individuals from the other candy
    corporate enterprises in Canada.

[5]

Nestlé Canada has never been charged with any offence
    as a result of the Competition Bureaus investigation, and none of these
    conversations, meetings or email exchanges related to any activities in the
    United States.

[6]

Although Nestlé Canada was initially named as a party
    to the U.S. Proceedings  along with Nestlé S.A., Nestlé U.S.A., and various
    entities connected with the Hershey, Mars and Cadbury enterprises  the claims
    against it were dismissed in August 2009 on jurisdictional grounds.  Nevertheless, the plaintiffs in the U.S.
    Proceedings continue to assert allegations respecting the conduct of Nestlé
    Canada and its representatives in the pleadings.  However, since the U.S. claims have been
    dismissed against Nestlé Canada, neither the U.S. District Court nor the
    parties in the U.S. Proceedings have any direct means to compel Nestlé Canada
    to produce documents that may be relevant to the pleadings or to require its
    representatives to be examined.  This is
    why the respondent has resorted to the LOR application asking the Superior
    Court of Ontario for assistance.

The Superior Court Proceedings

[7]

Treat America is one of the plaintiffs in the U.S.
    Proceedings and has been authorized to bring the LOR application in the U.S.
    proceedings and to seek its enforcement in Canada.  Judge Conner issued his initial LOR on July
    1, 2010.  Treat America commenced an
    application in the Superior Court (Commercial List) on September 13, 2010,
    seeking an order giving effect to the LOR.

[8]

Justice C. Campbell presided over the application and a
    series of case conferences held to resolve issues relating to production of the
    requested documents, but without success.  Campbell J. then heard the application and delivered reasons on January
    25, 2011, canvassing the facts, the issues and the law, but ultimately
    adjourning the application pending receipt of clarification from Judge Conner
    with respect to three particular areas of concern, namely,

a)

whether
    there was any mechanism for Nestlé Canada to challenge before the U.S. District
    Court the scope of discovery sought on the basis of relevance in the U.S.
    Proceedings before production and discovery was made;

b)

what
    assumptions the U.S. District Court makes with respect to the applicability of
    immunity rules and admissibility of the evidence obtained; and

c)

whether he could adjourn the motion for enforcement of
    the LOR until after the certification motion in the U.S. Proceedings without
    interfering with the due process of those Proceedings.

[9]

Judge Conner responded to the requests for
    clarification by way of a Renewed LOR dated February 15, 2011.  He advised, first, that while there was no
    mechanism by which Nestlé Canada could challenge the scope of discovery in the
    U.S. Proceedings, the challenges now raised in the Ontario application (as set
    forth in Nestlé Canadas factum filed before Campbell J. and provided to Judge
    Conner) substantially duplicate Nestlé USAs earlier challenges in the U.S.
    Proceedings prior to the issuance of the LOR.  Secondly, Judge Conner assumed that Canadas immunity rules would apply
    to the discovery provided by Nestlé Canada, including the deposition testimony
    of the targeted witnesses and that the practical effect of that would have to
    be addressed in the U.S. Proceedings.  He
    also noted that there is a Protective Order in place with respect to the U.S.
    Proceedings that will permit Nestlé Canada to designate as confidential,
    documents and testimony produced in the Proceedings pursuant to the LOR.  Finally, Judge Conner advised that the
    Ontario court could not adjourn the LOR application until after the class
    certification phase in the U.S. Proceedings because of the requirement in those
    Proceedings that he examine plaintiffs factual and legal allegations
thoroughly
, with a rigorous analysis
    which may include a preliminary inquiry into the merits (emphasis in
    original).

[10]

Campbell J. then heard further submissions and released
    his decision, with further reasons, on February 25, 2011.  He stated that he was more than satisfied
    with the responses to the questions posed [and] contained in the Renewed Letter
    of Request and that he was satisfied that as a matter of comity it is
    appropriate to honour the Letter of Request.  He granted the order for enforcement of the LOR.

Analysis

[11]

Nestlé Canada appeals from that decision.  Mr. Kwinter argues on its behalf that the
    respondent has failed to establish that the documentation and information
    sought are relevant or necessary for use in the U.S. Proceedings or not
    otherwise obtainable.  He also submits
    that the scope of production sought is too broad and that the order sought is
    unduly burdensome on Nestlé Canada since it is no longer a party to the U.S.
    Proceedings.

[12]

These arguments track the essential criteria that an
    Ontario court is to consider when determining whether to give effect to a
    letter of request, as outlined in
Re
    Friction Division Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et
    al. (No. 2)
(1986), 56 O.R. (2d) 722, at p. 732, and confirmed by this
    Court in a number of subsequent decisions:  see, for example,
France (Republic) v. De Havilland Aircraft of Canada Ltd
. (1991), 3
    O.R. (3d) 705;
Fecht
v. Deloitte & Touche
(1997), 32
    O.R. (3d) 417;
O.P.S.E.U. Pension Trust
    Fund v. Clark
(2006), 270 D.L.R. (4
th
) 429; and
Presbyterian Church of Sudan (Re)
(2006),
    275 D.L.R. (4
th
) 512.  Enforcement must also be consistent with the laws of Ontario and not
    contrary to public policy.

[13]

Mr. Kwinters overarching argument, however  into
    which the others fold  is that the application judge failed to exercise an
    independent discretion with respect to the foregoing criteria, being content
    instead not to go beyond the LOR on its face and to rely on the findings of
    Judge Conner.  He says this constitutes
    an error in law.

[14]

I do not accept these submissions.  In my view, the application judge considered
    and applied all of the pertinent principles, did not accept the LOR at face
    value and independently determined that it was appropriate, as a matter of
    comity, to honour the LOR.  I say this
    for the following reasons.

[15]

First, while it is true that the application judges
    reasons are relatively brief and that he did not engage in an extensive
    analysis of the evidence and the principles involved, context is
    important.  This was a case-managed
    proceeding on the Commercial List in which there had been a number of case
    conferences attempting to sort out the issues relating to production and the
    parameters of production.  The
    application judge is a seasoned Commercial List judge.  He referred to the
Friction Division Products
criteria in his reasons and those very
    criteria  without regard to their content  would have formed the framework
    for the case management discussions.  I
    am satisfied that the application judge was alive to, and applied, the relevant
    principles in arriving at his decision.

[16]

Secondly, the application judge was sensitive to the
    issues of comity and deference to the foreign court that properly underlie
    requests for assistance, but was not a slave to them.  I do not agree that he simply accepted the
    LOR at face value, failed to look beyond it, and did not exercise an
    independent discretion.

[17]

Canadian courts take a broad approach to such requests,
    and as the application judge noted, the exercise of discretion is based on the
    general principle that international comity dictates a liberal approach to
    requests for judicial assistance.  The
    classic statement in this regard is that of Dickson J. (as he then was) in
R. v.
Zingre
,

[1981] 2 S.C.R. 392, at p. 401:

It is upon this comity
    of nations that international legal assistance rests.  Thus the courts of one jurisdiction will give
    effect to the laws and judicial decisions of another jurisdiction, not as a
    matter of obligation but out of mutual deference and respect.  A foreign request is given full force and
    effect unless it be contrary to the public policy of the jurisdiction to which
    the request is directed ... or otherwise prejudicial to the sovereignty of the
    citizens of the latter jurisdiction.

[18]

Had the application judge simply accepted the LOR at
    face value, he would not have made the requests for clarification that he posed
    to Judge Conner before finalizing his decision.  Those requests touched on the extent to which the U.S. District Court would
    be made aware of the objections being advanced by Nestlé Canada, the extent to
    which the U.S. District Court would be responsive to immunity issues, and
    whether the request for assistance could be deferred until after the
    certification hearing in the U.S. District Court.  The application judge received responses that
    satisfied him on all counts.  Most
    significant for present purposes, perhaps, is the response to the first
    question: while the answer was that no procedure existed for Nestlé Canada to
    object to the scope of production requested in the U.S. Proceedings, Nestlé
    U.S.A. had in fact made all of the arguments presented before the application
    judge (and before us) on behalf of Nestlé Canada in the course of opposing the
    LOR before Judge Conner; the U.S. District Court was therefore fully apprised
    of the issues raised by Nestlé Canada with respect to the nature and scope of
    the production and examination requested.

[19]

The law is clear that Judge Conners decision is
    entitled to considerable deference in the Canadian application and that the court
    receiving the request for assistance does not sit in appeal from the decision
    of the requesting court:
Connecticut
    Retirement Plans and Trust Funds v. Buchan
(2007), 225 O.A.C. 106 (C.A.),
    at para. 13.  In this case, in addition,
    it is apparent that Judge Conners decision was arrived at after a thorough
    review of the pleadings in the U.S. Proceedings and the evidence before him,
    and after full and contested argument.  The
    LOR itself reflects the careful findings he made and his conclusions as to why the
    information requested is relevant to those proceedings.  Judge Conner, too, is case managing a complex
    series of class actions that comprise the Multi-District Litigation, and is
    therefore familiar with the issues involved in those proceedings.

[20]

These factors distinguish the application from that
    considered by this Court in
Presbyterian
    Church of Sudan,
where the LOR had been granted on the basis of an
    unopposed motion and the representations of counsel.  This Court concluded that the record did not
    support the sweeping production order sought and that the application judge had
    failed to direct his mind to the important issues of relevance and
    obtainability.  In those circumstances,
    the Court held at
para
. 32, that an Ontario court is
    not bound to accept the language of the foreign request as the final say, but
    is entitled to go behind it to examine precisely what it is the foreign court
    is seeking to do, in order to ensure that the requirements of Ontario law are
    met in giving effect to the foreign request.  In this case, the LOR application before Judge Conner was supported by
    the affidavit evidence of Mr. Wilcock of the

Canadian Competition Bureau, referred to above, which explains the role of
    the targeted Nestlé Canada individuals and sets out in considerable detail the
    investigative information concerning conversations, meetings and email
    exchanges in which they were involved.  That evidence was also in the record before Justice Campbell.

[21]

Mr. Kwinter argues that the Wilcock evidence does not
    meet the relevance test in these circumstances because the information does not
    pertain to anything that happened in the United States and the U.S. Proceedings
    do not allege any antitrust price fixing in Canada.  I do not accept this submission.

[22]

The pleadings in the U.S. Proceedings continue to set
    out allegations against Nestlé Canada and its representatives, alleging a
    connection between the conduct of the Canadian representatives and the U.S.
    antitrust activities.  The pleadings tie
    this Canadian conduct into the U.S. Proceedings on the basis that the U.S. and
    Canadian markets for candy are tightly interwoven  involving integrated and
    substantial cross-border commerce, cooperation through the use of licensing
    agreements, and memberships in trade associations.  It is alleged that because the Nestlé
    business is organized by geographic region and because Nestlé Canada and Nestlé
    USA are part of Nestlés Zone Americas, it is likely that decisions relating
    to pricing in Canada were part of an overall North American budgeting and
    strategic planning process which necessarily affected pricing in the United
    States; hence the relevance of production and discovery from the Canadian
    entity and its representatives.

[23]

Whether these allegations can be substantiated at trial
    is not the question.  Judge Conner has
    found the sought-after Canadian production and testimony to be relevant to the
    U.S. Proceedings.  His findings to this
    effect are entitled to considerable deference and, it seems to me  as it did
    to the application judge  that they are supported on the record before him and
    before the application judge.

[24]

I am also satisfied, as was the application judge, that
    the other
Friction Division Products
criteria are met on the record.  Treat America
    has requested the sought-after information from Nestlé Canada in a number of
    ways, but without success.  Since the
    Canadian entity is no longer a party to the U.S. Proceedings, the information
    is not compellable in any other fashion.  It is not an answer to say that some information pertaining to the
    Canadian operations might be obtained from production and depositions of the
    other candy producers and distributors.  The
    issue is whether evidence of the same value as that sought from the person to
    be examined can otherwise be obtained:
Connecticut
    Retirement Plans and Trust Funds v. Buchan
, at para. 19.  That cannot be the case, in my view, because
    production and discovery from the other candy producers and distributors will
    not provide access to internal memoranda, notes of meetings and email exchanges
    that may exist within the confines of the Nestlé Canada internal information system.
     Moreover, as this Court has previously
    noted, where fraud-like allegations are in play  as they are in the U.S.
    Proceedings  evidence providing confirmation of other information is
    important:
Connecticut Retirment Plans
    and Trust Funds v. Buchan
, at para. 19.  The criterion that the information is not otherwise readily obtainable
    has been met.

[25]

So, too, has the criterion of necessity.  For the reasons set out above in the
    relevance analysis, the sought-after information is necessary for the trial and
    for the disposition of the U.S. Proceedings.  Because of the thorough and rigorous examination of the record that is
    necessary for the certification procedure under the U.S. rules  as explained
    by Judge Conner  the information is necessary at the certification stage as
    well.

[26]

Nestlé Canada does not argue that enforcement of the
    LOR would be contrary to public policy.

[27]

Finally, I do not accept the argument that the
    sought-after production and discovery would be unduly burdensome to Nestlé
    Canada.  First, we were advised that the
    Nestle Canada representative would be required for no more than a day.  Secondly, as part of the case management
    process, electronic search parameters were developed that will enable Nestlé
    Canada to search for, identify and produce the documents in an orderly and
    expeditious manner.  Nestlé USA has
    agreed to operate under similar parameters in the U.S. Proceedings.  Moreover, it appears that similar
    documentation has already been organized and produced in the Canadian
    Competition Bureau investigation.

Conclusion

[28]

It is not contested that the application judge
    considered and applied the requirements of s. 60 of the
Evidence Act
, R.S.O. 1990, c. E.23 and s. 46 of the
Canada Evidence Act
, R.S.C. 1985, c. C-5:
    the LOR is issued by a foreign court of competent jurisdiction in relation to a
    civil proceeding in that jurisdiction, and the targeted witnesses are within
    the jurisdiction of the Ontario courts.  The record amply supported the application judges conclusion that the
    necessary criteria for enforcement of the LOR had been met, and I see no
    reversal of the burden of proof or other error in the exercise of his
    discretion in granting the order sought.

[29]

It follows that I would dismiss the appeal.

[30]

Treat America is entitled to its costs of the appeal,
    fixed in the agreed upon amount of $30,000 inclusive of disbursements and all
    applicable taxes.

R.A. Blair J.A.

I agree K. Feldman
    J.A.

I agree David Watt
    J.A.

RELEASED:  August 24,
    2011


