Bottom Line: If you're getting the feeling that
class action counsel in Canada have become bosom buddies with their
counterparts in the US and that getting hit in the south may well
presage another blow in the north, you're not just being
paranoid. That's exactly what's going on. While a number of
copycat class actions have been filed, two recently settled in
Canada, following settlements in the US: Reebok and Gaiam. Skechers
is still in progress.
REEBOK SETTLEMENT: $2. 2 MILLION
The Canadian Reebok class actions were filed in
Ontario and Quebec, alleging, respectively, that Reebok Canada
Inc., Reebok International Ltd. and Adidas Canada Limited
(collectively, "Reebok") made false or misleading
representations regarding the toning and
strengthening benefits of Reebok's toning shoes and,
in addition in Ontario, the health benefits of certain Reebok
toning apparel. After reportedly intense negotiations, the
settlement was approved by the Superior Court of Quebec
and the Ontario Superior Court on July 10, 2012, in hearings held
simultaneously via teleconference.
Reebok denies the allegations and any liability but, in the
settlement agreement, has agreed to pay up to $2.2 million
to residents of Canada who purchased the products from
December 5, 2008 to July 10, 2012. This was significantly less than
the US $25 million (inclusive of administrative expenses) payable
under Reebok International Ltd.'s September 2011 settlement with
the US Federal Trade Commission (which would also pay out US
class action claimants) – although in line with the fact that
we have roughly 10% of the US's population.
SKECHERS: IN PROGRESS
Just prior to a $40 million Federal
Trade Commission settlement in the US on May 16, 2012 with
Skechers USA Inc., a national class action was filed in the
Superior Court of Quebec by the
Consumer Law Group (April 21, 2012). The Canadian action
alleged similar misleading claims at issue down south – i.e.,
that Skechers' Canadian advertising was misleading when
claiming that SKECHERS Shape-ups® shoes and certain other
footwear could, among other things, firm buttocks, thigh and calf
muscles and tighten abs (Angell v. Skechers U.S.A. Inc.,
Skechers U.S.A. Inc.II and Skechers U.S.A. Canada
Inc.: 12 April 2012, Montreal 500-06-000608-121 (S.C.)
(Motion for Authorization).
The settlement with the FTC was part of a broader agreement,
resolving a multi-state investigation. As of the time of writing,
the Canadian matter has not yet settled. Below is one of the ads
shown on the FTC website relating to the US settlement.
GAIAM: $0 – BUT A BRAND NEW BOTTLE
As for Gaiam, Inc. ("Gaiam"), back in 2009, its spring
catalogue advertised its reusable aluminium water bottles
as Bisphenol A-free ("BPA"). Mr. Rosen bought
one. Apparently, however, the internal surface of the bottle was
lined with an epoxy resin, which allegedly contained
BPA that leached into the water. In the fall of 2009,
Gaiam removed the BPA-free representation but, according to the
lawsuit, the company failed to inform consumers,
at any time, about the presence of BPA.
When Jeffrey Rosen, a resident of Quebec, heard of the BPA, he
commenced a motion to authorize a class action in Quebec on behalf
of all Canadians who purchased similar bottles. This was on January
28, 2010, approximately three months after two class actions were
filed in the US.
Mr. Rosen wanted the Court to order Gaiam to cease its allegedly
unfair and deceptive conduct and affirmatively notify class members
of the presence of BPA in the bottles. He was also requesting that
the class members be given the opportunity to exchange or
be reimbursed for their water bottle purchases and be
awarded damages for the prejudice suffered
(purchase price, loss of use and enjoyment and trouble and
inconvenience) as well as punitive damages.
The parties settled the case. Rosen v. Gaiam, Inc., No.
500-06-000498-101 (Superior Court of Québec). On June 12,
2012 – about 2 ½ years after Mr. Rosen's motion
was filed, the Court approved the parties' out-of-court
settlement (in which Gaiam admits to no wrongdoing). While the
decision does not disclose the full settlement, the Court mentions
that Gaiam will create an exchange program according to which
consumers will be able to get Gaiam's new water bottle,
although no monetary damages. Gaiam will only pay the
legal fees of the petitioner, amounting to $75,765. The two US
class actions were also settled out of-court (in April 2011) on
reportedly similar terms.
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