Establishing a common misrepresentation can be a high hurdle to
class action certification for misrepresentation claims where
multiple representations are alleged to have been made. The issue
is particularly acute in the consumer protection context, where
customers often decide to purchase products only after speaking to
a sales representative. The British Columbia Court of Appeal's
recent decision in Marshall v. United Furniture Warehouse Limited
Partnership serves as a reminder of how difficult it can
be to obtain certification in these types of actions.
The Cash Back Voucher Program
The plaintiffs in Marshall sought certification of a
class action against the respondents, United Furniture Warehouse
and related entities, for, among other things, alleged deceptive
acts or practices and negligent misrepresentation related to a
"cash back voucher" program. Through the "cash back
voucher" program, United Furniture Warehouse granted vouchers
with a cash value to consumers who purchased furniture in some of
their stores. Consumers were required to wait three years after the
purchase before becoming eligible to redeem the voucher with a
third-party, the Consumers Trust.
In late 2005, the Consumers Trust filed for bankruptcy. United
Furniture Warehouse offered consumers the opportunity to exchange
vouchers for in-store credit. Unsatisfied with this offer, the
plaintiffs filed for class action certification, alleging that
United Furniture Warehouse misrepresented that it was the
administrator of the "cash back voucher" program.
Varying Combinations of Oral and Written Representations
The BC Court of Appeal affirmed the lower court's decision to refuse
certification on the ground that the plaintiffs failed to establish
a common issue. Central to each court's reasoning was that
"[e]very customer had to deal with a sales person in making
his or her purchase" and, therefore, oral representations were
"part of the mix for every customer". The combinations of
written and oral representations made individual inquiries
inevitable. It did not matter that the plaintiffs' claimed the
class was not relying on any oral representations — the fact
those representations might still affect the common issue question
was enough to prevent certification.
These facts are in stark contrast to class actions certified
based on an alleged misrepresentation in a single
advertisement or written material
provided to all members of the proposed class.
The Marshall case suggests that, as long as oral
representations are a significant "part of the mix",
plaintiffs will struggle to obtain certification of consumer
protection class actions alleging deceptive acts or practices, or
negligent misrepresentation. This hurdle is in addition to the
traditional barrier to certifying class actions alleging
misrepresentation: establishing reliance on a class-wide basis,
which Alexander Cobb and Adam Hirsh wrote about last year in the securities
context and which has been applied in the consumer protection act
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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