Canada: BC Supreme Court Dismisses Applications For Certification Of Consumer Protection Claims In Five Class Actions Against International Airlines


On August 18, 2015, Madame Justice Adair of the B.C. Supreme Court refused to certify as class proceedings five separate actions against each of Air Canada, Deutsche Lufthansa Aktiengesellschaft, Delta Air Lines, Inc., United Air Lines, Inc. and British Airways PLC (the "Airlines"). 

Unlu v. Air Canada, 2015 BCSC 1453 ("Unlu") is an important decision for consumer protection claims in British Columbia. It is the first decision to interpret and apply the British Columbia Court of Appeal's decision in Ileman v. Rogers Communications Inc., 2015 BCCA 260 ("Ileman Appeal") which recently clarified the requirements for a restoration order under s. 172(3)(a) of the Business Practices and Consumer Protection Act, S.B.C. 2004 c. 2 ("BPCPA"). 

Plaintiffs frequently seek restoration orders in British Columbia consumer class actions to attempt to recover the entire gain that accrued to the defendant(s) from the whole putative class as a result of the wrongful conduct rather than, or as an alternative to, seeking recovery of the damages suffered by each individual putative class member.

In Unlu, Justice Adair held that merely pleading a bare legal conclusion ─ without the necessary material facts ─  does not provide the requisite "interest" for a BPCPA restoration order. Justice Adair further held that that each plaintiff failed to satisfy the commonality and preferable procedure requirements of the Class Proceeding Act, R.S.B.C. 1996, c. 50 ("CPA"). In the result, Justice Adair dismissed the applications for certification in all five actions.

The Facts

Each Plaintiff in each of the five actions alleged that each respective Airline had engaged in deceptive pricing practices in respect to the manner in which fuel surcharges were displayed on passengers' ticket receipts. Specifically, each asserted that the fuel surcharges were separated from the price of air travel under the code "YQ" (or "YR") and classified as "taxes" payable to a third party when in fact they were collected and retained by each of the Airlines. Classification of these fuel surcharges as "taxes" when they were not collected by a third party government agency, the Plaintiffs argued, was a deceptive act or practice capable of misleading consumers as to the price of the air travel and thereby contrary to the provisions of the BPCPA.

Relief Sought by the Plaintiffs

Each Plaintiff, on behalf of her or his respective class, sought damages under s. 171 of the BPCPA, declaratory and injunctive relief pursuant to s. 172(1)(a) and (b) of the BPCPA, a restoration order (for class wide restitution or reimbursement) pursuant to s. 172(3)(a) of the BPCPA and, in the alternative, remedies for unjust enrichment. Punitive damages were also pleaded.

Section 171 - Claim for Damages

Each of the Plaintiffs pleaded, respectively, that "the Plaintiff and putative class members have suffered damages as a result of or in reliance upon the [Airline] Defendant's Deceptive Pricing Practices." Accordingly, the Plaintiff and putative class members are entitled to an order for damages pursuant to s. 171 of the BPCPA." 

At the certification hearing each of the Plaintiffs abandoned certification of their respective claims under s. 171(1) of the BPCPA, conceding (based on Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc., 2014 BCCA 36) that each plaintiff and putative class member would have to prove reliance and damages as a result of the alleged deceptive act or practice. That concession made the s. 171 claims unsuitable for determination on a class-wide basis.

Section 172(3)(a) - Claim for Restitution / Disgorgement

In Ileman v. Rogers Communications Inc. 2014 BCSC 1002 ("Ileman"), Justice Weatherill concluded that a restoration order under s. 172(3)(a) was available only if a plaintiff could demonstrate a "proprietary interest" in the money property or thing being claimed. Given Ileman, each Plaintiff conceded at the certification hearing that his or her pleadings did not meet the test for a restoration order under s. 172(3)(a) as none of them could demonstrate a "proprietary interest" in the money retained by the Airlines. 

Subsequent to the hearing of the applications for certification, but before Justice Adair released her reasons for judgment, the Ileman Appeal (Ileman v. Rogers Communications Inc., 2015 BCCA 260) was released.  

The Court of Appeal disagreed with Justice Weatherill holding that it was not necessary for a plaintiff to demonstrate a "proprietary interest" in the money, property or thing for purposes of a restoration remedy under s. 172(3)(a). Rather, the Court of Appeal held that the requisite "interest" must be "an existing private right", one "recognized by law outside of s. 172(3)(a). A "right to recover damages under s. 171" would, for instance, be sufficient. (emphasis added)

In light of the Ileman Appeal, each Plaintiff in supplemental submissions argued that the pleading of the s. 171(1) claim for damages, noted above, provided the requisite "interest" to support a restoration order under s. 172(3)(a).

In response, each of the Airlines argued that pleading of the s. 171 claim was "merely conclusory and should be struck" and furthermore, since each Plaintiff failed to plead material facts to demonstrate reliance on the alleged deceptive act or practice under s. 171, that by extension, no requisite "interest" for the s. 172(3)(a) claim had been pleaded either. (emphasis added)

The Airlines also argued that since proof of reliance and proof of loss or damages under s. 171 were inherently individualistic the requisite "interest" for a restoration order could not be demonstrated on a class wide basis such that the commonality and preferable procedure requirements under the CPA could not be satisfied. 

The Decision

Sufficiency of Pleading

Justice Adair agreed with the Airlines and held each Plaintiff had failed to plead the requisite "interest" for a restoration order, stating:

[51] In the context of whether the plaintiffs have sufficiently pleaded an "interest" to support the claim under BPA s. 172(3)(a), I agree with the Airlines. In my opinion, the plaintiffs have simply pleaded (in Air Canada NCC Part 3 para. 8) a bare legal conclusion, without pleading the necessary material facts. The result is that no reasonable claim has been pleaded under BPA s. 171. There is, therefore, no reasonable claim pleaded of an interest recognized by law outside of BPA s. 172(3)(a) to support the claim under that section, and no reasonable claim under s. 172(3)(a) has been pleaded.

Justice Adair's reasons make clear that in order to establish a claim for a restorative order under 172(3)(a) based on an "interest" grounded in s.171(1), a plaintiff must satisfy the pleading requirements for s.171(1). Where a s.171(1) claim is based on a deceptive act or practice under the BPCPA, it is necessary to plead the material facts supporting reliance on the deceptive act or practice and damages and loss. A bare pleading or conclusory statement of s. 171 breach will not be sufficient to satisfy the pleading requirements for a s. 172(3) claim.

Commonality and Preferable Procedure

Justice Adair also agreed with the Airline's submission that each Plaintiff failed to demonstrate there was a common issue with respect to the s. 171 and s. 172(3)(a) claims and that each Plaintiff failed to demonstrate that a class proceeding was the preferable procedure, stating:

[90] The plaintiffs originally proposed as common issue (xii) the following:
In the alternative, are the Plaintiff and class members entitled to damages pursuant to s.171 of the BPCPA assessed in accordance with ss. 29 and 30 of the CPA?
[91] However, as noted above, the plaintiffs concede that this cannot not be certified as a common issue, since a claim for damages under s. 171 requires proof of causation and loss on an individual basis. In my opinion, based on Ileman Appeal, this is fatal for certification of proposed common issue (xi), which relates to the remedy under BPA s. 172(3)(a). Since the issues that must be proved to demonstrate an "interest" for purposes of s. 172(3)(a) are individual, and must be determined first, the entitlement to the remedy under s. 172(3)(a) cannot be certified as a common issue.
[99]  In view of my conclusions above, my comments concerning CPA s. 4(1)(d) [preferable procedure] will be brief.  
[100]   I have concluded that the only claims that are reasonably pleaded are the claims for relief under BPA s. 172(1)(a) and (b).  Even assuming that the plaintiffs could craft an acceptable class definition and common issues relating to those claims, I do not see that invoking the procedural machinery associated with a certified class action can be justified.  Rather, I echo G.C. Weatherill J.'s comments in Ileman Certification, at para. 141:
[141]  Claims seeking only a declaration or an injunction under s. 172(1) of the BPCPA do not warrant certification because both a declaration and an injunction would be binding upon the Defendants regardless of whether or not the proceeding was a class action. The three principal goals of class proceedings . . . , namely judicial economy, behaviour modification and access to justice, are not served.  There is no judicial economy because the machinery and process required to administer class proceedings is not justified when the same issues can be fully addressed without a class proceeding.  Any required behaviour modification is achieved by the grant of a declaration and/or injunction is attained equally well in a non-class proceeding.  Access to justice is not deterred because there is no restitutionary or other type of monetary claim warranting such access. Accordingly, a class proceeding is unnecessary and wasteful. 

As a result, Justice Adair dismissed each of the applications for certification in all five actions.

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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