Canada: Non-Arbitrable Claims Appropriate For Class Certification

In the ongoing saga of Seidel v Telus Communications Inc., the BC Supreme Court was asked to certify the few claims that survived the enforceable mandatory arbitration clause, and it certified those claims in  2016 BCSC 114. This decision reminds us that carefully drafted arbitration clauses can carve out claims from potential class proceedings unless such clauses are overridden by express legislation.

The Proposed Class Action

As we have previously posted, the SCC decided that the binding arbitration clause contained in the Telus contracts was enforceable in respect of non-consumer claims, However, according to the SCC, the applicable consumer protection legislation overrode the arbitration clause for the specified claims falling under that Act. Justice Masuhara's January 2016 certified the surviving consumer claims as a class action.

The plaintiff alleged breaches of the BC Business Practices and Consumer Protection Act (BPCPA) based on historic billing practices relating to incoming calls. As a result of these practices, the plaintiff sought both a declaration that Telus engaged in deceptive acts and practices and/or unconscionable acts and practices pursuant to sections 5 and 9 of the BPCPA as well as an order returning the monies acquired because of these contraventions of the BPCPA pursuant to section 172 of the BPCPA.

The Certification Decision

The Court assessed each of the 5 criteria set out in the BC Class Proceedings Act that must be satisfied in order to certify a class action. In so doing, the Court noted that although the burden is on the plaintiff, that burden is not an onerous one:

  1. Reasonable Cause of Action

The Court found that it was not necessary for the class members to establish a proprietary interest in the monies gained by the defendant. Rather, given the low bar that it not be plain and obvious that no reasonable cause exists, the Court found that as long as the plaintiff could demonstrate an "interest" in the funds obtained by the defendant it had a reasonable cause of action on the basis of breach of contract for which recovery could be granted under section 172 of the BPCPA.

The Court also rejected the defendant's argument that the Court lacked the jurisdiction to certify these claims on the basis that damages owed to plaintiff for breach of contract is an arbitrable issue, severed from a class proceeding. Rather, the Court found that the mandatory arbitration clause does not preclude the plaintiff from relying on breach of contract to establish a right to recovery under the BPCPA.

  1. Identifiable Class of Two or More Persons

The proposed class was defined as:

All individual customers of the Defendant who were resident in British Columbia and who contracted for cellular telephone services through the Defendant from January 21, 1999 (excluding the Defendants' employees and agents) to the date on which the Defendant changed the language in its contracts.

The Court found that the proposed class, which appeared to be broad, was sufficient to meet this requirement because the definition allowed objective identification of a "consumer" as required by the BPCPA and any individual inquiry required would not make the definition unworkable. The Court further noted that overbreadth is not necessarily fatal to certification, as the class definition can always be revised.

Recently, the BC Supreme Court in Jiang v Peoples Trust Company, 2016 BCSC 368, found that a proposed class consisting of consumer residents in BC who purchased, received or acquired one or more Prepaid Cards issued or sold by any of the defendant was not certifiable because unlike in Seidel it was not possible, on an objective basis, to determine whether a proposed class member was a "consumer" under the BPCPA. As such, a multitude of individual inquires would be required.

  1. Common Question of Law or Fact

The Court rejected the defendant's argument that the common issues would require numerous individual inquiries such that the common issues would be overwhelmed by individual inquires. Rather, the Court found that establishing the defendant's billing practice during the class period would be a straightforward factual exercise and establishing deceptive representations would depend only on the written consumer contracts.  The Court did not certify all of the proposed common issues, however, holding that there was no basis in fact founding the allegations of spoliation.

  1. Preferable Procedure

Given the common issues, the Court found that a class proceeding would  be preferable to any other proceeding, noting especially that the small nature of the individual claims would make individual litigation unlikely.

  1. Appropriateness of the Representative Plaintiff

The Court found that Ms. Seidel was an appropriate representation plaintiff even though she was not a "consumer" within the meaning of the BPCPA for some or most of the class period. Indeed, the Court noted that a representative plaintiff need not be the best possible representative nor even be typical of the class and need not have a claim under every cause of action certified. Rather, the Court should consider whether the proposed representative plaintiff has "sufficient common interest with class members" and will vigorously and capably prosecute the interests of the class.

Notice of Appeal Filed

This decision seems to take a different approach than other cases considering class definitions in the context of consumer legislation. Unlike the other cases considering the same issues, the Court in Seidel held that a proposed class definition that is overly broad is not necessarily fatal to certification. In this case, unlike Ileman v. Rogers Communications Inc., 2014 BCSC 1002 and Jiang, the individual inquiry into whether the class member was a "consumer" did not make the definition unworkable.

Telus has filed a Notice of Appeal, which we hope will resolve the different approaches seen in the cases on this point.

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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