On August 4, 2023, the British Columbia Court of Appeal (BCCA) released companion decisions in Williams v. Amazon.com Inc. (Williams) and Petty v. Niantic Inc. (Petty). In both cases, the BCCA upheld partial stays of proposed consumer class actions, finding that arbitration agreements contained within electronic standard-form contracts were valid and enforceable. A week earlier, the Federal Court of Appeal similarly upheld a stay in Difederico v. Amazon.com Inc. — another proposed consumer class action involving similar facts — in favour of arbitration. These decisions confirm that, in the absence of clear legislative intervention to the contrary, arbitration agreements will generally be enforceable, even in standard form contracts of adhesion.
Background
In Williams, the plaintiff created an account with
Amazon.ca to make purchases from Amazon's online marketplace.
In doing so, he accepted Amazon's electronic conditions of use,
which contained an agreement to arbitrate all disputes relating to
the agreement. The plaintiff commenced a proposed class action in
the British Columbia Supreme Court (BCSC) alleging, among other
things, the defendants' business practices breached consumer
protection legislation and the Competition Act. The
defendants successfully applied to the BCSC for a stay of the
action on the basis of the arbitration agreement, except for
certain consumer protection claims that the Supreme Court of Canada
(SCC) had previously ruled are not arbitrable.
Separately, the plaintiffs in Petty commenced a proposed
class action in the BCSC against Niantic Inc. and other defendants
with respect to "loot boxes" and purchases made in mobile
video games. In Petty, the plaintiffs alleged breaches of
consumer protection legislation and unjust enrichment, among other
claims. The defendants applied to the BCSC to stay the action
(except again for certain consumer protection claims) on the basis
of an arbitration agreement contained in electronic terms of
service that the plaintiffs agreed to before playing the games in
issue.
Before the chambers judge, the plaintiffs in Petty
unsuccessfully argued that Williams should not be followed
because it had been decided before the SCC decision in Uber Technologies Inc. v. Heller
(Uber), in which the majority of the court found that an
arbitration agreement in a contract between Uber and a delivery
driver was unconscionable and therefore not enforceable. (See our
earlier Blakes Bulletin: Supreme Court of
Canada Finds Arbitration Clause to Be "Uber"
Unconscionable.)
The BCSC rejected these plaintiffs' arguments and granted the
partial stay sought by the defendants. The chambers judge concluded
that the case was distinguishable from the facts in Uber,
including because the process provided for in the arbitration
agreement in issue was a viable method of resolving the
plaintiffs' individual disputes in this specific case based on
the evidentiary record.
Appeal Decisions Upholding the Partial Stays
The plaintiffs in both Williams and Petty
appealed. The appeals raised similar issues and were heard the same
week and by the same panel of the BCCA. In both cases, the BCCA
upheld the stays and dismissed the plaintiffs' appeals. The
BCCA observed that by virtue of B.C.'s arbitration legislation,
and in the absence of other applicable legislative limits on the
enforceability of arbitration agreements in the province, the court
must make an order staying legal proceedings commenced
outside of arbitration unless it finds that the arbitration
agreement is void, inoperative or incapable of being performed.
This establishes a presumption in favour of enforcing arbitration
agreements, unlike in some other provinces where legislation voids
mandatory arbitration provisions in standard form consumer
contracts.
The BCCA determined that the chambers judges' decisions, which
involved questions of mixed fact and law, were entitled to
deference. In considering the specific facts and evidence in
Williams and Petty, including the tailored
arbitration processes provided for in each case, the nature of the
contracts at issue and the positions of the plaintiffs in relation
to the defendants, the court found that these cases were profoundly
different than the situation in Uber. While an inequality
of bargaining power existed between the plaintiffs and the
defendants in each case, it did not result in an
improvident bargain, and therefore did not give rise to a finding
of unconscionability. Neither case involved contracts of necessity,
and in each case the arbitration processes provided for were low-
or no-cost to the consumers. Although the plaintiffs wanted to
pursue their disputes through class actions rather than
arbitration, this is not a relevant factor on a stay
application.
Key Takeaways
Williams, Petty and Difederico confirm that post-Uber, in the absence of clear legislative intention to limit arbitration of consumer claims, arbitration agreements remain generally enforceable. This is so even in standard form consumer contracts of adhesion if the arbitration process provided for is accessible and offers a viable means for resolving the dispute. The challenged arbitration agreements within electronic conditions of use or terms of service in these cases were not found to be unconscionable or void for public policy reasons. These recent decisions underscore that Canadian courts accept arbitration as a viable method of dispute resolution.
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