Canada: Québec Class Actions: Strong Evidence Required On The Merits

In the recent judgment Duguay c. General Motors du Canada ltée¹ (Duguay) rendered on the merits of a class action, the Superior Court of Québec (the Court) highlights the risks of relying solely on factual presumptions to prove consumer awareness. The Court reminds plaintiffs to present strong evidence of alleged prohibited practices to obtain a favourable judgment in class action proceedings. This judgment is particularly interesting for class action defendants as it reaffirms that not all class actions will have a positive outcome for plaintiffs.

Factual background

On April 8, 2016, the Court authorized a class action against the defendants, General Motors of Canada (GMC), distributor and marketer of the Chevrolet Volt electric car (the Volt) in Canada, and General Motors LLC (GM) manufacturer of the Volt. The class action was brought on behalf of all persons who purchased or leased a Chevrolet A Volt model motor vehicle in Canada. Although the class description did not have a determined temporal scope, the evidence presented at trial only covered the years 2012 to 2019. In addition, although the class description was national, the parties waived the right to allege and establish the law outside Québec, inviting the Court to apply Québec law in accordance with article 2809 of the Civil Code of Québec.

This class action revolved around alleged prohibited commercial practices by defendants pursuant to Title II of the Consumer Protection Act (the Act) in the advertising of the Volt in the Canadian market. It was alleged that defendants falsely advertised the Volt as a car that could, without exception, make daily trips without using gasoline or emitting greenhouse gases when its battery was fully charged. Plaintiffs sustained that such representation was false because the Volt's gasoline generator activated to heat the cabin during cold weather. Defendants claimed that they were not trying to hide anything from consumers, as the use of gasoline generator in cold weather was openly disclosed to consumers.

Plaintiff claimed a reduction for all class members in the sale or rental price of the Volt, and subsidiarily, an award of damages representing the excess of gasoline costs incurred by the class members because of the unexpected activation of the gasoline generator in cold weather. Plaintiff also claimed punitive damages in the amount of $4 million based on article 272 of the Act.

Analysis

The key questions addressed in this judgment sought to determine whether the defendants had made false or misleading representations, and if they hid a material fact by failing to disclose certain information relating to the Volt's fuel consumption.

If false or misleading representations are established, the Court would need to determine if class members are entitled to claim damages from defendants, and if punitive damages should be awarded.

The Court analyzed plaintiff's evidence on the alleged misrepresentations and held that plaintiff had not specifically identified the representations it alleged to be false or misleading. Rather, the plaintiff referred to selected excerpts from defendants' promotional material which included annual brochures and their website. Plaintiff invited the Court to consider the central message of this material which promotes the Volt as an extended-range electric car. The plaintiff alleged that this central message falsely represented that the Volt can be used for short daily trips without consuming gasoline or emitting greenhouse gases. Plaintiff asked the Court to infer a presumption of fact that class members were aware of the central message prior to their respective purchases.

The Court concluded that the plaintiff had failed to prove by factual presumption that consumers were aware of the central message in the defendants' brochures and website before purchasing the Volt. This is because the mere existence of the brochures and the website containing the selected extracts during the relevant period could not, by itself, establish a presumption that class members were aware of the message.

The Court considered the overall impression of the brochures and website during the relevant period, and ultimately found that the allegation of false or misleading representation could not succeed. The Court concluded that a gullible and inexperienced consumer reading the complete advertising would be likely to infer that the Volt can travel a significant distance in electric range mode, while realizing that the distance travelled depends on numerous external factors, and defendants did not attempt to conceal the functionality of the gasoline generator in cold weather.

Finally, as to the remedies sought by the plaintiff, no compensatory damages could be awarded because defendants did not engage in any prohibited practices. Punitive damages were not awarded, as defendants were found to have been transparent with their customers and to have acted in good faith.

Key takeaways

The analysis and conclusions reached by the Court in Duguay serve as a reminder that class action plaintiffs should not solely rely on factual presumptions and must present strong evidence to support their claim. Despite the very few class action trials proceeding on their merits, they nevertheless entail serious risks that need to be properly assessed by plaintiffs.

As for class action defendants, this case is a welcome example that transparent business practices will be recognized and acknowledged by Québec courts.

Footnote

1. 2023 QCCS 3223.

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