The Court of Appeal recently affirmed a decision certifying a class proceeding against Federal Express Canada Corporation, FedEx Ground Package System, Inc., and FedEx Ground Package System, Ltd. (collectively, “FedEx”) in Robson v. Federal Express Canada Corporation. This blog post reviews the basis on which the Court of Appeal affirmed the certification.
The plaintiff in the case bought knitting supplies online from a U.S.-based company and, at the time of purchase, was advised by the vendor that shipping was free. The supplies were shipped with FedEx to the plaintiff in Ontario. After they were delivered, Federal Express Canada Corporation provided an invoice to the plaintiff setting out various amounts owing, including an “Advancement Fee” and a “Clearance Entry Fee.” The plaintiff paid these amounts, believing they were taxes and duties. However, a “significant portion” of these amounts was actually kept by FedEx as payment for its brokerage services.
The plaintiff commenced her class proceeding in early 2022, pleading among other things that FedEx invoiced consumers “misleading fees and surcharges” and that the fees and surcharges were “unsolicited service fees,” contrary to the provisions of the Consumer Protection Act.
Among other remedies, the claim seeks disgorgement of such unsolicited fees and “exemplary or punitive damages of $50 million.”
The motion judge certified the plaintiff’s class proceeding. On appeal, FedEx argued the motion judge erred in three ways – in finding that the plaintiff’s claim disclosed a cause of action, in finding that the proceeding involved “common issues,” and in defining the class “too broadly.”
Section 5(1) of the Class Proceedings Act sets out the requirements that must be met for a class proceeding to be certified. These requirements include that the pleadings must disclose a cause of action, that there be an “identifiable class” of at least two people that would be represented by the representative plaintiff, that the claims of the class members “raise common issues,” that a class proceeding would be the preferable procedure for resolving the common issues, and that there is a representative plaintiff who meets specific criteria.
In determining whether or not a claim discloses a cause of action, courts are required to assume the facts as pleaded are true, with limited exceptions. It must be “plain and obvious” that the claim does not disclose a cause of action. Courts are required to be generous and should not dismiss the motion to certify simply because the odds of success seem low or because the law underpinning the claim is novel or unsettled. Evidence is not considered at this point in the certification test.
Among other things, the claim alleged that FedEx breached sections 13, 14, and 15 of the Consumer Protection Act (and similar statutes in other provinces).
Broadly speaking, the statute provides that a “supplier” (as defined) is prohibited from demanding payment for unsolicited goods or services and must refund payments made by consumers for such goods or services upon demand, failing which the consumer may commence an action to recover those payments (see section 13).
The statute also sets out various “unfair practices” that, if committed, may entitle consumers to remedies (see section 18). One such practice is the making of a “false, misleading or deceptive representation” (section 14(1)), which includes a representation that “misrepresents the purpose of any charge or proposed charge.” Unfair practices also include “unconscionable representations” (see section 15). The statute states that a representation may be found unconscionable if the person making the representation knows or ought to know that “the price grossly exceeds the price at which similar goods or services are readily available to like consumers.” The Court of Appeal considered these various provisions.
In relation to section 13 of the Consumer Protection Act, the Court referenced statements included in the claim to the effect that the plaintiff did not request or solicit the services rendered by FedEx in relation to the “Advancement and Clearance Entry fees.” The claim also alleged that the services that formed the basis for those fees could be performed by a consumer “at little or no cost.”
In relation to sections 14 and 15 of the statute, the Court referenced allegations in the claim that the FedEx fees were described in a way that “convey[s] the general impression that all these fees are customs and tax-related fees imposed by the government that had been paid by FedEx.” The claim specifically referenced the wording of the invoice issued to the plaintiff and alleged that FedEx’s representations constituted unfair practices under the statute.
The Court of Appeal found that, on its face, the claim disclosed causes of action under the Consumer Protection Act.
The second issue considered by the Court of Appeal was whether the plaintiff’s claims raised common issues. The Court agreed with the motion judge that they did. FedEx made various arguments in support of a finding that the motion judge erred in this respect. In relation to unsolicited services (section 13 of the statute), it argued that each class member received different information relating to the charges they would be required to pay and had “different communications” with FedEx before delivery. Based in part on the standard form invoice, however, the Court ultimately concluded that there was at least “some basis in fact” for determining the section 13 issue as a “common issue.”
In relation to misrepresentations (sections 14 and 15 of the statute), FedEx argued there were no “common issues” because each of the class members had “different communications about the fees with FedEx and with their respective vendors” and that the merits of a claim of unfair practices depend on the “totality of the transaction,” even if a standard form invoice was issued to each class member containing the same representation. However, as the Court of Appeal noted, the entitlement of a consumer to a remedy under section 18 of the Consumer Protection Act does not “depend on the consumer having entered [an] agreement due to or in reliance on the unfair practice.” Even if the invoice did not “subjectively” mislead some class members who may have communicated with FedEx, the invoice could still have “objectively” misrepresented the fees. According to the Court of Appeal, the issue was one best resolved at trial.
Lastly, the Court considered whether the motion judge incorrectly defined the class for certification purposes. The class was defined as including all individuals in Canada who, “after placing an order for a shipment while acting for personal, family or household purposes …, paid an invoice … for at least one of a “Clearance Entry Fee”, “Disbursement Fee”, or “Advancement Fee” from 2016 to present.” FedEx argued that this class was too broad because it included those whose claims were barred by a limitation period and residents of Quebec. However, the Court of Appeal concluded that, while those issues might ultimately prove a valid defence to certain members of the class, they should not have an impact on the class definition at the certification stage.
Class actions play a critical role in holding large corporations accountable for unfair consumer practices. If you believe you or others have been affected by unlawful business practices, improper fees, or systemic misconduct, a class action may be an effective way to seek accountability and compensation. The experienced class action lawyers at Milosevic & Associates provide robust advice and dynamic legal solutions in class proceedings and multi-plaintiff litigation. To book a confidential consultation, please contact the firm online or call (416) 916-1387.
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