There have been a number of recent class actions commenced in Canada relating to pricing disclosure – and in particular, the alleged practice of “drip pricing”, whereby a company advertises a base price through various media but additional fees and surcharges are disclosed later in the sales/reservation process. However, in a recent decision, the Superior Court of Québec underscored the risks and challenges for plaintiffs in pursuing such cases, and provided guidance for advertisers and on-line retailers in respect of their pricing practices. In particular, in Prince v. Avis Group Inc. et al., the Court refused to authorize the class action proceedings brought against car rental companies seeking compensation on behalf of Québec consumers based on alleged violations of consumer protection legislation In so doing, the Superior Court specifically endorsed the advertising best practices of one defendant, and provided some welcome comfort companies who take steps to advertise a total estimated price as part of their on-line practices.
The class action sought compensatory damages as well as punitive damages due to alleged violations of the Consumer Protection Act (“CPA”) and the Civil Code of Québec in relation with the pricing practices of major car rental companies in Québec. More specifically, the proposed representative plaintiff, Norman Prince, claimed that the car rental companies charged a higher price compared to the base price advertised on the companies’ websites.
On August 4, 2016, Justice Johanne Mainville of the Superior Court of Québec concluded that the pricing practices of Entreprise Rent-A-Car Canada Company, and its related entities, complied with the CPA as the total estimated price clearly appeared on the reservation website.
Mr. Prince failed to bring any evidence of a prejudice caused by the alleged faults. The examination of Mr. Prince, authorized by the Court, confirmed the absence of damages suffered by him, as well as his overall satisfaction with the services offered by the rental companies.
As regards the claim for punitive damages, Justice Mainville cites with approval the Supreme Court of Canada ruling to the effect that a mere violation of a provision of the CPA, if any was found in the present case, is not sufficient to justify an award of punitive damages. It is only further to an analysis of the whole of the merchant’s conduct, as disclosed by the allegations of the proposed class action, that the court may determine “whether the imperatives of prevention justify an award of punitive damages in the case before it.”
In addition, Mr. Prince’s lack of standing was fatal to his claim. It is the individual claim of the representative plaintiff that must be considered at this stage. In the absence of proven prejudice, Justice Mainville concluded that Mr. Prince could not justify an individual claim.
The most surprising part of the case just might be how Mr. Prince learned that he was suggested by Merchant Law Group LLP as the class representative. “Once in a while I “Google” my own name” is how Mr. Prince indicated learning, quite by accident, that proceedings had been filed on his behalf. The limited evidence on record demonstrated that Mr. Prince was not in a position to properly represent the class members, a requirement under Article 575 of the Québec Code of Civil Procedure.
The Court’s decision may still be subject to appeal, but it does provide some much needed guidance to advertisers and on-line retailers in many industries who seek to pass-on and disclose additional state-imposed and other fees and surcharges as part of their sales/reservation processes. While the Court’s decision appears to recognize a potential safe harbour from the perspective of provincial consumer protection legislation, advertisers and on-line retailers should review their pricing and disclosure practices with experienced counsel given the existence of overlapping federal and provincial legislation, the potential enforcement risks and the interests of the class action bar in Canada in seeking collective relief on behalf of consumers.