On January 30, 2014, the British Columbia Court of Appeal overturned the certification of a class action against the manufacturers of children’s cough and cold medicines. The decision in Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc., 2014 BCCA 36 is notable because it: (1) addresses the remedies available to plaintiffs under consumer protection legislation, and (2) confirms that actions under such legislation must plead actual causation of injury.
In December 2008, Health Canada reversed a longstanding policy permitting the sale of over-the-counter cough and cold medicines for use by children under the age of six. The change came on the heels of several studies that suggested that cough and cold medicines were generally ineffective for young children, and were potentially unsafe.
The plaintiff launched a class action against manufacturers of those medicines claiming that, prior to December 2008, their sale constituted a “deceptive act or practice” under British Columbia’s Business Practices and Consumer Protection Act (BPA), and involved misleading representations to the public contrary to Canada’s Competition Act. The plaintiff sought not only statutory reimbursement remedies, but also disgorgement of the defendants’ profits pursuant to common law. The action was certified in 2011.
1. Breaches of Consumer Protection Legislation Do Not Ground Claims For Restitution
Both the BPA and Competition Act entitle injured consumers to compensation in the form of damages. Damages are awarded in amounts equal to the loss actually suffered by the individual consumer, often by way of a reimbursement. The plaintiff argued that breaches of the legislation also constitute a “wrongful act” that allowed her to recover under common law restitutionary principles (for unjust enrichment, waiver of tort, and constructive trust). She therefore sought restitutionary disgorgement of the money received by the defendants as a result of the alleged statutory breaches, in addition to the compensation available under the Acts.
Subsequent to the certification decision in 2011, the British Columbia Court of Appeal released its decision in Koubi v. Mazda, 2012 BCCA 310 (discussed here) holding that the BPA is an “exhaustive code” for the regulation of consumer transactions and that so-called “anti-enrichment” common law restitution claims premised on breach of the BPA were not available, as nothing in the BPA indicated that the Legislature intended to augment the statutory remedy by permitting consumers to mount restitutionary actions in waiver of tort, a particular restitutionary vehicle.
In Wakelam, the Court expanded the reasoning in Koubi and found that there was no legislative intent to create any restitutionary causes of action arising from or based on breaches of the BPA, and thus the plaintiff could not recover under unjust enrichment or constructive trust insofar as the claims were based on contraventions of the BPA. The claims grounded in the Competition Act were similarly dismissed, as the Court found that Parliament had not intended for the statutory right of action to be augmented by a general right to seek restitutionary remedies on the basis of breaches of the Act.
2. Injuries Must be Causally Connected to the Breach of Consumer Protection Legislation
Having determined that the plaintiffs’ claim under the Competition Act was limited to “damages” suffered “as a result of” the defendants’ breach, the Court found that, in order to succeed, a causal connection between the breach and the loss must be pleaded. It adopted the following passage from Singer v. Schering-Plough Canada Inc. 2010 ONSC 42:
The plain language of that section makes it clear, as the defendants assert, that the plaintiff must show both a breach of s. 52 and loss or damage suffered by him or her as a result of that breach. That can only be done if there is a causal connection between the breach (the materially false or misleading representation to the public) and the damages suffered by the plaintiff.
... It is not enough to plead the conclusory statement that the plaintiff suffered damages as a result of the defendant's conduct. The plaintiff must plead a causal connection between the breach of the statute and his damages. In my view, this can only be done by pleading that the misrepresentation caused him to do something - i.e., that he relied on it to his detriment (at para 91).
The Court similarly suggested that proof of reliance was a necessary element for a successful claim under the BPA. Since the plaintiff had failed to plead any material facts in support of the required causal connection, the Court inferred that she was unable to do so, and the claims were struck accordingly.
Relevance and Resonance
The Court’s finding that the BPA and the Competition Act will not support claims for common law restitutionary remedies will no doubt be considered in relation to similar consumer protection legislation across Canada. Plaintiffs who assert such legislation was breached will face the additional hurdle of demonstrating not only that they suffered losses, but that their losses were caused by the breach.