In the first decision in the class action context since the Supreme Court of Canada expanded the scope of summary judgment in Hryniak v. Mauldin, 2014 SCC 7, Perell J. of the Superior Court of Justice has dismissed a newly certified class action against travel booking website Expedia Inc. This decision underscores the fact that certification has no bearing on the merits of a class action, and further, that summary judgment may be an appropriate response to the certification of a weak claim.
New Test for Summary Judgment
In Hryniak, the Supreme Court held that the judge hearing a motion for summary judgment must review the evidence to determine whether there is a genuine issue for trial. There is no genuine issue for trial if the judge is able to come to a fair and just determination on the merits of the case. With the available record, the judge must be able to:
- Make the necessary findings of fact;
- Apply the law to the facts; and
- Conclude that summary judgment would be the proportionate, more expeditious and less expensive means to achieve a just result.
An Expedia customer named Tim Magill sought to commence a class proceeding on the basis that Expedia breached the terms of its contract with customers who booked hotel reservations using its website. Mr. Magill alleged that Expedia breached the reservation contract by improperly characterizing two bundled charges – a tax recovery charge and a service fee – that were added to the cost of hotel reservations. Mr. Magill alleged that Expedia failed to disclose the manner in which the tax recovery charge was calculated; that Expedia should have separated the tax recovery charge and a service fee; and that Expedia was not allowed to profit from the service fee.
Perell J. certified a class action against Expedia Inc., but not against its Canadian subsidiary: 2013 ONSC 683. Expedia then sought summary judgment.
On the motion for summary judgment, Perell J. had before him a record of the disclosure made by Expedia in respect of the impugned charges. The record revealed that both the tax recovery charge and the service fee are estimates, and that Expedia may overestimate or underestimate its actual tax and service costs. The disclosure also revealed that the impugned fees are bundled to comply with Expedia’s confidentiality agreements with its suppliers and to keep its trade secrets from being reverse-engineered.
Neither party argued that this case was inappropriate for a summary judgment. Perell J., being cognizant of the Supreme Court’s decision in Hryniak, noted that the evidentiary record before him was “more than adequate” to decide whether there were genuine issues for trial. The facts were not in dispute, and the issues of law and mixed fact and law did not require a trial.
Expedia argued that it had not breached its reservation contract. Additionally, Expedia contended that the profit element of the service fee was disclosed to customers. The motion turned on the interpretation of express terms in the reservation contract. Applying the principles of contractual interpretation, Perell J. concluded that Expedia did not breach the reservation contract. In His Honour’s view, the reservation contract did not promise to disclose the details of the impugned charges. Additionally, the record explained Expedia’s reasons for non-disclosure.
In granting the summary judgment, however, Perell J. noted his tentative view that any costs awarded should be modest, as the class action might have been avoided if Expedia had more thoroughly explained the tax recovery charge and service fee in its reservation contract.
This decision serves as an example of the third path between trial and settlement for certified class actions. Following the Supreme Court of Canada’s judgment in Pro‑Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, which liberalized the certification regime, it is expected that more defendants will find themselves standing at this crossroads. Magill confirms that Hrnyiak has rendered summary judgment a viable alternative in appropriate circumstances. In service of this alternative, Magill also emphasizes the courts’ increased willingness to dispose of class actions by deciding issues of contractual interpretation on a motion record. In this sense, Magill extends the line of jurisprudence begun by Arora v. Whirlpool Canada LP, 2012 ONSC 4642, aff’d 2013 ONCA 657.
Magill v. Expedia, Inc., 2014 ONSC 2073
Court File No.: CV-09-381919CP
Date of Decision: April 2, 2014