On January 30, 2014, the British Columbia Court of Appeal de-certified a class action1 alleging violations of both the British Columbia Business Practices and Consumer Protection Act2 (the BPCPA) and the federal Competition Act.3 The court found that both pieces of legislation constitute complete codes, such that class members did not have the ability to bring tort or equitable claims alleging breaches of the legislation.
While certain aspects of the class members’ claims remained after the tort and equitable claims were struck, the Court of Appeal went on to question the utility of the claims that remained and de-certified the class action, commenting that the sophisticated and scientifically supported regulatory system under the Food and Drugs Act4 (the FDA) had brought about the change in labeling sought. If the purpose of a class action is to redress “real injuries suffered by real people,” the Court of Appeal noted it was worth asking whether anything might be meaningfully addressed in the context of the remaining aspects of the claim.
Of interest to litigants generally in class actions, the Court of Appeal was prepared to address the parties’ legal questions head-on. The Court of Appeal confirmed it is beneficial to all concerned, including the justice system, if legal questions are directly addressed when raised at an early stage, rather than left for a trial that may never take place, or for another court in another case. It emphasized that scarce judicial resources may be squandered when difficult questions of law are continually sidestepped in the class action context as has been the case in the past.
Thus, while the cause of action test is often considered an easy one to meet in the context of class certification, it is not surmounted in all cases.
Background and facts
In 2008 Health Canada reversed a long-standing policy that had permitted the sale in Canada of certain children’s non-prescription cough and cold medicines. Manufacturers had already voluntarily ceased marketing the medicines for use for children under age two, and as a result of the change in policy Health Canada required those manufacturers to re-label the medicines to instruct consumers that they should not be used for children under six.5
The plaintiff nonetheless filed an action and sought to certify a class action against the defendant manufacturers of the cough and cold medicines. She made no claims alleging that the cough medicines had injured any class members, but rather advanced claims for unjust enrichment, waiver of tort and constructive trust, on the basis of alleged statutory breaches under the BPCPA and Competition Act.6 The plaintiff also sought direct relief under the legislation. The motions judge granted certification on December 22, 2011,7 and the defendants subsequently launched an appeal.
The Court of Appeal’s decision
The defendants argued, as a first ground of appeal, that the FDA’s purposes would be frustrated if provisions regarding “deceptive practices” under the BPCPA were to apply to the packaging, labeling and sale of the medicines in question.8 The Court of Appeal shared the defendants’ concerns regarding the possibility of different provincial laws applying across Canada to the labeling and marketing, and beneficial drugs being denied to some Canadians as a consequence.9 However, the Court of Appeal found that theFDA’s purpose is primarily permissive and as such, the Court of Appeal was not convinced that applying theBPCPA to the marketing and sale of cold medicines would necessarily frustrate FDA purposes such that theBPCPA should be rendered inoperative.10
The Court of Appeal next turned to whether the statement of claim disclosed a cause of action.11 The defendants argued that, in addition to the damages that might be available to her individually under s. 171 of the BPCPA, the plaintiff had improperly sought to recover under restitutionary principles premised on this purported BPCPA breach.
The Court of Appeal found that consistent with its decision in Koubi v Mazda,12 released after the certification application was decided, the BPCPA is an “exhaustive code” for regulating consumer transactions and that so-called anti-enrichment claims premised on breach of the BPCPA were not available in law.13 The Court of Appeal concluded the reasoning in Koubi applied not only to the allegation of waiver of tort (which was specifically dealt with in Koubi), but also to the claims for unjust enrichment and constructive trust based upon the purported breach of the BPCPA.14
The defendants also argued that the claims for restitutionary remedies under the Competition Act advanced by the plaintiff were “judicially indistinguishable” from those advanced under the BPCPA in Koubi.15 The Court of Appeal agreed and determined nothing in the Competition Act indicated Parliament intended that the statutory right of action under the Competition Act should be augmented by a general right for consumers to sue in tort or to seek restitutionary remedies. As such, the pleadings did not disclose a cause of action as theCompetition Act was a complete code.16
The Court of Appeal also accepted that there was no pleading that the plaintiff had sustained a loss or damage as a result of a breach of the Competition Act, and as such a direct claim under the Competition Actwas not disclosed. Further, relying on recent Supreme Court of Canada authority, the Court of Appeal found that aggregate assessment provisions of the Class Proceedings Act, do not give rise to a cause of action for restitutionary remedies not already available under the BPCPA or the Competition Act.
In reversing the majority of the certification judge’s finding, the Court of Appeal found that after the claims had been struck, the only claims that remained were for a declaration, injunctive relief, and an “advertising order” under the BPCPA. Given this, the Court of Appeal saw no alternative but to allow the appeal and decertify this proceeding, leaving the plaintiff at liberty to seek the certification of what remained of the action.17
The Court of Appeal noted that the case before it involved a “sophisticated and scientifically-supported regulatory system” in the form of the FDA regime, which in the Court of Appeal’s words “exists for the express purpose of monitoring the marketing of pharmaceuticals in Canada.” The Court of Appeal noted that this “system” has already brought about the changes sought by the plaintiff and if the purpose of class actions is to redress “real injuries suffered by real people” it was worth asking whether anything meaningful could be achieved by what remained of the lawsuit given the relief sought had been addressed by Health Canada and the defendants.
Of interest, the Court of Appeal in Quebec upheld the denial of authorization in a similar proposed class action (see our legal update), finding the allegations in that case did not demonstrate that the products were objectively harmful when used as directed, that the defendants had made false or misleading representations or had neglected to diligently disclose an important fact concerning the safety of their products.