‘No harm, no foul’ in airline surcharge fees

‘No harm, no foul’ in airline surcharge fees
The court said the plaintiffs knew of fuel surcharges charged by airlines like Air Canada, and no class-wide damage occurred.
A decision from the British Columbia Supreme Court is expected to “stem the tide” of consumer protection class action claims where the plaintiffs haven’t suffered any real damage or loss.

On Aug. 18, Justice Elaine Adair dismissed five class action certification applications in Unlu v. Air Canada, brought against five airlines including AC, Lufthansa, Delta, United, and British Airways. The plaintiffs made claims regarding the way fuel surcharges appear on a passenger ticket receipt.

The decision follows a trend in B.C. dismissing certification of consumer protection class actions where the plaintiffs have not suffered any real damage or loss and limits the scope for class-wide remedies pursuant to the B.C. Business Practices and Consumer Protection Act, says Robin Reinertson, a partner with Blake Cassels & Graydon LLP in Vancouver.

“It’s premature to say consumer protection class actions are dead in British Columbia, but plaintiffs’ counsel are going to have to think about how they craft them and when it’s appropriate to get class-wide damages — that’s the stumbling block for them now,” says Reinertson.

“We’ve seen this kind of decision in a few cases now,” says Reinertson, pointing to Clark v. Energy Brands, a case in which she and a co-counsel acted, as well as Ileman v. Rogers Communications Inc.

She says all the decisions have followed a trajectory where the B.C. courts have been saying there are two ways to get a remedy under the BPCPA — s. 171 and s. 172.

“Section 171 is a traditional damages section so you can only get relief under that section if a plaintiff has suffered damage or loss. The courts have recently clarified that requires proof of causation — and there had been a battle for a few years about whether proof of causation had to be established individually or whether you could establish class-wide reliance, which is an approach they have taken in California, for example,” she says.

The recent cases have reiterated that in order to establish s. 171 damages you have to establish causation for each class member.

“As Justice Adair says in the Unlu decision, that claim isn’t amenable to a class-wide resolution and the plaintiffs had conceded that, so she finds there is no common issue for s. 171 damages as a result — it’s just an inherently individual claim,” says Reinertson.

Plaintiffs have also been advancing claims under s. 172, which is different from damages. An individual doesn’t necessarily have to show damage or loss in the traditional Canadian legal sense but have some interest in the money before he or she can get a refund.

In Unlu, the plaintiffs couldn’t establish any kind of interest in the money or any right to damages under the B.C. Consumer Protection Act under the statute or common law, so there was no right to a restitution order remedy.

“What’s left is this weird s. 172 (1), which gives you the right for any person to seek declaratory or injunctive relief, and the court has now said in a couple of cases — in Unlu and Clark — that, if you are seeking just declaratory or injunctive relief and you aren’t seeking damages for the whole class because you don’t have a right to them, a class action is not an appropriate way to proceed. It’s not efficient,” says Reinertson.

There may be some other avenues for plaintiffs to explore such claims under the legislation and no doubt the plaintiff bar in B.C. will be exploring how to re-cast consumer projection claims.

Plaintiffs can pursue them on an individual basis and where there is damage or loss to consumers, but the problem in Unlu and other cases like it such as Ileman and Clark, says Reinertson, is they are consumer protection cases where there is alleged misrepresentation but the consumers didn’t suffer any actual loss as a result.

“The consumer knew what the price was for the ticket before they made their final decision. If you didn’t want to pay X number of dollars for your airline ticket, you had the information you needed to make your decision,” she says.

The plaintiffs said that, in using a code, the airlines classified the amounts payable pursuant to those codes as “taxes” payable to a third party, but, in fact, they collected the money and retained it without paying them to any third parties. The plaintiffs sought damages and a restoration order under the BPCPA and other remedies on the basis the airlines had been unjustly enriched.

“Why this is so interesting is because it is explaining the mechanics of a statutory version of waiver of tort,” says Michael Rosenberg, a lawyer with McCarthy Tétrault LLP.

“I have long argued the waiver of tort requires exactly that — a proprietary interest in the funds that are being claimed from the defendant. What the court seems to be saying here is that it’s not enough that the defendant took money from the plaintiff and that the way in which the defendant took the money contravened the BPCPA. There has to be some explanation of the unjustness of taking the money from the plaintiff.”

At the core of it, while there may have been a deceptive business practice, if the consumer would have paid the money anyway then where is the damage done?

“There is no harm, no foul, and the court is not going to expend its resources where there does not appear to have been a real injury to any plaintiff,” he says.

In Ileman, which was about cellphone access fees, there was no dispute the carriers were authorized to levy the fee.

“I suspect this progression, over the past couple of years, where all of these BPCPA claims are coming to certification hearings and we’re seeing the appropriate restrictions on class actions predicated on the BPCPA, I suspect this will stem the tide of these kinds of class actions insofar as consumer claims require the BPCPA to be viable,” says Rosenberg.

“The more adventuresome claims are unlikely to be commenced given the courts have now articulated the ground rules for the application of the BPCPA in the class action context.”

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