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Competitition - False and Misleading Representations. Palmer v. Teva Canada Limited
In Palmer v. Teva Canada Limited (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal against a lower court dismissal of a class action certification motion.
In a class action for contaminated drugs, the court considered a claim under s.52(1) ['False or misleading representations - Representations accompanying products'] of the Competition Act:(5) Claim under the Competition Act
[94] The appellants plead that the respondents contravened s. 52(1) of the Competition Act by knowingly or recklessly making representations as to the quality of their pharmaceutical products that were false or misleading in a material respect. Subsection 36(1) of the Competition Act creates a civil cause of action for a person who has suffered loss or damages as a result of conduct contrary to s. 52(1).
[95] Section 52 requires that there be a “representation.” This court has previously held that failure to disclose a non-dangerous defect cannot constitute a “representation”: Arora v. Whirlpool Canada LP, 2013 ONCA 657, 118 O.R. (3d) 113, at paras. 50-51 citing Williams v. Canon Canada Inc., 2011 ONSC 6571, at para. 227, aff’d on other grounds, 2012 ONSC 3692 (Div. Ct.). The object of s. 52(1) is to target deceptive marketing practices, not create liability for defective products.
[96] The motion judge did not err in finding that none of the pleaded misrepresentations are capable of sustaining a cause of action as a breach of s. 52(1) of the Competition Act. . Rebuck v. Ford Motor Company
In Rebuck v. Ford Motor Company (Ont CA, 2023) the Court of Appeal heard a class action appeal (on substantive issues, it was already certified), involving the federal EnerGuide fuel consumption program. The issues were consumer protection 'misrepresentation' ones, from the federal Competition Act, the Ontario Consumer Protection Act and similar other provincial statutes.
On the s.52 Competition Act false and misleading representations issue the court concluded:[15] On the first common issue, the appellant submits that the motion judge erred in his interpretation and application of s. 52 of the Competition Act by failing to hold that the representations made to the public by Ford on the EnerGuide label and in its marketing materials were knowingly false or misleading by understating the vehicles’ actual fuel consumption by an average of 15%.
[16] We do not accept this submission.
[17] Sections 52(1), 52(1.1)(a) and 52(4) of the Competition Act provide as follows:(1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.
(1.1) For greater certainty, in establishing that subsection (1) was contravened, it is not necessary to prove that
(a) any person was deceived or misled;
...
(4) In a prosecution for a contravention of this section, the general impression conveyed by a representation as well as its literal meaning shall be taken into account in determining whether or not the representation is false or misleading in a material respect. [18] It must be remembered that a person who contravenes s. 52(1) of the Competition Act is guilty of an offence. The information Ford provided on its EnerGuide labels and in its marketing materials complied with NRCan’s mandatory directions and guidelines. The motion judge found that the signatories to the MOU, including Ford Canada, reasonably believed that NRCan’s directives and guidelines were mandatory. By affixing its EnerGuide labels containing the information set out above and repeating that information in its marketing materials, Ford was carefully complying with the MOU and the Guidelines, not, as the appellant asserts, “knowingly or recklessly” making a representation to the public that is false or misleading in a material respect. As the motion judge recognized, it is hard to believe that the federal government intended to criminalize or otherwise impugn its own EnerGuide labels.
[19] It is true that by 2014 the picture was changing. The United States had adopted the 5-Cycle Test and it was widely acknowledged to better approximate real- world driving conditions than the 2-Cycle Test.
[20] However, that does not mean that Ford was obliged to shift to the 5-Cycle Test in Canada. As we have stated, the Guidelines required the use of the 2-Cycle Test, and did not permit the use of U.S. data based on the 5-Cycle Test. Ford complied with the MOU and the Guidelines. The fact that the United States – or Brazil, Luxembourg or any other country – might have had different, even better, guidelines is irrelevant.
[21] As to whether the representations were false or misleading, the appellant does not assert that, literally, the statements and representations set out on the EnerGuide label or the marketing materials were false or misleading in any respect. Moreover, before the motion judge, the appellant retracted the suggestion that the general impression conveyed by the EnerGuide label to the average car-buyer was that they would achieve a level of fuel consumption equal to the ratings set out on the label. Rather, class counsel argued that the label conveyed the general impression that the city and highway mpg ratings were intended and understood as median ratings and that every driver would have an equal chance of achieving fuel consumption that was above or below these medians. The motion judge rejected this argument. Contrary to the appellant’s submission on appeal, the motion judge applied an objective test, considering “the general impression conveyed by the EnerGuide Label to the average car-buyer”. He did not impermissibly stray into a subjective analysis or require proof, contrary to s. 52(1.1), that anyone was deceived or misled simply by noting that the appellant’s evidence undermined the general impression argued by his counsel.
[22] The appellant reframes his argument on appeal, submitting that the general impression conveyed is that the estimates predicted the vehicles’ actual fuel consumption, subject to reasonable variance, and, as a result, Ford understated the vehicles’ actual fuel consumption by an average of 15%. This is merely a version of the alleged “actual mileage” general impression abandoned at the hearing before the motion judge. We are not persuaded that the EnerGuide label and the marketing materials convey this general impression to the average car-buyer.
[23] As noted above, the motion judge referred to the average car-buyer. The appellant argues that the correct test required the motion judge, and requires this court, to consider the general impression that the representation is likely to convey to a credulous and inexperienced consumer: Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265, at para. 78.
[24] The Supreme Court of Canada in Richard considered Quebec’s Consumer Protection Act, C.Q.L.R. c. P-40.1. The Court held that the words “credulous and inexperienced” described the average consumer for the purposes of that Act. However, the Court acknowledged that “the adjectives used to describe the average consumer may vary from one statute to another” to reflect the “diversity of economic realities to which different statutes apply and of their objectives”: Richard, at para. 68. The intention of Quebec’s Consumer Protection Act is “to protect vulnerable persons from the dangers of certain advertising techniques”: Richard, at para. 72.
[25] Section 1.1 of the Competition Act describes its purpose, in relation to consumers, as “to maintain and encourage competition in Canada…in order to provide consumers with competitive prices and product choices.” Further, as noted above, a person who contravenes s. 52(1) of the Competition Act is guilty of an offence.
[26] This court has not previously considered whether the “credulous and inexperienced” consumer standard articulated in Richard applies to the Competition Act. Even if it did (and we do not determine that issue[2]), we are not persuaded that the general impression that the EnerGuide label was likely to convey to a credulous and inexperienced consumer purchasing or leasing a Ford vehicle is what the appellant alleged below or on appeal. The word “credulous” does “not suggest that the average consumer is incapable of understanding the literal meaning of the words used in an advertisement if the general layout of the advertisement does not render those words unintelligible”: Richard, at para. 72.
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