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Consumer - Unfair 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 rescission (and other) remedies under the Consumer Protection Act 'false, misleading, deceptive, or unconscionable representations' provisions:(4) Claim under the Consumer Protection Act
[83] The appellants also claim that the respondents breached ss. 14 and 15 of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A (CPA), by making false, misleading, deceptive, or unconscionable representations that their product was of high quality, free of defects, and fit for human consumption when the respondents knew, or ought to have known, that because of the presence of NDMA and NDEA, the contaminated valsartan was not safe and could cause or materially increase the risk of contracting cancer, liver disease, and other health conditions. The appellants plead that they are entitled to damages under s. 18 of the CPA.[2]
[84] The motion judge ruled that the consumer protection causes of action were not certifiable. He found it was plain and obvious that the damages sought were either not available or would be so de minimis as to not satisfy the preferable procedure criterion.
[85] The appellants state that the motion judge made three errors: first, by requiring intention and misinterpreting the pleadings to say intention was not pleaded; second, by finding damages were not available; and third, by requiring privity as a component of s. 18 of the CPA.
[86] It is not necessary to address the issue of intention. On a generous interpretation of the pleadings, the defendants are alleged to have known of the contamination. Nor is it necessary to consider the question of privity, which only applies to consumer protection legislation in some provinces and not others so would not be dispositive in this case.
[87] Rather, I rest my conclusion, as did the motion judge primarily, on the interpretation of s. 18 of the CPA and the issue of damages. Subsections 18(1) and (2) provide:Any agreement, whether written, oral or implied, entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and the consumer is entitled to any remedy that is available in law, including damages.
A consumer is entitled to recover the amount by which the consumer’s payment under the agreement exceeds the value that the goods or services have to the consumer or to recover damages, or both, if rescission of the agreement under subsection (1) is not possible,
(a) because the return or restitution of the goods or services is no longer possible; or
(b) because rescission would deprive a third party of a right in the subject-matter of the agreement that the third party has acquired in good faith and for value. [88] The appellants do not seek rescission. Nor would such a remedy be available since it is no longer possible to return the contaminated valsartan. Instead, they claim damages in the amount by which their payment for the drugs exceeded the value of the drugs, as well as damages for mental distress, anxiety, and costs of medical screening/monitoring.
[89] As stated above, I agree with the motion judge that the claim for damages for mental distress, anxiety, and costs of medical screening/monitoring are fatally flawed on the same basis as in the negligence cause of action: damages for an increase of a risk of harm and damages for mental injury that do not meet the required threshold of severity are not compensable in law.
[90] A claim brought under the CPA against a person who has allegedly engaged in an unfair practice is a statutory action. The primary method of righting the wrong is rescission, but s. 18 also provides that “the consumer is entitled to any remedy that is available in law, including damages” (emphasis added). This means that a court may award damages that “would be appropriate at common law”: Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921, 392 D.L.R. (4th) 490, at para. 94 citing Steven M. Waddams, The Law of Damages, 2nd ed. (Toronto: Canada Law Book, 1991) (loose-leaf updated 2015), at paras. 5.690 to 5.700.
[91] There is no error in the motion judge’s reasoning that the statutory remedies sought by the plaintiffs – damages for payment for the drugs in excess of value, damages for diminished benefit of the bargain under s. 18 of the CPA, and restoration of profits received under s. 172 of the British Columbia Business Practices and Consumer Protection Act, SBC 2004, c. 2 – are not available to the plaintiffs. There is simply no allegation or material facts to support an allegation that the drugs at issue were unfit for their intended purpose of treating hypertension or that the contaminated valsartan was a useless or ineffective drug for the purpose of treating hypertension. As already noted, notices from Health Canada advised putative class members to continue taking the drugs despite the contamination, unless a physician advised to the contrary.
[92] This case is thus distinguishable from those class actions brought under consumer protection provisions for unfair practices, such as WN Pharmaceuticals Ltd. v. Krishnan, 2023 BCCA 72, leave to appeal refused, [2023] S.C.C.A. No. 152 and Drynan v. Bausch Health Companies Inc., 2021 ONSC 7423, leave to appeal to Div. Ct. refused 2022 ONSC 1586. In those cases, the plaintiffs established that what was advertised was not what they received; the elements that induced the plaintiffs to purchase the products were absent and the products were therefore valueless.
[93] This case is fundamentally different. Its essence is a negligence claim for a contaminated product, not a deceptive misrepresentation. It is not obvious, and need not be decided, whether consumer protection legislation applies to this set of facts at all. It does not easily fit together with the examples of false, misleading, deceptive, or unconscionable representations set out in ss. 14 and 15 of the CPA. For this case, it is sufficient to say that asserting statutory breaches without pleading the underlying material facts necessary to support them is insufficient to cross even the low hurdle present in s. 5(1)(a) of the Class Proceedings Act, 1992. . 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 (CPA) and similar other provincial statutes.
On the Ontario Consumer Protection Act (CPA) unfair representations issue the court concluded:[27] On the second common issue, the appellant states in its factum that it “repeats and relies on the arguments made in respect of the errors set out in Common Issue 1 in support for its position that [Ford’s] Representations were false, misleading and deceptive in breach of sections 14 and 17 of [Ontario’s] Consumer Protection Act” and the parallel provisions of the consumer protection legislation in six other provinces.
[28] Sections 14 and 17 of Ontario’s Consumer Protection Act provide:14 (1) It is an unfair practice for a person to make a false, misleading or deceptive representation.
(2) Without limiting the generality of what constitutes a false, misleading or deceptive representation, the following are included as false, misleading or deceptive representations:
...
14. A representation…failing to state a material fact if such…failure deceives or tends to deceive.
...
17(1) No person shall engage in an unfair practice. [29] The motion judge found that the appellant “has not established on a balance of probabilities that any of the representations on the face of the EnerGuide Label or that the overall impression conveyed by the Label was false, misleading or deceptive, even under the most generous reading of the provincial ‘unfair practice’ provisions.” He rejected the appellant’s argument that, while Ford could not change the content of the EnerGuide label or use ratings other than those that it did, Ford failed to state material facts, and their failure to do so deceived or tended to deceive, by not providing supplemental disclosure to customers to the effect that: (1) the ratings on the label were provided for comparison purposes and not to predict actual fuel consumption; (2) the ratings, based on the 2-Cycle Test, and not the 5-Cycle Test, understated fuel consumption under real-world driving conditions by some 15%; and (3) the ratings on the label could only be achieved with fuel-efficient driving and not normal “real world” driving. The motion judge noted that the additional facts that the appellant argued should have been disclosed “simply restated what was already made clear in the FCG”.
[30] The appellant contends that the reference to the FCG on the EnerGuide label was not a disclaimer and served as a mere advisement to look elsewhere. The appellant argues that the court should not assume that consumers will follow this advice. Further, the onus ought to have been on Ford to demonstrate that the FCG was provided to all consumers. Even if the FCG fulfilled its disclosure obligations, Ford’s marketing materials were in breach of its duty to disclose because they did not refer to the FCG.
[31] We are not persuaded by this submission. In our view, there was no deceptive non-disclosure in breach of s. 14 of Ontario’s Consumer Protection Act or the parallel provisions of the consumer protection legislation in six other provinces. All of the appellant’s three “omissions” are variations on statements indicating that the ratings on the EnerGuide label do not represent the “actual” fuel consumption that will be achieved under “real-world driving conditions”. Given that the appellant failed to establish (or even advance the submission) that the overall impression conveyed by the label was that the represented mileage would be achieved by all drivers, the motion judge did not err in finding that the absence of additional disclosure would not deceive or tend to deceive the average car-buying consumer.
[32] As to the appellant’s assertion that the motion judge failed to address the marketing materials, which did not refer to the FCG, the motion judge characterized the appellant as focusing on the EnerGuide label and including little to no discussion of his allegation that Ford repeated the label’s fuel consumption data in their sales brochures and marketing materials. The motion judge noted that extending the focus to include the marketing materials “would have been problematic.” Such materials would appear to raise significant individual issues.
[33] In any event, while the marketing materials did not refer to the FCG, every consumer received the EnerGuide label, which did. There is no basis to interfere with the motion judge’s finding that car-buyers for whom fuel consumption was important would “likely” have consulted the FCG. The appellant’s argument that the references to the FCG on the EnerGuide label are not “disclaimers” is irrelevant. What is relevant is that the EnerGuide label prominently directed the customer to the FCG. The prospective customer was provided with accurate and valuable information about fuel consumption and told where they could look for additional information.
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