Extended warranties: merchants vindicated as seven proposed class actions are thrown out

February 2012 Author: Sophie Perreault

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Prior to June 30, 2010, merchants had no obligation to inform purchasers of consumer goods about the legal warranty before suggesting that they purchase an extended warranty.

However, since June 30, 2010, merchants are required to provide this information in accordance with s. 228.1 of the Quebec Consumer Protection Act (CPA).

A petitioner cannot be considered an adequate representative of the members of the group if he or she delegates all aspects of this role to class counsel.


The facts

On January 16, 2012, the Quebec Superior Court refused to authorize class action proceedings against seven merchants, taken on behalf of consumers who were offered or who purchased extended warranties on goods they purchased from the merchants.1 These decisions echo two previous decisions of the Court handed down in June 2011.2  

The proceedings alleged that prior to June 30, 2010 merchants were required to inform consumers about the existence of the legal warranty before suggesting that they purchase an extended warranty.

No colour of right (Art. 1003(b) CCP)

The Court found that the motions did not meet the colour of right test for the following reasons:  

  • The amendments introduced by new s. 228.1 CPA create a prohibited commercial practice that did not exist before;
  • The new provision does not have retroactive effect;
  • Before June 30, 2010, there was no obligation for merchants to inform consumers about the existence of a legal warranty or about its scope;
  • The rules for conventional warranties differ from those for legal warranties;
  • The extended warranties purchased by the petitioners are not valueless and therefore on this ground alone do not constitute misrepresentation by the merchants.

The petitioners’ status as adequate representatives was challenged (Art. 1003(d) CCP)

The Court noted that the same law firm initiated ten similar cases, containing allegations that were almost identical in two respects:

  • the representations allegedly made by the various sales clerks when the extended warranties were purchased; and
  • the allegations concerning the ability of the petitioners to act as representatives.

Faced with such allegations repeated systematically in ten different files, the Court took a cautious approach, expressing its concern that the proceedings were initiated by counsel rather than the petitioners. Representatives cannot perform their role by simply delegating all aspects to their counsel. If they do so, it is legitimate to question their ability to represent the members adequately.

Conclusion

For merchants:

Before June 30, 2010, there existed no obligation to inform consumers of the existence of the legal warranty before suggesting the purchase of an extended warranty.

Since June 30, 2010, merchants have an obligation to provide this information to consumers in accordance with the provisions of new s. 228.1 CPA. Merchants should take care to train their employees properly in this regard.

Class actions – the petitioner’s status as representative

This decision confirms recent case law which raised the bar for an individual to be considered an adequate representative. An action initiated by counsel rather than by the petitioner will elicit serious doubts in this regard.

Footnotes

1 Toure c Brault & Martineau inc., 500-06-000531-109, 2012 QCCS 99;

Blondin c Distribution Stéréo plus inc., 500-06-000548-103, 2012 QCCS 105;

Filion c Corbeil Électrique inc., 500-06-000535-100, 2012 QCCS 101;

Guindon c Brick Warehouse, l.p., 500-06-000533-105, 2012 QCCS 100;

Normandin c Bureau en gros (Staples Canada inc.), 500-06-000547-105, 2012 QCCS 104;

Roulx c 2763923 Canada inc. (Centre Hifi), 500-06-000538-104, 2012 QCCS 103;

Tahmazian c Sears Canada inc., 500-06-000537-106, 2012 QCCS 102, André Prévost J.S.C., 16-01-2012.

2 Tremblay c Ameublements Tanguay inc., 200-06-000128-101, 2011 QCCS 3078, appealed 200-09-007483-115;

Fortier c Meubles Léon ltée, 200-06-000129-109, 2011 QCCS 3069, appealed 200-09-007482-117.

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