Absence of evidence stalls misleading advertising class action

The recent dismissal of a class action against Ford confirms the utility of summary judgment motions in class actions, particularly when the evidence advanced to support the plaintiffs’ claims was found by the court to be insufficient and contrary to common sense. The decision is also a helpful reminder that compliance with government guidelines cannot subsequently give rise to a breach of federal competition law (or provincial consumer protection law) as that would be “contrary to fair play and common sense.” 

Background

The case concerned allegations Ford engaged in misleading advertising in contravention of the Competition Act and provincial consumer protection statutes because it provided fuel consumption estimates using less representative testing. 

The evidence established that in 1995, Ford entered into a Memoranda of Understanding with the federal Department of Natural Resources to use EnerGuide labels and fuel consumption reporting requirements in the sale or lease of new vehicles. The federal government sought to help consumers compare the fuel consumption of different vehicle brands and models, encouraging fuel-efficient driving. The Ford models in 2013 and 2014 had affixed to them labels with numbers calculated using 2-cycle laboratory testing per the EnerGuide requirements at the time. In 2015, the federal government adopted a 5-cycle test that better approximated real-world driving conditions.

Every label was required to mention the Fuel Consumption Guides (FCGs), which were published annually by the federal government and provided the following: explanatory information, vehicle attributes and test results, information about testing methods, the use of ratings, and factors that may affect measuring fuel efficiency. The FCGs repeatedly stated the ratings were for comparison purposes only, the testing could not simulate all possible conditions and behaviours in its measurement, and the ratings were not predictive of actual fuel consumption. 

The plaintiff’s 2014 Ford Edge SUV (with a label estimating 24 mpg/city and 36 mpg/highway) ran at only 23 mpg in highway driving. The plaintiff arranged to have the vehicle inspected at dealerships both in the US and Canada. At both locations, he was informed there was “nothing wrong with the vehicle.” He brought forward the class action complaining Ford knew that the 5-cycle test was a more accurate representation of real-world conditions but continued to use the 2-cycle test, understating the fuel consumption by some 15 percent. 

Decision

In dismissing the class action the court found there was “a complete absence of evidence for any of the plaintiff’s key allegations.”  

The court found that while section 52(1) of the Competition Act prohibits knowingly or recklessly making representations to the public that are false or misleading in a material respect when promoting a product or business interest, the provision does not create a general duty to disclose; it only applies where a person knowingly or recklessly makes a false or misleading representation. 

Ford’s compliance with federal government guidelines could not fairly or reasonably amount to a breach of federal competition law because it would run contrary to common sense and fair play. In addition, it would reject the principles of statutory interpretation, most clearly the presumption of consistency (the federal government does not “intend to make or empower the making of contradictory enactments”).¹ Furthermore, while section 52(4) of the Act takes into account the general impression of a representation, there was insufficient evidence to conclude that any such impression was created. 

The provincial consumer protections statutes were also found inapplicable due to the plaintiff’s failure to prove both a general impression as above and a failure to disclose. The plaintiff failed to establish that the EnerGuide label or the general impression of the label was misleading or deceptive, even under a “generous interpretation” of the provisions. 
Any arguments around non-disclosure were also rejected by the court because no evidence was presented in support of the claims. There was no obligation to provide a second label containing information that was otherwise available through FCGs. On the contrary, the mention and publication of the FCGs did in fact point to disclosure of all relevant information, and uncontested evidence was brought to show the likelihood of consulting the FCGs was high for car buyers for whom fuel consumption was important. 

Takeaways

Using a summary judgment motion to decide this class action suit on the merits represents the effective use of a proportional procedure where there is simply no genuine issue for trial. This case also provides helpful guidance where statements are made in consumer-facing materials that are consistent with or approved by government regulation. It defies common sense to believe a representation that is approved by regulation could then be considered false or misleading under the federal Competition Act or provincial consumer protection legislation.

The author wishes to thank Mohammed M’Hiri, law student, for his help in preparing this legal update.