COURT FILE NO.: 09-CV-381919CP
DATE: February 1, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
TIM MAGILL
Plaintiff
– and –
EXPEDIA, INC. and EXPEDIA CANADA CORPORATION
Defendants
Henry Juroviesky and Eli Karp for the Plaintiff
Jeffrey S. Leon and Eric R. Hoaken for the Defendants
HEARD: January 15-17, 2013
PERELL, J.
REASONS FOR DECISION
I. INTRODUCTION
[1] Pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. C.6, Tim Magill, who lives in Collingwood, Ontario, brings this motion to certify a class action against: (a) Expedia Canada Corp., a Canadian company with offices in in Toronto, Ontario; and (b) Expedia, Inc., a U.S. corporation, headquartered in Bellevue, Washington. Expedia, Inc. is Expedia Canada`s parent corporation.
[2] The action is brought on behalf of 1,500,000 Canadian customers that annually book hotel rooms on the www.expedia.ca web-site. At the core of the proposed class is the allegation that unbeknownst to its customers, in making hotel bookings, Expedia Inc. wrongfully charges services fees for which it is not entitled.
[3] For the Reasons that follow I certify a breach of contract claim as a class proceeding against Expedia, Inc. I do not certify a class action as against Expedia Canada.
II. EVIDENTIARY BACKGROUND
[4] Mr. Magill supported his motion for certification by delivering: (a) his own affidavits dated February 23, 3001 and December 18, 2011; (b) affidavits from Adrian Karoly dated February 23, 2011 and December 22, 2011. Mr. Karoly is the principal of Prism Economic Consulting Inc., which specializes in economic damage quantification. He has a MBA and is also a Chartered Financial Analyst; and (c) an affidavit from Aaron Hershtal dated February 24, 2011. Mr. Hershtal is an Associate of Juroviesky LLP, Mr. Magill’s proposed Class Counsel.
[5] Mr. Magill and Mr. Karoly were cross-examined on their affidavits. The Defendants also cross-examined Neil Forth and Tim Shkolnik, business associates of Mr. Magill.
[6] Expedia Canada and Expedia Inc. opposed this motion for certification by delivering: (a) affidavits from Sean Shannon sworn on August 22, 2011 and June 26, 2012. Mr. Shannon is the Vice-President and General Manager of Expedia Canada; and (b) an affidavit from Dr. Ruth M. Corbin of CorbinPartners Inc. sworn on August 19, 2011. CorbinPartners Inc. was retained to survey Canadian adults who had purchased hotel accommodations using an online travel company.
[7] Mr. Shannon was cross-examined on his affidavit.
III. FACTUAL BACKGROUND
1. Introduction to Factual Background
[8] I will discuss the factual background in four sections. In the first section, I shall discuss the application of the Consumer Protections Act, 2002. The discussion here, which is legal and not factual in its orientation, is necessary to understanding whether the claims of Mr. Magill and of the putative members are suitable for certification under the Class Proceedings Act, 1992.
[9] In the second section of the factual background, I shall describe the general factual background of the class action claims against Expedia Canada and Expedia Inc. The factual background is largely taken from assuming the facts set out in Mr. Magill’s Statement of Claim are true and from the summary of the facts as set out in the Defendant’s factum.
[10] In the third section of the factual background, I shall describe Mr. Magill’s individual claim and the circumstances that led to this proposed class action. In the third section, I will also discuss the procedural history of this action.
[11] In the fourth section of the factual background, I shall describe some additional facts that are relevant to determining whether the criteria for certification have been satisfied.
2. The Application of the Consumer Protection Act, 2002
[12] The Consumer Protection Act, 2002 applies to “consumer transactions” if the “consumer” or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place (s. 2(1)). A “consumer” is an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes (s.1). A “consumer transaction” means any act or instance of conducting business or other dealings with a consumer, including a consumer agreement (s.1).
[13] For the purposes of this proposed class action, it is worth emphasizing that the Ontario Act applies when the consumer is located in Ontario or the supplier is located in Ontario. The Ontario Act does not apply for a consumer outside Ontario transacting with a supplier outside Ontario, although it would apply with a supplier located in Ontario. (I foreshadow to note that Expedia Inc. is not located in Ontario.)
[14] Under the Consumer Protection Act, 2002, a “consumer agreement” is an agreement between a “supplier” and a consumer in which the supplier agrees to supply goods or services for payment (s.1). A “supplier” is a person who is in the business of selling, leasing or trading in goods or services or is otherwise in the business of supplying goods or services, and includes an agent of the supplier and a person who holds themself out to be a supplier or an agent of the supplier (s.1).
[15] Part II of the Consumer Protection Act, 2002 provides consumers with rights and warranties with respect to goods and services. Mr. Magill’s proposed class action is not based on Part II of the Act. Rather, Mr. Magill advances claims under Part III and Part IV of the Consumer Protection Act, 2002.
[16] Part III of the Act addresses “Unfair Practices” and provides that no person shall engage in an unfair practice (s.17). Section 14 (1) provides that it is an unfair practice for a person to make a false, misleading or deceptive “representation”. A “representation” is a representation, claim, statement, offer, request or proposal that is or purports to be: (a) made respecting or with a view to the supplying of goods or services to consumers, or (b) made for the purpose of receiving payment for goods or services supplied or purporting to be supplied to consumers (s.1). Section 14 (2) provides inclusive examples of false, misleading or deceptive representations.
[17] Under s. 18 of the Consumer Protection Act, 2002, which is found in Part III, if there is an unfair practice, subject to certain preconditions, a consumer may bring an action for the remedy of rescission of the consumer agreement. The consumer may also seek monetary remedies if rescission is not possible. The preconditions for any remedy under Part III are that the consumer must give notice within one year after entering into the agreement. If a consumer has delivered notice and has not received a satisfactory response within a prescribed period, the consumer may commence an action. If a consumer is required to give notice in order to obtain a remedy, a court may disregard the requirement to give the notice or any requirement relating to the notice if it is in the interest of justice to do so (s.18 (5)).
[18] Mr. Magill also advances claims under Part IV, which concerns the rights and obligations respecting specific consumer agreements including an “internet agreement,” which is a consumer agreement formed by text-based internet communications (s.20(1)) and a “remote agreement,” which is a consumer agreement entered into when the consumer and supplier are not present together.
[19] Before a consumer enters into an internet agreement, the supplier shall disclose the prescribed information to the consumer (s.38(1)). Under s. 40 (1) of the Act, a consumer may cancel an internet agreement at any time from the date the agreement is entered into until seven days after the consumer receives a copy of the agreement if: (a) the supplier did not disclose to the consumer the information required under subsection 38 (1); or (b) the supplier did not provide to the consumer an express opportunity to accept or decline the agreement or to correct errors immediately before entering into it. Under s. 40(2), a consumer may cancel an internet agreement within 30 days after the date the agreement is entered into, if the supplier does not comply with a requirement under section 39 (copy and content of internet agreement).
[20] There are also disclosure obligations and cancellation rights for a remote agreement (s.47).
[21] If a consumer has a right to cancel a consumer agreement under Part IV, the consumer may cancel the agreement by giving notice in accordance with section 92 (Form of Consumer Notice) of the Act (s.94(1)). If a supplier has charged a fee or an amount in contravention of this Act or received a payment in contravention of this Act, the consumer who paid the charge or made the payment may demand a refund by giving notice in accordance with section 92 within one year after paying the charge or making the payment (s.98 (1)). If a consumer is required to give notice in order to obtain a remedy, a court may disregard the requirement to give the notice or any requirement relating to the notice if it is in the interest of justice to do so (s.101).
[22] The Consumer Protection Act, 2002 envisions that consumers may bring class actions under the Class Proceedings Act, 1992. Section 8 of the Consumer Protection Act, 2002 provides that a consumer may commence a proceeding on behalf of members of a class under the Class Proceedings Act, 1992 or may become a member of a class in such a proceeding in respect of a dispute arising out of a consumer agreement despite any term or acknowledgment in the consumer agreement or a related agreement that purports to prevent or has the effect of preventing the consumer from commencing or becoming a member of a class proceeding.
3. The Customer and Consumer Claims against the Defendants
[23] Expedia Inc. is the leading online travel company in the world. It is an intermediary between travelers and travel providers, such as hotels and airlines. Around the world, there are at least 20 Expedia.com sites, including a site in Canada. Expedia, Inc. provides travel-related products including hotel reservations to Canadian customers through a Canadian based website: www.expedia.ca.
[24] Canadian customers book hotel reservations through Expedia Inc. primarily using the website. The customer pays for a reservation and for accommodation at a hotel listed on the website. As part of the booking process, customers enter into a contract. The customer must, as a condition of using www.expedia.ca, agree to comply with and be bound by the Terms of Use.
[25] Mr. Magill alleges that when a Canadian customer uses the Expedia website to reserve and pay for a hotel room, he or she enters into a standard form reservation agreement with Expedia, Inc. and with Expedia Canada. He pleads that the agreement is a “consumer agreement” or a “consumer transaction” under Ontario`s Consumer Protection Act, 2002, S.O. 2002, c. C.30.
[26] The Defendants agree that there is a contract between Expedia Inc. and the customer. To be more precise, the Defendants submit that there is always one and sometimes, there are two contracts between Expedia Inc. and the consumer. The first contract, which during argument was referred to as Contract A, is the contract that governs the use of the www.expedia.ca website. The Defendants submit that if pursuant to the Terms of Use, the customer completes a hotel booking, then the customer enters into Contract B, which is the contract that actually makes hotel accommodation available to the customer. The Defendants argue that Contract B does not carry forward the representations or terms of the Terms of Use.
[27] The Defendants assert that the Defendant Expedia Canada does not enter into any contracts. The Defendants submit that Expedia Canada’s sole function is to market and promote Expedia Inc. and www.expedia.ca in Canada.
[28] However, relying on the provisions in the standard form that indicate that "we", "us", "our" and "Expedia" refer to Expedia, Inc., a Washington corporation and/or our subsidiaries,” Mr. Magill argues that both Expedia Inc. and Expedia Canada are contracting parties.
[29] Mr. Magill pleads that the standard form agreement is comprised of the Reservation Agreement with its “Terms of Use” and the confirmation emails sent to the customer.
[30] For present purposes, the relevant provisions from the Expedia, Inc. Web Site Terms, Conditions and Notices (“Terms of Use”) are set out below, with my emphasis added:
AGREEMENT BETWEEN CUSTOMER AND EXPEDIA, INC.
Welcome to www.expedia.ca (the “Website”). This Website is provided solely to assist customers in gathering travel information, determining the availability of travel-related goods and services, making legitimate reservations or otherwise transacting business with travel suppliers, and for no other purposes. The terms "we", "us", "our" and "Expedia" refer to Expedia, Inc., a Washington corporation and/or our subsidiaries. The term "you" refers to the customer visiting the Website and/or booking a reservation through us on this Website, or through our customer service agents.
This Website is offered to you conditioned upon your acceptance without modification of all the terms, conditions, and notices set forth below (collectively, the "Agreement"). By accessing or using this Website in any manner, you agree to be bound by the Agreement. Please read the Agreement carefully. If you do not accept all of these terms and conditions, please do not use this Website. Be sure to return to this page periodically to review the most current version of the Agreement. We reserve the right at any time, at our sole discretion, to change or otherwise modify the Agreement without prior notice, and your continued access or use of this Website signifies your acceptance of the updated or modified Agreement.
USE OF THE WEBSITE As a condition of your use of this Website, you warrant that (i) you are at least 18 years of age; (ii) you possess the legal authority to create a binding legal obligation; (iii) you will use the Website in accordance with this Agreement; (iv) you will only use this Website to make legitimate reservations for you or for another person for whom you are legally authorized to act; ….
PREPAID HOTEL RESERVATIONS
You agree that your credit card will be charged by Expedia for the total reservation price, which includes the room rate displayed on the Website, plus tax recovery charges, and service fees.
You acknowledge that Expedia does not collect taxes for remittance to applicable taxing authorities. The tax recovery charge on hotel accommodations is a recovery of the estimated transaction taxes (e.g. sales and use, occupancy, room tax, excise tax, value added tax, etc.) that Expedia pays to the hotel supplier in connection with your hotel reservations. The hotel suppliers invoice Expedia for tax amounts. The Hotel suppliers remit applicable taxes to the applicable taxing jurisdictions. Expedia does not act as co-vendor with the supplier with whom we book or reserve our customer’s travel arrangements. Taxability and the appropriate tax vary greatly by location. The actual amounts paid by Expedia to the hotel suppliers may vary from the tax recovery charge amounts, depending upon the rates, taxability, etc. in effect at the time of the actual use of the hotel by our customers.
The service fees compensate Expedia for its costs in servicing your travel reservation. Our service fees vary based on the amount and type of hotel reservation.
LIABILITY DISCLAIMER
The information, software, products and services published on this Website may include inaccuracies or errors, including pricing errors. In particular the Expedia companies and Expedia affiliates do not guarantee the accuracy of, and disclaim all liability for any errors or other inaccuracies relating to the information and description of the hotel, air, cruise, car and other travel products displayed on the Website (including without limitation, the pricing, photographs, lists of hotel amenities, general product descriptions, etc.) ….
In no event shall the Expedia companies, the Expedia affiliates, and/or their respective suppliers be liable for any direct, indirect, punitive, incidental, special, or consequential damages arising out of, or in any way connected with, your access to, display of or use of this Website … whether based on a theory of negligence, contract, tort, strict liability or otherwise, and even if the Expedia companies, the Expedia affiliates and/or their respective suppliers have been advised of the possibility of such damages.
If, despite the limitation above, the Expedia Companies, the Expedia Affiliates or their respective suppliers are found liable for any loss or damage which arises out of or in any way connected with any of the occurrences described above, then the Expedia Companies, the Expedia Affiliates or their respective suppliers liabilities will in no event exceed, in the aggregate, the greater of (a) the service fees you paid to Expedia in connection with such transaction(s) on this Website or (b) One-Hundred U.S. Dollars (US$100.00.).
[31] It is the Defendants’ evidence that six versions of the www.expedia.ca Terms of Use existed between June 2007 and August 2011.
[32] Between June 2007 and October 2007, the Terms of Use did not refer to the tax recovery charge or service fee. The Terms of Use stated, "You shall be completely responsible for all charges, fees, duties, taxes, and assessments arising out of the use of this Web Site."
[33] In October 2007, the Terms of Use were revised and were stated as set out above.
[34] Between October 2007 and March 2011 the Terms of Use were amended but the paragraphs referred to above remained unchanged.
[35] In March 2011, the provisions relating to the tax recovery charge and service fee were revised. The March 2011 version of the Terms of Use stated:
Prepaid Hotel Reservations
You acknowledge that the Expedia Companies pre-negotiate certain room rates with hotel suppliers to facilitate the booking of reservations on your behalf. You also acknowledge that the Expedia Companies provide you services to facilitate such booking of reservations for a consideration (the "facilitation fee"). The room rate displayed on the Website is a combination of the pre-negotiated room rate for rooms reserved on your behalf by the Expedia Companies and the facilitation fee retained by them to compensate them for their services. You authorize the Expedia Companies to book reservations for the total reservation price, which includes the room rate displayed on the Website, plus tax recovery charges, and service fees. You agree that your credit card will be charged by the Expedia Companies for the total reservation price. Upon submitting your reservation request you authorize the Expedia Companies to facilitate hotel reservations on your behalf, including making payment arrangements with hotel suppliers.
… The tax recovery charges included in the total reservation price are a recovery by the Expedia Companies of the estimated taxes (e.g. sales and use, occupancy, room tax, excise tax, value added tax, etc.) that the hotel supplier will charge on the pre-negotiated room rate in connection with your hotel reservations. The hotel suppliers remit applicable taxes to the applicable taxing jurisdictions … Taxability and the appropriate tax rate vary greatly by location. The actual tax amounts paid by the Expedia Companies to the hotel suppliers may vary from the tax recovery charge amounts, depending upon the rates, taxability, etc. in effect at the time of the actual use of the hotel by our customers. We retain our service fees as additional compensation in servicing your travel reservation. Our service fees vary based on the amount and type of hotel reservation.
[36] Mr. Magill alleges that under what in the hospitality industry is known as the Merchant Model, Expedia Inc. and Expedia Canada have agreements with hotels for volume discount rates for rooms. Expedia then adds a markup and then markets the hotel rooms and charges for the rooms and for certain service charges. .
[37] The Defendants’ evidence is more precise. Their evidence is that Expedia Inc. uses two business models for hotel room booking: (1) the Agency Model; and (2) the Merchant Model.
[38] Under the Agency Model, the hotel bills the customer and pays Expedia Inc. a commission. Under the Agency Model, which is not the subject matter of this action, the customer does not pay Expedia Inc. Further, under the Agency Model, Expedia Inc. does not charge a fee on pre-packaged vacations, many of which include a hotel reservation. Customers contract directly with and pay the tour providers, and the tour provider pays Expedia Inc. a commission. A small proportion of hotel reservations booked during the proposed class period used the agency model.
[39] This proposed class action concerns Merchant Model transactions. Under the Merchant Model, Expedia Inc. has confidential agreements with hotels. The confidential information includes the net rate that Expedia Inc. pays the hotel for the customer's right to use a room. Under the Merchant Model, the customer pays Expedia Inc. when he or she makes a hotel reservation. Expedia Inc. is invoiced by the hotel after the hotel room is used and then pays the hotel.
[40] Under the Merchant Model, the amount paid by the customer is comprised of: (1) the room rate; (2) the tax recovery charge; and (3) the service fee. The room rate charged to the customer is comprised of the confidential rate (the net rate) charged to Expedia Inc. by the hotel plus a markup charged by Expedia Inc.
[41] Under the Merchant Model, the tax recovery charge is an estimate of the taxes that the hotel is required to collect and remit on the confidential net rate. The exact amount of taxes cannot be determined at the time of booking. Expedia Inc. uses the tax recovery charge to pay the hotel the taxes charged on the customer's hotel room after checkout. If the actual taxes exceed the tax recovery charge, then Expedia Inc. pays the hotel the difference without charging the customer.
[42] The Service Fee is an additional amount retained by Expedia Inc. to offset its costs in provide hotel content on its websites. The calculation of Expedia Inc.'s service fee is a highly confidential trade secret.
[43] Under the Merchant Model, for the purposes of invoicing the customers, the tax recovery charge and the service fee are combined into one charge. The Defendants state that if Expedia Inc. displayed the tax recovery charge separate from the service fee, customers and competitors could reverse-engineer the net rate and place Expedia Inc. in the position of potentially breaching confidentiality provisions in its agreements with the hotels.
[44] It was the Defendants’ evidence that customers booking hotel reservations through www.expedia.ca proceed through a "booking path". The nightly room rate, the combined tax recovery charge and service fee per night, and the total price are displayed on the website at least four times during the booking path before the customer arrives at the "Complete this Booking" stage.
[45] Once the customer clicks "Complete this booking", Expedia Inc. submits that Contract A is completed, although it may resume again the next time the customer signs on to www.expedia.ca.
[46] After the conclusion of Contract A, Expedia Inc. sends a reservation request to the hotel and charges the customer's credit card. Expedia Inc. submits that after the completion of Contract A, it immediately sends an email to the customer confirming the terms of Contract B, which is the contract that makes hotel accommodation available to the customer. The email states the hotel details, the check-in and check-out dates, the total number of nights and the room rate per night, the combined tax recovery charge and service fee and the total price.
[47] A customer wishing to cancel a hotel reservation before staying at the hotel is free to do so. Expedia Inc. does not charge fees for cancellations.
[48] Mr. Magill does not agree with Expedia Inc.’s two contract theory for hotel transactions brought about by consumers using www.expedia.ca. Mr. Magill pleads that the amount of the “Service Fee” charged by the Defendants includes a profit element that is not disclosed in the “Terms of Use,” and he pleads that Expedia Inc. does not disclose the amount of the taxes or the amount of the actual service fees associated with the transaction, thus not providing clarity as to the quantity of the Service Fee.
[49] He pleads that the Defendants do not disclose: (1) their Wholesale Rate, (2) the fact that taxes paid by Defendants are based on the Wholesale Rate, (3) the amount of the tax recovery charge,” or (4) the amount that Defendants pay to the hotel for taxes associated with the reservation. He pleads that the consumer cannot determine the tax recovery charge because he or she does not know if it is based on the Consumer Rate or the undisclosed Wholesale Rate.
[50] In paragraphs 27 and 29 of his Statement of Claim, Mr. Magill pleads:
The Plaintiff pleads that in doing so, the Defendants do not clearly portray the rate (Consumer or Wholesale) upon which transaction taxes, and thus the “Tax Recovery Charges”, are properly based. This enables Defendants to impose additional charges within the amalgamated “Tax and Service Fee” charge, by potentially misleading consumers to believe that Defendants calculate and recover taxes in an amount based on the higher Consumer Rate, as opposed to the lower Wholesale Rate for which they pay the hotels.
The Plaintiff pleads that by combining the “Tax Recovery Charge” and the “Service Fee,” they Defendants are also able to conceal the true nature, purpose and amount of each, while collecting a single excessive “Taxes and Services Fee” charge from customers.
[51] Mr. Magill pleads that the Defendants charged and Class Members paid a Taxes and Service Fees charge that is in excess of the combined total of: (a) the taxes actually paid; and (b) the costs actually incurred by Expedia Inc. More particularly, he pleads that the Defendants charged and Class Members paid an amount that was in excess of the combined total of: (a) the taxes imposed by the applicable taxing authorities and/or collected by hotels as described in the definition of the “Tax Recovery Charge” in the “Terms and Conditions”; and (b) the costs actually incurred by the Defendants in processing Class Members’ reservations as claimed by the definition of the “Service Fees” in the “Terms and Conditions”.
[52] Mr. Magill alleges that the Defendants breached their contract with consumers by collecting hidden additional profit within the “Service Fees. In his Statement of Claim, he gives an example of a $20 per night overcharge, and in paragraph 39 of his Statement of Claim, he pleads, with my emphasis added:
Therefore, pursuant to the Excessive Taxes and Fees Scheme, the Plaintiff pleads that the Defendants have breached their contractual obligations with respect to each and every customer from the inception of the relevant Class Period to the present because: (i) the Defendants collected a Tax Recovery Charge based upon the lower Wholesale Rate and did not represent this practice accurately or clearly to the customer, thus contravening the standard contract with consumers that warrants the nature and amount of the Tax Recovery Charge and (ii) the Defendants did not disclose the amount of taxes actually imposed by the taxing authorities and/or collected by the hotels, or the nature, purpose, or amount of the service fee, in contravention to the Defendants standard contract with consumers that warrant composition of the Service Fee as “the costs in servicing your travel reservation”.
[53] Mr. Magill also pleads that the Defendants, by carrying out the excessive taxes and fees scheme and by breaching the contracts with the Plaintiff and Class Members, the Defendants violated the duty of good faith and fair dealing.
[54] Mr. Magill alleges that the Defendants have violated Parts III and IV of Ontario`s Consumer Protection Act, 2002, and he seeks a refund of all monies received by the Defendants “in the course of conducting the Excessive Taxes and Fees Scheme.”
[55] He pleads that the Defendants are engaged in unfair practices in breach of s.17 (1) of the Consumer Protection Act, 2002, in that the representations are false, misleading or deceptive under section 14(1) and (2) of the Consumer Protection Act, 2002.
[56] Mr. Magill pleads that the Defendants by bundling the “Tax Recovery Charge” and the “Service Fees” into the combined “Taxes and Service Fees” that the Defendants failed to comply with sections 4, 5, 14(2)(14), 14(2)(15), 14(2)(16), 38(1), and 45 of the Consumer Protection Act, 2002, and sections 18, 19, 32(4), (5), & (6), 37(1), (4), (5), & (6) of the Act’s Regulations and that the Defendants failed to clearly itemize and disclose all applicable charges, taxes, and fees with sufficient particularity and clarity as required by the Act and Regulations.
[57] Further, Mr. Magill pleads and relies on Section 4 of the Consumer Protection Act, 2002 and Regulations 18 and 19 of the Act’s Regulations. He alleges that all agreements between the Class and the Defendants are either Internet Agreements or Remote Agreements and under the Act’s regulations, a supplier must separately itemize and accurately describe all charges and fees imposed by the supplier on the consumer, which he alleges the Defendants have failed to do. He alleges that pursuant to sections 5, 11, 20, and 21 of the Act and the Regulations, the Defendants are required to delineate with particularity and itemize all charges and taxes to the consumer, at the time of the formation of the consumer contract.
[58] Mr. Magill pleads that by not disclosing the true amount of the “Taxes and Services Fee” charge paid by customers and by assessing taxes and fees in excess of the amounts actually incurred in connection with the reservation, the Defendants have engaged in, and continue to engage in, unfair and deceptive acts and practices in violation of the Consumer Protection Act, 2002 and also s. 52 of Competition Act R.S.C. 1985, c. C-34 and common law duties. In paragraph 102 of this Statement of Claim, he pleads:
- The Plaintiff pleads that by not disclosing the true amount of the “Taxes and Services Fee” charge paid by customers, including the Plaintiff and putative Class Members defined herein, and by assessing taxes and fees in excess of the amounts actually incurred in connection with the reservation, the Defendants have engaged in, and continue to engage in, unfair and deceptive acts and practices in violation of the Consumer Protection Act, 2002, the Competition Act and/or common law duties.
[59] Pausing here in the discussion of the factual background to the proposed class action, paragraph 39, which is the essential breach of contract pleading in the Statement of Claim, is a pleading of breaches of express terms of the contract between all users of the website and both Defendants. Mr. Magill is not pleading implied terms, and in his statement of claim, he mentions implied terms only with respect to his claims for remedies under the Consumer Protection Act, 2002. I will return to this point below, but note here that some of the Defendants’ arguments against the certification of this class action are directed towards the problems associated with a class action based on a pleading of breach of implied terms in a contract.
[60] By way of remedies, Mr. Magill claims, among other things: orders directing compliance with the Competition Act and the Consumer Protection Act, 2002; rescission under the Consumer Protection Act, 2002; damages in the amount of $50 million; punitive damages in the amount of $5 million; $1 million for the costs of administering the plan of distribution; and a disgorgement of the Defendants’ profits.
[61] Mr. Magill pleads that as a result of the various contraventions of the Consumer Protection Act, 2002, the consumer agreements are not binding on the Plaintiff and the Class Members, and the class is entitled to the remedy of cancellation. Notwithstanding that the class members have already received the benefit of their hotel reservations, Mr. Magill pleads that the class members are entitled to refunds.
[62] He pleads by way of a waiver of tort the right to elect at the trial of the common issues to have damages assessed in an amount equal to the gross revenues earned by the Defendants, or the net income received by the Defendants as a result of their alleged misconduct. And he pleads that the Defendants have been unjustly enriched.
[63] Mr. Magill proposes the following class definition and class period:
“Class I members” means all persons in Canada who booked for personal, family or household use, a hotel reservation and/or any combination of automobile and flight reservations where a hotel reservation was a component of the reservation (“Reservation”) through Defendants’ website, and were assessed a “Tax Recovery Charge” and a “Service Fee” when purchasing the same, during the Class Period;
“Class II members” means all persons or entities in Canada, excluding Class I members, who booked a hotel reservation and/or any combination of automobile and flight reservations where a hotel reservation was a component of the reservation (“Reservation”) through Defendants’ website, and were assessed a “Tax Recovery Charge” and a “Service Fee” when purchasing the same, during the Class Period;
“Class Period” as it relates to claims against Expedia Canada Corporation is from June 26, 2007 to the date of certification, and as it relates to claims against Expedia, Inc., is from July 28, 2008 to the date of certification.
4. Mr. Magill’s Personal Use of Expedia and the Procedural History of this Action
[64] Mr. Magill is a director of global business development for Axcess Canada Inc., which provides software to the financial services industry. Between June 2007 and August 2011, he booked fourteen hotel reservations through Expedia Inc. Three hotel reservations were cancelled. One reservation was booked for his son almost two years after the commencement of this action. It appears that but for the transaction for his son, all of Mr. Magill’s reservations were for business travel. Business travel is not a consumer transaction under the Consumer Protection Act, 2002.
[65] Sometime before June 2009, while attempting to reconcile his GST/HST for his personal and business travel expenses, Mr. Magill discovered that the Taxes and Services Fees charged by Expedia Inc. on hotel reservations did not reconcile. He believed that he had been unlawfully charged undisclosed profits and hidden fees.
[66] On June 26, 2009, Mr. Magill issued a statement of claim against Expedia Canada and “expedia.ca.”, which is not a legal entity.
[67] On July 28, 2010, Mr. Magill delivered materials in support of a motion for leave to amend the statement of claim to, among other things, add Expedia Inc. as a defendant. A draft amended statement of claim was included in those materials. In September 2010, The Defendants brought a cross-motion to strike parts of Magill's pleadings. They did not attack the claim for breach of contract or for waiver of tort.
[68] On September 24, 2010, I made various orders including striking out the claim against Expedia.ca and adding Expedia, Inc. as a party defendant. I ordered that the the definition of the class period should be struck out with leave to amend to plead: (a) a class period as against Expedia Canada with a start date of June 26, 2007 and an end date as of the date of certification of the action as a class proceeding; and (b) a class period as against Expedia, Inc. with a start date of July 28, 2008 and an end date as of the date of certification of the action as a class proceeding.
[69] I ordered that the pleas of breaches of the Consumer Protection Act, 2002, shall be struck out, but Mr. Magill was granted leave to deliver a fresh pleading to plead violations of the Act against both Expedia, Inc. and Expedia Canada.
[70] In January 2011, Magill served a Fresh as Amended Amended Statement of Claim omitting all references to the Consumer Protection Act, 2002.
[71] On March 8, 2012, Mr. Magill served a Fresh as Amended Amended Amended Statement of Claim reinserting claims for breach of the Consumer Protection Act, 2002. Three types of Consumer Protection Act, 2002 claims are asserted: (1) unfair practices (Part III); (2) failures to disclose prescribed information (Part IV); and (3) illegal charges (Part IV, s. 98). All these claims are based on the same alleged inadequacy of disclosure.
[72] It appears that five of Mr. Magill’s reservations were made after the commencement of this action and that for all the reservations booked by Mr. Magill, he personally is out-of-pocket for only one, which was made after the commencement of the action. The other bookings were business travel for which Mr. Magill was reimbursed by his business associates. For the transaction for which he is out of pocket, the Terms of Use language referred to in the Statement of Claim had been revised such that the wording upon which he seeks to base all of his proposed claims no longer appeared in the Terms of Use.
5. Additional Background Facts
[73] In the real world outside of the pleaded world of Mr. Magill’s Statement of Claim, Expedia Canada does not enter into contracts with customers, and it is not a supplier under the Consumer Protection Act, 2002. There is no basis in fact for customers to advance contract claims against Expedia Canada.
[74] Mr. Magill did not lead any evidence to dispute the Defendants' factual submission that Expedia Inc. is the only contracting party with consumers in Canada and that Expedia Canada’s role is limited to marketing and promoting Expedia Inc.’s business and www.expedia.ca within Canada.
[75] It was not disputed that Expedia Canada is not a "supplier" under the Consumer Protection Act, 2002, i.e., a person in the business of selling, leasing or trading in goods or services or is otherwise in the business of supplying goods or services. Notwithstanding how the Terms of Use might be pleaded and interpreted, the factual reality is that the sole contracting party with the customer using www.expedia.ca is Expedia, Inc.
[76] This additional background fact has significant practical consequences for Mr. Magill’s proposed class action. Assuming that he has pleaded a cause or causes of action against Expedia Canada, which is the first criterion for certification, Mr. Magill cannot satisfy the identifiable class, common issues, and preferable procedure criteria against Expedia Canada with respect to the causes of action, because there is no basis in fact to satisfy these criteria. Thus, no claims can be certified as against Expedia Canada and, practically speaking, it is out of this proposed class action.
[77] I foreshadow to say that the absence of Expedia Canada also has consequences to the proposed class action as against Expedia Inc. Among other things, the absence of Expedia Inc. will influence the class definition, the common issues, and the preferable procedure criteria in the proposed class action against Expedia Inc.
[78] Another significant additional fact is that although Expedia Inc. is a supplier for the purposes of the Consumer Protection Act, 2002, there is no basis in fact to establish that it is a supplier located in Ontario. Since July 28, 2008, Expedia Inc.'s principal executive office has been located in Bellevue, Washington and each and every one of Expedia Inc.'s directors and officers has been a resident of the United States. Expedia Inc.'s central management and control has been based in Bellevue, Washington, and Expedia Inc. has not had any employees based in Canada. The Board of Directors of Expedia Inc. has not met in Ontario, and the annual meeting of the shareholder of Expedia Inc. has not been held in Ontario. Expedia Inc. has not filed or paid income taxes in Ontario. It has not owned, leased or rented any real estate or had any other assets in Ontario, and Expedia Inc. was not a "reporting issuer" under the Ontario Securities Act.
IV. CERTIFICATION - INTRODUCTION
[79] I turn now to the question of whether Mr. Magill’s action should be certified as a class action under the Class Proceedings Act, 1992.
[80] Pursuant to s. 5(1) of the Class Proceedings Act, 1992, the court shall certify a proceeding as a class proceeding if: (a) the pleadings disclose a cause of action; (b) there is an identifiable class; (c) the claims of the class members raise common issues of fact or law; (d) a class proceeding would be the preferable procedure; and (e) there is a representative plaintiff who would adequately represent the interests of the class without conflict of interest and who has produced a workable litigation plan.
[81] For an action to be certified as a class proceeding, there must be a cause of action, shared by an identifiable class from which common issues arise that can be resolved in a fair, efficient, and manageable way that will advance the proceeding and achieve access to justice, judicial economy, and the modification of behaviour of wrongdoers: Sauer v. Canada (Attorney General), 2008 43774 (ON SC), [2008] O.J. No. 3419 (S.C.J.) at para. 14, leave to appeal to Div. Ct. refused, 2009 2924 (ON SCDC), [2009] O.J. No. 402 (Div. Ct.).
[82] On a certification motion, the question is not whether the plaintiff's claims are likely to succeed on the merits but whether the claims can appropriately be prosecuted as a class proceeding: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 16.
[83] The test for certification is to be applied in a purposive and generous manner, to give effect to the important goals of class actions – providing access to justice for litigants; promoting the efficient use of judicial resources; and sanctioning wrongdoers to encourage behaviour modification: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at paras. 26-29; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at paras. 15 and 16.
[84] The purpose of a certification motion is to determine how the litigation is to proceed and not to address the merits of the plaintiff's claim; there is to be no preliminary review of the merits of the claim: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at paras. 28-29.
V. THE CAUSE OF ACTION CRITERION
[85] The first criterion for certification is whether the plaintiff’s pleading discloses a cause of action.
[86] The “plain and obvious” test for disclosing a cause of action from Hunt v. Carey Canada, 1990 90 (SCC), [1990] 2 S.C.R. 959 is used to determine whether a proposed class proceeding discloses a cause of action for the purposes of s. 5 (1)(a) of the Class Proceedings Act, 1992: Anderson v. Wilson (1999), 1999 3753 (ON CA), 44 O.R. (3rd) 673 (C.A.) at p. 679, leave to appeal to S.C.C. ref’d, [1999] S.C.C.A. No. 476; 176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 2002 6199 (ON SC), 62 O.R. (3d) 535 (S.C.J.) at para. 19, leave to appeal granted, 2003 36393 (ON SCDC), 64 O.R. (3d) 42 (S.C.J.), aff’d (2004), 2004 16620 (ON SCDC), 70 O.R. (3d) 182 (Div. Ct.).
[87] Where a defendant submits that the plaintiff’s pleading does not disclose a reasonable cause or action, to succeed in having the action dismissed, the defendant must show that it is plain, obvious, and beyond doubt that the plaintiff cannot succeed in the claim: Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 4831 (ON CA), 164 D.L.R. (4th) 257 (Ont. C.A.). Matters of law that are not fully settled should not be disposed of on a motion to strike: Dawson v. Rexcraft Storage & Warehouse Inc., supra, and the court's power to strike a claim is exercised only in the clearest cases: Temelini v. Ontario Provincial Police (Commissioner) (1990), 1990 7000 (ON CA), 73 O.R. (2d) 664 (C.A.).
[88] In assessing the cause of action or the defence, no evidence is admissible and the court accepts the pleaded allegations of fact as proven, unless they are patently ridiculous or incapable of proof; A-G. Canada v. Inuit Tapirisat of Canada, 1980 21 (SCC), [1980] 2 S.C.R. 735; Canada v. Operation Dismantle Inc., 1985 74 (SCC), [1985] 1 S.C.R. 441; Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1 (C.A.); Folland v. Ontario (2003), 2003 52139 (ON CA), 64 O.R. (3d) 89 (C.A.); Canadian Pacific International Freight Services Ltd. v. Starber International Inc. (1992), 1992 15412 (ON SC), 44 C.P.R. (3d) 17 (Ont. Gen. Div.) at para. 9.
[89] Generally speaking, the case law imposes a very low standard for the demonstration of a cause of action, which is to say that, conversely, it is very difficult for a defendant to show that it is plain, obvious, and beyond doubt that the plaintiff cannot succeed with the claim.
[90] For the purposes of certification, Mr. Magill advances claims or causes of action for breach of contract, unjust enrichment, and contravention of the Consumer Protection Act, 2002 and the Competition. He claims a variety of remedies.
[91] The Defendants acknowledge that it is not plain and obvious that the causes of action asserted in the Statement of Claim are incapable of success, except Mr. Magill's claim that the Defendants breached Part IV of the Consumer Protection Act, 2002 (failure to disclose prescribed information), which the Defendants submit is incapable of success as pleaded.
[92] Moreover, in what might be the called technical arguments, the Defendants assert that the Statement of Claim fails to satisfy the low threshold of s. 5(1)(a) because it contains two radical defects; namely: (1) the pleading impermissibly relies on or asserts "enterprise liability"; and (2) it is so imprecise and internally inconsistent that the Defendants do not know the "precise nature" of the claims against them.
[93] I disagree with the Defendants’ technical arguments. The fallacy in these arguments is that the Defendants mistakenly describe Mr. Magill’s pleading and then fain not to understand the nature of the claims being made against them.
[94] Mr. Magill is not relying on enterprise liability. His basic case is that he and class members have privity of contract with Expedia, Inc. and its subsidiary Expedia Canada and that the Defendants have breached their contracts with customers and also contravened the Consumer Protection Act, 2002 and the Competition Act.
[95] In Martin v Astrazeneca Pharmaceuticals Plc, 2012 ONSC 2744 at paras. 117-127, Justice Horkins explained that "as a matter of pleading, it is inappropriate to simply lump together the … defendants." I agree with Justice Horkins, but in the case at bar, it is the Defendants’ Terms of Use on the Expedia website that include both Expedia Inc. and its subsidiaries in a document that everybody agrees is a contract.
[96] I appreciate that the Defendants argue that as a matter of contract interpretation, only the consumer and Expedia Inc. are contracting parties and that the Expedia Affiliates and suppliers are third party beneficiaries, but that argument is a matter of defence and does not negate what is an apparent breach of contract claim against both Expedia Canada and Expedia Inc.
[97] Mr. Magill’s pleading is not a thing of beauty. There are inconsistencies in the pleading, but a party may make inconsistent allegations in a pleading, where the pleading makes it clear that they are being pleaded in the alternative: rule 25.06(4). The Defendants are being ingenuous in asserting that they do not understand the claims being made against them.
[98] I, therefore, conclude that there is no merit to the Defendants’ technical arguments.
[99] With respect to the alleged substantive defect in Mr. Magill’s Statement of Claim, as noted above, the Defendants assert that his Part IV claims under the Consumer Protection Act, 2002 are incapable of success as pleaded.
[100] In his Statement of Claim, Mr. Magill alleges that the Defendants breached Part IV of the Act by failing to disclose certain prescribed information to the consumer. The Defendants argue that as a matter of law, breaches of Part IV of the Consumer Protection Act, 2002 only become actionable after certain actions are taken by the consumer. They argue that if a supplier fails to disclose the prescribed information, then a consumer may cancel an internet or remote agreement until seven days after the consumer received a copy. The consumer must give notice of his or her intention to cancel the contract. The supplier must then refund any payment made under the contract within fifteen days.
[101] The Defendants submit that it is only if the supplier fails to refund the payment, that the consumer may commence an action. The Defendants submit that Mr. Magill does not plead that he or putative class members notified the Defendants of the intention to cancel a Contract. They submit that he has not pleaded that the Defendants failed to refund him or class members any amount. They also do not plead reliance on the provisions of the Consumer Protection Act where the court may waive the notice requirements of the Act.
[102] With the necessary pre-conditions to the statutory cause of action missing, the Defendants submit, therefore, that the claims relating to Part IV of the Consumer Protection Act, 2002 are incapable of success. I agree, and I also think that in the case at bar it would not be in the interests of justice to waive the notice requirements for these claims, which are really about some possible overcharging for expenses incurred by Expedia Inc. and not about consumers missing an opportunity to rescind or cancel the hotel bookings they were prepared to pay for and which they in fact enjoyed.
[103] Thus, I agree with the Defendants’ substantive argument about Part IV of the Consumer Protection Act, 2002, and I conclude that this particular claim as pleaded does not satisfy the cause of action criterion of the Class Proceedings Act.
[104] The Defendants could have made similar arguments about Mr. Magill’s Part III Consumer Protection Act, 2002 claims, but rather they attacked the Part III and IV claims as not raising common issues and as failing the preferable procedure criterion, which are topics I will consider later.
[105] Thus, with an exception for the Part IV of the Consumer Protection Act, 2002 claim, Mr. Magill satisfies the first criterion for certification of his action.
VI. THE IDENTIFIABLE CLASS CRITERION
1. The Identifiable Class Criterion - Introduction
[106] In defining class membership, there must be a rational relationship between the class, the causes of action, and the common issues, and the class must not be unnecessarily broad or over-inclusive: Pearson v. Inco Ltd. (2006), 2006 913 (ON CA), 78 O.R. (3d) 641 (C.A.) at para. 57, rev'g 2004 34446 (ON SCDC), [2004] O.J. No. 317 (Div. Ct.), which had aff'd [2002] O.J. No. 2764 (S.C.J.).
[107] The definition of an identifiable class serves three purposes: (1) it identifies the persons who have a potential claim against the defendant; (2) it defines the parameters of the lawsuit so as to identify those persons bound by the result of the action; and (3) it describes who is entitled to notice: Bywater v. Toronto Transit Commission, [1998] O.J. No. 4913 (Gen. Div.).
[108] The Defendants argue that Mr. Magill fails to satisfy the second criterion for certification for five reasons: (1) there is no evidence of two or more putative class members; (2) the class definition is unworkable; (3) the definition of Class I members is overly broad; (4) the definition of the class period is overly broad; and (5) the definition is defective because some proposed class members will be persons who book the hotel reservation but who do not actually pay because they have been reimbursed by others.
[109] With respect to the fifth objection to the class definition, Mr. Magill is an example of a person who the Defendants say should not be a class member, because except for the hotel reservation he made for his son, which they submit is not actionable, he is not out-of-pocket for the reservations he made using www.expedia.ca.
2. The Technical Objections to Mr. Magill’s Proposed Class Definition
[110] Four of the Five Objections to Mr. Magill’s proposed class definition may be described as technical objections, and it is convenient to address these objections together. The non-technical objection is the submission that there is there is no evidence of two or more putative class members. I will discuss that objection later.
[111] Mr. Magill’s proposed class definition is set out earlier in this judgment, and structurally there are three parts to it. The first part is meant to bring into the class those persons with Consumer Protection Act, 2002 claims. The second part of the definition is meant to bring into the class those persons with breach of contract and unjust enrichment claims. It should be observed that those persons with Consumer Protection Act, 2002 claims are a subset of persons with breach of contract and unjust enrichment claims. The third part of the class definition provides the class period or the temporal aspects of the class definition.
[112] Much of the Defendants’ technical attacks against the proposed class definition and for that matter their strongest attacks are against the first part of the definition. The Defendants submit that the proposed definition of "Class I members" is overly broad because, as already noted above, the Part IV claims under the Consumer Protection Act, 2002 are untenable and there is no basis in fact for claims against Expedia Canada.
[113] Although Ontario’s Consumer Protection Act, 2002 does apply to contracts between Expedia Inc. (as a supplier) and consumers, it application is confined to consumers in Ontario. Only Class I members located in Ontario when the transaction took place can advance claims against Expedia Inc. under Ontario’s Consumer Protection Act, 2002. Thus, for example, a consumer in Saskatchewan does not qualify to make an Ontario Consumer Protection Act, 2002 claim.
[114] If there were viable claims against Expedia Canada, which is located in Ontario, then consumers in provinces outside Ontario could assert those claims and rely on Ontario’s Consumer Protection Act, 2002. However, it was conceded by Mr. Magill that only Ontario resident consumers can rely on Ontario’s Consumer Protection Act, 2002 to make claims against Expedia Inc.
[115] As explained above, Expedia Canada does not contract with customers. With no viable claims against Expedia Canada, the first part of the class definition fractures the solidarity of class members’ advancing Consumer Protection Act, 2002 claims. All class members will have breach of contract and unjust enrichment claims, but many class members will not have Consumer Protection Act, 2002 claims because the class member resides outside Ontario or because the class member is not a consumer; i.e. he or she is not a person “in Canada who booked for personal, family or household use, a hotel reservation and/or any combination of automobile and flight reservations where a hotel reservation was a component of the reservation.”
[116] There is also the problem with the first part of the proposed class definition that apart from the fact that not all class members with breach of contract claims have Consumer Protection Act, 2002 claims, those who have both a breach of contract claim and a Consumer Protection Act, 2002 gain little from the Consumer Protection Act, 2002 claim, which throws up numerous individual issues.
[117] I agree with the Defendants’ submission that a class proceeding would not be the preferable procedure for the more difficult and largely redundant Consumer Protection Act, 2002 claims. To advance a Consumer Protection Act, 2002 claim, a class member must qualify himself or herself as a consumer and as qualified to make the complaints and obtain the remedies available under the Act. For instance, a customer who booked a hotel in New York City would have to prove that he or she was travelling to New York for a vacation and not for business purposes. To the extent that the alleged breaches of the Consumer Protection Act, 2002 do not overlap with the breach of contract and unjust enrichment claims, the individual issues are more contentious and more difficult to prove .
[118] Further, there is the problem that the Consumer Protection Act, 2002 claims were removed and then reasserted as a cause of action in March 2011, which arguably presents a limitation period problem for claims before March 2009, when Expedia Inc. was added as a party defendant.
[119] Most of the problems associated with the Consumer Protection Act, 2002 or similar problems exist with respect to Mr. Magill’s Competition Act claims.
[120] The proper response to these problems is not to certify the first part of the proposed class definition but to certify the second part of the definition with slight modifications. The result is the following class definition, that satisfies the test for a suitable class definition:
“Class Member” means all persons or entities in Canada who during the “Class Period” booked a hotel reservation and/or any combination of automobile and flight reservations where a hotel reservation was a component of the reservation (“Reservation”) through Expedia Inc.’s website, and were assessed a “Tax Recovery Charge” and a “Service Fee.”
“Class Period” is from July 28, 2008 to February 28, 2011.
[121] The end date for the Class Period has been shortened from the date of certification to February 28, 2011 to take into account the fact, noted above, that in March 2011, the Terms of Use were revised.
[122] I see no merit in what I will label the Defendants’ “out-of-pocket argument,” which is that the class definition is over broad because it includes persons who book hotel reservations but are reimbursed for the cost of using www.expedia.ca by others, including their employers, business partners, or family members.
[123] Expedia Inc.’s Terms of Use require as a condition of the use of the Website that the user warrant that: (a) he or she possesses the legal authority to create a binding legal obligation; (b) he or she will use the Website in accordance with the Agreement; and (c) he or she will only use the Website to make legitimate reservations for the user or for another person for whom the user is legally authorized to act. It is envisioned that users of the website will make bookings for others. It is, therefore, quite appropriate to include as class members persons who have been reimbursed by another person for whom the user is legally authorized to act.
3. The Numerousity and Social Utility Argument against Mr. Magill’s Proposed Class Definition
[124] In the United States under Rule 23a of United States Federal Rules of Civil Procedure numerousity is a prerequisite to a class action. Rule 23a (1) provides that “one or more members of a class may sue or be sued as representative parties on behalf of all members only if the class is so numerous that joinder of all members is impracticable; …” In contrast, in Ontario, s. 5 (1)(b) only requires that “there is an identifiable class of two or more persons that would be represented by the representative plaintiff.” However, because the size of the class is relevant to the policy goals of advancing access to justice and judicial economy, it is proper to consider the size of the class when deciding whether the grant certification: Lau v. Bayview Landmark Inc., [1999] O.J. No. 4060 (S.C.J.) at para. 26; Ward-Price v. Mariners Haven Inc., [2002] O.J. No. 4260 (S.C.J.); Paron v. Alberta (Environmental Protection), [2006] A.J. No. 573 (Q.B.) at paras. 102-12.
[125] The Defendants submit that in the case at bar there is no evidence that anyone other than Mr. Magill seeks to assert a claim against the Defendants, and they rely on a line of authority that establishes the proposition that the plaintiff has to establish there are enough persons willing to pursue a claim to make the whole process of a class proceeding worthwhile. See: Zicherman v. Equitable Life Insurance Co. of Canada 2000 50952 (ON SC), [2000] O.J. No. 5144 (S.C.J.); Bellaire v. Independent Order of Foresters, 2004 95288 (ON SC), [2004] O.J. No. 2242 (S.C.J.); Dumoulin v. Ontario, [2005] O.J. No. 3961 (S.C.J.) and [2006] O.J. No. 1233 (S.C.J.); Ducharme v. Solarium de Paris Inc., 2007 14346 (ON SC), [2007] O.J. No. 1659 (S.C.J.), aff’d [2008] O.J. No. 1558 (Div. Ct.); Chartrand v. General Motors Corp., 2008 BCSC 1781; Poulin v. Ford Motor Co. of Canada, 2008 54299 (ON SCDC), [2008] O.J. No. 4153 (Div. Ct.); Nadolny v. Peel (Region), [2009] O.J. No. 4006 (S.C.J.); Singer v. Schering-Plough Canada Inc., 2010 ONSC 42, [2010] O.J. No. 113 (S.C.J); Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744; Keatley Surveying Ltd. v. Teranet Inc., 2012 ONSC 7120.
[126] This line of authority establishes that class action legislation is designed to provide an effective means of resolving situations where two or more people have the same or similar complaints, not to create complaints where none exist, and there must be some evidence that two or more people have a complaint that they would wish to have prosecuted: Chartrand v. General Motors Corp., supra at paras. 44-68; Singer v. Schering-Plough Canada Inc., supra at paras. 119-136; Martin v. Astrazeneca Pharmaceuticals PLC, supra at paras. 203-06; Keatley Surveying Ltd. v. Teranet Inc., 2012 ONSC 7120 at paras.203-206. There must be an air of reality between the plaintiff's claim and the proposed class and an indication that the proposed class has claims that they would wish to have prosecuted: Samos Investments Inc. v. Pattison, 2001 BCSC 1790, [2001] B.C.J. No. 2702 (S.C.), aff’d, [2003] B.C.J. No. 348 (C.A.); Chartrand v. General Motors Corp., supra at paras. 44-68; MacFarlane v. United Parcel Service Canada Ltd., 2009 BCSC 740, [2009] B.C.J. No. 1112 (S.C.).
[127] In Bellaire v. Independent Order of Foresters, supra at para. 33, Justice Nordheimer stated:
In my view, before the extensive process of a class proceeding is engaged, it ought to be clear to the court that there is a real and subsisting group of persons who are desirous of having their common complaint (assuming there to be a common complaint) determined through that process. The scale and complexity of the class action process ought not to be invoked at the behest, and for the benefit, of a single complainant.
[128] In Taub v. Manufacturers Life Insurance Co. (1988), 1998 14853 (ON SC), 40 O.R. (3d) 379 (Gen. Div.), Justice Sharpe stated at para. 5.
In the case at bar, there is no evidence that the harm complained of by the representative plaintiff is the subject of concern on the part of anyone else. The nature of the harm disclosed by the plaintiff's affidavit is not of a kind that makes it at all obvious that it would have affected anyone else. … On the basis of such a record, I fail to see how I am in a position to make the determinations I am required to make before certifying this action as a class proceeding. Accordingly, I dismiss the motion on this ground …
[129] In Lambert v. Guidant Corp., 2009 23379 (ON SC), [2009] O.J. No. 1910 (S.C.J.), Justice Cullity stated at paras. 97-99:
In the submission of defendants' counsel, the class proposed by the plaintiffs should be rejected on the ground that there was no evidence that anyone other than the plaintiffs has a genuine interest in trying the merits of the claims asserted by them and, also, because the class definition is "grossly broad and over-inclusive".
In some cases, judges have insisted that as a requirement for certification the court must be satisfied that the plaintiffs are not the only members of the class who wish to enforce the claims that the plaintiffs seek to assert on their behalf. In Poulin v. Ford Motor Co of Canada, [2006] O.J. No. 4625 (Div. Ct.), at para 55, MacDougall J. stated:
In my view, before the extensive process of a class proceeding is engaged, it ought to be clear to the court that there is a real and subsisting group of persons who are desirous of having their common complaint (assuming there to be a common complaint) determined through that process. The scale and complexity of the class-action process ought not to be invoked at the behest, and for the benefit, of a single complainant.
- In other cases, courts have not insisted on evidence of a group interest in the enforcement of the claims, and I do not understand the above statement in Poulin to require evidence in all cases that the plaintiffs are not the only persons interested in advancing claims: Cassano v. Toronto-Dominion Bank (2007), 2007 ONCA 781, 87 O.R. (3d) 401 (C.A.) is an example of a case in which a proceeding was certified notwithstanding the absence of any evidence of interest by putative class members other than the plaintiffs. In such cases, it seems that the court may be prepared to presume from the nature of the claims and the circumstances of a particular case that the plaintiffs are likely to have the support of other class members.
[130] In the case at bar, it emerged during argument that the Defendants were urging on the court the approach that the requirement in s. 5 (1)(b) of the Class Proceedings Act, 1992 that there is an identifiable class of two or more persons be used as a gatekeeper mechanism to filter out class actions that would have no social utility as demonstrated by the fact that there appeared to be none or too few putative class members interested in achieving access to justice or alternatively in achieving the behaviour modification of the defendant. The Defendants submitted that the evidentiary record in the case at bar demonstrated the phenomenon that the putative class members had no interest in pursuing claims against Expedia Inc., and, therefore, Expedia Inc. should not be required to undergo the extensive process of defending a class action.
[131] However, the approach suggested by the Defendants about the requirement in s. 5 (1)(b) that there is an identifiable class of two or more persons is problematic. Social utility is not a juristic element and is more a matter of policy or political debate. Measuring social utility would be difficult and it would be inconsistent with the design of the certification criteria, which are not designed to probe the social utility of any particular class proceeding any more than they are to probe the merits of the proposed class action.
[132] Using numerousity as a measure of social utility is also unreliable. Particularly where putative class members have very small individual claims, the social utility of the class action becomes debatable, because it will be behaviour modification that will be the rationale for the class action. Where the claims are small, the number of interested claimants provides little reliable information. From an access to justice prospective class members may be indifferent to the class action; indeed, putative class members may have good reason to be indifferent because even their small claims may be distributed cy-pres.
[133] Also problematic is that were the court to vigorously impose numerosity as a precondition to the certification of a class action, one can anticipate that plaintiffs and defendants will, practically speaking, conduct campaigns for supporters or opponents to certification of the class action. In this regard, it would appear that that is what the Defendants attempted to do in the case at bar by commissioning survey evidence from Dr. Ruth M. Corbin about the attitudes of putative class members. However, the certification of a class action is not an election campaign, but a juridical exercise of determining whether certain criteria specified by the Legislature have been satisfied.
[134] It must be kept in mind that the certification criteria are designed to filters out claims which as a matter of procedure are not suitable for a class action. The certification criteria do not involve an evaluation of the merits or likely merits of the plaintiff’s claim. Although the certification criteria may involve some analysis of the social utility of a class action because of the underlying policies of promoting access to justice and of encouraging behaviour modification, and although as the line of cases mentioned above demonstrate, the criteria will from time to time filter out a class action that has no social utility, the criteria remain procedural and juridical, and the pre-conditions to certification are not meant to determine the merits or the social utility of the proposed class action.
[135] In my opinion, Mr. Magill’s claim is not idiosyncratic, and he has done enough to show that there is or that there easily could be a class of two or more persons who would be interested in pursuing claims against Expedia Inc. Although it remains to be seen whether it has any merit, Mr. Magill’s action is not a fanciful breach of contract claim without an air of reality.
4. Conclusion re the Class Definition Criterion
[136] I conclude that Mr. Magill’s proposed class action satisfies the second criterion for certification by showing an identifiable class for breach of contract and unjust enrichment claims.
VII. THE COMMON ISSUES CRITERION
[137] For an issue to be a common issue, it must be a substantial ingredient of each Class member's claim and its resolution must be necessary to the resolution of each Class member's claim: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 at para. 18.
[138] The fundamental aspect of a common issue is that the resolution of the common issue will avoid duplication of fact-finding or legal analysis: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at para. 39; McCracken v. Canadian National Railway Co. 2012 ONCA 445 at para. 183.
[139] With regard to the common issues, "success for one member must mean success for all. All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent." That is, the answer to a question raised by a common issue for the plaintiff must be capable of extrapolation, in the same manner, to each member of the class: Shopping Centres Inc. v. Dutton, supra at para. 40; Ernewein v. General Motors of Canada Ltd., 2005 BCCA 540 at para. 32; Merck Frosst Canada Ltd. v. Wuttunee, 2009 SKCA 43 at paras. 145-46 and 160; McCracken v. Canadian National Railway Co., supra, at para. 183.
[140] Common issues should not be framed in overly broad terms. It does not serve the ends of either fairness or efficiency to certify an action on the basis of issues that are common only when stated in the most general terms because inevitably such an action would break down into inefficient individual proceedings: Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184 at para. 29; McCracken v. Canadian National Railway Co.2012 ONCA 445 at para. 183.
[141] An issue is not a common issue if its resolution is dependent upon individual findings of fact that would have to be made for each class member: Fehringer v. Sun Media Corp., [2003] O.J. No. 3918 (Div. Ct.) at paras. 3, 6. Common issues cannot be dependent upon findings which will have to be made at individual trials, nor can they be based on assumptions that circumvent the necessity for individual inquiries: Nadolny v. Peel (Region), [2009] O.J. No. 4006 (S.C.J.) at paras. 50-52; Collette v. Great Pacific Management Co., 2003 BCSC 332, [2003] B.C.J. No. 529 (B.C.S.C.) at para. 51, var'd on other grounds (2004) 2004 BCCA 110, 42 B.L.R. (3d) 161 (B.C.C.A.); McKenna v. Gammon Gold Inc., 2010 ONSC 1591, [2010] O.J. No. 1057 (S.C.J.) at para. 126, leave to appeal granted 2010 ONSC 4068, [2010] O.J. No. 3183 (Div. Ct.), var’d 2011 ONSC 3882 (Div. Ct.).
[142] An issue can satisfy the common issues requirement even if it makes up a very limited aspect of the liability question and even though many individual issues remain to be decided after its resolution. In determining the commonality of a question, the focus is on the commonality of the question, and it is an error to focus on those aspects of the claim that would require individual determination. The comparative extent of individual issues is not a consideration in the commonality inquiry although it is a factor in the preferability assessment. See Cloud v. Canada (Attorney General) (2004), 2004 45444 (ON CA), 73 O.R. (3d) 401 (C.A.) at paras. 51 to 65, leave to appeal to S.C.C. ref'd, [2005] S.C.C.A. No. 50.
[143] The common issue criterion presents a low bar: Carom v. Bre-X Minerals Ltd. (2000), 2000 16886 (ON CA), 51 O.R. (3d) 236 (C.A.) at para. 42; Cloud v. Canada (Attorney General) (2004), O.R. (3d) 401 (C.A.) at para. 52; 203874 Ontario Ltd. v. Quiznos Canada Restaurant Corp., 2009 23374 (ON SCDC), [2009] O.J. No. 1874 (Div. Ct.), aff’d 2010 ONCA 466, [2010] O.J. No. 2683 (C.A.), leave to appeal to S.C.C. ref’d [2010] S.C.C.A. No. 348. An issue can be a common issue even if it makes up a very limited aspect of the liability question and even though many individual issues remain to be decided after its resolution: Cloud v. Canada (Attorney General) supra, at para. 53.
[144] Mr. Magill proposed the following common issues:
A. Did the Class Members enter into a standard contract with the Defendants?
(i) What were the terms of said contract?
(ii) Did the Defendants, as a standard billing practice, charge a “Taxes and Services Fee”?
B. Did the Defendant breach the contract in any of the following ways:
(i) By not disclosing whether the Taxes Fee was charged on the Retail Rate or the Wholesale Rate?
(ii) By charging the Taxes Fee based on the Wholesale Rate?
(iii) By not breaking out the Taxes and Services Fee into its components, that is, the Taxes Fee and the Services Fee?
(iv) By not disclosing and by infusing a profit element into the Services Fee?
(v) By virtue of the above violations and non-disclosure, violating the duty of good faith and fair dealing?
C. Is the contract between the Defendants and Class Members classified as a “consumer agreement” as defined by section 1 of the Consumer Protection Act, 2002?
(i) Do Expedia, Inc. and Expedia Canada Corporation jointly, promote, offer and sell travel accommodations, reservations, services and products across Canada to consumers through the website found at www.expedia.ca?
D. Did the Defendants fail to adequately disclose the individual components of the Taxes and Services Fee, where necessary?
(i) If so, does the Defendants' failure to disclose constitute a breach of section 17(1) of the Consumer Protection Act, 2002 as an unfair practice by virtue of a false, misleading, or deceptive representation under Subsections 14(1) and (2) of the Consumer Protection Act, 2002?
E. Did the Agreement constitute a “remote agreement” as contemplated by Section 20(1) of the Consumer Protection Act, 2002?
(i) Did the Defendants comply with Section 45 of the Consumer Protection Act, 2002 wherein it is mandated to disclose the information prescribed under Section 37 of the Regulations?
(ii) Did the Defendants comply with Section 46 of the Consumer Protection Act, 2002 wherein it is mandated to provide a copy of the Agreement as prescribed by Section 39 of the Regulations?
(iii) Are Class Members entitled to cancellation under Section 47 of the Consumer Protection Act, 2002?
F. Did the Agreement constitute an “internet agreement” as contemplated by Section 20(1) of the Consumer Protection Act, 2002?
(i) Did the Defendants comply with Section 38 of the Consumer Protection Act, 2002 wherein it is mandated to disclose the information prescribed under Section 32 of the Regulations?
(ii) Did the Defendants comply with Section 33 of the Consumer Protection Act, 2002 wherein it is mandated to provide a copy of the Agreement?
(iii) Are Class Members entitled to cancellation under Section 40 of the Consumer Protection Act, 2002?
G. If the Defendants have violated the Consumer Protection Act, 2002 and/or collected a fee which is construed to be unlawful under that Act, are the Plaintiff and Class Members entitled to cancellation of the contract, contract damages, rescission, restitution, refund and/or disgorgement of profits under the Consumer Protection Act, 2002 in accordance with Sections 92, 95, 96, 98, 100 and 101?
H. If the Defendants are found to have engaged in an unfair practice, can Class Members rescind their contracts with the Defendants under Section 18(1) of the Consumer Protection Act, 2002?
(i) Further under Section 18(2), can Class Members recover the difference between the amount paid to Defendants and the value to the Class Members of the services received in accordance with Section 18(2) of the Consumer Protection Act, 2002?
I. Should the court waive the notice provisions of Sections 18(3) and 92 of the Consumer Protection Act, 2002 as permitted by Sections 18(15) and 101, respectively of the Act?
J. Were the Defendants unjustly enriched?
K. Did the Defendants violate Section 52(1) of the Competition Act?
(i) By failing to disclose that the “Taxes and Services Fees” charge far exceeds the combined total of (i) the taxes imposed by the applicable taxing authorities and/or collected by hotels, and (ii) the costs actually incurred by Defendants in processing Class Members’ reservations?
(ii) By failing to adequately disclose the full nature of the “Taxes and Service Fees” charge that it, in fact, contained a profit element for Defendants and failing to disclose the individual amounts paid for tax and the amounts paid for service costs to the Defendants?
(iii) Can reliance on the Defendants’ misrepresentations/omissions be inferred under the circumstances in accordance with Section 52.1 of the Act?
L. Do the Defendants hold amounts rationally connected to the “Excessive Tax and Service Fees” scheme for the benefit of the Plaintiff and Class Members as “constructive trustees”?
M. Can the damages be calculated on the basis of restitution?
(i) Can the damages be calculated on an aggregate basis under Section 24 of the Class Proceedings Act?
(ii) If yes, what is the quantum of damages?
N. Can the damages be calculated on an individual basis?
(i) Is it practical and/or cost effective to calculate the damages on an individual basis?
O. Are the Defendants Liable to Class Members for Punitive Damages?
[145] In my opinion, Questions: A; and B (i)(ii)(iii) and (iv), but not (v), are certifiable as common issues.
[146] In my opinion, Questions C, D, E, F, G, H, I, J, K, L, M, N, and O are not certifiable as common issues.
[147] A few comments about these conclusions are necessary.
[148] The Defendants made numerous arguments against the various common issues and whether there was any basis in fact or class member interest in pursuing the claims based on the Defendants’ Contract A and B theory of the contractual relationship between class members and Expedia Inc.
[149] Repeatedly, the Defendants asserted that there was no breach of either contract and that ultimately under contract B, the class members got the service they expected at the price they expected to pay and there would be little interest or reason for class members to pursue claims. For instance, the Defendants submitted that there was no breach of contract because the express terms relied on in the Terms of Use were representations and not promises and thus Mr. Magill was attempting to disguise a negligent misrepresentation claim, which would not be certifiable, as a breach of contract law claim.
[150] For present purposes, I need not and should not comment about some of the particular arguments by the Defendants about commonality because they are actually arguments about the merits of the class members’ claims for breach of contract. It will be for the common issues judge to determine whether there is any merit to Mr. Magill’s theory that there was only one contract that was breached and Expedia Inc.’s arguments that there were one or two perfectly performed contracts or that the contracts did not contain promises but rather representations not capable of being breached.
[151] One argument that does require comment is the Defendants’ argument that the breach of contract claims want for common issues because those claims depend upon the assertion of implied terms of contract and the implication of contract terms is inherently individualistic. All that needs to be said about this argument is that it is based on the faulty premise that Mr. Magill’s contract action relies on implied terms. It does not. He relies on a breach of express terms of the Terms of Use.
[152] With respect to question B (v), which I did not certify, the question is redundant and it serves no purpose. If there was a breach of the contract, then nothing changes if that breach is also categorized as a breach of a duty of good faith and fair dealing. If there was no contract breach, then relying on a free-standing duty of good faith and fair dealing as a basis for liability is not adequately supported by the Statement of Claim and it would take Mr. Magill’s claim into the murky territory of implied terms of good faith and fair dealing, which may not be certifiable.
[153] With respect to question J (the unjust enrichment question), which I did not certify, the elements of an unjust enrichment are: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment: Garland v Consumers' Gas Co., 2004 SCC 25, [2004] 1 SCR 629. The corresponding deprivation requires a direct connection between the enrichment of the defendant and the deprivation of the plaintiff: Pettkus v Becker, 1980 22 (SCC), [1980] 2 SCR 834 at p 852.
[154] In the case at bar, assuming that there is a breach of contract, it is clear that if Expedia Inc. has been unjustly enriched, its enrichment and the class members’ corresponding deprivation is commensurate with the extent to which Expedia Inc. gained from breaching particular contracts. Conversely, if there is no breach of contract, there is no unjust enrichment claim.
[155] Practically speaking, the unjust enrichment claim is redundant and does very little to advance the proceedings. If the class succeeds at the common issues trial on its contract claim, class members will need to quantify their breach of contract claim or their unjust enrichment claim at an individual issues trial. In this regard, it is worth noting that for some class members and Mr. Magill is an example the common issues trial could possible involve an examination of numerous discrete bookings of hotels only some of which, if any, involve breaches of contract or unjust enrichments. In the case at bar, once Expedia Inc.’s bogus out-of-pocket argument is rejected and once the issue about breach of contract is determined, the issues about unjust enrichments are essentially individual and not common issues.
[156] With respect to question M and N (the aggregate or individual assessment questions), which I did not certify, the Defendants argued that an aggregate assessment of damages should not be certified as a common issue for three reasons: (1) the proposed common issues of liability will not resolve liability on a class-wide basis; (2) the damage quantification reports prepared by Adrian Karoly should be accorded no weight; and (3) even if considered by the court, Mr. Karoly's reports do not establish a workable methodology for determining damages on a class-wide basis.
[157] I agree with the first and third of the reasons and do not need to address the second reason, which largely turns on whether Mr. Karoly wrongfully refused to answer questions posed during his cross-examination.
[158] In the case at bar, liability cannot be determined on class wide basis. Whether or not the Defendant’s approach to charging its fees could amount to a breach of contract can be determined on a class wide basis, but whether all of the contracts were, in fact, breached cannot be determined on a class wide basis. The same may be said about the unjust enrichment claims, which depend upon individual breaches of contract unjustly enriching Expedia Inc.
[159] With respect to question O (punitive damages), which I did not certify, the availability of punitive damages as a head of damages cannot be rationally or fairly determined until the number of breaches and the quantum of damages is determined. In the circumstances of this case, the availability of the remedy of punitive damages is not a common issue. See Robinson v. Medtronic, 2009 56746 (ON SC), [2009] O.J. No. 4366 (S.C.J.), aff'd 2010 ONSC 3777, [2010] O.J. No. 3056 (Div. Ct.).
VIII. THE PREFERABLE PROCEDURE CRITERION
[160] The fourth criterion for certification is the preferable procedure criterion.
[161] Preferability captures the ideas of: (a) whether a class proceeding would be an appropriate method of advancing the claims of the class members; and (b) whether a class proceeding would be better than other methods such as joinder, test cases, consolidation, and any other means of resolving the dispute: Markson v. MBNA Canada Bank (2007), 2007 ONCA 334, 85 O.R. (3d) 321 (C.A.) at para. 69, leave to appeal to S.C.C. ref'd, [2007] S.C.C.A. No. 346; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158.
[162] For a class proceeding to be the preferable procedure for the resolution of the claims of a given class: (1) it must represent a fair, efficient, and manageable procedure; and (2) it must be preferable to any alternative method of resolving the claims: Cloud v. Canada (Attorney General) (2004), 2004 45444 (ON CA), 73 O.R. (3d) 401 (C.A.) at paras. 73-75, leave to appeal to S.C.C. ref'd, [2005] S.C.C.A. No. 50.
[163] Whether a class proceeding is the preferable procedure is judged by reference to the purposes of access to justice, behaviour modification, and judicial economy and by taking into account the importance of the common issues to the claims as a whole, including the individual issues: Markson v. MBNA Canada Bank (2007), 2007 ONCA 334, 85 O.R. (3d) 321 (C.A.) at para. 69, leave to appeal to S.C.C. ref'd, [2007] S.C.C.A. No. 346; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158.
[164] In considering the preferable procedure criterion, the court should consider: (a) the nature of the proposed common issue(s); (b) the individual issues which would remain after determination of the common issue(s); (c) the factors listed in the Act; (d) the complexity and manageability of the proposed action as a whole; (e) alternative procedures for dealing with the claims asserted; (f) the extent to which certification furthers the objectives underlying the Act; and (g) the rights of the plaintiff(s) and defendant(s): Chadha v. Bayer Inc. (2001), 2001 28369 (ON SCDC), 54 O.R. (3d) 520 (Div. Ct.) at para. 16, aff'd (2003), 2003 35843 (ON CA), 63 O.R. (3d) 22 (C.A.), leave to appeal to S.C.C. ref'd, [2003] S.C.C.A. No. 106.
[165] In my opinion, a class proceeding would be the preferable procedure for the resolution of Questions: A; B (i)(ii)(iii) and (iv) but not (v).
[166] Assuming I am wrong above in concluding that Questions C, D, E, F, G, H, I, K, L, M, N, and O are not certifiable as common issues, in my opinion, a class proceeding would not be the preferable procedure for the resolution of these questions and the associated causes of action. In my opinion, in the circumstances of this proposed class action, this list of common issues cannot be resolved in a fair, efficient, and manageable way that will advance the proceeding and achieve access to justice.
[167] As I note above, these issues are largely redundant to the breach of contract claims. If these issues were certified along with the breach of contract claim and the breach of contract claim failed then the other claims would also fail with a great deal of time and attention wasted on them. If the breach of contract claim succeeded then, practically speaking, these additional issues would be redundant but require individual issues trials to determine whether the class member was a consumer under Ontario’s Consumer Protection Act, 2002. The certification of the Consumer Protection Act, 2002 claims is not required for behaviour management because if there was wrongdoing, about which I make no finding, it stopped in March 2011, when the Terms of Use were revised. If there was wrongdoing, the Class Members will be able to achieve access to justice from their breach of contract claims.
[168] I wish to be very clear that I am not deciding that Consumer Protection Act, 2002 claims are not suitable for certification. Each class action is different, and all that I am deciding is that for this particular class action, the Consumer Protection Act and the Competition Act claims are not certifiable.
[169] Based on the breach of contract cause of action, I conclude that Mr. Magill’s proposed class action satisfies the fourth criterion for certification as a class action.
IX. THE REPRESENTATATIVE PLAINTIFF CRITERION
[170] The fifth and final criterion for certification as a class action is that there is a representative plaintiff who would adequately represent the interests of the class without conflict of interest and who has produced a workable litigation plan.
[171] The representative plaintiff must be a member of the class asserting claims against the defendant, which is to say that the representative plaintiff must have a claim that is a genuine representation of the claims of the members of the class to be represented or that the representative plaintiff must be capable of asserting a claim on behalf of all of the class members as against the defendant: Drady v. Canada (Minister of Health), 2007 27970 (ON SC), [2007] O.J. No. 2812 (S.C.J.) at paras. 36-45; Attis v. Canada (Minister of Health), [2003] O.J. No. 344 (S.C.J.) at para. 40, aff'd [2003] O.J. No. 4708 (C.A.).
[172] Provided that the representative plaintiff has his or her own cause of action, the representative plaintiff can assert a cause of action against a defendant on behalf of other class members that he or she does not assert personally, provided that the causes of action all share a common issue of law or of fact: Boulanger v. Johnson & Johnson Corp., [2002] O.J. No. 1075 (S.C.J.) at para. 22, leave to appeal granted, [2002] O.J. No. 2135 (S.C.J.), varied (2003), 2003 45096 (ON SCDC), 64 O.R. (3d) 208 (Div. Ct.) at paras. 41, 48, varied 2003 52154 (ON CA), [2003] O.J. No. 2218 (C.A.); Matoni v. C.B.S. Interactive Multimedia Inc., 2008 1539 (ON SC), [2008] O.J. No. 197 (S.C.J.), at paras. 71-77; Voutour v. Pfizer Canada Inc., [2008] O.J. No. 3070 (S.C.J.); LeFrancois v. Guidant Corp., [2008] O.J. No. 1397 (S.C.J.) at para. 55.
[173] Whether the representative plaintiff can provide adequate representation depends on such factors as: his or her motivation to prosecute the claim; his or her ability to bear the costs of the litigation; and the competence of his or her counsel to prosecute the claim: Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at para. 41.
[174] The Defendants submit that Mr. Magill is not an appropriate representative plaintiff for four reasons: (1) he only falls within the class definition for one of his fourteen hotel reservations when the Terms of Use no longer contained the wording to which he objects; (2) he does not understand his personal costs exposure in this litigation; (3) he has demonstrated, through his refusal to answer numerous relevant questions, a lack of willingness to vigorously and capably prosecute the interests of the class; and (4) his proposed litigation plan is fundamentally flawed.
[175] After examining the details of these arguments, I find these arguments weak. In my opinion, Mr. Magill has satisfied the fifth criterion for certification.
[176] The first argument against Mr. Magill is based on the fact that Mr. Magill was reimbursed for all but one of his hotel reservations. As already noted above, I do not see this as objectionable.
[177] The second argument that Mr. Magill does not understand his personal costs exposure is incorrect because I would not draw that conclusion from the evidentiary record, and I rather conclude that Mr. Magill is aware that he is exposed to a significant costs award.
[178] The third argument is based on Mr. Magill’s alleged failure to answer proper questions during his cross-examination for this certification. This argument is problematic because, the Defendants did not bring a motion to compel answers to the questions that Mr. Magill on the instruction of his lawyer refused to answer. Now is not the time to have a refusals motion.
[179] Upon closer examination the third argument is really a veiled attack on the competence of Class Counsel and upon Mr. Magill’s choice of counsel. If that is the case, then the attack fails, because I would not fault Mr. Magill for his choice of counsel.
[180] The fourth argument that the litigation plan is fundamentally flawed turns out to be the two trivial points that: (1) the Defendants are unable to provide a list of class members; and (2) there is no evidence of a website to inform proposed class members of this litigation. Both matters are problems of how to give notice to the class that could and will be resolved.
[181] Accordingly, I conclude that Mr. Magill satisfies the fifth criterion for certification.
X. CONCLUSION
[182] For the above reasons, I grant this motion for certification of Mr. Magill’s class action.
[183] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Defendants’ submissions within 30 days from the release of these Reasons for Decision followed by Mr. Magill’s submissions within a further 30 days.
Perell, J.
Released: January 31, 2013
COURT FILE NO.: 09-CV-381919CP
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
TIM MAGILL
Plaintiff
‑ and ‑
EXPEDIA, INC. and EXPEDIA CANADA CORPORATION
Defendants
REASONS FOR DECISION
Perell, J.
Released: January 31, 2013.