Telus class action case heads to the SCC

The application of a key provision in the provincial Arbitration Act when there are class actions involving two different types of potential claimants will be before the Supreme Court of Canada this fall.

Leave was granted to Telus from an Ontario Court of Appeal decision last year that declined to issue a partial stay related to business customers in a $520-million class action filed over the rounding up of wireless calls to the next minute for billing purposes, allegedly without disclosing the practice.

The appeal in Wellman v. Telus Communications Company, which has attracted a number of consumer and business organizations seeking leave to intervene, will also likely examine whether a Court of Appeal decision in 2010 on similar issues is still good law.

Class actions that feature both consumers and business customers as part of the group of claimants is not uncommon, says Chantelle Cseh, a partner at Davies Ward Phillips & Vineberg LLP in Toronto, who normally acts for clients on the defence side of these proceedings. 

“This arises frequently. We have decisions from a number of jurisdictions. This is an opportunity for the Supreme Court to clarify rules that will be of general application,” says Cseh.

The provincial Consumer Protection Act states that, in the case of consumers, any user agreements that call for arbitration are invalid in terms of restricting the right to be part of a legal action. For the Court of Appeal, in its decision last year, the main issue was whether business customers of Telus should be excluded because those contracts included a mandatory arbitration clause. Section 7(5) of the Arbitration Act permits a court to stay certain “matters” within an arbitration agreement.

In the Telus litigation, about 70 per cent of the proposed class is made up of consumers and 30 per cent are customers who purchased business plans.

The wording of the arbitration statute does not grant authority to override the arbitration provisions in its entirety, argue lawyers for Telus in written submissions filed with the Supreme Court.  The communications company is also arguing that the Court of Appeal erred in distinguishing the Supreme Court’s 2011 decision in Seidel v. Telus, a case that originated in British Columbia and related to its provincial consumer protection legislation.

The Court of Appeal concluded that the law in Ontario in this area is still determined by Griffin v. Dell, a 2010 decision by a five-judge panel that declined to stay non-consumer claims in a class action over allegedly defective notebook computers.

“Seidel has not overtaken or altered the authority of Griffin, as Griffin is consistent in principle with Seidel but was decided in a different legislative context,” wrote Justice Katherine van Rensburg for the majority in the Wellman decision.

Justice Robert Blair, in a separate judgment, agreed with the majority that Griffin has not been overruled in Ontario and that, as a result, the class action can include business customers. However, he also expressed reservations about the earlier decision.

“While I have reservations about the correctness of the decision in Griffin as it relates to a partial stay of the non-consumer claims, it is binding on us and dispositive of the issue,” wrote Blair.

Cseh agrees with the reservations expressed by Blair.

“I think Griffin was incorrectly decided,” she says.

Telus, she believes, also has a strong case in its appeal to the Supreme Court.

“Just because you have initiated a class action, should that oust substantive rights?” she asks. Business customers can still pursue claims against a company through an arbitration process, Cseh suggests.

“It does not mean you are out of luck. It can be done very efficiently,” she says.

Jeremy Martin, a lawyer at Cassels Brock & Blackwell LLP in Toronto, suggests that if the Court of Appeal decision is upheld, it would expand the ability to bring a class action beyond what was originally intended.

“Class actions tend to be procedural only. They are to advance claims that could not otherwise be brought,” says Martin, whose practice focuses on class action defence.

The relevant section of the Arbitration Act permits a court “to separate issues” within an agreement and not the entire agreement itself, he says.

“The question of whether you can get business claims through the back door is about inflating the total damages,” says Martin.

Mohsen Seddigh, a lawyer at Sotos LLP, is acting for the Public Interest Advocacy Centre and the Consumers Council of Canada, two of the groups seeking to be granted intervener status at the Supreme Court.

Telus is proposing “a different statutory interpretation” of the relevant section of the Arbitration Act than what the courts in Ontario have found, says Seddigh. As well, he suggests that at a time when the nature of the workforce is changing, there is not always an obvious difference between a consumer or business customer.

“Is an Uber driver a business customer? It is not always clear cut,” says Seddigh, noting that people may use wireless devices both for personal and business purposes. The advocacy groups are hoping that when hearing the appeal, the Supreme Court “will take it out of an academic context, run an analysis and see if consumers are going to be impacted,” he says.