Class action suits to test new Quebec contract termination law

A Quebec law firm has filed two class action suits against Bell Canada and Telus Mobility over the companies’ contract termination policies, potentially creating the first legal test of a new provincial law surrounding telephone contracts. On Sept. 30, Montreal law firm BGA Avocats filed requests with the Quebec Superior Court to hear two class action cases against the telcos. Former customers of the companies are seeking damages for negative impacts on their credit ratings. The cases are expected to put a legal test a new Quebec law surrounding contract termination fees that came into force on July 1, 2010. Under the province’s Consumer Protection Act, cellphone cancellation fees cannot exceed the discount received when purchasing a subsidized handset. Fees tied to non-subsidized phones cannot exceed $50, or 10 per cent of the value of the unpaid services. Both Bell and Telus told The Wire Report in August they were compliant with the new law. Under Quebec law, a single plaintiff can file a class action with the province’s Superior Court. The ruling can then be applied to a larger group of plaintiffs after a decision has been reached—but a judge must first approve the case. One suit filed by BGA would apply to all Bell wireline customers who were charged contract termination or related fees after Oct. 1, 2007. According to court documents, the plaintiff, Oka, Que.-resident Robert Morin, has been a Bell customer since 1955. But in October 2009, he decided to change his wireline supplier, leading to contract termination fees of $209.61. Morin said a Bell representative told him the fees were tied to the termination of a 24-month contract, but Morin insisted he had never agreed to such a contract. Morin is now seeking the cancellation of the fees, along with $500 in damages for the negative impact that non-payment of the fees had on his credit rating. Court documents also say Morin asked the court to order Bell to pay $2 million in punitive damages as part of a class action suit. Bell declined to comment Tuesday. The second case, if approved as a class action suit, would affect all Telus Mobility customers charged contract termination fees after Oct. 1, 2007. According to court documents, Saint-Casimir, Que.-resident Stéphane Fortier bought a cellphone with Telus in March 2010 under a 36-month contract. Fortier also bought from the company a $7 insurance plan for the phone. Fortier lost the cellphone after a few weeks of use and discovered the loss wasn’t covered by the insurance policy. He then decided to terminate the contract. Although Fortier said a Telus representative informed him the cancellation would incur fees, he said the amount was never discussed. In May 2010, Fortier was charged contract cancellation fees of $700. Fortier is also seeking termination of the fees as well as $500 in damages for the negative impact the incident had on his credit rating. Telus spokeswoman Amélie Cliche told The Wire Report Tuesday that the company has a “valid defence” against the charges, but could not comment further. David Bourgoin, a lawyer at BGA Avocats representing the plaintiffs, said in an interview that Quebec’s new law on contract fees will serve as a reference in the two cases to support arguments that contract termination fees are unfair—despite the fact that the suits involve fees charged before the law came into force. “What we’re saying is that the law only puts the dots on the i’s and confirms that the practice is excessive,” he said. He added that the cases are generating significant public interest. “As soon as we filed the action, many people showed a lot of interest,” he said. “We saw there was general discontent because people feel like prisoners to their contracts.” John Lawford, counsel with the Public Interest Advocacy Centre (PIAC) in Ottawa, said in an interview that PIAC receives a large number of complaints from the public involving contract termination fees. “The problem is it’s an outrageously high break fee,” he said. “It doesn’t matter that it’s in the fine print when you sign up. It’s not often a really big feature of the pitch when you’re getting a free phone ... It’s legal, but is it fair?” But Lawford said Bell and Telus can argue the new law is unconstitutional because telecommunications fall under federal jurisdiction. He said the Quebec government knows the law “is riding pretty close to the edge of constitutionality, because it is aimed at cellphone contracts that are Telecom .” “I expect to see it in the Supreme Court of Canada.” Lawford said Telus is more likely to push the constitutionality argument than Bell because it is not likely to play well with the Quebec public and could result in a customer backlash. As the incumbent telecom player in the province, Bell has more to lose, he suggested. “Bell is pretty careful because that’s their home territory. Telus … is happy to take Quebec on, because they’re not going to lose some huge amount,” he said. But Bourgoin said that, irrespective of the new law, the companies must prove under the Quebec Civil Code that customer contract cancellations are harmful to the companies and that termination fees are necessary to deter them. “They can make the Quebec Civil Code declared non-applicable to their activities … That would be their only way ,” he said. “Maybe they will try, because they will see this is a large scale action that could represent several million dollars down the line.” BGA Avocats also filed a third class action suit against Bell Mobility on Aug. 13, 2010, involving contract termination fees charged to wireless customers. The case has yet to be approved for a hearing. kfournier@thewirereport.ca

Class action suits to test new Quebec contract termination law

News | October 12, 2010

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us