Experts expect growing trend of class actions against telcos

Class action lawsuits against telecom companies are expected to become a growing trend as more Canadian provinces revise their consumer protection laws, experts say. “I think what you're seeing is governments attempting to leap into the gap that has been caused by either the unwillingness or lethargy on the part of federal authorities to legislate or regulate in a particular area that is normally under federal jurisdiction,” Michael Janigan, executive director of consumer group the Public Interest Advocacy Centre (PIAC), said in an interview. On March 18, the Supreme Court of Canada ruled that consumers in B.C. who argue they have suffered from deceptive business practices can pursue class actions against companies even if their service contracts say otherwise. In 2000, B.C. resident Michelle Seidel entered into a cellphone contract with Telus Corp. The standard contract included a clause waiving the customer's right to launch or participate in a class action suit. Instead, the contract directed parties towards private arbitration. But Seidel took issue with the telco, arguing that it charged for the short time period between the initiation of a call and its connection, instead of only the period when a call is connected. In 2005, Seidel sought to have a class action certified in the B.C. courts, arguing under the B.C. Business Practices and Consumer Protection Act that Telus had engaged in deceptive business practices. But Telus told the court that the case shouldn't go ahead because of Seidel's contract. The matter was brought to the Supreme Court, which sided with the B.C. law in a 5-4 ruling. “Whether an arbitration clause in a consumer contract is unfair or unconscionable must always be determined on a case-by-case basis in light of the relevant facts ... the British Columbia legislature remains free to address any unfairness or harshness that might be perceived to be imposed as a result of the inclusion of arbitration clauses in commercial contracts,” the court wrote. In its decision, the court upheld Telus' arbitration clause, but noted that the B.C. law creates an exception for consumers like Seidel who say they suffered from deceptive business practices. Arthur Grant, a lawyer with Grant Novacs Norell who represented Seidel in the case, said in an interview that while the ruling clarifies the conditions for people to file a class action suit, the decision will not necessarily translate into more class actions in B.C. Grant said it would be up to the provincial legislature to amend its consumer protection law to open up more class action suits. “B.C., in order to be as open as Ontario, Quebec and Alberta, needs to amend its legislation,” he said. Quebec, Ontario and Alberta have amended their consumer protection legislation to limit contract clauses intended to prevent class actions. Manitoba is looking at introducing legislation that would mandate the use of plain language in cell phone contracts and fair practices for contract cancellation clauses. “It's certainly a victory for this plaintiff and a victory for class action firms in British Columbia, but it's also a clear statement to the legislature that, if you want to do so, Alberta, Ontario and Quebec have already done that,” Grant said. Grant said there are a number of jurisdictions outside of Canada that indicate, in certain circumstances, contracts cannot prevent the consumer from bringing a case to court instead of arbitration. Grant said amending the B.C. consumer law would be a good move for consumers and could be based on legislation from the other provinces. He added that he expects provinces to look at further consumer protection from requirements to find a resolution through arbitration. “I do think we are likely to see a trend of other provinces adopting the same sort of protective provisions in their consumer protection legislation,” he said. “They're going to have to say, 'Yes, this can only be done through the mechanism of a class action,' because an individual, unless they've got an incredibly deep pocket, can't go up against a giant like Telus.” In a Feb. 22 post on the website of the National Union of Public and General Employees (NUPGE), union national president James Clancy wrote that an increasing number of consumers are taking their telco issues to court. “Heading to court has become a popular way to hold telecommunication companies accountable to the public,” he said. “It’s unfortunate the federal government lacks the guts to regulate an industry that continues to short-change consumers on the quality of service, yet over-charge them at every step.” Janigan said Quebec is considered to have the most accommodating class action structure, noting that the province's consumer protection law has specific provisions that apply to the wireless sector. Since January 2009, Quebec courts have agreed to hear six class action suits involving telecom services. By comparison, over the same period, the other Canadian provinces do not show that any new telecom cases were agreed to be heard, according to the Canadian Bar Association’s national class action database. Janigan said that the federal government should step in to clarify the rules across the board for wireless contracts. He said this could be done through the CRTC, and that the push to do so could come from a cabinet direction. But Anthony Hémond, an analyst specializing in telecommunications, broadcasting and privacy issues at Quebec consumer group Union des consommateurs, said in an interview that it's unlikely a federal body will step in to regulate contracts, which fall under provincial jurisdiction. “Currently the CRTC has a policy of deregulation, that it is not to intervene in the telecom market,” he said. “Would the CRTC step in to regulate? I don't think so.” Although the Supreme Court decision cleared up the matter of whether Seidel could bring the case before the courts, the class action has yet to be certified, and could be rejected. Shawn Hall, a spokesman for Telus, said in an interview that the case has “no merit.” “The plaintiff is saying that they should be charged for talk time only, as if it were possible to connect the call between two travelling mobile devices with no network search time,” he said. Hall said Telus' terms of service make it clear that charges begin from the point when network resources start to be used, which happens when a person hits call after dialing a number. Hall added that the Supreme Court upheld the validity of the arbitration clause in Telus' contracts. “No one wins when you go to court. We'd rather sit down and talk it out with the customer and sort things out with them,” he said. “It avoids unnecessary and costly legal action on both parts.” But Hémond said court is often a better option for consumers than arbitration. “Arbitration systems are often, unfortunately, opaque ... and companies are often used to the process, and already have knowledge on the arbitrator or on past decisions. So courts are a much easier way for consumers to reach common ground rather than to go through arbitration,” he said. Hall said Telus will continue using an arbitration clause in its contracts. He added that the company does not expect to see a rise in class actions in the province following the ruling. kfournier@thewirereport.ca

Experts expect growing trend of class actions against telcos

News | March 31, 2011

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