Murphy v. Compagnie Amway Canada

Murphy v. Compagnie Amway Canada
Court (s) Database
Federal Court Decisions
Date
2011-11-23
Neutral citation
2011 FC 1341
File numbers
T-1754-09
Decision Content
Federal Court
Cour fédérale
Date: 20111123
Docket: T-1754-09
Citation: 2011 FC 1341
Ottawa, Ontario, November 23, 2011
PRESENT: The Honourable Mr. Justice Boivin
BETWEEN:
KERRY MURPHY
Plaintiff
and
COMPAGNIE AMWAY CANADA
and
AMWAY GLOBAL
Defendant
REASONS FOR ORDER AND ORDER
Overview
[1] This case concerns a dispute between Kerry Murphy (plaintiff), an Independent Business Owner (IBO), and the Compagnie Amway Canada (Amway) (defendant), a wholesaler of home, personal care, beauty and health products.
[2] The Court recalls that the spouse of Kerry Murphy, Cheryl Rhodes, was also listed as a plaintiff at the outset of this action but she withdrew and filed a notice of discontinuance on May 9, 2011. Thus, for ease of reference, the Court will refer solely to the plaintiff in these Reasons for Order and Order.
[3] On October 23, 2009, pursuant to Rule 334.16 of the Federal Courts Rules, SOR/98-106, the plaintiff instituted a proposed class proceeding against the defendant, alleging that its business model and distribution system is in violation of sections 52, 55, and 55.1 of the Competition Act, RSC 1985, c C-34 (Competition Act). Pursuant to section 36 of the Competition Act, the plaintiff seeks damages from the defendant in the amount of $15,000. The plaintiff filed a Motion for Certification of a Proposed Class Action to that effect.
[4] The defendant has responded to the plaintiff’s Motion to Certify a Class Action with several motions. Amongst them is the defendant’s Motion to Stay and Compel Arbitration. The defendant’s central argument is that the Federal Court lacks the jurisdiction to hear the plaintiff’s motion and that, instead, the arbitrator, contemplated in the “Agreement to Arbitrate” of the Registration Agreement concluded by the parties, has jurisdiction. As well, the defendant filed a Motion to Strike Affidavits and Exhibits Thereto from the Motion for Certification as well as a Motion for an Order that Responses to Certain Requests for Undertakings be treated as Confidential.
[5] The aforementioned four (4) motions were heard jointly on October 3, 4, and 5, 2011.
Factual Background
The Defendant and its Business Model
[6] The defendant operates in Canada since 1962. From July 16, 1999 to December 28, 2000, the defendant was known as Quixtar Canada Inc. On January 1, 2001, Quixtar Canada Inc. transformed into Quixtar Canada Corporation. On September 1, 2008, Quixtar Canada Corporation reverted to its name Amway Canada Corporation (Compagnie Amway Canada).
[7] The defendant markets its products to consumers through a system known as a multi-level marketing plan. This structure consists of a vast network of Independent Business Owners (IBOs). This system is established as follows: the defendant supplies products to its IBOs throughout Canada and then encourages them to recruit other distributors in turn, and so on, which results in the creation of multiple layers of distributors. The sales made by the recruited IBO also compensate the original recruiter IBO in part through a bonus system known as a “sponsorship chain”. The recruitees are known as the “downlines” of the marketing scheme and the recruiters are known as the “uplines”.
[8] When new IBOs are recruited, they must review the Business Opportunity Brochure and they must sign a Registration Agreement, in which they agree to be bound by the defendant’s IBO Compensation Plan and the Rules of Conduct that are set out in the Business Reference Guide. As well, the Registration Agreement also contains a clause entitled “Agreement to Arbitrate” by which the parties agree to submit any possible claim to arbitration, which shall be governed by the Ontario Arbitration Act, 1991, SO 1991, c-17.
Relationship between the Parties
[9] The defendant’s company records indicate that the plaintiff registered four (4) times with the defendant over the course of a number of years. The defendant alleges that in 1980-82 the plaintiff proceeded with registration but did not follow-up or purchase any products. Subsequently, the plaintiff signed a Registration Agreement with the defendant on October 21, 1999 that lasted until December 31, 2001. The plaintiff signed a third Registration Agreement on May 22, 2002 until he stopped operating as an IBO on December 31, 2002. Finally, the plaintiff entered into a fourth Registration Agreement from June 5, 2008 to December 31, 2009. The Registration Agreements concluded by the parties all contained an arbitration clause and made reference to certain dispute resolution procedures contained in the IBOs Rules of Conduct.
[10] On November 26, 2008, the plaintiff renewed his registration with the defendant online for the 2009 year. The plaintiff claims that it ended its relationship with the defendant on August 11, 2009, as this date represents its last sale.
Registration Agreement and Supporting Materials
[11] The Registration Agreement drawn up by the defendant referred to at the hearing and signed by the applicant contains the following provisions:
Agreement to Arbitrate
I agree that I will give notice in writing of any claim or dispute arising out of or relating to my Independent Business, the Quixtar IBO Compensation Plan, or the IBO Rules of Conduct, to the other party or parties involved in the dispute, specifying the basis for my claim and the amount claimed or relief sought. I will then try in good faith to resolve the dispute using the Dispute Resolution Procedures contained in the IBO Rules of Conduct, including the conciliation process.
If the claim or dispute is not resolved to my satisfaction within 90 days, or after the conciliation process is complete, whichever is later, I agree to submit any remaining claim or dispute arising out of or relating to my Independent Business, the Quixtar IBO Compensation Plan, or the IBO Rules of Conduct (including any claim against another IBO, or any such IBO’s officers, directors, agents or employees; or against Quixtar Inc., Quixtar Canada Corporation, and any parent, subsidiary, affiliate, predecessor or successor thereof, or any of their officers, directors, agents, or employees) to binding arbitration in accordance with the Arbitration Rules, which are set forth in the IBO Rules of Conduct. … The Ontario Arbitrations Act (1991) or any Canadian arbitration statute that may supersede it, shall govern the interpretation, enforcement and proceedings in any federal or provincial court in Canada. The parties intend for the Arbitration Rules to apply to the maximum degree possible in any arbitration.
…
Business Support Materials
I understand that some IBOs independently produce and distribute Business Support Materials (BSMs) such as books, magazines, audio and video tapes, software, Web sites, Internet services and other electronic media, support tools, or tickets to motivational or business-building seminars and rallies. Some IBOs earn income from the sale of BSMs apart from their earnings as IBOs. I understand that my decision to purchase any BSMs is entirely up to me. In making this decision, I will use my own good judgment as to what is best for my Independent Business. I acknowledge that I have received and read a copy of the Business Support Materials Arbitration Agreement (BSMAA). If I decide to purchase BSMs, I should also execute the Agreement to Arbitrate contained therein, but I acknowledge that in any event BSMs disputes involving another IBO remain subject to my Agreement to Arbitrate, above.
Registrant(s)
I certify that all of the information above is complete and correct, including my sponsoring IBO. I have read and agree to adhere to the terms of this Agreement, including the Quixtar Terms and Conditions printed on the reverse side (Page 2 of 2). I further agree to abide by any additional terms and conditions of use posted on the Quixtar.com Web site. I need only select the Business Services & Support portion of the Quixtar Registration Package to become an IBO. I certify that in deciding to become an IBO I have relied solely on the earnings representations and information contained in the IBO Compensation Plan. I certify that I have received, read, and understood the Quixtar Business Opportunity Brochure. I understand that the average monthly gross income earned by “active” IBOs was $181.
[12] Moreover, the following are the applicable dispute resolution and arbitration sections set forth in the Rules of Conduct:
11. Dispute Resolution Procedures
The Corporation and the IBOAI provide a confidential dispute resolution process under which Amway Global and its IBOs agree to resolve all claims and disputes arising out of or relating to an IB, the Amway Global Independent Business Owner Compensation Plan (“IBO Compensation Plan”), or the Rules, as well as disputes involving Support Materials (SMs.) IBOs agree to submit any dispute with another IBO, a former IBO, Amway Global, or an approved seller or supplier of SM to the dispute resolution procedures in this Rule 11, including Conciliation (Rule 11.2) and, if necessary, Arbitration (Rule 11.3). This Rule 11 applies, without limitation, to any claim or dispute against an IBO, former IBO or any such IBO’s officers, directors, agents, or employees; or against Amway Corp. d/b/a Amway Global, Amway Canada Corporation d/b/a Amway Global, and any parent, subsidiary, affiliate, predecessor or successor thereof, or any of their officers, directors, agents, or employees. Rule 11 is reciprocal and binds both Amway Global and IBOs.
…
11.3. Arbitration.
All disputes not resolved through the process described in Rules 11.1 and 11.2 above shall be settled in arbitration as stated below. The arbitration award shall be final and binding and judgment thereon may be entered by any court of competent jurisdiction…
…
11.3.5. If IBOs become involved in a claim or dispute under the arbitration rules, they will not disclose to any other person not directly involved in the conciliation or arbitration process (a) the substance of, or basis for, the claim; (b) the content of any testimony or other evidence presented at an arbitration hearing or obtained through discovery; or (c) the terms or amount of any arbitration award. However, nothing in these Rules shall preclude a party from, in good faith, investigating a claim or defense, including interviewing witnesses and otherwise engaging in discovery.
…
11.3.7. To reduce the time and expense of the arbitration, the arbitrator will not provide a statement of reasons for his or her award unless requested to do so by all parties. The arbitrator’s award shall be limited to deciding the rights and responsibilities of the parties in the specific dispute being arbitrated.
…
11.3.9. No party to this agreement shall assert any claim as a class, collective, or representative action if (a) the amount of the party’s individual claim exceeds $1,000, or (b) the claiming party, if an IBO, has attained the status of Platinum either in the current fiscal year or any prior period. This subparagraph shall be enforceable when the applicable law permits reasonable class action waivers and shall have no effect when the applicable law prohibits class action waivers as a matter of law. In any case, the class action waiver provision, as well as any other provision of Rule 11, is severable in the event any court finds it unen­forceable or inapplicable in a particular case.
11.3.10. Class action claims are not arbitrable under these Rules under any circumstances; but in the event a court declines to certify a class, all individual plaintiffs shall resolve any and all remaining claims in arbitration.
Justice Mainville’s Order of July 2, 2010
[13] On April 7, 2010, the plaintiff filed a Motion for Directions, asserting that the defendant’s Motion to Stay and to Compel Arbitration was premature. By Order dated May 5, 2010, Justice Mainville (as he then was), the acting case management judge at the time, held that the Motion to Stay and to Compel Arbitration was to be heard in limine litis on June 18, 2010, as he maintained that “the Defendants’ motion may bring an end to the proceedings in their entirety or may result in a narrowing of the scope of the case for certification”.
[14] On July 2, 2010, Justice Mainville rendered Reasons for Order and Order concerning the hearing of June 18, 2010 on the Motion to Stay and Compel Arbitration which it is recalled merely concerned the jurisdiction of the Court. The defendant and plaintiff limited their arguments as to whether the Federal Court or an arbitrator could decide the scope, validity and enforceability of the arbitration agreement at issue. Thus, the substantive issues were left to be decided at a later date. In this context, Justice Mainville stated the following:
[20] I agree with the Plaintiffs that the provisions of the Amway Rules of Conduct are clear: a) class action claims are excluded from arbitration, and b) any controversy concerning the unenforceability or inapplicability of the limited class action waiver set out in subparagraph 11.3.9 of the Amway Rules of Conduct is to be decided by the courts. Consequently, both class action claims and any controversies concerning the enforceability or applicability of the limited class action waiver are not “matter[s] to be submitted to arbitration under the [arbitration] agreement” as contemplated by subsection 7(1) of the Ontario Arbitration Act, 1991.
…
[25] In this case, the parties have entered into an agreement which clearly confers jurisdiction and authority on the courts over class action claims and over the enforceability or applicability of the limited class action waiver. The Amway Rules of Conduct are largely dictated by the Defendants themselves, and these Rules exclude these types of disputes from the arbitration process.
[15] Justice Mainville accordingly determined that it fell upon the Court to determine the applicability of the partial class action waiver contained in the arbitration agreement concluded by the parties. He therefore deferred the hearing of the substance of the Motion to Stay and Compel Arbitration such as it be heard at the same time as the plaintiff’s Motion for Certification.
[16] On July 12, 2010, the defendant filed a Notice of Appeal to the Federal Court of Appeal regarding the decision rendered by Justice Mainville on July 2, 2010. However, the defendant ultimately filed a Notice of Discontinuance in Appeal on November 12, 2010.
[17] For the sequence of the joint hearings on October 3, 4, and 5, 2011, the Court determined that the Motion to Stay and Compel Arbitration would be heard first as it deals with the Court’s jurisdiction over the matter as a whole. Indeed, the Court’s decision with respect to the Motion to Stay and Compel Arbitration impacts on the outcome of the other three (3) motions.
Issue
[18] The Motion to Stay and Compel Arbitration raises the issue of the scope, validity and enforceability of the parties’ arbitration agreement and, more particularly, the limited class action waiver contained in section 11.3.9 of the Rules of Conduct. In addressing this issue, the Court must consider the following aspects:
1) The interpretation of sections 11.3.9 and 11.3.10 of the Rules of Conduct;
2) The jurisprudential principles regarding no-class action arbitration clauses and the doctrine of the “preferable procedure”;
3) The Competition Act;
4) Section 7(5) of the Ontario Arbitration Act.
Applicable Legislation
[19] Several provisions of the Competition Act, the Federal Courts Rules, SOR/98-106, the Federal Courts Act, RSC 1985, c F-7 (Federal Courts Act) and the Ontario Arbitration Act, 1991, (Ontario Arbitration Act), are relevant to the present case. For ease of reference, these provisions are reproduced in the Annex to this Order.
Analysis
1) The Interpretation of Sections 11.3.9 and 11.3.10 of the Rules of Conduct
Defendant’s Position
[20] By virtue of its Motion to Stay and Compel Arbitration, the defendant contends that the plaintiff’s claim in the circumstances is subject to arbitration pursuant to the parties’ arbitration agreement. Hence, the defendant submits that the present proceedings must be dismissed or stayed permanently in accordance with section 50(1) of the Federal Courts Act and the plaintiff’s claim must be referred to arbitration.
[21] More particularly, the defendant emphasizes that section 11.3.9 of the Rules of Conduct encompasses a class action waiver for individual claims exceeding $1,000. This, argues the defendant, evidences that a claim such as the one at issue in the amount of $15,000, is subject to this class action waiver. Consequently, the defendant asserts that the plaintiff is not entitled to initiate a class action. Rather, the plaintiff’s claim must be heard by an arbitrator on an individual basis.
Plaintiff’s Position
[22] It is the plaintiff’s position that the Federal Court has jurisdiction to hear the present class action as sections 11.3.9 and 11.3.10 confer this jurisdiction over class actions or claims exceeding $1,000 to the Court as opposed to an arbitrator. The plaintiff is further of the view that the parties’ arbitration agreement confers upon the Court jurisdiction to determine whether the class action waiver at issue in this case is “enforceable” and “applicable”.
[23] More particularly, the plaintiff relies on section 11.3.10 of the Rules of Conduct and asserts that the language of this provision suggests that a claim will be brought to arbitration only in the event a court declines to certify a class action. The plaintiff accordingly contends that its claim cannot be heard in arbitration prior to a debate on the issue of certification.
[24] Finally, the plaintiff also emphasizes that though section 11.3.9 of the Rules of Conduct contains a class action waiver for claims exceeding $1,000, this waiver is said to be “severable in the event any court finds it unenforceable or inapplicable in a particular case” according to the terms of section 11.3.9.
Analysis
[25] The Court recalls that section 11.3 of the Rules of Conduct entitled “Arbitration” provides, in relevant parts as follows:
11.3. Arbitration.
All disputes not resolved through the process described in Rules 11.1 and 11.2 above shall be settled in arbitration as stated below. The arbitration award shall be final and binding and judgment thereon may be entered by any court of competent jurisdiction…
…
11.3.5. If IBOs become involved in a claim or dispute under the arbitration rules, they will not disclose to any other person not directly involved in the conciliation or arbitration process (a) the substance of, or basis for, the claim; (b) the content of any testimony or other evidence presented at an arbitration hearing or obtained through discovery; or (c) the terms or amount of any arbitration award. However, nothing in these Rules shall preclude a party from, in good faith, investigating a claim or defense, including interviewing witnesses and otherwise engaging in discovery.
…
11.3.7. To reduce the time and expense of the arbitration, the arbitrator will not provide a statement of reasons for his or her award unless requested to do so by all parties. The arbitrator’s award shall be limited to deciding the rights and responsibilities of the parties in the specific dispute being arbitrated.
…
11.3.9. No party to this agreement shall assert any claim as a class, collective, or representative action if (a) the amount of the party’s individual claim exceeds $1,000, or (b) the claiming party, if an IBO, has attained the status of Platinum either in the current fiscal year or any prior period. This subparagraph shall be enforceable when the applicable law permits reasonable class action waivers and shall have no effect when the applicable law prohibits class action waivers as a matter of law. In any case, the class action waiver provision, as well as any other provision of Rule 11, is severable in the event any court finds it unen­forceable or inapplicable in a particular case.
11.3.10. Class action claims are not arbitrable under these Rules under any circumstances; but in the event a court declines to certify a class, all individual plaintiffs shall resolve any and all remaining claims in arbitration.
[26] The Court further recalls that the parties freely entered into an extensive and detailed “Agreement to Arbitrate” as part of the Registration Agreement dated June 5, 2008, to which they remain bound.
[27] The Court will thus refer to the above-quoted provisions, collectively, as the parties’ arbitration agreement.
[28] The Court finds the parties’ arbitration agreement to be clear. First, section 11.3.9 of the Rules of Conduct allows class actions for an amount not exceeding $1,000. Second, claims over $1,000 are subject to a class action waiver. Third, as stated in section 11.3.10, class actions are not arbitrable under the Rules of Conduct under any circumstances. Finally, for claims under $1,000, in the event a court declines to certify a class, all individual plaintiffs shall resolve any and all remaining claims in arbitration.
[29] Equally clear in the mind of the Court are the terms of section 11.3.9 which further state that the class action waiver is enforceable when permitted by law but will have no effect when class action waivers are prohibited as a matter of law, which in turn raises the importance of legislative intent as discussed in more detail later in these Reasons for Order and Order. As noted earlier, section 11.3.9 also states that the class action waiver is severable if a Court were to find it “unenforceable” or “inapplicable”.
[30] The Court further recalls that there is no dispute between the parties that the relevant statutes applicable to this case, namely the Competition Act, the Ontario Arbitration Act and the Federal Courts Rules do not explicitly and expressly prohibit class action waivers.
[31] Against this background, and considering the clear wording of both sections 11.3.9 and 11.3.10, the Court rejects the plaintiff’s contention that the Court has jurisdiction over its class action claim and accordingly concludes that the plaintiff’s claim for $15,000 must be heard (i) by an arbitrator and (ii) on an individual basis in accordance with the parties’ arbitration agreement.
2) The Jurisprudential Principles Regarding No-Class Action Arbitration Clauses and the the Doctrine of the “Preferable Procedure”
[32] Although the Court rejects the plaintiff’s interpretation of sections 11.3.9 and 11.3.10 of the Rules of Conduct, a further question raised by the parties’ dispute concerns emerging jurisprudential principles with regards to no-class action arbitration clauses and the applicability of the “preferable procedure” doctrine in the present circumstances.
Defendant’s Position
[33] As a general proposition, the defendant contends that an arbitration agreement creates a “private jurisdiction” that is conferred to the arbitral tribunal, and thus diverts state-appointed courts of jurisdiction over all disputes falling within the scope of the said arbitration agreement.
[34] In keeping with this proposition, the defendant also submits that a plaintiff cannot request a court to assert jurisdiction over a matter that is subject to an arbitration agreement, on the mere basis that the plaintiff has chosen to proceed by way of a class action as the procedural vehicle to advance his claim.
[35] In this regard, the defendant refers to the jurisprudence of the Supreme Court of Canada which, argues the defendant, establishes that agreements to arbitrate, including ones that incorporate a class action waiver, must be enforced in the absence of clear legislative language to the contrary. Section 36 of the Competition Act, says the defendant, is void of any such legislative intent.
[36] Finally, whilst the defendant acknowledges that the provisions of the parties’ arbitration agreement are subject to the Ontario Arbitration Act, it argues that this Act, and more specifically s 7(5) does not apply in the case at bar.
Plaintiff’s Position
[37] In response, the plaintiff advances the proposition that the Court should consider the enforceability of the class action waiver in the context of the “preferable procedure” doctrine.
[38] More particularly, although the plaintiff agrees that the Competition Act, the Federal Courts Rules, and the Ontario Arbitration Act are all silent with regard to the validity of class action waivers, the plaintiff submits that the validity of a class action waiver must be decided in light of the “preferable procedure” doctrine. It is the plaintiff’s position that, in the present circumstances, a class action proceeding is the only way to ensure that the objectives of the Competition Act are truly respected and that justice is provided.
Analysis
[39] From the outset, the Court observes that both the plaintiff and the defendant refer to the recent Supreme Court of Canada decision in Seidel v TELUS Communications Inc., 2011 SCC 15, [2011] 1 SCR 531 [“Seidel”] in support of their respective position.
[40] The Seidel case involved a consumer’s claim against TELUS, a telecommunications service provider, pursuant to a cellular phone services contract concluded by the parties. The plaintiff in that case had sought certification of a class proceeding under the Business Practices and Consumer Protection Act, SBC 2004, c-2 (BPCPA) and invoked certain rights and protections pursuant to the BPCPA. TELUS sought to stay the proceedings and have them refer to arbitration pursuant to both the parties’ arbitration agreement and the British Columbia Commercial Arbitration Act, SBC 1986, c-3, s-15. The arbitration agreement in Siedel also contained a class action waiver.
[41] In a split decision (5-4), the majority of the Supreme Court of Canada allowed the claim pursuant to s 172 of the BPCPA. The majority found that section 172 - coupled with s 3 - of the BPCPA reflected the intention of the legislature to prohibit class action waivers. On this basis, the majority of the Supreme Court of Canada concluded that the class proceeding should proceed notwithstanding the arbitration clause contained in the arbitration agreement between the parties. The majority was of the view that s 172 of the BPCPA was in fact a public interest remedy and its policy objectives were incompatible with low-profile, private and confidential arbitrations.
[42] Although more recent, the Siedel case comes after a long string of Supreme Court of Canada decisions which have contributed to confirming Canada’s status as an “arbitration-friendly” jurisdiction. In particular, the Court recalls the Supreme Court of Canada’s landmark decision in Desputeaux v Éditions Chouette (1987) inc., 2003 SCC 17, [2003] 1 SCR 178 [Desputeaux], which stands for the principle that a statute cannot be assumed to exclude arbitration unless it so states (para 42). This principle was also acknowledged in Dell Computer Corp. v Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R.801 [Dell], Rogers Wireless v Muroff, 2007 SCC 35, [2007] 2 SCR 921 [Rogers] and Bisaillon v Concordia University, 2006 SCC 19, [2006] 1 SCR 666 [Bisaillon]. These cases - and the Siedel case does not take exception to this - all illustrate that arbitration agreements must be enforced by courts absent specific legislative language to the contrary.
[43] More particularly, the majority reaffirmed this principle in Seidel at paras 2 and 42:
[2] The choice to restrict or not to restrict arbitration clauses in consumer contracts is a matter for the legislature. Absent legislative intervention, the courts will generally give effect to the terms of a commercial contract freely entered into, even a contract of adhesion, including an arbitration clause. …
[42] For present purposes, the relevant teaching of Dell and Rogers Wireless is simply that whether and to what extent the parties’ freedom to arbitrate is limited or curtailed by legislation will depend on a close examination of the law of the forum where the irate consumers have commenced their court case. Dell and Rogers Wireless stand, as did Desputeaux, for the enforcement of arbitration clauses absent legislative language to the contrary.
[Emphasis in Original]
[44] The Court accordingly may not, absent legislative language to this effect, assert jurisdiction over a matter that is subject to an arbitration agreement. The enforcement of arbitration agreements has long been recognized by Canadian jurisprudence as an acknowledgment of the “jurisdictional choice” made by the parties. This has been the case in the face of class action waivers applicable to matters subject to public order consumer protection legislation void of language to the contrary (Dell).[1]
[45] It is likewise true that class actions, as a procedural vehicle, have long been recognized as serving the purpose of facilitating access to justice for citizens. It has further been confirmed by the Supreme Court of Canada that class action proceedings play an important role in our judicial system (Bisaillon, para 16). To quote the case law in this regard, class actions represent a “means of facilitating access to justice, promoting efficiency in and reducing costs associated with civil litigation, and deterring or modifying dangerous or risky behaviour …” (Seidel, para 135; Western Canadian Shopping Centres Inc. v Dutton, 2001 SCC 46, [2001] 2 SCR 534 ). For this reason, class action waivers are sometimes regarded with suspicion.
[46] However, courts have consistently defined class actions, as a procedural vehicule “whose use neither modifies nor creates substantive rights” (Bisaillon, para 17). Specifically, class actions cannot serve as a means of circumventing an agreement to arbitrate.
[47] In this regard, the Court recalls the Supreme Court of Canada’s reasoning in Bisaillon:
[17] The class action is nevertheless a procedural vehicle whose use neither modifies nor creates substantive rights …. It cannot serve as a basis for legal proceedings if the various claims it covers, taken individually, would not do so ….
[19] Similarly, recourse to this procedural vehicle does not change the legal rules relating to subject‑matter jurisdiction …
[22] In short, the class action procedure cannot have the effect of conferring jurisdiction on the Superior Court over a group of cases that would otherwise fall within the subject‑matter jurisdiction of another court or tribunal. Except as provided for by law, this procedure does not alter the jurisdiction of courts and tribunals. Nor does it create new substantive rights. …
[48] It is also noteworthy that the Supreme Court of Canada reiterated the above in Dell at para 107.
[49] In the present case, the plaintiff relied heavily on the case Griffin v Dell Canada Inc, [2009] OJ No 418 (Ontario Superior Court), [2010] OJ No 177 (Ontario Court of Appeal) [Griffin]) and its adoption of the “preferable procedure” doctrine in order to meet the underlying objectives of class actions, namely: access to justice, judicial economy and behaviour modification.
[50] The Court has not been persuaded that the “preferable procedure” doctrine is applicable in the circumstances and the Federal Courts Rules sections on class proceedings do not support the plaintiff’s argument on this issue.
[51] Nor has the Court been persuaded that upholding the class action waiver in the present circumstances would be unconscionable as implied by the plaintiff. On this point, the Court observes that in Siedel, while the majority chose not to address the doctrine of unconscionabilty (para 45), the minority would not have applied the doctrine, noting that “the courts have instead left the question whether arbitration is appropriate for particular categories of disputes to the discretion of the legislatures” (para 172).
[52] In sum, the Court finds that, absent clear legislative language prohibiting class action waivers, it must give effect to the parties’ agreement to arbitrate. Given that the plaintiff has argued that such intent can be found, in particular in the Competition Act, the Court now turns to this question.
3) The Competition Act
Plaintiff’s Position
[53] The plaintiff submits that the class action waiver contained in section 11.3.9 of the Rules of Conduct should not be upheld in the present circumstances because this would be contrary to the purposes of the Competition Act which creates a regime of public order that governs the conduct of companies in Canada and that aims to prevent anti-competitive practices. In this connection, the plaintiff relies on section 36 of the Competition Act which identifies the Federal Court of Canada as a court of competent jurisdiction under the Act.
[54] The plaintiff compares section 36 of the Competition Act to sections 3 and 172 of the BPCPA at issue in Siedel and submits that, as in Siedel, the plaintiff should not be held to the class action waiver.
Defendant’s Position
[55] The defendant contends that section 36 of the Competition Act and sections 3 and 172 of the BPCPA differ in many respects and that the analogy urged by the plaintiff is untenable.
Analysis
[56] The Competition Act is a federal statute that governs the conduct of business in Canada. Section 1.1 of the Act outlines that its purpose is to maintain and encourage competition in Canada in order to: i) promote the efficiency and adaptability of the Canadian economy; ii) expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada; iii) ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy; and, iv) provide consumers with competitive prices and product choices.
[57] As noted above, the plaintiff relies on section 36 of the Competition Act which states:
Recovery of damages
36. (1) Any person who has suffered loss or damage as a result of
(a) conduct that is contrary to any provision of Part VI, or
(b) the failure of any person to comply with an order of the Tribunal or another court under this Act, may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him, together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.
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Jurisdiction of Federal Court
(3) For the purposes of any action under subsection (1), the Federal Court is a court of competent jurisdiction.
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Recouvrement de dommages-intérêts
36. (1) Toute personne qui a subi une perte ou des dommages par suite :
a) soit d’un comportement allant à l’encontre d’une disposition de la partie VI;
b) soit du défaut d’une personne d’obtempérer à une ordonnance rendue par le Tribunal ou un autre tribunal en vertu de la présente loi,
peut, devant tout tribunal compétent, réclamer et recouvrer de la personne qui a eu un tel comportement ou n’a pas obtempéré à l’ordonnance une somme égale au montant de la perte ou des dommages qu’elle est reconnue avoir subis, ainsi que toute somme supplémentaire que le tribunal peut fixer et qui n’excède pas le coût total, pour elle, de toute enquête relativement à l’affaire et des procédures engagées en vertu du présent article.
[…]
Compétence de la Cour fédérale
(3) La Cour fédérale a compétence sur les actions prévues au paragraphe (1).
[…]
[58] The plaintiff further contends that an analogy can be drawn between the objectives of the Competition Act and its section 36, and the BPCPA, more particularly its section 172. Sections 3 and 172 of the BPCPA state the following:
Waiver or release void except as permitted
3. Any waiver or release by a person of the person’s rights, benefits or protections under this Act is void except to the extent that the waiver or release is expressly permitted by this Act.
Court actions respecting consumer transactions
172.(1) The director or a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in Supreme Court for one or both of the following:
(a) a declaration that an act or practice engaged in or about to be engaged in by a supplier in respect of a consumer transaction contravenes this Act or the regulations;
(b) an interim or permanent injunction restraining a supplier from contravening this Act or the regulations.
...
(3) If the court grants relief under subsection (1), the court may order one or more of the following:
(a) that the supplier restore to any person any money or other property or thing, in which the person has an interest, that may have been acquired because of a contravention of this Act or the regulations;
(b) if the action is brought by the director, that the supplier pay to the director the actual costs, or a reasonable proportion of the costs, of the inspection of the supplier conducted under this Act;
(c) that the supplier advertise to the public in a manner that will assure prompt and reasonable communication to consumers, and on terms or conditions that the court considers reasonable, particulars of any judgment, declaration, order or injunction granted against the supplier under this section.
Nullité de la renonciation non autorisée aux droits
3. Sauf dans la mesure où elle est expressément permise par la présente loi, la renonciation aux droits, avantages ou protections qui y sont prévus est nulle.
Recours judiciaires relatifs à des opérations commerciales
172 (1) Le directeur ou une personne autre qu'un fournisseur -- que cette personne ait ou non un intérêt, particulier ou autre, à faire valoir sous le régime de la présente loi ou qu'elle soit ou non touchée par l'opération commerciale à l'origine du litige -- peut intenter une action devant la Cour suprême en vue d'obtenir :
a) un jugement déclarant qu'un acte commis par un fournisseur, ou sur le point de l'être, ou une pratique qu'il utilise, ou est sur le point d'utiliser, en ce qui concerne une opération commerciale contrevient à la présente loi ou à ses règlements;
b) une injonction provisoire ou permanente interdisant au fournisseur de contrevenir à la présente loi ou à ses règlements.
[…]
(3) Si la Cour accueille l'action sous le régime du paragraphe (1), elle peut ordonner
a) que le fournisseur restitue à une personne les sommes ou autres biens ou choses, à l'égard desquels cette personne a un intérêt, et qui peuvent avoir été obtenus par suite d'une contravention à la présente loi ou à ses règlements;
b) si l'action est intentée par le directeur, que le fournisseur lui rembourse la totalité ou une partie raisonnable des frais engagés pour soumettre le fournisseur à une inspection sous le régime de la présente loi;
c) que le fournisseur informe le public, de manière efficace et rapide et suivant les modalités que la Cour estime raisonnables, du contenu de tout jugement, jugement déclaratoire, ordonnance ou injonction prononcé contre le fournisseur sous le régime du présent article.
[59] The Court recalls that the majority in Seidel, above, found that a section 172 claim under the BPCPA can be initiated by parties to a contract as well as third parties regardless or whether that person has a contractual relationship with TELUS. The majority also stressed that the section 172 of the BPCPA allows the consumer or third parties to bring an action in the British Columbia Supreme Court. Also, that court may grant remedies pursuant to section 172.
[60] The Court does not accept the plaintiff’s suggestion that the language and intent of section 36 of the Competition Act resembles the above-quoted