Small businesses must go through arbitration, not class action suit
OTTAWA – In an arcane but important ruling, the Supreme Court today determined that when Telus Ontario business subscribers must enter into mediation and arbitration when they have a dispute, and are not to join class action lawsuits.
The proposed class action against Telus was on behalf of about two million Ontario residents who entered into mobile phone service contracts with Telus challenging an undisclosed practice of rounding up calls to the next minute such that customers believed they were overcharged.
The question decided with today’s decision is whether both consumers and non‑consumers (business customers) can go into a class action litigation, since Telus’s wireless contracts include a clause stipulating that all related claims must be determined through mediation or arbitration.
This clause was invalidated by the Consumer Protection Act of Ontario that allows consumers to pursue their claims in court. However, since the business customers do not benefit from this protection, a lower court had found that business customers should be able to be included in the Class Action suit.
This ruling is not strictly a telecommunication issue but would apply to similar cases involving small business customers in Ontario, who may have contracts which stipulate arbitration.
The case was not a slam dunk either, since the Court voted 5 to 4 in favour of Telus with the Chief Justice voting for the minority – which is uncommon.
“We are pleased with the Court’s decision to uphold the arbitration clause in our contracts with business customers,” said Telus in an email statement. “Both the Supreme Court of Canada, in this and other decisions, and the Ontario Legislature, in enacting the Arbitration Act, have long recognized the virtues of commercial arbitration as an effective and appropriate method of resolving disputes.
“Arbitration supports our desire to resolve issues directly with our business customers in a manner that is simple, timely and cost-effective for them. We believe that most business customers feel the same way, and that their support for arbitration is reflected in the positions taken by the Canadian Chamber of Commerce and the Canadian Federation of Independent Business, both of whom supported Telus’s arguments before the Supreme Court of Canada.”
The Public Interest Advocacy Centre, on the other hand, argues that “there is a need now for legislation to fix this artificial divide between ‘consumers’ and ‘business’. Expect provincial arbitration clause prohibitions to be widened,” said John Lawford, executive director and general counsel at PIAC.
He says most of the hybrid consumers that were discussed got retail plans, meaning there is a very good argument they are in the class action.
“If the companies profit by selling retail plans to people using their products and services for small business or gig economy jobs, they have to live with it – those are consumers. If they want immunity from a large consumer class they will have to sell enterprise or business plans to those folks,” he concluded.
The class action of consumers will continue its course while business customers will have to go through mediation and arbitration.
