By Ahmad Hathout
The Quebec Court of Appeal ruled last month that a trial court should consider punitive damages in a proposed class action lawsuit involving the reimbursement of phone unlocking fees.
In February 2024, the Quebec Superior Court authorized a class of plaintiffs to sue Rogers, Bell, Telus, and Quebecor for charging phone unlocking fees to Quebec customers between the period of August 14, 2014 and December 1, 2017.
But the court denied a request to allow the class to seek punitive damages, which would go beyond reimbursement, in part because it believed that the telecoms did not act maliciously. The telecoms had argued before the court that the regulator did not ban the practice of selling locked phones and unlocking fees during the period in question and, when it did, they complied with the order. (The CRTC, however, recently told two telecoms to stop the practice.)
While punitive damages are exceptional, the appeal court said the plaintiff, at this stage, need only show that it is possible or tenable for a court to conclude that there was exploitation of consumers “intentionally, maliciously, or vexatiously, or through ignorance, recklessness, or gross negligence,” as per sections of the province’s Consumer Protection Act and the Civil Code of Quebec.
“I am of the opinion that, indeed, such an argument is tenable,” the appeal justice wrote in the December 18 judgment.
Punitive damages function “to protect the integrity of the Consumer Protection Act by penalizing any action incompatible with the objectives pursued by the legislature,” the justice noted.
The justice ordered the lower court to amend its original ruling with instruction to the trial court to consider whether class members, if they prove their case, are entitled to punitive damages and how much. The class is seeking $25 per member in punitive damages.
The head of the class was a Fido customer who, in 2016, paid what she called an “abusive” $50 plus tax to unlock her phone to use a local SIM card and avoid roaming and long-distance charges while in the Philippines. She has argued that removing such a charge would not have caused hardship to these companies because they don’t charge them anymore, and alleges the practice produced a “cash cow” for the telecoms to the tune of millions of dollars a year during the period in question.
Before it banned the sale of locked devices in December 2017, the CRTC said four years earlier that “locked devices can be a barrier for customers wishing to subscribe to a competing or foreign mobile broadband service provider while traveling” and that the practice “does not promote market dynamism.” However, the telecoms “have demonstrated that locking may be necessary in some cases at the start of a contract to limit subscription fraud,” it continued.
Bell declined to comment. Requests for comment to Rogers, Telus and Quebecor were not answered.
Photo of Quebec Court of Appeal via Wikimedia
