By Ahmad Hathout
The country’s largest telecoms are challenging a decision by Quebec’s highest court allowing a proposed class of plaintiffs to seek punitive damages for device unlocking fees.
Rogers, Bell, Telus and Quebecor are asking the Supreme Court of Canada this week to review the December decision by the Quebec Court of Appeal, which stems from a Fido (Rogers) customer being charged what she called an “abusive” $50 plus tax to unlock her device before going on an overseas trip in 2016.
The telecoms allege the Quebec Court of Appeal incorrectly interpreted parts of the province’s Consumer Protection Act (CPA), such as a condition in the law that allows for punitive damages if the businesses specifically fail to fulfill an obligation. The telecoms argue they had a contractual right to both sell locked devices and charge to unlock them – practices the CRTC acknowledged as valid to initially curb fraud – before the regulator banned the practices in 2017.
“If upheld, this ruling will have serious consequences for business stability in Quebec,” the leave application reads. “Indeed, the possibility of claiming punitive damages in the context of the price revision of goods or services, if it is maintained, will significantly increase the legal uncertainty of consumer contracts for companies doing business in Quebec, and it will have significant, very difficult to measure effects on trade in the province, while businesses are not exposed to such risks in other Canadian provinces.”
The application adds that the ruling would lower the threshold for justifying punitive damages and open the door to more class actions “for acts committed in compliance with the law.”
In February 2024, the Quebec Superior Court authorized the class of plaintiffs to sue the large telecoms 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 Quebec Court of Appeal 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 CPA and the Civil Code of Quebec.
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 plaintiffs must prove their case at trial to see any of that.
