Up, up and away: BC Court of Appeal dismisses unjust enrichment class action against international airlines

Airplane

Class Action Alert

By:

On September 12, 2017, Mr. Justice Groberman, writing for the BC Court of Appeal, upheld the decision of the BC Supreme Court in Unlu v Air Canada, 2015 BCSC 1453 (“Unlu”), refusing to certify as class proceedings five separate actions against each of Air Canada, Deutsche Lufthansa Aktiengesellschaft, Delta Air Lines, Inc., United Air Lines, Inc., and British Airways PLC (the “Airlines”).1

The chambers decision2

In Unlu, the plaintiffs sought certification under the Class Proceedings Act, RSBC 1996, c. 50 (the “CPA”) of their claims under the Business Practices and Consumer Protection Act, SBC 2004, c. 2 (the ”BPCPA”) and for unjust enrichment. Each respective plaintiff had purchased international air travel tickets. These tickets, the plaintiffs alleged, improperly described the amount paid for fuel surcharges as “taxes” or “taxes and fees” rather than as airline charges. The plaintiffs argued that the classification of fuel surcharges as “taxes” when they were not collected by a government agency was a deceptive pricing practice contrary to the BPCPA and the receipt of such amounts unjustly enriched the Airlines.

Madam Justice Adair of the BC Supreme Court refused to certify the proceedings on multiple grounds. In particular, Justice Adair held that the plaintiffs had failed to plead the requisite “interest” to support their claim for a restoration order under the BPCPA and further failed to demonstrate common issues relating to the claims. Even if such common issues could be crafted, Justice Adair found that a class proceeding would not be the preferable procedure, as required by s. 4 of the CPA.

Issues on appeal

In the Appeal Decision, the plaintiffs abandoned their claims under the BPCPA and sought only to have their respective claims in unjust enrichment certified under the CPA. The plaintiffs argued that the ticket receipts each plaintiff received after purchasing airline travel formed part of their respective contracts with the Airlines, and while the plaintiffs acknowledged that the Airlines were entitled to keep the amounts properly shown as airline charges and had the legal right to impose fuel surcharges, they argued that the Airlines were not entitled to retain the amounts shown as “taxes” or “taxes and fees”. The retention of those fees – they argued – resulted in the Airlines’ unjust enrichment.

The decision

Sufficiency of the pleadings

In his analysis with respect to whether each plaintiff had satisfied the requirement of s. 4(1)(a) of the CPA that “the pleadings disclose a cause of action”, Justice Groberman noted that each of the plaintiffs’ respective claims for unjust enrichment were only briefly set out in the notices of civil claim.

Each of the plaintiffs pleaded, in essence, that (with reference to the Simsek action) “in charging and collecting a 'YQ' [the fuel surcharge] pursuant to the Deceptive Pricing Practice, the Defendant has received a benefit, and that the Plaintiff and putative class members have suffered a corresponding deprivation for which there is no juristic reason […]”. They further pled that there was no juristic reason for such enrichment because the contract between each of the plaintiffs and the respective Airlines did not refer to a fuel surcharge being payable to the Airlines.

Justice Groberman held that the pleadings did not contain “sufficient detail” to disclose a cause of action under s. 4(1)(a) of the CPA, in particular because the plaintiffs failed to describe and interpret the document or documents which they alleged constituted the contract with the Airlines on which their claims depended.

Although Justice Groberman was unable to conclude that the claims could never set out a cause of action with more “elaborate and precise pleadings”, he nonetheless found that the potential class proceeding could not be saved by further amendments, finding agreement with Justice Adair that each of the plaintiffs had failed to satisfy the commonality and preferable procedure requirements of the CPA. At paras 38-39:

[38]       That said, I would not, on the material before the court, conclude that the claims could not, with more elaborate and precise pleadings, properly set out causes of action sounding in unjust enrichment.

[39]       As I will discuss, the judge had a second basis for dismissing the certification application. She considered that the plaintiffs had not identified any common issues that could be efficiently dealt with in class proceedings. For reasons that follow, I am of the opinion that the judge was correct in that assessment. Accordingly, it is unnecessary to say more about amendments to the pleadings that might serve to properly disclose a cause of action.

Common issues

Each of the plaintiffs had originally proposed the following common issue:

[22] …

vii.        At all times material to these proceedings, did the Defendant engage in a practice of airfare pricing which excluded and separated amounts charged pursuant to the “YQ” [or, in the case of Delta, YR] code from the cost of the Services, and instead classified and/or included those “YQ” [or, in the case of Delta, “YR”] amounts as or in “taxes” payable to a third party, when in fact the amounts charged by the Defendant pursuant to the “YQ” [or, in the case of Delta, “YR”] code were amounts retained by the Defendant and diverted entirely to its own use (the “Deceptive Pricing Practice”)?

In evaluating this proposed common issue, Justice Groberman found that there were critical factual issues requiring individualized investigation that must be determined before proposed issue (vii) could be considered a common issue. In particular, it would need to be determined whether each class member purchased their ticket from an authorized agent or independent vendor, as well as what form of receipt each received. As such, Justice Groberman held that there were insufficient commonalities among the class members to proceed. Although he noted that this did not necessarily preclude the possibility that common issues could properly arise amongst a much more narrowly defined class, he held that such a narrow class could not be certified in the case at bar and even if such a narrow class could be construed it would not be suitable for purposes of invoking a class proceeding, stating:

[48]       Counsel for the plaintiffs suggests that the problem might be alleviated by redefining the class, both by limiting the class period and by narrowing the description of ticket sellers whose customers qualify for class membership. While I would not rule out the possibility of common issues arising in respect of a very narrow class (perhaps, for example, customers of a single travel agent in a particular time period), nothing in the evidence would allow the court to define such a class, nor are the current actions suitable vehicles by which to conduct such narrow litigation.

[49]       Proposed common issue (vii) is the key to the unjust enrichment claims. Without it, there can be no efficacy in proceeding with these matters as class proceedings. I agree with the chambers judge’s conclusions that it has not been shown that issue (vii) raises issues common to class members.

As a result, the Court of Appeal dismissed the appeal.

This case is an example of the fact that the mere pleading of a claim for unjust enrichment where such a claim is dependent on the existence of a contract and its contractual terms will not, without more, provide a basis upon which the courts will certify a class proceeding.



[1] Simsek v United Airlines, Inc., 2017 BCCA 316 (the "Appeal Decision”).

[2] For a more detailed review of the chamber judge’s reasons for judgment, see here.