Reimbursement program not a substitute for recovery through a class proceeding: the Quebec Court of Appeal
I. Introduction
In Lachaine c. Air Transat AT inc., the Québec Court of Appeal reversed the Superior Court’s decision and allowed authorization of a class action for customers who had travel cancelled by Canadian airlines during the COVID-19 pandemic.
The Court of Appeal authorized the class action even though the defendant airlines were implementing reimbursement programs to refund customers for the value of their cancelled air travel.
II. Facts
The plaintiffs had purchased plane tickets from major Canadian airlines, but their flights were cancelled due to the COVID-19 pandemic and Canada’s decision to close its borders. The defendant airlines offered customers credits for future travel[i], taking the position that this practice was consistent with the terms and conditions of the customers’ cancelled tickets.[ii] Later on, however, in April 2021, some of the defendant airlines reached agreements with the federal government to offer voluntary reimbursements to customers.[iii]
The plaintiffs’ original statement of claim alleged that there was no contractual, common law or statutory basis for the defendant airlines to offer credits as opposed to reimbursement. The plaintiffs sought a class action in order to allow its proposed class members to receive refunds.[iv] After the defendant airlines offered reimbursement, however, the plaintiffs amended their claim and re-focused their arguments, claiming that the reimbursement programs did not address the plaintiffs’ residual claims for interest accrued from the time of their ticket purchase to the time of reimbursements.[v]
III. Legal Context
Before a class action can proceed to a trial on the merits, prospective plaintiffs must demonstrate that their case meets the statutory requirements for authorization. The authorization motion is typically the first step in any class action. During an authorization motion in Quebec, the plaintiffs have the onus to demonstrate that: the claims of the members of the class raise identical, similar or related issues of law or fact; the facts alleged appear to justify the conclusions sought; the composition of the class makes it difficult or impracticable to apply the rules for mandates to take part in judicial proceedings on behalf of others or for consolidation of proceedings; and the class member appointed as representative plaintiff is in a position to properly represent the class members.[vi]
IV. The Superior Court of Québec’s Decision
The Superior Court of Québec (per Justice Bernard Tremblay) refused to authorize the class action against the majority of the air travel company defendants in June 2021, and against Sunwing in October 2021.[vii] Justice Tremblay found that the plaintiffs had failed to satisfy the first and second criteria for authorizing class actions under article 575 of the Québec Code of Civil Procedure because the claims between proposed class members were not sufficiently similar (“commonality”), and the claims did not disclose a cause of action.[viii]
With regard to commonality, Justice Tremblay found that there were significant differences between the terms, rates and conditions for the different tickets purchased by proposed class members, with further variation between the defendant airlines. Justice Tremblay found that these differences precluded a finding of commonality between the class members’ claims.[ix]
Further, Justice Tremblay found that the claims did not disclose a cause of action because the defendant airlines’ implementation of a voluntary reimbursement program made the plaintiffs’ claims untenable because they could no longer show that they had incurred damages.[x]
V. The Court of Appeal’s decision
The Québec Court of Appeal[xi] reversed the Superior Court’s decision, granting the plaintiffs’ appeal in part, and authorizing the class action.
With respect to commonality, the Court of Appeal found that the Superior Court judge erred by focusing on whether the proposed class action would result in common interpretation of contract terms, rates and conditions. The Court of Appeal characterized this as the first judge deciding that there were not common answers between class members. Instead, the Court of Appeal found that the focus of a court’s analysis on commonality should be whether there were common issues between the plaintiffs.[xii] The Court of Appeal found that the plaintiffs had appropriately identified common issues, namely that all plaintiffs had been refused reimbursement or had been issued reimbursements which did not account for interest, and that the defendant airlines were all similarly situated air travel companies, which had sold and then cancelled airline tickets.[xiii]
With respect to whether the plaintiffs had a viable cause of action, the Court of Appeal found that the Superior Court judge had prematurely concluded that the plaintiffs had no viable cause of action. In particular, the Court of Appeal highlighted that the court did not have details about the proposed reimbursement program, including whether the different reimbursement programs would refund the proposed class members for all damages that they would be entitled to through the courts.[xiv] For example, the Court of Appeal noted that the reimbursement program would not eliminate the class members’ claims for interest given the time elapsed between the ticket purchase and the reimbursements, nor would the reimbursements account for the plaintiffs’ claims for moral or punitive damages.[xv]The plaintiffs were not successful in all aspects of their appeal. First, the Court of Appeal made clear that the plaintiffs had not demonstrated that the proposed class had either a global or national scope. Consequently, the class was limited to Québec.[xvi] Second, the Court of Appeal found that one of the representative plaintiffs was not an appropriate plaintiff, because they had obtained a reimbursement by the time the appeal was heard.[xvii]
VI. Why this matters
This case is a reminder of the challenges to defendants in opposing authorization. It further raises important strategic considerations for defendants who try to take proactive steps to properly indemnify their customers and in turn avoid class actions.
The Court of Appeal’s decision reaffirmed that a judge at the authorization hearing has a “limited role”, particularly emphasizing that a judge’s focus at the authorization stage is to dismiss untenable causes of action.[xviii] The Court of Appeal was therefore willing to authorize the class action based on the plaintiffs’ residual claims related to interest on the alleged damages, and punitive damages.
Above all, this decision offers guidance for defendants who seek to properly indemnify their customers and in turn avoid class actions through crediting, refunding or reimbursing their customers. The Court of Appeal’s analysis reflects a concern that the implemented reimbursement program did not account for all damages that may be available to the plaintiffs through a civil claim (in this case, interest, and punitive damages). The Court of Appeal emphasized that detailed evidence demonstrating that the reimbursement program supplanted the need for a civil claim would be necessary for a defendant to demonstrate that a claim did not disclose a cause of action. At the authorization stage in Quebec, for defendants to file such evidence first requires leave. Corporate defendants – across all industries – would be well advised to carefully and strategically consider customers’ potential damages from the outset as they consider any reimbursement or recall program, whether in anticipation of or in response to a class action.
The Defendants have recently sought leave to appeal before the Supreme Court of Canada, but no decision has yet been rendered.
[i] Lachaine v. Air Transat AT inc., 2021 QCCS 2305; Lachaine c. Air Transat AT inc., 2024 QCCA 726 [“Lachaine”] at para 7
[ii] Lachaine v. Air Transat AT inc., 2021 QCCS 2305 at para. 3.
[iii] Lachaine v. Air Transat AT inc., 2021 QCCS 2305 at paras. 23-27; Lachaine at para 12
[iv] Lachaine v. Air Transat AT inc., 2021 QCCS 2305 at paras. 2;
[v] Lachaine v. Air Transat AT inc., 2021 QCCS 2305 at paras. 39;
[vi] See, Québec, Code of Civil Procedure, CQLR c C-25.01, a. 575; see e.g., Ontario, Class Proceedings Act, 1992, SO 1992, c 6, s. 5. We note that there are important differences between the certification processes across Canada, requiring analysis under relevant legislation across each province.
[vii] Lachaine at paras 13-15
[viii] Code of Civil Procedure, CQLR c C-25.01, a. 575
[xi] Comprising of Justices Gagnon, Beaupré, and Baudouin.
[xiv] Lachaine at paras 30-31
[xvi] Lachaine at paras 45-46
[xviii] Lachaine at para 21 citing Saint Joseph's Oratory of Mount Royal v. JJ, 2019 SCC 35 at paras 10-11
