On June 2, 2006, the Supreme Court of British Columbia dismissed all claims in a proposed $130 million class action against the majority of non-alcoholic beverage brand-owners in British Columbia and their appointed beverage container agency, Encorp Pacific (Canada) ("Encorp").
The claim, initiated by the Consumers' Association of Canada and its president, Bruce Cran, essentially challenged the very manner in which Encorp, a not-for-profit corporation, operates and funds the deposit/refund recycling system for used beverage containers pursuant to the Beverage Container Stewardship Program Regulation and its successor, the Recycling Regulation (the "Regulation"). While the plaintiffs advanced a number of claims, there were two of primary significance:
- that the defendants, by using unredeemed deposits to fund the recycling system, had converted $70 million in deposit funds in breach of an alleged trust obligation they jointly owed to the consumers of B.C.; and
- that the defendants had allegedly, in charging a container recycling fee (CRF) that was identified separately from the product price, unlawfully passed $60 million of the cost of operating the recycling system on to the consumers of B.C.
In her Reasons for Judgment, the Honourable Russell J. agreed with the submissions of the defendants, advanced primarily by Fasken Martineau on behalf of Encorp and several brand-owners, that
- The deposit/refund system and the Regulation by which it was established could not be characterized as creating a trust, and there was no breach of trust or conversion of the deposit funds;
- The CRF is expressly authorized by virtue of the provincial government's approval of Encorp's stewardship plan, and is impliedly authorized by the Regulation, and is therefore lawful;
- The failure of the plaintiffs' fundamental premises largely disposed of the ancillary causes of action; and
- Even where there was a possibility of one or more of the ancillary causes of action standing alone, the plaintiffs failed to plead the material facts, nor was there any evidence to support their claims.
This case validates the manner in which the industry, through Encorp, has chosen to operate the deposit/refund system for recycling used beverage containers. In a strictly legal sense, however, it is perhaps more broadly significant in its reinforcement of a growing body of jurisprudence supporting the use of pre-trial interlocutory applications to streamline the increasingly cumbersome class action process, particularly in cases where pleadings that lack merit may nevertheless meet the low threshold for certification.
Encorp Pacific (Canada), McCain Foods (Canada), McCain Foods Limited, Dan-D Foods Ltd., Zellers Inc., Proctor and Gamble Inc., Ocean Spray International Inc., Great Western Brewing Company Limited, Canada Pure Water Company Ltd., Canadian Springs Water Co., Tetley Canada Inc., and Clearly Canadian Beverage Corp. were successfully represented by Geoffrey Cowper Q.C. and Tracey M. Cohen, with expertise on class action matters provided by Andrew Borrell and additional assistance provided by associates Michelle Booker and Alexis Kerr, all of the Vancouver office.
The Consumers' Association of Canada et al v. Coca-Cola Bottling Company et al, 2006 BCSC 863 (CanLII)