On October 1, 2012, the Superior Court of Quebec ruled on two motions for authorization to institute a class action against United Parcel Service du Canada Ltée ("UPS") and FedEx Trade Networks Transport et Courtage (Canada) Inc. ("FedEx"). The Honourable Justice William Fraiberg concluded that both Motions for Authorization did not meet the criteria required under Article 1003 of Quebec's Code of Civil Procedure to authorize the class action. More particularly, with respect to M. Leblanc's Motion for Authorization against UPS (the "Motion for Authorization"), the Court found that: 1) the Motion for Authorization did not raise identical, similar or related questions of law or facts (Art. 1003a); 2) that the facts alleged did not appear to justify the conclusions sought (Art. 1003b)); and that 3) Mr. Leblanc was not in a position to represent the members adequately (Art. 1003d)).
This decision is important for both courier companies who perform customs clearance services on behalf of vendors, as well as all vendors located outside of Canada who deal with Quebec consumers.
The Motion for Authorization brought by M. Leblanc against UPS is one of three class actions brought in Canada over brokerage fees charged to consumers in Canada by UPS for the customs clearance of certain goods from the United States into Canada. The class action in British-Columbia was dismissed on the basis of a motion for summary judgment and was upheld on appeal. The Ontario class action was certified, but appeals and leaves to appeal are pending. UPS has thus far been successful in one application for leave to appeal in Ontario. The authorization for a class action in Quebec has now been dismissed.
In Quebec, the Petitioner, M. Leblanc, sought authorization to undertake a class action on behalf of a class comprising of individuals who were charged brokerage fees for the international delivery of goods in Canada for supposedly unsolicited brokerage services rendered by UPS.
The facts can be summarized as follows:
M. Leblanc, a Quebec resident, purchased a shirt from Vicki Batwin, trading as "Vicki's Corner" of Oceanside, New York through e-Bay on May 1, 2004 for which he paid the price of $11.99 US plus a shipping and handling fee of $10. Ms. Batwin contracted with UPS for the transport of the shirt to Mr. Leblanc's door.
Ms. Batwin mistakenly declared the value of the shirt she sold Mr. Leblanc at $25 US on the UPS shipment documents instead of its $11.99 purchase price. As a result, it was assessed at a customs value of $34.27 Canadian. Mr. Leblanc was charged $16.80 in brokerage fees and $7.68 in taxes (inclusive of those on the brokerage fees) for a total of $24.48. UPS's driver then presented the invoice to Mr. Leblanc's spouse when he delivered the shirt and she paid it on his behalf in cash. Had M. Leblanc refused to pay these charges, Mr. Leblanc or his spouse could have requested that the goods be returned to the shipper, Ms. Batwin, or held in UPS Canada's Montreal facility pending customs clearance by another broker or by Mr. Leblanc himself.
Invoking the Civil Code of Quebec (the "CCQ") and the Quebec Consumer Protection Act (the "CPA"), M. Leblanc sought to bring class action against UPS in recovery of the fees for customs brokerage services charged to him and other Quebec residents as well as $20 in punitive damages under section 230 CPA because they had not ordered the services.
Decision of the Superior Court
In dismissing the Motion for Authorization, the Superior Court of Quebec found that the governing law was not that of Quebec, but rather that of each of the American state in which each of the distinct contracts of carriage for goods were made between the vendors and UPS, rendering class action treatment unsuitable. In effect, the Court found that not only would the governing law differ in each case, but not all contracts would involve a consumer or be contracts of adhesion (for example the contract between a courier company and Amazon would not be a consumer contract or a contract of adhesion).
Given that Quebec law was found not to apply, the Court further held that M. Leblanc could not seek punitive damages under the CPA since there was no consumer contract.
Moreover, the Court found that although there was no evidence that M. Leblanc was made aware of the existence of the brokerage fees, the bill of lading contained an implicit authorization to perform the brokerage services for a price to be determined by the value of the service. In effect, the Court held that the brokerage services performed by UPS were unavoidable and a necessary incident of the contract of carriage according to its nature and in conformity with the law. More particularly, the Court found that knowledge of the requirement of customs clearance and knowledge that only the courier companies can perform that service for door-to-door delivery must be imputed to both the shipper, Ms. Batwin, and the Petitioner, M. Leblanc. Both considerations were found to be matters of law and therefore "deemed knowledge".
With respect to the allegation that the brokerage services performed were unsolicited, the Court determined that the obligation to inform consumers of the brokerage fees is ultimately the responsibility of the vendors, such as Ms. Batwin, not the courier companies such as UPS, since the former has the primary relationship with the consumer and is thus in the best position to obtain and provide them with all the material information.
With respect to the amount of brokerage fees charged by UPS to M. Leblanc, the Court concluded that M. LeBlanc did not offer any evidence whatsoever that the fees charged by UPS were excessive or "abusive". The point of comparison drawn to Canada Post was found to be inappropriate since Canada Post is a non-profit government service that is not competitive with the seamless and rapid door-to-door service provided by UPS.
Finally, the Court concluded that Mr. Leblanc lacked sufficient interest to sue UPS because the brokerage fees he paid were occasioned by the error of his vendor who overstated the customs value of the shirt he imported. But for this error, the shirt would not have attracted any brokerage fees.
This is an important decision for courier companies who perform customs clearance services on behalf of vendors, as well as all foreign vendors dealing with Quebec consumers. It confirms that the obligation to inform consumers of the brokerage fees related to customs clearance services is ultimately the responsibility of the vendors not the courier companies. Furthermore, the decision confirms that class action treatment is not suitable where the relevant facts as well as the applicable law for each class member are not the same.
* UPS was represented by senior co-counsel John Campion (Toronto) and Eleni Yiannakis (Montréal) and assisting co-counsels Noah Boudreau (Montréal), Antonio Di Domenico (Toronto) and Robin P. Roddey (Toronto).