In Rebuck v. Ford Motor Company, 2022 ONSC 2396 (Rebuck), the Ontario Superior Court of Justice dismissed a certified class action on its merits by way of summary judgment. The claim sought $1.5 billion in damages on behalf of a national class with respect to alleged breaches of misleading advertising provisions in the Competition Act and certain provincial consumer protection statutes. The case highlights how success on certification does not guarantee success on the merits, and offers valuable guidance on the types of evidence relevant to defending false advertising class actions.

Background

In 2016, the plaintiff commenced this class action against Ford on behalf of a national class, claiming damages of $1.5 billion for alleged breaches of the Competition Act as well as the consumer protection statutes of several provinces. The core allegation was that Government of Canada-mandated “EnerGuide” labels that were affixed by Ford to windows of its vehicles had misled potential purchasers about the vehicles’ fuel efficiency and that Ford bore legal responsibility for the damages that the plaintiff class allegedly suffered as a consequence.

Specifically, the plaintiff argued that although Ford had tested the fuel consumption of its vehicles using the most up-to-date “5-Cycle Test” method, and had subsequently become aware that the fuel consumption figures contained in the EnerGuide labels (which were based, as per Government of Canada requirements at the time, on the older and less accurate “2-Cycle Test” method) were understated, Ford had omitted to disclose this in the EnerGuide labels or to correct the impression allegedly given by the labels in any other way.

Certification Decision (2018)

The plaintiff moved for certification in 2018. Ford opposed certification, arguing that, among other things:

• No misrepresentation: the limited evidence tendered by the plaintiff (i.e., the text on the EnerGuide labels and Ford’s other promotional materials) did not establish that a misrepresentation was made, nor could representations arising from an industry-wide fuel consumption rating system promoted by the federal government (such as EnerGuide) be actionable as misrepresentations;
• No commonality: the limited evidence tendered by the plaintiff did not establish common issues between the putative class members, given that each consumer in the automobile market approaches promotional materials from their own particular point of view; and
• No causality: the plaintiff could not establish a causal connection between the representations made in the EnerGuide labels and the damages allegedly suffered by class members.

The Court nevertheless ruled for the plaintiff and certified the class action on the following grounds:

• The representations on the EnerGuide labels were objectively inaccurate and misleading, since they were based on the results from the older and less accurate test rather than the newer and more accurate test;
• Individualized evidence was not required, given that the alleged misrepresentations that formed the heart of the claim were made in writing within nationally disseminated materials, such as the EnerGuide Case law had affirmed that sufficient commonality could be established on the basis of this evidence where the representations at issue are in written form; and
• The plaintiff had adequately pled a causal connection between the representations and alleged damages by claiming that the alleged misrepresentations concerning fuel consumption had caused buyers and lessees to spend more on fuel than they had anticipated. Notably, unlike common law claims for misrepresentation, the plaintiff was not required to establish actual reliance (i.e., that buyers and lessees of Ford vehicles had actually relied on the content of the EnerGuide labels in deciding to buy or lease those vehicles).

In light of the foregoing, the Court held in favour of the plaintiff and certified six common issues.

The Summary Judgment Motions (2022)

Almost four years after certification was granted, both parties elected to move for summary judgment. The plaintiff brought a motion for summary judgment on three of the six certified common issues:

• whether Ford had breached 52 of the Competition Act (i.e., by making a false or misleading representation for the purpose of promoting a product);
• whether Ford had breached sections 14 and 17 of the Consumer Protection Act, 2002 (Ontario) and parallel provisions of other provincial consumer protection legislation by making false, misleading or deceptive representations; and
• whether the class members were entitled to damages.

Ford brought a cross-motion to have the entire action dismissed.

Notably, during the years that elapsed between the certification motion and the hearing of the summary judgment motions in April 2022, the parties had built a substantial evidentiary record (comprised of filed documents, affidavits and transcripts) upon which the parties and the Court agreed that the common issues could be adjudicated. Furthermore, the parties submitted extensive arguments in support of their positions on the merits, including a 340-page factum prepared by Ford.

The Decision

Based on the record and parties’ submissions, the motion judge ruled in favour of Ford and dismissed the class action in its entirety, with respect both to the Competition Act and to the consumer protection law claims.

Section 52 of the Competition Act

In order to prove a breach of the Competition Act, the plaintiff was required to establish that: Ford had knowingly or recklessly made a false or misleading representation; and the class members had suffered damages as a result.

The Court affirmed that s. 52 of the Competition Act only applies where a party makes a representation in issue and does not impose a general duty on a party to disclose information (i.e., information updating or contextualizing a representation previously made). As such, whether Ford had breached s. 52 of the Competition Act would be determined with reference to the specific representations made by Ford in the EnerGuide labels, without consideration of whether Ford ought to have disclosed the matter of the transition between the two test methods to the public.

The Court held that the content of the EnerGuide labels had not constituted a false or misleading representation for two reasons.

Firstly, the content of the EnerGuide labels complied with federal government guidelines prescribing its content and the required fuel consumption test method. The Court held that compliance with such guidelines cannot fairly or reasonably amount to a breach of federal competition law. In other words, the legislature should not be held to have criminalized or otherwise impugned its own EnerGuide labels. The motion judge noted that to find otherwise would violate an established principle of statutory interpretation: the presumption of consistency. This principle affirms that where federal statutes can be interpreted so as not to interfere with one another, that interpretation is to be preferred. Interestingly, in this case he applied that principle to a purported conflict between a statute and the federal guidelines underlying the EnerGuide program – holding that, since Ford had complied with those guidelines, it could not be held to have breached federal competition law in doing so.

Secondly, under s. 52(4) of the Competition Act, a Court must consider “the general impression conveyed by a representation” in determining whether that representation was false or misleading. There was no dispute that each of the statements made in the EnerGuide labels was literally true. Accordingly, the Court held that the alleged misrepresentation was not inherently obvious in the circumstances. The Court noted that in such cases, plaintiffs may often supplement evidence of “general impression” with focus group, survey or expert evidence. However, in this case, while the plaintiff argued that the “general impression” created by the EnerGuide labels was that the fuel consumption estimates represented the median of what drivers could expect to achieve, the plaintiff did not tender any evidence on point beyond an affidavit that he swore concerning how he himself was allegedly misled. As a result, the Court held that there was insufficient evidence of any alleged class-wide expectation of fuel consumption.

Consumer protection legislation

In order to prove a breach of the relevant provincial consumer protection legislation, the plaintiff was once again required to establish that Ford had made a false or misleading representation and that the class members had suffered damages as a result. In contrast to the Competition Act claim, however, the plaintiff was entitled under the consumer protection legislation to argue misrepresentation by non-disclosure. The plaintiff made such an argument in addition to asserting the foregoing “impression” argument that was made under the Competition Act.

The Court rejected the plaintiff’s “impression” argument for the same reasons as it did under the Competition Act claim. With respect to the misrepresentation by non-disclosure argument, the Court considered the specific content of the EnerGuide labels and whether the material facts purportedly omitted deceived customers, and thus, required further disclosure. The EnerGuide labels contained two statements (one in block letters) referring consumers to government fuel consumption guides, which themselves made clear that the fuel consumption figures contained in the EnerGuide labels were provided for comparison purposes and not to predict actual fuel consumption.

Ford led uncontroverted expert evidence that Google search rankings for the government fuel consumption guides were high and that consumers for whom fuel consumption was important would likely have consulted them. The plaintiff did not lead evidence that despite the EnerGuide label’s references to the guidelines, consumers simply relied on the EnerGuide labels without consulting the guidelines, nor that Ford knew that this was the case. Ultimately, the Court was not persuaded on the evidence that additional disclosure had been required and held that the plaintiff had failed to establish a false or misleading representation by omission.

Damages

Given the motion judge’s findings on the foregoing issues, the damages common issue was also decided in Ford’s favour. The motion judge held that even if the plaintiff had prevailed in establishing liability under the Competition Act and/or the consumer protection legislation, he would likely have failed to establish that damages could be determined on an aggregate basis given a myriad of further hurdles (i.e., the need for individualized assessments, detrimental reliance issues, limitation periods and privity of contract problems).

Key Take-Aways

The decision is an example of a court dismissing a class action by way of summary judgment and on its merits after certification is granted.

While class action counsel will want to be on the lookout for a possible appeal, Rebuck highlights:

• how success on certification does not guarantee success on the merits of a case, and how summary judgment motions are likely to become more prevalent, especially in light of the amendments to Ontario’s Class Proceedings Act, 1992 that require courts to hear dispositive motions and motions that may narrow the issues to be determined in advance of certification (unless ordered that the motion be heard in conjunction with certification);
• that courts will generally require evidence that the defendants knew or ought to have known that their customers would rely on misleading or deceptive omissions to prove that a representation violates provincial consumer protection legislation;
• that representations made in compliance with federal guidelines will generally not be found unlawful; and
• how consumer focus group, survey or expert evidence may be relevant to establishing that a representation made in promotional materials or labels created a “general impression” that was false or misleading, and/or that a defendant ought to have disclosed further information clarifying that representation.