Takeoff Denied Again: B.C. Court of Appeal Affirms Denial of Airline Fuel Surcharge Class Action

On September 12, 2017, the British Columbia Court of Appeal (Court) affirmed the refusal to certify a class proceeding against various airlines regarding the description of fuel surcharges in Simsek v. United Airlines, Inc. (also referred to as Unlu v. Air Canada) (Unlu). The plaintiffs alleged that the airlines improperly characterized fuel surcharges as “taxes” or “taxes and fees” on ticket receipts and sought restitution for unjust enrichment by the defendant airlines. The Court of Appeal upheld the B.C. Supreme Court’s decision that the plaintiffs had not shown that the requirements for certification under section 4(1) of the Class Proceedings Act (CPA) were met, because the proposed common issues could not be resolved without individualized inquiries.

CERTIFICATION DECISION

On the certification application, the plaintiffs in Unlu alleged that collecting fuel surcharges under a code on the ticket receipt described as “taxes” or “taxes and fees” was a deceptive act or practice contrary to the Business Practices and Consumer Protection Act (BPCPA). They also alleged that their contracts with the airlines did not entitle the airlines to retain any amounts described as “taxes” or “taxes and fees”, giving rise to the plaintiffs’ claims for unjust enrichment relating to the fuel surcharges. The airlines argued, among other things, that the processes for purchasing airline tickets are diverse. Notably, none of the plaintiffs’ tickets were purchased directly from the airlines and none of the ticket receipts with allegedly deceptive statements were airline documents. Instead, these tickets were purchased from travel agencies and the airlines asserted that they had no control over the ticket receipt practices at the travel agency level.

The application judge dismissed the application for certification, holding that the requirements of section 4(1) of the CPA had not been met. In particular, Justice Adair found that the plaintiffs had not adequately pleaded claims for damages under section 171 of the BPCPA, for a restoration order under section 172(3)(a) of the BPCPA, or for restitution arising from unjust enrichment. She also concluded that sections 4(1)(c) and (d) of the CPA — requiring that there be common issues and that a class proceeding be the preferable procedure — were not met. For more information, see our August 2015 Blakes Bulletin: Takeoff Denied for Airline Fuel Surcharge Class Action.

APPEAL

The Court of Appeal affirmed the application judge’s decision. On appeal, the plaintiffs abandoned their claims under the BPCPA and pursued only their claims for unjust enrichment. Hence, the only issue before the Court was whether the unjust enrichment claims ought to be certified as class proceedings.

While the Court agreed that the claims in unjust enrichment had not been properly pleaded, it did not affirm the certification decision on that basis. The Court stated that the plaintiffs had not adequately articulated their theory that the contracts between them and the airlines did not authorize fuel surcharges. However, the Court declined to conclude that causes of action in unjust enrichment could not be properly set out in amended pleadings.

Instead, the Court relied upon, and agreed with, the finding by the application judge that the plaintiffs failed to show that there were common issues meriting certification. The proposed common issue that was the “linchpin” of the plaintiffs’ unjust enrichment claims — whether the airlines charged fuel surcharges under the guise of taxes payable to a third party when in fact the airlines retained those amounts for their own use — could not be dealt with commonly without individual enquiries. The Court found that it would need to be determined whether the sellers acted as authorized agents for the airlines when the class members purchased their tickets, which would require individualized investigation. Further, because the evidence showed that the forms of receipt differed (some receipts labelled the disputed charge codes as “taxes”, some as “taxes and fees”, and some referenced “charges” in addition to taxes), individualized inquiry would be necessary to determine the form of receipt that each class member received. The proposed common issues were either pointless or riddled with individual issues, meaning section 4(1)(c) of the CPA was not satisfied.

The Court’s decision in Unlu affirms that common issues must truly be common. Where the proposed common issues are incapable of being resolved unless they are preceded by individualized inquiry, class certification will be inappropriate. There must be sufficient commonalities among the class members before common issues will be recognized and class certification granted.

For more information, please contact:

Robin Reinertson                       604-631-3323
Joshua Hutchinson                    604-631-4178

or any other member of our Litigation & Dispute Resolution group.