In an appellate ruling in Lachaine v. Air Transat AT inc. (Air Transat), the Quebec Court of Appeal (QCA) authorized a class action that claimed a refund from various airlines (Respondents) after airplane tickets and travel packages were cancelled due to the COVID-19 pandemic. The QCA allowed the class action to proceed despite the Respondents’ stated commitment to establish voluntary refund programs for their customers.

The QCA’s ruling in this matter raises the question of the effect that implementing a voluntary refund program may have on an application to authorize a class action in Quebec.

Procedural Background

Following the cancellation of all flights from Canada due to the COVID-19 pandemic, the appellants, Messrs. Lachaine and Bonnier (Appellants), were offered a travel credit subject to certain conditions rather than the reimbursement of their airline tickets or travel packages. The Appellants filed a class action claim on behalf of all individuals who had purchased or held airline tickets or travel packages with the Respondents and whose tickets or packages had been cancelled due to the COVID-19 pandemic without reimbursement. They sought a full refund of the amounts for the cancelled tickets and packages, as well as C$250 for trouble and inconvenience.

The judge refused to authorize the class action because of (i) the great disparity in the contractual frameworks applicable to the members of the proposed class, which meant that no common issue could be identified; and (ii) the implementation of voluntary refund programs by the Respondents, which extinguished the members’ main cause of action as well as their ancillary causes of action for interest or damages. The judge, referring to the decisions rendered in Apple Canada Inc. v. St-Germain (Apple), Perreault v. McNeil PDI inc. (Perreault) and Paquette v. Samsung Electronics Canada Inc. (Paquette), concluded that the Respondents’ announcement of the creation of voluntary refund programs extinguished the Appellants’ and class action members’ cause of action regarding the reimbursement of their airline tickets and travel packages, and that they no longer had an arguable case to assert against the Respondents.

The QCA disagreed with the judge’s ruling and overturned the authorization judgment.

Common Issues

The QCA noted that the requirements set out in article 575(1) of Quebec’s Code of Civil Procedure concerning the existence of common issues in members’ claims must be interpreted liberally. A judge need only identify a single issue that would make it possible for “not insignificant” progress to be made in resolving the individual claims of class action members. According to the QCA, the judge erred in his analysis by seeking common answers to the issues raised in respect of the various contracts rather than identifying at least one common issue. The diversity of answers to an identified common issue cannot prevent the authorization of a class action.

Voluntary Refund Programs

The appeal raised the issue of whether the Respondents’ announced commitment to create voluntary refund programs for their customers extinguished the class members’ main cause of action. According to the QCA, the case at hand differed from those cited by the judge, namely Apple, Perreault and Paquette, in that each of the judges in the latter cases appeared to have had the benefit of examining the scope and terms of the voluntary refund programs in their entirety and had been satisfied that the respective class members’ claims had been met. However, in Air Transat, the Respondents had not filed any written refund policy in evidence. Therefore, the judge had no detailed information on such programs that would allow him to conclude that all class members had been or were going to be reimbursed, and that they no longer had an interest in the action.

The QCA added that the judge had also erred in law in deciding that the announcement of the creation of the voluntary refund programs extinguished the class members’ ancillary causes of action. The extinguishment of the right to reimbursement of airline tickets or travel packages did not extinguish the claim for interest, which was a distinct claim. Contrary, once again, to the decisions rendered in Apple, Perreault and Paquette cited by the judge, the customers’ reimbursement by the Respondents was not done prior to the class action filing or immediately or promptly thereafter. In Apple, Perreault and Paquette, it had been determined that allowing the claims to continue would run counter to the specific objectives of a class action, which should not be used in cases that lead nowhere and for which the respondents have diligently fulfilled their responsibilities. In Air Transat, several months (and in one case, over a year) had elapsed between the class action filing and the Respondents’ announcement of the creation of the refund programs. According to the QCA, the extinguishment of the main cause of action did not appear to have extinguished the class members’ entitlement to interest resulting from the Respondents’ delay in repaying the amounts owed, as well as to damages.

The QCA also found that Mr. Lachaine no longer had the requisite capacity to properly represent the class members, as the issuer of the credit card with which he had purchased his travel package had fully and diligently reimbursed the amount of his purchase. Mr. Bonnier is, therefore, now the only person appointed as representative plaintiff.

Proposed Global or National Class

It should be noted that the QCA rejected the global or national class proposed by the Appellants as the latter had merely invoked common law rules and various consumer protection laws to justify the proposed class. Such broad and imprecise allegations are insufficient to establish an arguable legal syllogism in support of a global or national class action claim. The QCA determined that the group would, therefore, be limited to Quebec consumers only.

Conclusion

This ruling by the highest court in Quebec provides important information for companies that are targeted by class actions and, in appropriate cases, are considering creating a voluntary refund program for their customers. In its decision, the QCA confirmed that a company’s undertaking to set up a refund program may be sufficient for a class action authorization to be denied, provided that:

(i) proof of the terms of the program is filed at the authorization stage (which implies, incidentally, that the court should authorize such evidence at the authorization stage);

(ii) such evidence allows the court to conclude that all class members have been or will be reimbursed for their purchases and that they no longer have an interest in the action; and

(iii) the company implements its program immediately or promptly after the class action filing, or prior to same. Otherwise, even if members are reimbursed, the class action may still be authorized to allow members to claim interest and damages for trouble and inconvenience.