Lack of Evidence Blocks Misleading Advertising Class Action | Canada | Global law firm
The recent dismissal of a class action lawsuit against Ford confirms the usefulness of summary judgment motions in class actions, particularly where the evidence adduced to support plaintiffs’ claims has been found by the court to be insufficient and contrary to common sense. The ruling is also a helpful reminder that compliance with government guidelines cannot subsequently result in a violation of federal competition law (or provincial consumer protection law) because doing so would be “unfair”. play and common sense”.
The Case Relevant Allegations Ford engaged in misleading advertising in violation of the competition law and provincial consumer protection laws, as it provided estimates of fuel consumption using less representative tests.
Evidence established that in 1995 Ford entered into a memorandum of understanding with the federal Department of Natural Resources to use EnerGuide labels and fuel consumption reporting requirements when selling or leasing new vehicles . The federal government has sought to help consumers compare the fuel mileage of different makes and models of vehicles, encouraging fuel-efficient driving. Ford models in 2013 and 2014 had labels with numbers calculated using 2-cycle lab testing per EnerGuide requirements at the time. In 2015, the federal government adopted a 5-cycle test that more closely approximated real-world driving conditions.
Each label had to mention the Fuel Consumption Guides (FCGs), which were published annually by the federal government and provided the following: explanatory information, vehicle specifications and test results, information on test methods, the use of ratings and the factors that can affect the measurement of energy efficiency. FCG has repeatedly stated that the ratings are for comparison purposes only, that the tests cannot simulate all possible conditions and behaviors within its measurement, and that the ratings are not predictive of actual consumption of fuel.
The plaintiff’s 2014 Ford Edge SUV (with a tag estimating 24 mpg/city and 36 mpg/highway) only got 23 mpg in highway driving. The claimant arranged to have the vehicle inspected at dealerships in the United States and Canada. At both places he was told there was “nothing wrong with the vehicle”. He filed the class action lawsuit complaining that Ford knew the 5-cycle test was a more accurate representation of real-world conditions, but continued to use the 2-cycle test, underestimating fuel economy by approximately 15%.
In dismissing the class action, the court concluded that there was “a complete absence of evidence for one of the plaintiff’s main allegations”.
The tribunal concluded that even though section 52(1) of the competition law prohibits knowingly or recklessly making statements to the public that are materially false or misleading when promoting a product or business interest, the provision does not create a general duty of disclosure; it only applies when a person knowingly or recklessly makes a false or misleading statement.
Ford’s compliance with federal government guidelines could not fairly or reasonably be equated with a violation of federal antitrust law, as it would violate common sense and fair play. Moreover, it would reject the principles of statutory interpretation, most clearly the presumption of consistency (the federal government “does not intend to enact or authorize the making of conflicting legislation”).1 Furthermore, although Article 52(4) of the Law takes into account the overall impression of a performance, there was insufficient evidence to conclude that such an impression was created.
Provincial consumer protection laws were also found to be unenforceable due to the plaintiff’s failure to prove both a general impression as above and a failure to disclose. The applicant failed to establish that the EnerGuide label or the general impression of the label was misleading or deceptive, even on a “generous interpretation” of the provisions.
All arguments regarding non-disclosure were also rejected by the court as no evidence was presented to support the allegations. There was no requirement to provide a second tag containing information that was otherwise available through the FCGs. On the contrary, the mention and publication of the FCGs did indicate the disclosure of all relevant information, and uncontested evidence was adduced to demonstrate that the probability of consulting the FCGs was high for car buyers for whom the consumption of fuel was significant.
Take away food
The use of a motion for summary judgment to decide this class action on the merits represents the effective use of a proportional process when there is simply no real issue to be tried. This case also provides helpful guidance when statements are made in consumer materials that comply with or are approved by government regulations. It is contrary to common sense to believe that a statement approved by regulation could then be considered false or misleading under federal law. competition law or provincial consumer protection legislation.
The author would like to thank Mohammed M’Hiri, law student, for his help in preparing this legal update.