SCC nixes possible Quebec lawsuit against Dell
Published Friday, July 13, 2007 3:15PM EDT
OTTAWA - Consumers: read the fine print -- even when you have to search for it online.
That's the lesson from a Supreme Court of Canada ruling Friday that's being cast by some as a buyer-beware defeat for customers.
The high court ruled 6-3 to nix a brewing Quebec class-action lawsuit against the Dell Computer Corp. over incorrect prices that were mistakenly posted online.
At issue was a clause used by Dell and several other computer makers and cellphone companies that bars dissatisfied customers from pursuing complaints through class-action lawsuits. Instead, such disputes are limited to less costly and lower profile arbitration.
A Montreal man, Olivier Dumoulin, launched the lawsuit against Dell because the company wouldn't honour the lower prices for Axim handheld personal digital assistants on its Canadian website.
The company had incorrectly listed the Axims for $89 and $118, depending upon the model. The real prices were $379 and $549 respectively.
In 2004, the Quebec Superior Court granted Dumoulin and a consumer group class-action certification. Among their complaints was that fine print explaining the arbitration clause was buried among terms and conditions not easily accessed on Dell's website.
The top court majority sided with Dell and referred the case to arbitration, saying that miffed consumers have no automatic right to class-action remedies.
Moreover, it ruled that a recent Quebec law barring companies from using no-class-action clauses doesn't apply because it was passed after the Dell case began.
"The arbitration clause was not prohibited by any provision of Quebec legislation at the time it was invoked,'' wrote Justice Marie Deschamps for the majority.
The high court also reiterated its confidence in private arbitration as a legitimate alternative to lawsuits, and one that should not necessarily be viewed with suspicion when it comes to buyer disputes.
Friday's judgment is not exactly pro-consumer, says Frederic Bachand, a McGill University law professor who helped represent a neutral intervener in the case.
"On this very specific point (the judges) said: 'We don't have a problem with a contractual provision which seeks to limit one's right to launch or participate in a class action.'
"This is significant, and I think will be seen by most observers as a surprising aspect of the court's judgment.
"Consumers are not presumed to be so vulnerable. They have their own responsibilities when they're doing business in cyberspace.''
Without a blanket prohibition on arbitration clauses, disgruntled buyers have to argue case by case why such litigation limits are fundamentally unfair, Bachand says.
The ruling won't have much impact in Quebec or Ontario where laws now prevent companies from using the clauses.
But it remains to be seen whether other provinces will step up consumer protections.
Big business tends to favour arbitration because it's done privately, it doesn't draw negative publicity and costs less.
Bruce Cran, president of the Consumers' Association of Canada, says his group will be urging more safeguards for buyers.
"We're disappointed the court has taken this direction,'' he said in an interview.
"I think all of us should be upset with what amounts to the return to small-print items. This is the electronic equivalent.''
A spokesman for Dell was not immediately available.
The high-court majority essentially said that contractual details of the arbitration clause were clearly outlined for anyone who sought and read them.
Consumers who find the outcome unsatisfying still have one recourse, says Cran.
"Dell Computer should be prepared to accept the wrath of the buying public with the possible loss of future sales.''