Five key takeaways from Canadian court’s dismissal of Expedia class action dismissal

In Hoy v Expedia Group Inc (2022 ONSC 6650), the plaintiffs brought a proposed class action alleging that trivago, Expedia and Booking.com breached the unfair practice provisions of provincial consumer protection legislation and Section 52 of the Competition Act. Ultimately, the Ontario Superior Court dismissed the case – the judgment is currently under appeal.

The plaintiffs alleged that the defendants misled consumers by presenting search results as objective and unbiased when, in fact, the rank ordering of properties on the defendants’ websites was influenced by the compensation they received. In addition, the plaintiffs alleged that the defendants made false or misleading claims on their websites about discounts and the remaining inventory left at each hotel.

Following investigations in Europe, trivago, Expedia and Booking.com each entered into undertakings with the UK Competition and Markets Authority (CMA) to reform their business practices. Additionally, trivago was ordered by the Federal Court of Australia to pay fines for misleading representations on its website and television advertising in proceedings brought by the Australian Competition & Consumer Commission (ACCC) (ACCC v Trivago, NV No 2, 2022 FCA 417).

In Canada, however, the Ontario Superior Court declined to adopt the conclusions reached in foreign jurisdictions. Rejected these options, the court instead concluded that the plaintiffs’ claim did not disclose a cause of action and that the other certification criteria had not been met.

The ruling provides several key takeaways for practitioners.

One: compensable injury is required for a certifiable claim in Ontario

This case is the latest instalment of the ‘no harm, no foul’ principle, under which there must be a class of two or more plaintiffs who have suffered compensable harm in order for a class action to be certified. In this case, the plaintiffs’ claims that they received inferior accommodation for the price or lost the opportunity to obtain superior accommodation for the price were not compensable by law.

Two: absent compensatory damages, claims for “loss or damage” under Section 36, for breach of Section 52 of the Competition Act, are doomed to fail

Justice Perell held that the plaintiffs’ claims for restitution, nominal damages, punitive damages and disgorgement were doomed to fail in the absence of a claim for compensatory damages. In addition, the Competition Act claims failed because the plaintiffs had not pleaded reliance, there was no general duty of disclosure under the act and no material facts were pleaded that the alleged misrepresentations were made knowingly or recklessly.

Three: restitution, disgorgement and nominal damages are not available for a breach of consumer protection legislation

The plaintiffs alleged that the consumers and the accommodation market had been harmed by the defendants’ business practices but did not seek compensatory damages for the class, conceding that they would be difficult or impossible to prove on a class-wide (or even an individual) basis. Justice Perell held that both as a matter of statutory interpretation and common law, the remedies sought by the plaintiffs were not available. The primary remedy for breach of the unfair practice provisions of the Consumer Protection Act, 2002 is rescission. Damages are an alternative remedy to restore consumers to the position they would have enjoyed had the unfair practice not occurred.

Four: breach of consumer protection and adverse foreign regulatory proceedings is not enough for a certifiable punitive damages claim

The court held that the plaintiffs failed to plead sufficient material facts for a punitive damages claim despite arguable breaches of the consumer protection legislation and the CMA/ACCC proceedings in the United Kingdom and Australia, respectively. In addition, a freestanding claim for punitive damages would not be the preferable procedure.  

Five: limitation periods can be used to narrow the proposed class in certain cases

Had the other certification criteria been met, the court held that the class would have to be amended to take account of the applicable limitation periods. The plaintiffs proposed a 15-year limitation period based on the ultimate limitation period in Ontario. However, the court held that the presumptive basic limitation period in Ontario was two years after each class member made the searches. Class counsel did not need to be retained for the plaintiffs to discover their claims.