APA’s lawyer opposes a settlement in a class action over excessive charges by auto dealers in Quebec

On June 4th the Superior Court of Quebec heard a request for the Court’s approval of a settlement in four class actions taken against more than 200 auto dealers over their deceptive pricing practices. The defending new and used car dealerships were accused of bumping up their advertised prices by $300 to over $1,000 at delivery. The proposed settlement provides a store credit of $75 that customers can use at their original dealership for a future purchase.

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There were over 35 lawyers at the hearing, and 30 attending online, several from large firms including Norton Rose and Fasken Martineau. Lawyers for the defence represent about 150 of the 200+ auto dealers sued in the four actions over their excessive charges.

It was the first appearance of lawyers from Quebec’s Office de la protection du consommateur (OPC) ever at a settlement hearing, appearing on behalf of the President of the OPC. Judge Sylvain Lussier welcomed the OPC lawyers warmly, inviting them to do it more often.  

The judge acknowledged the presence of the APA and Union des consommateurs in the courtroom and asked us if the consumer associations planned to intervene. We answered in the negative as we had been unable to arrange legal representation. Journalists were present at the hearing and online. Judge Lussier welcomed La Presse reporter Marie-Ève Fournier warmly, and stressed the important contribution that the media makes. (It’s a complete turnaround from decades ago when judges could be cranky about the presence of media or advocacy groups in their courtrooms).

The morning opened with a presentation by Jimmy Lambert, the lawyer for the plaintiffs, extolling the settlement. Among the arguments in favour: a settlement is faster than winning at trial and less risky, and recent caselaw in Quebec on all-in pricing has been negative. Me. Lambert stated that the $75 store credit was supported by the class representatives, some of whom were in attendance. One of them is a collector of automobile memorabilia who planned to buy a branded Kia mug or T-shirt as opposed to applying the credit toward a discount on service for his vehicle (the statement was followed by audible twittering in the courtroom). Because this was a hearing to approve a proposed settlement that would end all future litigation, the lawyers for the auto dealers were fully onside with the lawyer for the plaintiffs.

Me. Lambert’s firm calculated its fee of $5-$6 million dollars based on a take-up rate of 100% for the $75 credit, which is equivalent to $35 million dollars in savings to clients of the dealerships. (The APA believes the actual rate of claims will be much lower.) Undistributed monies will be retained by the dealers, and there is no provision for an accounting to anyone at the end of the distribution.

APA Montreal’s lawyer, Hubert Lamontagne, was scheduled to address the court later in the day as a class member; he had the status to do it because he was a customer of one of the dealers settling the action. Mr. Lambert accused Hubert of professional misconduct, alleging he wasn’t the actual buyer of a vehicle from one of the defendant dealers, which means he had no standing to appear before the Court, and that some of the citations in his written submission had been manipulated to make them appear to say the opposite of their actual meaning (!)

Hubert spoke after lunch and easily cleared up the allegations regarding his misconduct, which were spurious. Hubert was one of 11 persons who registered a formal objection to the settlement, and the only intervenor present at the hearing to oppose it. Hubert was the only intervenor to challenge the rosy projections for the take-up rate on the distribution which underpins the calculation of $5-$6 million dollars in lawyer’s fees to be paid for by the auto dealers. Hubert challenged the absence of oversight by the Court over the distribution of the credits and asked for an accounting to the Court after a preliminary distribution.

The lawyers for the OPC spoke next. They stressed that their “intervention” was not an “opposition” to the settlement. Even with one hand tied behind each of their backs, the presence of the three OPC lawyers at the hearing was remarkable of itself and carried weight in the courtroom.

Next came a lawyer representing Quebec’s class action fund, the Fonds d’aide aux actions collectives. He too stressed that his intervention was not an opposition to the settlement, but reminded the judge that under the Code of Civil Procedure the Court has authority for oversight over the distribution.

 At the end of the afternoon Judge Lussier said he had three options:

• Approve the settlement, perhaps with a couple of additional conditions on oversight that are in the Code of Civil Procedure but not included in the settlement
• Suspend the hearing and ask the parties to return with an improved version of the agreement
• Reject the settlement

 A lawyer from Norton Rose warned the judge that the defendants had already offered their best deal, and that it would likely collapse if they had to reopen negotiations.

 Judge Lussier invited the APA’s Hubert Lamontagne to make written submissions regarding the contingency fees and distribution of the store credit within the next few days. Hubert was the only party invited by the court to send in a written submission after the hearing. Later, Hubert learned that the defendants were preparing an addendum for the judge, likely to address a couple of the APA’s misgivings.

The APA will report again after the judge renders a decision.

Sidebar

Coincidentally, one of the class representatives, a senior citizen, was sitting next to us in the courtroom. It turned out he is a former APA member or user of our services and a fan of the Association. During a break I asked him:

APA: What do you think of the settlement?

Consumer: It’s a bad deal.

APA: So why did you support it?

Consumer: I have a terminal illness, it’s cirrhosis of the liver along with co-morbidities. At most, I’ve got five years to live. I won’t be around if the case doesn’t settle, and they’ll lose their plaintiff.

APA: What are you going to buy with the store credit?

Consumer: Nothing! I wouldn’t do business with those cheats again! And I wouldn’t pass along the credit to a friend either. They tried to charge me an extra $500 at delivery for preparation. I told them the ad says the vehicle is inspected. The seller reduced the charge to $300 and said “Take it or leave it.” I wanted the car, so I took it. When I started the engine on delivery, the low fuel warning light started flashing immediately; the indicated range to empty was “Zero!” I asked the dealership, “What’s that about?” They answered, “It happens,” and pointed me to the nearest gas station. At the gas station, I noticed my license plate was dangling, having been installed only partway. Basically, they hadn’t done any preparation…

Settlement Eligibility

Consumers who are eligible from refunds are supposed to have received an email on or around April 4, 2024. The settlement applies to new and used vehicle purchases made on the following dates: