December 20, 2007
Top court won't hear appeal of case which could bankrupt consumer group
OTTAWA - The non-profit Consumers' Association of Canada could end up bankrupt after losing a disastrous class-action lawsuit over soft-drink deposits, which left it saddled with hundreds of thousands of dollars in legal bills.
On Thursday, the Supreme Court of Canada refused to hear the group's appeal, leaving it with the tab not only for its own costs but those of its high-powered opponents as well.
In 2005, the association sued Coke, Pepsi and other big beverage companies, retailers including Wal-Mart, Costco and Zellers and Encorp Pacific, the British Columbia beverage container agency, claiming they had mishandled millions of dollars in deposits and recycling fees.
The suit said the deposits should have been held in trust for consumers.
The association said the companies were, in effect, imposing an illegal, private tax on consumers.
Justice Loryl Russell of the B.C. Supreme Court dismissed the suit and ordered the association to pick up the legal costs incurred by the companies. The provincial Court of Appeal agreed.
Bruce Cran, the association's president, said the enormous costs could force the organization out of business.
"It's hundreds of thousands of dollars," he said. "The amount doesn't matter any more, it's so high. It's more money, in any case, than we have available.
"We have no assets to speak of."
The class-action suit claimed the corporations had diverted $70 million in unclaimed deposits to their own use between 1998 and 2004.
Cran filed an affidavit in the case, saying the companies had no right to use those deposits for their own benefit.
"I expected that excess deposit funds would be used for the benefit of consumers generally or be used by governments to promote environmental causes such as reclamation of landfill sites," he said in his affidavit.
The judge found, though, that the value of the unclaimed deposits didn't even cover the costs to the companies of the province's mandatory recycling system.
Cran said the association never got a real hearing.
"We got very short shrift from the original judge, we got total hostility from the appeals court in British Columbia and a disappointing outcome with the Supreme Court of Canada."
He said he fears that the outcome will put a chill on future class-action suits.
"This will do away with probably 95 per cent of future actions because I don't think anyone wants to be involved to this degree," he said.
"Why would an association, or the directors thereof, take something on when they know they could be facing hundreds of thousands of dollars in costs?"
He suggested lawmakers will have to look at the situation.
The association has been around since the late 1940s, lobbying government and pressuring industries over everything from margarine taxes 50 years ago to auto insurance rates today.
It calls itself "the most trusted voice in Canada for consumer protection and fair play."
It's had a reasonable track record, but this case has left it reeling.
Cran said, though, he doesn't regret the suit.
"This was something we felt we had to, we did it to the best of our ability," he said. "The fact that it hasn't worked I suppose is the way it is, and we'll move on from there.
"I've got no regrets. We wouldn't change anything that we've done here."
He said the association's board will meet after the holidays to decide what to do.
"We can take our loss and move on as best we can. How that will be and what form it will take will have to be the result of meetings we'll have in the new year."
