Appeal court panel sees no error in motion judge’s finding the claim discloses a cause of action
An Ontario Court of Appeal panel has upheld the certification of a class-action lawsuit that alleges courier service FedEx Canada violated consumer protection laws by making “misleading and deceptive” representations about fees charged to customers who import goods into Canada.
The lawsuit Robson v. Federal Express Canada Corporation claims FedEx fail to disclose the existence or amount of “clearance entry,” "advancement," or "disbursement" fees until after consumers have received their shipment. The suit also alleges that the fees misrepresent their nature by implying they are government-levied charges when, in fact, they are not. The plaintiffs are suing for a refund of these fees, along with a punitive damages fee of $50 million.
The class action was certified by a lower court in October 2024, but FedEx appealed, resulting in a Court of Appeal hearing in April. And in a decision released in early December, Justice Lise Favreau, on behalf of the three-judge panel, stated: “The issues raised by FedEx may constitute valid defences to the claim, but I see no error in the motion judge’s determination that the claim discloses a cause of action. I also see no error in the motion judge’s conclusion regarding common issues and the class definition.”
The case dates back to June 2020, when plaintiff Karen Robson, representing the class, ordered knitting supplies from Ganxxet, a Florida-based company. Ganxxet’s website noted that delivery was free, but any shipments outside the US “may be subject to taxes, customs duties and fees by the destination country.”
The supplies were delivered in July 2020, and Robson received an invoice from FedEx stating she owed a CAD$10 “advancement fee,” a CAD$29 clearance entry fee, and HST of $5.07 on the “ancillary service fees.” With Canadian HST of $20.16, Robson was invoiced for $64.23.
The invoice contained the statement: “FedEx Express has arranged clearance and submitted payment to the customs agency in the destination country on your behalf.”
In the lawsuit, Robson argued that, at the time she made the payment, she believed all the amounts were for government-levied customs charges; she did not believe any of them went to FedEx for services it provided.
As it turns out, Justice Favreau says in her decision, the “Advancement Fee” and “Clearance Entry Fee” are not amounts for government duties and taxes, but “rather amounts that went to FedEx.” The charge for “HST and ADV/Ancillary Services Fees” of $5.07 is a tax on the advancement fee of $10 and the clearance entry fee of $29. The charge for “Canada HST” is a tax on the goods Robson bought.
The claim alleges that FedEx engages in unfair practices in its cross-border delivery services, including making misleading and deceptive representations about the fees it charges consumers who import goods into Canada through FedEx.
The claim further states that FedEx imposes these fees and surcharges for customs-related services that consumers did not ask FedEx to provide. Calling them “unsolicited service fees,” the claim alleges that these practices contravene ss. 13, 14 and 15 of the Consumer Protection Act.
The motion judge initially found that the claim meets all the criteria for certification under the Class Proceedings Act and that it discloses a cause of action for breach of the Consumer Protection Act. Additionally, the motions judge accepted the class definition proposed by Robson. This definition would encompass claims from across the country and date back to 2016, when the charges were first levied.
The same judge rejected FedEx’s suggestion that there was no misrepresentation in this case because Robson and other potential class members could find out about the nature of the fees through FedEx’s website. He also rejected FedEx’s argument that the Consumer Protection Act did not apply because the claim arises from a contract made in the United States between FedEx and Ganxxet.
Finally, the motion judge found that a class proceeding was the preferable procedure to resolve the common issues and that the litigation plan put forward by Robson was appropriate.
FedEx appealed to the Ontario appeal court on three issues: that the motion judge erred in finding that the claim discloses a cause of action; that the motion judge erred in defining the class too broadly; and that the class was appropriately defined.
On the latter issue, Justice Favreau in the appeal court ruling noted that Robson’s action commenced on January 7, 2022, and the class definition certified by the motion judge goes back to 2016.
Robson’s rationale for starting the class period in 2016 was that this was when FedEx allegedly started the billing practices at issue in this case. But that is six years before the commencement of the action, a definition that includes “people over a four-year period whose claims are presumptively statute-barred, namely people who paid the fees at issue between 2016 and January 6, 2020.”
The appeal court decision ruled: “The certification stage is not the time to close off the possibility that some people who paid these fees before January 7, 2020, may nevertheless have valid claims. FedEx may have a valid limitation defence to their claims as a whole, or there may be a need for individual assessments of the discoverability of these claims. However, the class definition should not be used to foreclose these claims at this stage of the proceedings.”
The ruling added: “This is an issue that can be managed by the creation of a subclass if the court below determines that the limitation period issue can be determined on a subclass basis.
“Otherwise, for those whose claims presumptively fall outside the basic limitation period, discoverability will have to be decided on an individual basis once the common issues have been decided. But this does not detract from the finding that the class definition meets the criteria for certification.”
