A Product Recall Does Not Always Justify The Authorization Of A Class Action

• Published date: 09 May 2020
• Author: Mr Noah Boudreau and Nicolas-Karl Perrault
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation, Dodd-Frank, Consumer Protection Act
• Law Firm: Fasken

Though a voluntary or government-ordered product recall does not necessarily constitute proof of a hidden defect, product recalls are often followed by requests to institute class actions in Canada, and particularly in Quebec where the legal principles applicable to the liability of professional sellers favour buyers.

Even after conducting a product recall and offering buyers compensation, it is not uncommon for manufacturers to be faced with a request to institute a class action despite the fact that the harm suffered appears at first glance to be minimal or nonexistent. Furthermore, Quebec courts are flexible when evaluating the criteria for authorizing a class action, in keeping with the principles articulated by the Supreme Court of Canada in decisions such as L'Oratoire St-Joseph du Mont-Royal v. J.J.¹ and Vivendi Canada Inc. v. Dell'Aniello.²

But does a product recall by a manufacturer, in and of itself, always justify the authorization of a class action in Quebec?

A recent judgment by the Honourable Justice Daniel Dumais of the Quebec Superior Court in Paquette c. Samsung Electronics Canada Inc.³ indicates that the answer to this question is no and that a class action should not be authorized where a manufacturer, upon discovering the defect, promptly fulfills its obligations by recalling the sold products and offering the buyers fair compensation, particularly when the buyers have suffered no harm beyond the normal inconveniences everyone in society must bear.

Background

In the fall of 2016, Samsung issued two recalls for certain Samsung Galaxy Note 7 cellphones (the "Note 7") due to overheating problems.

The Note 7 was released in Canada on August 19, 2016. Shortly after its release, an investigation revealed overheating issues caused by the Note 7's battery, which could result in a fire and destroy the phone. Some 30 incidents were reported in early September 2016, though none in Quebec.

On September 2, 2016, Samsung stopped selling the Note 7 in Canada and issued a first recall. It offered either to (i) replace buyers' Note 7 with a new device equipped with a battery sourced from another supplier or (ii) give buyers a full refund.

On September 8, 2016, the applicant Patricia Paquette (the "Applicant") joined the recall program and chose to have her Note 7 replaced with a new device. She continued using her original Note 7 until she received the new device, despite this having been expressly prohibited.

It turned out that the new devices also had issues.

On October 11, 2016, Samsung issued a second recall and notified buyers that they should stop using the Note 7. At this point...