September 30, 2007
Consumers fighting back
Class-action lawsuits on rise as buyers let companies beware
By LINDA LEATHERDALE, TORONTO SUN
September 30, 2007
Cellphone companies, automakers and toy manufacturers have all been the targets of recent class-action lawsuits launched by consumers tired of being kicked around.
There's a Viking saying: Don't get mad, get even. And one way for the downtrodden to get even are class-action lawsuits.
There was a time when you never heard of consumers banning together to hire a pit-bull lawyer and go after Goliath. But lately, the legal confetti has been flying.
Some say the one who let the legal hounds out was Erin Brockovich, portrayed by Julia Roberts in the popular 2000 movie.
Brockovich, with now deceased pugnacious lawyer Edward Masry, took on the mighty Pacific Gas & Electric Co. in a toxic pollution suit and won an amazing $333 million US for 648 residents in Hinkley, Calif.
Some will argue this is nothing but pure greed. Win a lawsuit and you've won the litigation lottery. In other words, it's all about the money and not justice.
But Regina lawyer Tony Merchant, whose firm, The Merchant Group, is involved in a host of class-action suits across the country, says that's not true. Most just want fairness and they're tired of being kicked around.
"People have become conscious that they don't have to be kicked in the face over and over again," said Merchant, a former Saskatchewan MPP.
Bruce Cran, president of the Consumers Association of Canada, says weak consumer protection laws in Canada are forcing consumers into the courts to fight for fairness.
Cran says he's miffed there is no longer a separate consumer ministry in Ottawa to advocate for consumer rights. Instead, consumers are lumped into Industry Canada, which Cran says shows industry is in the driver's seat, not consumers. That's despite the fact that consumers account for two-thirds of Canada's economic health and wealth.
"When the election rolls around, consumers should be asking the parties if they'll insist on consumer representation in cabinet," Cran said.
Other consumer advocates complain lax competition laws and a watchdog with no bark or bite allow powerful oligopolies to bully the little consumer. And heaven help them if they complain.
To me, this is bullying at its height. Sprint Nextel axed up to 1,200 of its customers for calling customer service too often, and told them to switch to another wireless carrier. In other words, Sprint fired its own customers. Whatever happened to the customer comes first? And that's in the U.S., where there's plenty of competition.
GAUGING CUSTOMERS
Here in Canada, my boss -- Pierre Karl Peladeau, CEO of Quebecor Inc. -- complains that three dominant players in the wireless market are forcing customers to overpay for service.
"The Big 3 wireless players (Bell, Rogers and Telus) have a stranglehold on competition and on your wallet," Peladeau said in a recent speech to the Empire Club in Toronto. He backed up his accusations with charts and graphs showing Canadians pay some of the highest cellphone fees in the world, while our access to new technologies lags.
Industry insiders accuse Peladeau of having a personal axe to grind because he wants entry into the market and is seeking a next-generation wireless network in Quebec.
Meanwhile, anger over high cellphone fees has led to a class-action lawsuit handled by Merchant's law firm. The lawsuit, certified in Saskatchewan court, claims Canadian cellphone companies are profiteering by charging customers system-access fees over and above their regular fees.
Most companies charge system access fees of $6.95 a month and the lawsuit, which tackles all players in Canada, including Rogers, Telus and Bell, claims "unjust enrichment" because providers make the fees look like they are being charged by federal regulators or going to maintain the system, when they are really going to the companies' bottom line, Merchant said.
When the industry was in its infancy, system access fees were originally paid by the consumer to Industry Canada, explained a spokesman with the Canadian Wireless Telecommunication Association. But by the mid-1980s, cellphone companies became responsible for collecting the fees, while Industry Canada upped the licensing fees charged to companies.
It's estimated the companies pay $150 million a year for use of the airwaves. But Merchant estimates the companies make more than $1.2 billion a year by charging Canada's 15 million cellphone users the system access fee.
The lawsuit is valued at more than $12 billion, plus interest. None of the lawsuit's allegations have been proven in court.
Another class-action suit made headlines as our loonie zoomed to hit parity with the U.S. Greenback, sparking howls of complaints from Canadians that they were overpaying for many goods, including magazines, computers, greeting cards and cars.
REVVING UP FOR LAWSUIT
Toronto class-action law firm Juroviesky and Ricci filed a $2-billon suit, on behalf of four Toronto residents, who claim the auto industry conspired to inflate the price of automobiles in Canada in an effort to discourage cross-border shopping.
Named in the lawsuit are the Canadian and U.S. Divisions of General Motors, Honda, Nissan and Chrysler. Also named are automobile dealer associations in Canada and the U.S.
The suit covers consumers who bought cars between August 2005 and August 2007, as the Canadian dollar was gaining strength, and claims the defendants attempted to control and limit cross-border shopping by:
- Forcing consumers to sign "no export clauses."
- Failing to honour warranties purchased on the other side of the border.
- Penalizing dealers who sold vehicles and threatening dealers who didn't comply.
Again, none of these allegations have been proven in court.
The latest class-action lawsuit, now making headlines, is another suit by Merchant Law Group, this time targeting toymakers Mattel Canada Inc., U.S.-based Mattel Inc., and its subsidiary Fisher-Price Inc.
About 750 consumers have joined this legal battle and Merchant believes many more will join.
"We've been contacted by people from right across the country," he said.
The suit was sparked by the recall of more than 20 million made-in-China toys over the past two months, as exports from manufacturers came under scrutiny for high levels of lead and design defects.
In the statement of claim, the plaintiffs argue the toymakers "conducted themselves in a wilful, wonton and reckless manner," and accuses the defendants of unfair business practices in dealing with customers and the public.
No Mattel spokespeople were available for comment. And again, none of these allegations have been proven.
Merchant said these are only a few of the lawsuits swirling in Canada. Others deal with the GST, stocks and bonds, and even Agent Orange.
Go to
www.merchantlaw.com or e-mail Merchant at
tonymerchant@canada.com
"There is no risk to consumers to join in," Merchant said. "If we lose in the court, the law firm pays. But if we win, consumers stand to gain financially and be part of getting companies to do the right thing."