In Rebuck v Ford Motor Company[i], the Ontario Superior Court of Justice recently considered the issue of allegedly false or misleading advertising on labels regarding the fuel efficiency of an automotive manufacturer’s vehicles in the context of a certified class action. The Court granted summary judgment dismissing the Representative Plaintiff’s claims under both federal competition legislation and provincial consumer protection laws. The Court found that compliance with federal manufacturing guidelines insulated the manufacturer from liability for allegedly contravening the federal Competition Act, and that the Plaintiff had not met his onus to demonstrate misleading advertising by omission of material facts under provincial consumer protection law.
Facts
In 2014, the Plaintiff leased a 2014 Ford Edge SUV made by the Defendants. Affixed to the car’s window was the EnerGuide label, which stated the vehicle’s estimated miles-per-gallon (mpg) on the highway (36 mpg) and in the city (24 mpg).[ii] It also displayed the federal government’s “EnerGuide” and “Canada” marks, and advised that (1) the estimates were based on the Government of Canada’s approved criteria and testing methods; (2) the actual fuel consumption of the vehicle may vary; (3) the customer should “Refer to the Fuel Consumption Guide” (FCG); and (4) a copy of the FCG could be obtained by calling a listed number.[iii]
On his first long road-trip, the Plaintiff noticed that the fuel consumption was 23 mpg while on the highway, which he asserted was “far worse”[iv] than the 36 mpg on the EnerGuide label. While the Plaintiff conceded that he did not expect to necessarily achieve the 36 mpg estimate, he had assumed the car would sustain “maybe 30, maybe 27”[v] highway mpg. Several inspections conducted at Ford dealerships concluded that there was nothing wrong with the vehicle. The Plaintiff ultimately filed a class action on behalf of the 600,000 persons in Canada who had purchased or leased a new 2013 or 2014 Ford vehicle alleging a breach of the misleading advertising provisions in s. 52 of the Competition Act and ss. 14 and 17 of the Ontario Consumer Protection Act (CPA). The Plaintiff sought damages for an alleged 15% overpayment in fuel charges incurred over the course of the ownership or lease of class members’ vehicles.[vi]
The claim was certified as a class proceeding by the Court, and both the Plaintiff and the Defendants brought cross-motions for summary judgment.
Issues
The Plaintiff advanced two arguments in support of the claim. First, the Plaintiff asserted that the fuel ratings on the EnerGuide label were false and misleading because the label stated that Ford used “government-approved test methods,” which gave the impression that the fuel consumption ratings were certified by the Government of Canada and that the government stood behind their accuracy.[vii] Second, the Plaintiff argued that Ford had engaged in deceptive non-disclosure with respect to the type of fuel consumption test used to produce the estimates on the EnerGuide label. Ford had continued to use the 2-cycle fuel efficiency test when this test was no longer used by US regulators and was phased out by the Canadian federal regulator (NRCan) in 2015 in favour of the more representative 5-cycle test.[viii] The Plaintiff argued that Ford had failed to disclose that the ratings were provided more for comparison purposes between different car models and not to predict actual fuel consumption, that the ratings understated fuel consumption under real-world driving conditions, and that the ratings printed on the label could only be achieved through fuel efficient driving and not normal “real world” driving.[ix]
Discussion
Section 52(1) of the Competition Act
Justice Belobaba began his analysis by laying out the conditions for finding false or misleading advertising under section 52(1), which states:
No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect. [emphasis added]
This provision requires a person to knowingly or recklessly make a false or misleading representation, and unlike the parallel provincial consumer protection provisions, does not leave room for a failure to disclose a material fact as a basis for liability (i.e., a representation by omission). Justice Belobaba found that the Plaintiff had not shown that Ford had made false or misleading representations under this provision for two reasons.[x]
First, Ford had, in fact, complied with federal guidelines in the testing of its vehicles and in the reliance on the EnerGuide labels.[xi] While the 5-cycle fuel efficiency test had been adopted in the US as the governing test and was set to be adopted under the Canadian federal regulatory guidelines, this did not come into force until 2015.[xii] Justice Belobaba went on to apply the presumption of consistency between the Competition Act and federal government guidelines, and found that the legislature could not have intended for compliance with the federal guidelines to constitute a breach of federal competition legislation.[xiii]
In the alternative, Justice Belobaba found that the Plaintiff had failed to prove that the “general impression” conveyed by the EnerGuide label amounted to false or misleading advertising.[xiv] The Plaintiff argued that the general impression created by Ford was that every vehicle that bore the EnerGuide label would actually achieve the 24 mpg city and 36 mpg highway fuel consumption. However, the Plaintiff’s own evidence contradicted this, as he had admitted that he expected “maybe 27” mpg in highway driving. This was a number that would have resulted in increased fuel consumption actually higher than the 15% increase associated with the “undisclosed” 5-cycle test results.[xv] Coupled with the Plaintiff’s failure to adduce any other evidence relevant to the general impression issue, the Court rejected the Plaintiff’s argument based on a misleading general impression and found no contravention of the Competition Act.[xvi]
Sections 14 and 17 of the Ontario Consumer Protection Act
Under the CPA, Justice Belobaba found that the only plausible argument left for the Plaintiff was misrepresentation by non-disclosure.[xvii] On this point, he agreed with the Plaintiff that affixing a second label to Ford cars which identified the relevant alleged omissions – that the estimates on the EnerGuide label were for comparative purposes, that the ratings were based on the 2-cycle test, and that the ratings could only be achieved with fuel efficient driving – would not have contravened any of the federal guidelines or created any conflicts between the federal and provincial legislation, as argued by Ford.[xviii] However, the key question was “whether in all the circumstances . . . Ford Canada [was] legally obliged to attach a Second Label disclosing the three alleged omissions.”[xix] On this issue, His Honour rejected the substance of the Plaintiff’s arguments by addressing each of the three alleged omissions.
On the first alleged omission – the fact that EnerGuide ratings were provided for comparison purposes – Justice Belobaba noted that the label clearly referred the buyer twice to the FCG published by Ford, which highlighted this fact. On the second alleged omission – that the ratings were based on the 2-cycle and not the 5-cycle test – the Court noted again that this information was provided in the referenced FCG, and that regardless of the test used, vehicle fuel efficiency rankings remained the same. Similarly, Justice Belobaba found that the third alleged omission – that the ratings could only be achieved with fuel-efficient driving – was also addressed in the FCG. This argument was further undermined by expert evidence adduced by Ford demonstrating that most drivers actually understood that fuel consumption varied widely based on one’s driving style.[xx] Justice Belobaba noted that while evidence showing that the average car buyer never or rarely read the FCG may have lent credence to the Plaintiff’s position, no such expert evidence was led. Accordingly, Ford was found not to have contravened the CPA.[xxi]
Conclusion
This case highlights both the legal and evidentiary requirements in order to establish false or misleading advertising claims regarding manufacturing labels. To establish a contravention of the Competition Act, proof of a wilfully or recklessly made misleading representation is required – mere omissions will not suffice. By contrast, while a Plaintiff may argue under consumer protection legislation that a manufacturer misled consumers by failing to disclose material information (even if the manufacturer was compliant with federal guidelines), persuasive evidence must be adduced to establish what class members were led to believe by the label and that the Defendant actually knew of the label’s alleged use or non-use by the average purchaser. However, where the facts underlying a representation are compliant with government regulations (in this case, the fuel efficiency test used for the EnerGuide label), a finding of misleading advertising will be difficult to make out.
For more information about class actions in Canada, please contact Matthew Fleming and Amer Pasalic.
[i] 2022 ONSC 2396.
[ii] Ibid at para 5.
[iii] Ibid at para 7.
[iv] Ibid at para 8.
[v] Ibid at para 10.
[vi] Ibid at para 17.
[vii] Ibid at para 38.
[viii] Ibid at para 32.
[ix] Ibid at para 39.
[x] Ibid at para 47.
[xi] Ibid at para 48.
[xii] Ibid at para 33.
[xiii] Ibid at paras 49-51.
[xiv] Ibid at para 53.
[xv] Ibid at para 65.
[xvi] Ibid at para 69.
[xvii] Ibid at para 75.
[xviii] Ibid at para 81.
[xix] Ibid at para 82.
[xx] Ibid at para 84.
[xxi] Ibid at paras 86-90.
