I have written a couple of times now on criminal interest rates.  Those posts have looked at complaints against financial institutions or larger companies that charged late fees or something similar.  In each case, the complaint took the form of a class action.  For example, in Markson the complaint was that MBNA was charging a fee of around $7 or $8 for cash advances.  Even if you were constantly taking cash advances against your credit card, the total of the fees would not be sufficient in most instances to justify the costs of litigation.  Enter the class action.  $7 alone for me is not worth suing over.  But take that $7 and multiply it by a million cash advances for all customers and suddenly this is money worth fighting over.

Markson and similar cases derive their strength from a couple of decisions out of the Supreme Court of Canada involving a similar dispute between Gordon Garland and Enbridge (back then, Consumers Gas).  After two rounds of litigation going all the way to the Supreme Court and losing both times, Enbridge settled the class action suit against it.

What is interesting, though, is that after the settlement, Enbridge applied to the Ontario Energy Board for permission to pass the costs of the settlement on to its gas customers.  The National Post has reported that the OEB has agreed to the request.  Moreover, similar requests will be made by other utilities if and when they have to settle or pay on class action litigation.

Part of the justification for class action lawsuits is that they can act as controls on corporate actions.  However, if the results of the lawsuits are simply passed on to consumers (and in the case of utilities to some of the very people who “win” the lawsuits), it makes me wonder if this objective will be achieved.  As such, it also makes me wonder if there will continue to be class action lawsuits – at least against utility companies.  I’m not saying whether this is a good or bad result.  It just makes me wonder if we didn’t end up spinning our wheels (at least partially).

CALC

This entry was posted on Wednesday, February 20th, 2008 at 3:33 pm and is filed under Litigation, Miscellaneous. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.