A Quebec telecommunications giant won a partial victory after the Quebec Court of Appeal reduced the amount of punitive damages it was ordered to pay in a class action suit from $1 million to $200,000.
On November 2015 Videotron was ordered to pay more than $7 million for improperly billing its TV customers for a federal fund to improve local programming. The special charge on TV services was introduced by the Canadian Radio-television and telecommunications commission (CRTC) in 2009 and eliminated in 2014. Vidéotron passed it on to its TV-service clients, initially charging them 1.5 per cent of their monthly fee and gradually reducing it to 0.5 per cent in 2013.
A class action suit filed on behalf of Videotron’s 1.5 million customers alleged the company overcharged consumers for the fee, especially those who had bought a bundle of services. The class also alleged that the fee was applied to the full monthly cost of Videotron services for consumers who bought pay-per-view services, when it should only have applied to TV services. On top of that, the class alleged that Vidéotron based the fee for cable customers on its regular monthly rate, even when they had a discount for bundling. The class further alleged that Videotron only forwarded amounts to the CRTC based on the after-discount total.
Quebec Superior Court Judge Carole Hallée found Videotron had deliberately overcharged consumers and therefore breached its contracts with consumers. She awarded $3.2 million to the class-action plaintiffs to compensate for the fund on video-on-demand services, $3.1 million for the overcharges on cable service, and levied a fine of $1 million in punitive damages.
“The company committed a prohibited business practice by failing to clearly explain to its customers how it calculated these costs,” said Quebec Court of Appeal Justice Jacques Dufresne in Videotron c. Girard 2018 QCCA 767.
Justice Dufresne pointed out that when customers entered into the contract or when it was subsequently amended, they never knew that the fees were not based on the price of the package they chose. Instead they were calculated according to the basic price of the service and that the money Videotron collected from them was more than what it paid to the CRTC, added Justice Dufresne. “These false representations were likely to influence the decision of customers to enter into a contract with Videotron,” concluded Justice Dufresne. “The condemnation for Videotron to reimburse the overpayments for cable services is therefore upheld.”
But the appeal court held that the amount awarded in punitive damages was excessive and disproportionate. Videotron’s breach is “better characterized as an ill-advised decision than as a deliberate intention to overcharge its subscribers for a product without their knowledge,” held Justice Dufresne. Punitive damages were reduced to $200,000.