Proposed class action takes aim at airport fees paid by airline employees

Parties
Basis of claims
Fees
MOAs
Privity of contract issue
Jurisdiction
Scope of proceedings and potential exposure
Comment


Three dozen Canadian airports may be on the hook for fees charged to airline employees flying on employee travel passes. A proposed class action has been commenced in the Federal Court of Canada claiming compensation for airline employees who paid certain fees which the representative plaintiff claims should not have been paid pursuant to agreements signed by the defendant airports.(1)

Parties

Class actions in Canada require a representative plaintiff to advance the claim on behalf of a class. In this case, the representative plaintiff is Brian Roy, a pilot employed by Air Canada who resides in Nova Scotia.

Roy represents all airline employees who have travelled through various airports across Canada using an employee travel pass and paid certain fees charged by the airports.

Each defendant is a corporation, society or non-profit corporation which operates a commercial airport in Canada.

Basis of claims

The representative plaintiff claims that the airports charged two fees – an airport improvement fee (AIF) and a passenger facility fee (PFF). In doing so, the claim is that the airports breached their contractual obligations, as they had signed memorandums of agreement (MOAs) not to charge these fees to employees using travel passes.

The representative plaintiff also claims that the airports have been unjustly enriched by charging these fees when they had agreed not to.

Finally, the representative plaintiff claims that the airports misrepresented to the proposed class members that AIFs and PFFs were required, breaching Section 52 of the Competition Act, which provides as follows:

52 (1) 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.

The representative plaintiff claims that the airports are liable under three theories of liability. First, under the law of contract for breaching the MOAs regarding AIFs and PFFs.

Second, under Section 36 of the Competition Act, which creates a private right of action for breaching the act. In this case, the class is attempting to claim for damage caused by the airports allegedly misrepresenting that employees using travel passes were required to pay AIFs and PFFs.

Third, under the law of restitution, as the representative plaintiff claims the airport defendants were unjustly enriched by collecting the fees to the detriment of the class members.

Fees

The fees at issue in this litigation are imposed by airports to support capital improvements and cover operating expenses.

AIFs are fees charged to passengers departing from an airport. These fees are levied by airports and the proceeds are usually intended for funding capital improvements.

PFFs are fees levied by airports which fund capital improvements or operations of the airport.

MOAs

The three MOAs on which the representative plaintiff bases his claim for breach of contract are agreements to which the various defendant airports are parties.

The representative plaintiff contends that these MOAs include contractual terms preventing the defendant airports from charging AIFs and PFFs to airline employees travelling on business or customers travelling on passes or other travel documents with certain industry discount codes.

The claim also raises the issue that the MOAs were deliberately concealed from the representative plaintiff and states that a number of the defendant airports represented on their websites or in public documents that AIFs and PFFs are not charged to airline employees travelling on business.

The claim also argues that the failure to produce the MOAs to the representative plaintiff on request was a breach of the duty of good faith because the defendant airports are in a business-to-consumer relationship with airline employees travelling through their airports.

Privity of contract issue

The claim specifically deals with the issue of privity of contract, because the plaintiffs are clearly not parties to the MOAs.

The claim points to a number of exceptions to the rule that non-parties to a contract cannot enforce the rights and obligations agreed to therein, including the following:

• the claim states that the airlines were acting as agents for their passengers when signing the MOAs;
• the claim states that the MOAs were collateral contracts to those between the passengers and the airlines (a 'collateral contract' is one that induces a person to enter into a separate primary contract); and
• the claim states the MOAs were made for the benefit of the class member passengers.

Jurisdiction

The proposed class proceeding was commenced in the Federal Court of Canada, which has jurisdiction over actions pursuant to the Competition Act and aeronautics.

Scope of proceedings and potential exposure

As noted above, three dozen airports are named in the proposed class action. The claims states "it is estimated that each airline employee contributed at least $3,000 per year to the Defendant airports collectively".

Should the airports be required to reimburse the AIFs and PFFs, this could amount to a significant damages award.

Comment

This proposed class proceeding will be of particular interest to airports, as it will illuminate whether private agreements among airports with respect to fees charged can be enforced by passengers.

The proceeding will certainly cause airports to re-evaluate their public disclosure and practices with respect to AIFs and PFFs and consider whether their practices align with any agreements they are parties to.

For further information on this topic please contact Carlos P Martins or Emma Romano at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800) or email (cmartins@lexcanada.com or eromano@lexcanada.com). The Bersenas Jacobsen Chouest Thomson Blackburn website can be accessed at www.lexcanada.com.

Endnotes

(1) Roy v The Calgary Airport Authority, Federal Court of Canada, Action T-519-19.