"Complete code" argument continues to be a powerful defence in consumer class actions

01 December 2015

If Parliament intends for a statutory cause of action to be the sole remedy for breaches of a given statute, the statutory regime is a “complete code.” Canadian courts are increasingly receptive to the complete code argument, which can bar “parasitic” common law and equitable claims based on breaches of statute.

The complete code argument can be a powerful tool for defendants in consumer class actions. In the most recent example, the British Columbia Court of Appeal held that the patent regime is a complete code that bars civil claims for Patent Act breaches. As a result, the BCCA dismissed a consumer class action alleging that Pfizer Canada Ltd. unlawfully abused the patents system with its VIAGRA® patent.

The ruling is part of a wave of jurisprudence on the complete code issue, which should continue in 2016.

Recent Complete Code Cases and the Competition Act Controversy

The “complete code” argument has been developed and debated in the following notable decisions, which laid the groundwork for the BCCA’s latest decision on the patent regime:  

  • In Koubi v Mazda, the BCCA considered whether breaches of BC’s consumer protection legislation could ground a claim in waiver of tort. Relying on the general rule that there is no common law cause of action to enforce statutory rights, the BCCA decertified the waiver of tort claim. The BCCA held that the Business Practices and Consumer Protection Act was meant to be a complete code and that Parliament did not intend to supplement its statutory remedies by permitting consumer claims for equitable relief.
  • In Wakelam v Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc, the BCCA appeared to extend the application of Koubi to tort claims based on Competition Act breaches. In a class action concerning misleading marketing, the BCCA said that Parliament did not intend to allow consumers to sue in tort or restitution based on breaches of the Competition Act
  • In Watson v Bank of America Corporation, the BCCA accepted that Wakelam bars restitutionary claims based on Competition Act breaches, but found it did not bar tort claims for unlawful means conspiracy. The common law permitted conspiracy claims based on breaches of competition legislation prior to the introduction of the statutory cause of action. Ultimately, the BCCA was of the view that Parliament did not intend to replace the tort claim with the statutory claim.  
  • In Shah v LG Chem, Ltd, Justice Perell held that the BCCA erred in Watson. The error was asking whether the Competition Act provides a superior way to remedy breaches of its price-fixing provisions. In his view, the correct question is whether Parliament meant for the statutory remedies to be the exclusive remedies for breaches of the act. The plaintiff’s argument that explicit language is necessary to alter common law rights was rejected for three reasons.
  1. Parliament introduced comprehensive statutory causes of action and remedies, indicating its intention to preclude an ineffective common law cause of action for conspiracy.
  2. Parliament created the wrongdoing that formed the basis of the price-fixing conspiracy tort to begin with, and added a statutory cause of action that deprived plaintiffs of little.
  3. The statutory cause of action filled any gap in competition law, which meant that there was no longer a gap to be filled by the common law claim for conspiracy.

Low v Pfizer Canada Inc – the Complete Code Trend Continues

In Pfizer, the BCCA found the patent regime to be a complete code that forecloses consumer civil claims for unlawful interference with economic relations and unjust enrichment. Although the patent regime does not provide consumer remedies, the BCCA held that it precludes consumer claims for three main reasons.

  1. Patent rights are entirely a creature of statute. Nothing in the legislation suggests an intention to allow consumer claims. Moreover, the regime does not confer rights to consumers, so it cannot be inferred that the lack of a statutory consumer claim implies a common law cause of action. The plaintiff was attempting to expand the scope of the regulations by relying on Parliament’s silence.    
  2. Appellate courts have found the patent regime to be a complete code between innovators and generics. Courts have also found that Parliament intended to limit generics to claiming losses and to preclude generics from claiming disgorgement of profits. It would be illogical to permit consumers to claim disgorgement, based on the same wrongful conduct, when generics cannot.
  3. Parliament put consumer protection in place by having a board review innovators’ pricing.

Looking Ahead

Pfizer and the other cases show that courts are wary of permitting civil claims if the predicate wrongdoing is provided by a comprehensive regulatory regime. The decision also adds the patent regime to the list of “complete codes.” This is welcome news for defendants facing class actions in regulated areas of law.

The BCCA in Pfizer steered clear of the debate over whether the Competition Act is a complete code. The conflicting case law in this area raises the tougher question of when statutory causes of action are intended to replace pre-existing common law rights. The Ontario Court of Appeal may soon weigh in on whether the Competition Act is a complete code if it hears an appeal in Shah. We expect that the complete code argument will be a hotly contested issue in the coming year.  

Additional Reading

You can read a full analysis of the Pfizer decision here.

For a discussion of Parliament’s decision to preclude generics from recovering disgorgement of profits from innovators, see: Sandra Barton, Mark Hines & Shawn Therien, “Neither Cause of Action nor Remedy: Doing Away with Waiver of Tort,” Annual Review of Civil Litigation (2015).

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