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B.C. could see Groupon class action

Legal experts say B.C. could join Ontario, U.S. juridictions in suing Groupon over deal expiry provisions

As an Ontario class action targeting Groupon Inc.'s deal -xpiry provisions joins similar class actions launched south of the border, legal experts say B.C. could well see a comparable class action launched against the “daily deal” company.

In June, Toronto law firm Sack Goldblatt Mitchell LLP launched a class action on behalf of representative plaintiff Hitendra Patel. Christine Davies, a lawyer on the case, said the three key components of the case are:

•whether the expiry of daily deal vouchers is permitted by Ontario's consumer protection legislation;

•whether Groupon's policy of redeeming just the amount paid for the Groupon is permitted by the legislation; and

•whether the language used to describe Groupon's terms and conditions is confusing and misleads consumers.

The statement of claim states that Patel purchased a $50 groupon for the Gap for $25 from Groupon in the fall of 2010. It says that when shopping at a Gap location shortly after the coupon's November 19, 2010, expiry date, Patel attempted – but failed – to redeem the groupon for either the face value or purchase price.

The class Patel is looking to represent includes anyone in Ontario who purchased or acquired a groupon from Groupon for services or products prior to the date of certification of the action; the action has yet to be certified.

“It's happened at least once, and I expect we'll hear from a number of other individuals who've encountered the same problem,” Davies said.

Companies that have used Groupon's deals haven't been named in the suit; just Groupon.

“I think from the consumer's perspective, they deal with Groupon, they purchased the Groupon through Groupon's website and become bound to Groupon's terms and conditions so we consider Groupon to be liable,” Davies said.

Patel is seeking:

•$110 million in damages;

•various orders;

•a declaration that Groupon has engaged in unfair practices under Ontario's Consumer Protection Act;

•injunctions halting Groupon from relying on its “illegal contractual terms and representations” and doing so in future;

•a declaration that Groupon charged or received illegal fees or payments contrary to Ontario legislation as the result of expiry dates and partial redemption provisions; and

•an injunction restraining Groupon from charging or receiving “its illegal fees or payments” in the future.

Both Davies and Vancouver-based class-action lawyer Reidar Mogerman, a partner with Vancouver-based Camp Fiorante Matthews, said a similar class action could emerge in B.C.

“It's a viable case in British Columbia,” Mogerman said. “It makes both procedural sense and it makes substantive sense.”

Whether it will emerge, he said, will turn on whether B.C. class-action lawyers think they've got a real case.

He added that B.C.'s consumer-protection statute is actually stronger than Ontario's.

“There's no reason you couldn't have a case like this in British Columbia – in fact it would probably be easier to have a case like this in B.C. than in Ontario.”

But Mogerman said such a case wouldn't hit B.C. businesses that have been using the daily deal site.

“I'm very certain that from a legal point of view, it would only hit Groupon,” he said. “Whether each business, from a business point of view, wants to be associated with practices that are called into question – that's up to that business. But that's a business question, not a legal question.”

Steve Kates is an associate professor at Simon Fraser University's Beedie School of Business who specializes in marketing and consumer behaviour.

“Highly publicized lawsuits could damage the meaning and the value of the brand, from the perspective of the consumer,” he wrote in an email. “On the other hand, consumers do have experience with coupons which expire and may value Groupon (and its competitors) still favourably regardless.”

Davies said a B.C. action could be launched while the Ontario suit is still working its way through the courts.

“I don't think there's necessarily a reason why such a claim would have to be delayed, pending the resolution of the Ontario action.”

Groupon did not respond to interview requests. •