The Federal Court of Canada decided this week that it lacks jurisdiction over a proposed class action on COVID-19 airfare refunds.
This news came on Thursday, November 26, 2020, when the Federal Court of Canada released the decision of Donaldson v Swoop Inc. et al, 2020 FC 1089. In this proposed class action, passengers sought refunds as a result of having their flights cancelled (or voluntarily cancelling their flights) due to the COVID-19 pandemic.
The Plaintiff sought to certify a global class action against Swoop, WestJet, Air Canada, Air Transat, and Sunwing. The heart of the Plaintiff’s claim was that the Defendant airlines breached their contracts with the proposed class members, or that those contracts were “frustrated” due to the pandemic.
Before deciding whether the case ought to be certified as a class proceeding, the Court considered a motion by the Defendant airlines to dismiss the case on the basis that the Federal Court lacked jurisdiction over the subject-matter of the dispute.
The Court confirmed that since the Federal Court is a statutory court, it only has jurisdiction to hear such claims as are specifically set out in the Federal Courts Act (the “Act”). Section 23 of the Act provides that the Federal Court has jurisdiction where a claim is made “under an Act of Parliament or otherwise” in relation to any matter coming under certain classes of subjects, which include aeronautics.
Conditions for the Federal Court to have jurisdiction:
The court held that:
- There must be a statutory grant of jurisdiction by the federal Parliament.
- There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.
- The law on which the case is based must be “a law of Canada” as the phrase is used in s. 101 of the Constitution Act, 1867.
A recent Supreme Court of Canada decision (Windsor (City) v Canadian Transit Co.) confirmed that the “cause of action, or the right to seek relief, must be created or recognized by a federal statute, a federal regulation or a rule of the common law dealing with a subject matter of federal legislative competence.”
The Plaintiff argued that certain federal statutes create a comprehensive regulatory scheme governing air travel contracts, and that those schemes were sufficient to give jurisdiction over the case to the Federal Court.
The Plaintiff relied upon two cases from the 1970s and 1980s in which the Federal Court assumed jurisdiction over cargo claims that were brought pursuant to the Warsaw Convention (the predecessor to the Montreal Convention). The Warsaw and Montreal Conventions are incorporated into Canadian law by the Carriage by Air Act (i.e. a federal law which is essential to the disposition of the case).
The Court distinguished those cases, recognizing that the Plaintiff’s claims were not brought pursuant to the Montreal or Warsaw Conventions. The Court also confirmed that the “comprehensive” legislative scheme governing airline passenger contracts did not create a cause of action for the proposed class members or entitle them to any specific relief in Federal Court.
Court cites lack of jurisdiction over plaintiff’s claims
The Court confirmed that the essential nature of the Plaintiff’s claim was a contractual dispute. It mattered not that the Defendant airlines are federally regulated entities. There were no “federal laws” (common law or otherwise) which were essential to the disposition of the case. The law to be applied to the dispute is the provincial common law of contract. Finding that it was “plain and obvious” that the Federal Court lacked jurisdiction, the Court struck the Plaintiff’s Statement of Claim without leave to amend.
This case provides a clear articulation as to the Federal Court’s jurisdictional limits in the realm of aeronautics, and provides important clarification on what types of disputes the Federal Court is able to adjudicate.
If you have any questions, please contact a member of our Aviation Group.