Top court rules out class-action lawsuit against Dell

The Supreme Court of Canada on Friday dismissed a call for a class-action lawsuit against Dell Computer Corp. and referred the online shopping dispute to arbitration.

The Supreme Court of Canada has dismissed a call for a class-action lawsuit against Dell Computer Corp., a decision that could have implications for online shoppers.

In a 6-3ruling released Friday, the courtreferred the case in question to arbitration, saying arbitrators have the same resources and expertise as the courts.

A Quebec man and a consumer group had wanted to sue the computer-maker after incorrect prices were mistakenly posted on the company's website. A clause, accessible through a link on the bottom of the web page, said consumer disputes would be resolved through arbitration.

The Supreme Court dismissed an earlierQuebec lower court ruling that the terms and conditions of sale were not made obvious to the consumer.

A hyperlink at the bottom of the web page is "consistent with industry standards" and a notice, written in block capital letters, urges consumers to read the document, wrote the Supreme Court.

"This warning brings the existence of the dispute resolution clause directly to the attention of the reader at the outset," said the court, which noted "a certain level of computer competence be attributed to those who choose to engage in e-commerce."

The court also rejected the argument that arbitration proceedings are "inherently unfairand abusive for the consumer."

"On the contrary, it may well facilitate the consumer’s access to justice," said the court.

Incorrect prices posted

The case was prompted when Dell Inc. in 2003 posted incorrect low prices for Axim hand-held computers on its website. Instead of correct prices of $379 and $549 for the computers, prices were listed at $89 and $118.

Dell learned of the mistake and immediately erected an electronic barrier to block the page, but some consumers were able to circumvent the barrier, found the incorrect listings and placed orders.

Dell normally received between one and three weekend orders for Axim computers, but orders for 509 computers were placed that weekend.

The company issued a correction notice and offered the customers a discount, but refused to honour the incorrect price listings.

Olivier Dumoulin of Saint-Laurent, Que., in response began the class-action lawsuit, insisting that Dell honour terms and conditions of sale.

Read fine print: expert

Ontario and Quebec have since passed laws saying companies cannot implement mandatory arbitration clauses.

The Supreme Court wrote that the laws are not retroactive in Dumoulin's case.

Jeremy DeBeer, a law professor at the University of Ottawa, said Friday's decision sends a"loud and clear" messageto provinces that haven't passed similar laws.

"The rest of the Canadian provinces need to get out and start thinking about this issue," he said. "Provincial policy-makers need to think about ways to amend consumer protection laws in all of the provinces."

"For consumers, you better pay close attention to what's in the fine print."

DeBeer said arbitration is a good dispute resolution procedure, but"only if it's truly consensual."

Court sides with Rogers

The top court also ruled Friday against a consumer's bid to launch a class-action suit against Rogers Wireless Inc. in a dispute over cellphone prices.

In 2004, the company partnered with American cellphone companies to offer service in the U.S. for 95 cents a minute, except in certain excluded areas where it charged $4 a minute.

In November 2004, Frederick Muroff filed a motion with Quebec Superior Court for permission to file a class-action suit against Rogers, arguing that the rates for the excluded areas were not sufficiently explained to subscribers.

He claimed they were "abusive, harsh and unconscionable" under the Civil Code of Quebec and the Consumer Protection Act.

Muroff sought damages and reimbursements of fees for all the subscribers who had paid them.

But Rogers, like Dell, had an arbitration clause in its contract and said that only the arbitrator had the jurisdiction to hear Muroff's application.