In recent years, several provinces have taken steps to prevent suppliers from restricting consumers’ access to the courts via class proceedings or otherwise. In 2025, British Columbia joined the likes of Ontario, Québec, Alberta and Saskatchewan and introduced amendments to its consumer protection legislation (the Business Practices and Consumer Protection Act) prohibiting class action waiver provisions (which limit the ability of consumers to institute or be part of a class action) and dispute resolution provisions (requiring all disputes to be arbitrated) in consumer contracts.
Plaintiffs in proposed class actions often seek to rely on these types of restrictions under consumer protection statutes to resist the enforcement of class action waiver and arbitration clauses. But these consumer protection statutes are provincial legislation, not federal. So, what about cases in Federal Court under federal law? Can a supplier defendant in a consumer class proceeding brought in the Federal Court rely on class action waiver and dispute resolution clauses in consumer contracts?
The short answer is yes. In Zanin v. Ooma, Inc., 2025 FC 51, the Federal Court held that prohibitions on class action waivers and dispute resolution provisions in provincial consumer protection statutes do not apply in proposed federal class proceedings based on federal causes of action housed in federal statutes. Unless the federal statutes on which the class proceeding is based contain restrictions on class action waivers and dispute resolution provisions, such provisions are presumptively valid and enforceable unless some other doctrine (such as unconscionability) precludes a defendant’s reliance on them.
Zanin v. Ooma, Inc.
In Zanin, the plaintiff purchased home phone services from the defendants, Ooma Inc. and Ooma Canada Inc., because those services were advertised as being “FREE” or costing “$0”. As part of that purchase, the plaintiff agreed to Ooma’s terms and conditions. The terms and conditions included, in relevant part, a class action waiver and a dispute resolution provision requiring all disputes to be arbitrated. The contract used capitalized letters to introduce the waiver and arbitration provisions and draw them to the customer’s attention.
Rather than being free, the plaintiff alleged that he incurred monthly fees of approximately $5 to $6 in relation to the home phone services. The plaintiff filed suit, claiming breaches of paragraph 7(d) the Trademarks Act and sections 52 and 54 of the Competition Act and sought to certify the matter as a class action on behalf of all individuals who were at one point subscribed to Ooma’s home phone service. Ooma sought to stay the action in favour of arbitration based on the arbitration clause in the terms and conditions.
The Arguments
Ooma contended that the arbitration clause was valid and enforceable under the Competition Act and the Trademarks Act. Therefore, Ooma argued, the matter should be referred to arbitration where the arbitrator could decide whether the class action waiver was valid and enforceable pursuant to the competence-competence principle.
The plaintiff resisted Ooma’s jurisdiction arguments. The plaintiff argued that provincial consumer protection laws either ban or severely limit the reach of arbitration clauses and class action waivers in consumer contracts and that such bans and restrictions operate when claims are brought pursuant to federal law. The plaintiff also argued that section 25 of the Federal Courts Act, which permits suits in Federal Court where no other court has jurisdiction, allowed the court to retain jurisdiction. Finally, the plaintiff argued that the arbitration clause was, in any event, unconscionable and incapable of being performed.
The Federal Court’s Decision
The Federal Court stayed the action in favour of arbitration and dismissed the plaintiff’s arguments that provincial consumer protection laws nullified the arbitration clause. The Court noted that, while provincial laws may restrict or ban arbitration in the consumer context, neither the Competition Act nor the Trademarks Act did so and neither federal statute could be conflated with provincial consumer protection law.
The Court also remarked that not every provincial law invalidates arbitration clauses in commercial agreements ab initio. Rather, some statutes only restrict the operability of such clauses if they disallow a plaintiff from seeking to exercise certain rights in a certain forum (e.g., in Ontario, where the plaintiff was resident, arbitration clauses in consumer contracts are only invalid insofar as a plaintiff cannot commence a claim in the Superior Court of Justice to exercise a right provided under Ontario’s consumer protection legislation). The Court would have reached the same conclusions regarding whether provincial laws nullified the class action waiver.
The plaintiff’s other arguments fared no better. Section 25 of the Federal Courts Act does not invalidate alternative methods of dispute resolution and does not operate where a plaintiff could have sought relief in a provincial superior court. The arbitration clause was not unconscionable as there was neither an inequality of bargaining power nor an improvident bargain. Finally, it was not sufficiently clear that the arbitration clause was incapable of being implemented and thus the Court determined that it was for the arbitrator to finally determine pursuant to the competence-competence principle, along with the enforceability of the class action waiver.
The Federal Court of Appeal
On May 19, 2026, the Federal Court of Appeal dismissed the appeal in Zanin in 2026 FCA 98. Interestingly, the Federal Court of Appeal seems to have left unanswered the question of whether provincial consumer protection legislation could apply in federal class proceedings based on federal law. Pamel J.A. noted that in Zanin that there was no evidence of a substantial connection to British Columbia, as Mr. Zanin was a resident of Ontario (not a British Columbia consumer) and Ooma Canada was a supplier of goods pursuant to British Columbia's Business Practices and Consumer Protection Act. Pamel J.A. went on to note that amendments to the Business Practices and Consumer Protection Act did not have retroactive effect and would not have applied to Mr. Zanin's claims, which arose prior to such amendments.
Looking Forward
The decisions of the Federal Court and Federal Court of Appeal in Zanin emphasize that the federal courts will not be keen, in federal class proceedings based on federal law, to disregard arbitration clauses and class action waivers found in consumer contracts despite provincial consumer protection legislation. While the Federal Court's decision enunciated a broader principle—that provincial restrictions found in consumer protection legislation will not apply to federal class proceedings premised on federal law unless such federal statutes include comparable restrictions—the Federal Court of Appeal did not go so far. The Federal Court of Appeal seems to have left the door open to the possible application of provincial restrictions on arbitration clauses and class action waivers in federal class proceedings provided those statutes would have otherwise applied to the parties and claims at issue. It remains to be seen whether future litigants will continue to try and leverage provincial restrictions on arbitration clauses and class action waivers in federal cases based on federal law.
If you have further questions about this update or class action litigation more generally, please contact the authors or a member of the Class Action Litigation group.
