Executive Summary: Key Legal and Evidentiary Issues

• Central to the appeal was whether Ooma's alternative request for summary judgment within its stay motion caused it to attorn to the Federal Court and waive arbitration.
• Enforceability of the arbitration clause and its attached class action waiver was contested, including whether British Columbia's consumer protection provisions applied to an Ontario resident.
• Competence-competence principles governed Zanin's argument that the arbitration clause was incapable of being performed under Peace River.
• Application of the "strong cause" test to the forum selection clause raised the arbitrability of damages claimed under section 36 of the Competition Act.
• Whether the pleadings disclosed a reasonable cause of action under section 52 of the Competition Act was the key substantive question addressed.
• Expert evidence and its necessity for assessing the "general impression" of allegedly false advertising at certification was disputed.

Facts of the case

In January 2020, John Zanin, a resident of Ontario, subscribed to a Voice over Internet Protocol (VoIP) telephone service offered by Ooma, Inc., a company headquartered in California, after seeing an advertisement in a Costco magazine. The service was advertised as "Free" or "$0," with customers responsible only for fees and applicable taxes. Ooma charged Zanin monthly fees that often ranged between $5 and $6, which the company admitted formed part of its revenues. Zanin cancelled his subscription in December 2021. The co-respondent, Ooma Canada Inc., is a wholly owned subsidiary incorporated in British Columbia in August 2019 strictly for administrative purposes and to collect invoices; it has no employees, no involvement in advertising, and is not a party to any customer contract. The proposed class action began in February 2021 with Fiona Chiu as the initial proposed representative plaintiff, alleging that Ooma falsely described the service as free and misrepresented its true cost. The statement of claim and certification motion advanced claims of misrepresentation and double ticketing under sections 52 and 54 of the Competition Act and the use of false descriptions under section 7 of the Trademarks Act. On November 9, 2021, Justice Gascon substituted Zanin as the proposed representative plaintiff, with the proceedings deemed to have commenced on November 8, 2021.

The arbitration and forum selection clauses at issue

Ooma's governing terms and conditions contained an arbitration clause requiring any dispute under the subscription agreement — including the scope or applicability of the arbitration agreement itself — to be determined by arbitration in Santa Clara County, California, under the Judicial Arbitration and Mediation Services (JAMS) Comprehensive Arbitration Rules and Procedures. That clause also contained a class action waiver by which customers specifically waived the right to participate in any representative proceeding, including class actions. A separate forum selection clause designated the courts of Santa Clara County for litigation in the event any part of the arbitration agreement was found unenforceable. Ooma objected to the Federal Court's jurisdiction from the outset. Justice Gascon's Scheduling Order of March 22, 2021, and his later Substitution Order provided that specified steps — including filing a defence, perfecting the certification motion, and Ooma's motions on jurisdiction and limitation periods — would proceed without prejudice to Ooma's stated position and would not constitute attornment to the Court's jurisdiction. In June 2021, Ooma filed its stay motion, seeking a stay in favour of the arbitration and forum selection clauses and, as alternative relief, summary judgment under Rules 213 and 215(1) of the Federal Courts Rules on the basis that the action was time-barred and disclosed no cause of action against Ooma Canada.

The court's reasoning and analysis

On January 10, 2025, the motions judge granted Ooma's stay motion in favour of arbitration in California under section 50 of the Federal Courts Act and dismissed the certification motion, finding no reasonable cause of action under either statute. On appeal, Zanin limited his challenge to the stay and to whether his section 52 Competition Act claim disclosed a reasonable cause of action; he did not contest the findings on paragraph 7(d) of the Trademarks Act or section 54 of the Competition Act. Writing for a unanimous panel, Pamel J.A. applied the standards from Housen v. Nikolaisen, reviewing questions of law for correctness and findings of fact or mixed fact and law for palpable and overriding error. On the attornment argument, he found no reviewable error in the motions judge's conclusion that Ooma had "acted within the boundaries" of the Court's Orders and consistently reserved its jurisdictional objections, noting that whether a party has attorned or waived arbitration is a question of mixed fact and law (Barer v. Knight Brothers LLC). He rejected the argument that sections 14.1 to 14.4 of the British Columbia Business Practices and Consumer Protection Act voided the clause, observing that those provisions came into force on March 31, 2025 — after Zanin had ceased being a customer — have no retroactive effect, and had no substantial connection to a case involving an Ontario resident. He also declined to find the clause incapable of performance, holding that its fact-infused compatibility with JAMS procedures fell to the arbitrator under the competence-competence principle, especially absent expert evidence on California law. On the forum selection clause, he agreed that damages claimed under section 36 of the Competition Act are arbitrable (Difederico; Murphy v. Amway Canada Corporation). Although Zanin's concession that upholding the arbitration agreement would end the matter rendered further analysis unnecessary, Pamel J.A. addressed the section 52 cause of action. The motions judge had found (at paragraphs 458, 486, and 492) that Zanin's allegations were not a fair and accurate rendering of Ooma's actual representations, that no ordinary or credulous consumer could read them as offering a truly free service given the express mention that customers pay applicable taxes and fees, and that the "general impression" test is objective and does not require a thorough review of the evidence. Distinguishing the Cineplex proceedings, the Court noted that Ooma's materials disclosed that fees and taxes remained payable. Applying Pro-Sys Consultants Ltd. v. Microsoft Corporation, Pamel J.A. agreed it was plain and obvious the claim could not succeed and rejected the contention that expert evidence is always required to assess general impression at the certification stage.

Ruling and outcome

Finding that Zanin had not established any reviewable error on the part of the Federal Court, the Federal Court of Appeal dismissed the appeal with costs. The successful parties were the respondents, Ooma, Inc. and Ooma Canada Inc., in whose favour costs were awarded. The reasons do not specify a dollar figure for those costs, so the exact amount cannot be determined from the decision.