When Sparkling Wine tries to pass off as Champagne

Par Sarah D. Pinsonnault, avocate

Sarah D. Pinsonnault, avocate, Larivière Meunier

To begin, let’s get one thing straight: yes, all Champagne is technically sparkling wine, but not all sparkling wine is Champagne. In fact, in order for sparkling wine to be called “Champagne”, one of the main requirements is that it must hail from the region of Champagne, France. Given that Champagne is often known to be associated with prestige, it could be understood why someone would want to associate their glass of bubbly with that name. However, it is illegal in many countries (Canada being one of them) to label any product “Champagne” unless it is produced in accordance with the Comité Interprofessionnel du vin de Champagne regulations. The case of MacDuff c. Vacances Sunwing inc., 2020 QCCS 31 deals with a class action lawsuit authorized by the Québec Superior Court that targets Sunwing Vacations Inc. (“Sunwing”) for having allegedly engaged in deceptive marketing practices by using the word « Champagne  » in its advertising of flights and holiday packages that included a « Champagne service » without actually serving it. Set in that context, we are however reminded in this decision that out-of-court settlements have, between the parties, the authority of res judicata and the mutual concessions made therein must be respected.

Context

In the case at bar, l’Institut national de l’origine et de la qualité and the Comité interprofessionnel du vin de Champagne (collectively referred to as the “Impleading Parties”) seek to participate in the class action lawsuit involving Sunwing in order to protect the distinctiveness of the geographical indication « Champagne  » in Canada, a mission these legal entities domiciled in France are entrusted with. They wish to become parties to the proceeding in order to support the Applicant’s position and, as such, file evidence, participate in the examinations for discovery of Sunwing’s representatives, file a cross-examination, cross-examine Sunwing’s expert, as well as make written and oral submissions on the merits. Consequently, given that the Impleading Parties wish to do more than simply participate in the debate at the hearing, their voluntary intervention is termed “conservatory” rather than being an intervention as a “friend of the court” pursuant to section 185 of the Code of Civil Procedure.

However, this was not the first time the Impleading Parties were before the courts with respect to Sunwing’s use of the term « Champagne » in its marketing of travel and air transportation. In fact, in 2018, the Impleading Parties filed an injunction against Sunwing before the Federal Court (Institut National de L’Origine et de la Qualité et al v. Sunwing Travel et al., T-532-17; the “Federal Court case”), seeking the cessation of the use of the word « Champagne » in its advertising; claiming that it is a false description of an alcoholic beverage it served that is not true Champagne, thus misleading the public.

In October 2018, Sunwing and the Impleading Parties however agreed to an out-of-court settlement in the Federal Court case, which included a declaration of acquiescence and a broadly worded discharge:

“FULL AND FINAL RELEASE

[..] each of the Champagne Parties on their own behalf, […] do hereby release, remise and forever discharge each of the Sunwing Parties […] from any and all actions, applications, causes of action, claims, contracts, convenants, debts, dues, accounts, liens, costs and demands whatsoever which they ever had, now have or hereafter shall have for or by reason of any cause, matter or thing whatsoever existing up to the present time and in any way related to the Federal Court Action.

It is understood and agreed that in the event that the Champagne Parties, or any of them or any of their respective members, should make any claim, demand or commence, or threaten to commence any proceeding against the Sunwing Parties or any of them, […] on the basis of any cause of action for which the Champagne Parties have provided a release in the present document, this document may be raised as an estoppel to any such proceeding.” (underline added)

Justice Granosik, J.C.S., therefore had to decide whether the Impleading Parties were allowed to intervene in the case at bar for conservatory purposes despite the October 2018 discharge.

Decision

The Impleading Parties argued inter alia that the discharge does not explicitly mention « conservatory intervention » and thus does not cover such a procedure.

That said, given that a transaction is a contract (s. 2631 CCQ), the common intention of the parties must be sought when interpreting its terms. In doing so, Justice Granosik, J.C.S., found that use of several synonyms (e.g. « any and all actions, applications, causes of action ») revealed the firm intention of the parties to no longer see the Impleading Parties initiate any proceedings against Sunwing with respect to the issues in dispute. This finding seemed all the more compelling in light of the fact that both proceedings arise substantially from the same facts and that Sunwing’s grounds of defence in the class action lawsuit are similar, if not identical, to those it asserted before the Federal Court.

Also, the nature of the transaction / discharge reveals that Sunwing ultimately abandoned the practice that the Impleading Parties had reproached it for and acquiesced in judgment. In exchange, however, Sunwing demanded and obtained judicial peace.

Furthermore, the context in which the transaction / discharge was made demonstrates that the Impleading Parties were fully aware of the class action lawsuit filed against Sunwing in or around February 2017.

Consequently, Justice Granosik, J.C.S. found that the October 2018 discharge includes the eventuality of a conservatory intervention and thus the Impleading Parties’ declaration of intervention in the case at bar was rejected:

“[22] En somme, il y a lieu de conclure que la quittance d’octobre 2018 vise une intervention conservatoire et que le moyen que Sunwing oppose à l’acte d’intervention en cause est bien fondé. Le Tribunal doit ici assurer l’application de la transaction, qui a l’effet de la chose jugée, mettre en œuvre la volonté des parties clairement exprimée et empêcher les Intervenants de remettre en cause devant les tribunaux ce qui fait l’objet de la quittance. D’ailleurs, on peut noter que dans les situations où, à la suite d’une transaction, une partie souhaite la mise en cause forcée d’une personne bénéficiant de celle-ci, les tribunaux ont rejeté d’emblée la procédure. La même solution doit prévaloir pour empêcher la partie qui bénéficie d’une quittance d’être assujettie à une intervention conservatoire qui en nierait tant l’objet que l’esprit.”

To read this case in its entirety, click here.

Related cases:
MacDuff c. Vacances Sunwing inc., 2019 QCCS 2551
Macduff c. Vacances Sunwing inc., 2018 QCCS 1510
Macduff c. Vacances Sunwing inc., 2017 QCCS 4540