Quebec class-action over key fobs may be worth $1 billion
The Superior Court of Quebec recently authorized a class-action lawsuit filed by a Quebec City law firm against 13 major automakers that claims car manufacturers have been marketing vehicles with safety flaws that make their cars prone to theft. So prone to theft, in fact, that if the class-action proceedings initiated by Cabinet Bouchard Avocats were to succeed, the defence — the 13 automakers being sued — might be on the hook for over a billion dollars, which would make this one of the biggest class-action lawsuits ever initiated against the auto industry in Canada.
The safety flaw in question? Smart keys. These electronic key systems — you may also know them as “key fobs” — allow drivers to unlock and start their vehicles at the push of a button, without even removing the remote from their pocket or purse. The problem — and the reason for the lawsuit — is that these keyless entry systems, at least as currently designed, are as popular with car thieves as they are with car owners.
That’s because the technology the keys use to communicate with the vehicle’s onboard computer is surprisingly easy for criminals to intercept and copy. This allows the thief to commit “relay attacks” – and remotely unlock the doors, start the engine, and drive away with the vehicle in minutes — and then, using the vehicle’s electronic On-Board Diagnostics (OBD) system, reprogram a new key, among other things. As you’ve likely seen in headlines the last few years, from there thieves typically resell the stolen cars, often internationally.
This is exactly what happened to André Lacroix, who initiated the class-action lawsuit. The retired engineer’s Toyota Highlander disappeared one night in April 2022, after he parked it in his daughter’s driveway in Boucherville, south of Montreal. That evening, Lacroix remembers returning from his walk and checking that the doors of his vehicle were locked. He also remembers leaving the keys in his coat, hanging inside the house near the front door.
Despite these precautions, when he woke up the next day, he realized his SUV was gone. No alarm sounded during the night; no broken glass was found on the ground. Not a single noise disturbed the neighbourhood. His vehicle was never to be found.
Lacroix concluded he had fallen victim to a relay-attack theft, now one of the most prevalent types of car theft in Quebec and Ontario, the two Canadian provinces considered the epicentre of a national car-theft crisis the last few years.
That’s why, in May of 2024, the Bouchard Avocats law firm filed a request to authorize a class-action suit, arguing car manufacturers were guilty of negligence in the design of their vehicles. According to the plaintiffs’ lawyers, this makes the manufacturers liable for their cars’ thefts. “They equipped their vehicles with a system that they knew was vulnerable to relay theft — and they continue to do so,” argues the firm. “They could and should have taken steps to minimize security risks and prevent theft of electronic keys, but they failed to do so.”
Furthermore, say the legal documents, manufacturers “should have informed buyers of this security flaw and measures that could have reduced the risk of theft associated with it; however, they failed to do so.” The plaintiff’s attorneys submitted “owner’s manuals” as evidence, demonstrating there was no indication of “the security flaw that allows the signal from the electronic key to be captured and relayed to a device that can unlock and start the vehicle.”
According to section 228 of Quebec’s Consumer Protection Act, failing to inform consumers by concealing an important fact is illegal. “Not only are the victims entitled to compensation, but there must also be a deterrent measure against the defendants,” adds the legal documentation.
The Honorable Clément Samson of the Quebec Superior Court heard these arguments and authorized the class-action lawsuit, though he excluded certain brands.
Which 13 car manufacturers were named in the suit—and which weren’t
The class-action lawsuit primarily covers automobilistes living in Quebec whose vehicles, if it’s of one of the following brands and came equipped with a smart key, have been stolen:
- Audi Canada
- FCA (Stellantis) Canada
- Ford Canada
- Honda Canada
- Hyundai Canada
- Kia Canada
- Mazda Canada
- Mitsubishi Canada
- Nissan Canada
- Subaru Canada
- Toyota Canada
- Volkswagen Canada
- Volvo Canada
Judge Samson excluded BMW (as well as Mini); Jaguar; Land Rover; and Mercedes-Benz brands, ruling their vehicles are equipped with more secure devices, notably UWB (ultra-wide band) technology, and sometimes a signal deactivation of the remote control that shuts down power after two minutes of inactivity, thus preventing relay attacks.
Porsche and General Motors (and its Buick, Cadillac, Chevrolet, and GMC brands) were also excluded “for technical reasons related to the rules of evidence,” according to Bouchard lawyers. Similarly, Tesla, Rivian, Lucid, VinFast, and other “start-ups” whose electric vehicles are rarely stolen were not included.
$1,500 in compensation asked for each stolen vehicle
To be eligible for this class-action, Quebec residents must have had their vehicle stolen within the three years prior to the filing of the claim, i.e. between May 3, 2021; and May 2, 2024. Owners or lessees of a stolen vehicle from a brand other than the 13 named above or of a vehicle equipped with a traditional key (or a UWB smart key) are not part of the group.
Bouchard Avocats’ cabinet won’t estimate the number of “members” included in this class-action lawsuit, but our own estimates, based on data from Équité Association, a national organization dedicated to fighting insurance crime, suggest between 20,000 and 30,000 of the 40,000 vehicles stolen in Quebec during the covered time period came from the brands mentioned above and were equipped with a (non-UWB) smart key.
For those “who have suffered damages related to insurance deductibles, premium increases, and disturbances and inconveniences following the theft,” the class-action seeks, upon presentation of evidence, compensatory damages of $1,500 per member. Do the math and that would add up to a total between $30 and $45 million in compensation (again, our estimates).
(Automakers) equipped their vehicles with a system they knew was vulnerable to relay theft — and they continue to do so
—Bouchard Avocats
It should be noted that in 2022, at the height of the crisis, car theft cost Canadian insurers more than $1 billion—losses that directly affect the cost of individual premiums.
Note: If you are a Quebec resident who was the victim of vehicle theft by relay attack between May 3, 2021, and May 2, 2024, you are automatically part of the class-action lawsuit. However, you may opt out within 60 days of the law firm Bouchard Avocats’ publication of the notice to members. The firm’s Eric Bouchard invites anyone who has been the victim of vehicle theft and who may be eligible for the class-action to contact his firm.
Why the firm’s seeking astronomical punitive damages
The class-action lawsuit emphasizes the fault “has been ongoing for many years, constituting an unlawful and intentional infringement” of the right to peaceful enjoyment of property and laments that, to date, “no defendant has issued a recall of vehicles to correct the safety defect in personal electronic keys.” It also argues the defendants “tout the benefits” of innovations like driver-less cars “without pointing out the weaknesses of these innovations in terms of safety,” and that that’s why “punitive damages must be high enough to ensure that the defendants prioritize the safety of their technologies as much as they prioritize marketing their products.”
It will be up to the judge who would ultimately hear the trial to determine the amount of these penalties (if any are ordered) but for now, Judge Samson is authorizing those based on “alleged recklessness” and “the manufacturers’ inertia all this years.”
The plaintiffs’ attorneys recommends punitive damages of $1,500 for all new vehicles sold by the 13 manufacturers in question during the relevant time period that were equipped with smart keys, whether those vehicles were stolen or not. In Quebec, just over 1.2 million new vehicles were sold during the three years covered by the legal proceedings, and our own estimates suggest as many as three-quarters of them were sold by those 13 manufacturers.
What is the proportion of these vehicles equipped with smart keys? It’s impossible to say, but if, hypothetically, some 80% of them were, the punitive damages could total an astonishing $1 billion, should the court order them. For perspective, Volkswagen Canada was ordered to pay $2.1 billion as a result of its high-profile Dieselgate case, though that case stretched Canada-wide.
However, unlike the compensatory damages mentioned earlier, this sum would not be paid to Quebecers; instead, Cabinet Bouchard Avocats proposes awarding these punitive damages to “an association recognized for protecting consumer interests in the automotive sector or to any public or private organization working to combat vehicle theft.”
Years of court proceedings lie ahead before these exemplary damages are ordered, or aren’t. In Quebec, once authorized, a class-action lawsuit takes an average of seven years to settle (or even ten years, in the case of a recent Mazda suit over its SkyActiv engines) and not always to the benefit of the instigators. More importantly, four out of five class actions end in an out-of-court settlement, as was the case with Toyota’s CableGate.
Will there be a réglement à l’amiable in this case? Too soon to tell. That said, Judge Samson did articulate the sizable hole the automakers have dug for themselves: “If the technology has evolved so much in 10 years, as the defendants claim, with increasingly high-performance security models,” he wrote in authorizing the lawsuit, “how is it that, at least 12 years after the introduction of smart keys, relay attack thefts seem to remain so easy [for thieves] to carry out?”