Canadian Class Action Update
Since the release of our fall newsletter there have been several important developments in various Canadian franchise class proceedings.
Quiznos and its distributor, Gordon Food Service (“GFS”), were unsuccessful in their bid to have the Supreme Court of Canada entertain an appeal of the Ontario Court of Appeal decision affirming the Divisional Court’s certification of the action as a class action. Certification is now complete and the matter is proceeding to discoveries over the summer months. Our firm represents the franchisee class.
The Ontario Superior Court of Justice certified an action on behalf of Pet Valu franchisees against their franchisor. The franchisees contend that the franchisor has breached its contractual and statutory obligations to them over the past 7 years by failing to pass on the benefit of the volume rebates which the franchisor has successfully negotiated for the benefit of the entire system by virtue of its tremendous bargaining power. A statement of the common issues certified will be finalized in March, 2011. Our firm represents the franchisee class.
The Ontario Court of Appeal will be considering an appeal on behalf of over 300 former Sunoco dealers in Ontario later this year. The Superior Court of Justice determined that Suncor was entitled to enter into its agreements with the dealers that last preceded the termination of the dealerships without having had to provide a disclosure document within the meaning of the Arthur Wishart Act (Franchise Disclosure), 2000, as an exemption to disclose was available to it given the provisions of the agreement relating to its term. This decision determined at first instance the major substantive issue in the intended class proceeding.
The decision has important implications for the franchise industry given the lower court’s interpretation of the exemption. We are not recommending that our franchisor clients immediately seek to avail themselves of the benefits of the decision given the issues which will be decided by the Court of Appeal. Our firm is representing the appellant in the proceeding.
The Ontario Superior Court of Justice heard lengthy argument in December, 2010 on the motion brought on behalf of over 200 terminated General Motors dealers to have their dispute with GM and the law firm of Cassels Brock & Blackwell certified as a class action relating to the “Wind Down Agreements” which these dealers entered into to close their dealerships when GM was threatening potential insolvency proceedings in the spring of 2009. The class proceedings judge is still considering the matter and no date has been set for the release of the reasons for decision. Our firm together with the Toronto based firm of WeirFoulds LLP is representing the dealers.
The Ontario Super ior Cour t of Justice also certified a claim brought by a number of Sears home services franchisees relating to the alleged failure by Sears to pass on rebates pursuant to their contracts with Sears and pursuant to Sears’ statutory duties under the Arthur Wishart Act. The decision is not under appeal. We will continue to keep you informed on important developments as these and other class actions wind their way through the courts.