Class Action Update May 11, 2010

Class Action Update May 11, 2010

What is the lawsuit about?

This lawsuit concerns Pet Valu’s alleged failure to pass on supplier rebates and benefits to its franchisees, while simultaneously charging its franchisees undisclosed fees. These actions are alleged to be in breach of both the Pet Valu franchise agreement and Ontario’s franchise legislation, known as the Arthur Wishart Act (Franchise Disclosure), 2000.

Pet Valu is one of the largest purchasers of pet food in Canada. As such, it has tremendous purchasing power and the ability to negotiate preferential deals with suppliers.

The franchise agreement recognizes Pet Valu’s purchasing power as a fundamental component of the Pet Valu system. However, the claim alleges that Pet Valu has failed to pass on to its franchisees the benefits of collective purchasing power, including supplier rebates and benefits.

In addition, the claim alleges that Pet Valu has been charging mark-ups on private label products in excess of the 10% mark-up permitted under the franchise agreement.  As well, the claim alleges that the 5% delivery charge which Pet Valu charges on all deliveries is not permitted by the franchise agreement.

What is the status of the lawsuit?

The lawsuit was commenced on December 9, 2009.

Pet Valu will not be required to deliver a statement of defence until after the court has decided whether or not this action can proceed as a class action.

What is the next step in the lawsuit?

The next step in this action is to certify it as a class action. In order for an action to proceed on behalf of all Pet Valu franchisees, a judge must decide whether the members of the proposed class have common issues, and whether a class action is the preferred way to resolve the issues.

The certification process is underway. The hearing of the motion for class certification is scheduled for August 25 and 26, 2010 in Toronto. All franchisees are welcome to attend the hearing. We will notify post the location of the court house and courtroom when we have that information.

What are the chances that the lawsuit will be certified as a class action?

We believe based on the current state of the caselaw that this action will likely be certified as a class action.

Who brought the lawsuit forward?

The Statement of Claim was issued on behalf of a company (the “representative plaintiff”) which operates a Pet Valu store in Aurora, Ontario. The representative plaintiff has been a Pet Valu franchisee since 2005.

The representative plaintiff’s role is to work with us to bring the action forward and to represent the class members in court.

How will counsel keep me updated on the progress of the case?

If the lawsuit is certified as a class action, you will receive a formal notice from the court explaining the nature of the case and providing you with the opportunity to opt out if you wish.

General information about the lawsuit will be posted on Sotos LLP’s website at

Where can I send any documents that I have that may be relevant to the class action?

Please contact us if you have any documents that you believe may be relevant to the class action.

If you have any questions, please direct them to:

Allan Dick, Sotos LLP (t) 416-977-0007
David Sterns, Sotos LLP (t) 416-977-0007