Sears Canada Oppression Class Action
This case alleges that the payment of a $509 million extraordinary dividend by Sears Canada on December 6, 2013 was oppressive and contrary to the Canada Business Corporations Act (the “CBCA”). The claim seeks damages against Sears Canada Inc., its directors and its corporate parents, ESL Investments Inc. and Sears Holding Corporation for conduct contrary to the CBCA on behalf of operators of Sears Hometown Stores.
On June 22, 2017, Sears Canada filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”), staying the action against Sears Canada and its directors. The stay against the directors has since been lifted by the CCAA judge. Sears Holding Corporation filed for Chapter 11 bankruptcy protection in the US, staying the action against Sears Holding Corporation. Accordingly, the claim against its directors and ESL Investments Inc. continues.
The claim is being advanced together with three other claims against the defendants brought by: (i) Sears’ Monitor in the CCAA; (ii) a Litigation Trustee appointed in the CCAA proceeding; and (iii) Sears’ pension plan administrator. Each of the claims relates to the payment of the extraordinary dividend in 2013 by Sears Canada.
The four actions are scheduled to be heard together at a joint trial scheduled for February, 2020.
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Sears Canada Oppression Updates
- January 25, 2019: The motion to certify the case as a class action will be heard April 17-18, 2019.
- January 25, 2019: If certified, the common issues trial will be heard in February, 2020, together with three other claims against the defendants brought by: (i) Sears’ Monitor; (ii) a Litigation Trustee appointed in the CCAA proceeding; and (iii) Sears’ pension plan administrator.
- December 3, 2018: The stay granted to the directors of Sears Canada has been lifted and the case can proceed against the directors.
- January 29, 2018: 1291079 Ontario Limited’s motion to have MNP appointed as financial advisor to the Class was adjourned. A copy of the Endorsement can be viewed here.
- January 25, 2018: Sotos LLP and Blaney McMurtry are appointed as representative counsel to represent the interests of the Class with respect to advancing a claim on behalf of the Class pursuant to the Claims Procedure Order dated December 8, 2017 in the CCAA filing. A copy of the Order can be viewed here.
- January 25, 2018: See Notice to Class here.
- January 19, 2018: We are seeking a representative order in the CCAA to represent the Hometown Dealers. We are also seeking to have MNP LLP appointed as financial advisors to the class. This motion will be heard January 29, 2018. Our intent is to file a Proof of Claim on behalf of the class setting out the class’ damages.
- June 22, 2017: Sears has filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”). This filing stays (puts on hold) the class action. We are currently reviewing and assessing the class’ rights in the CCAA filing.
- October 21, 2015: A statement of claim was issued alleging that Sears oppressed the class members when it paid out a $500 million dollar dividend to its shareholders in December 2013. A copy of the statement of claim can be viewed here.
Sears Canada Oppression News
Frequently Asked Questions
A class action is a special form of lawsuit in which one plaintiff brings a claim against one or more defendants based on allegations which are common to a group, or class, of people. In order for the action to become a class action, it must proceed through a stage known as “certification”.
A statement of claim is issued on behalf of a “representative plaintiff”. The representative plaintiff’s role is to work with class counsel to bring the action forward and to represent the class members in court.
In order for an action to proceed on behalf of the entire class, a judge must decide (among other things) whether the members of the proposed class have common issues, and whether a class action is the preferred way to resolve the issues. The process to decide these issues is known as the “certification motion”. If the judge is satisfied that the case meets all of the requirements for certification, he or she will issue an order which certifies the action as a class action.
No. If the lawsuit is certified, and you are included in the class as defined, you are automatically included in the lawsuit.
No. We will work primarily with the class representative.
Those who do not wish to remain in the class will be given the option to opt-out by sending an opt-out form at the appropriate time to us.
Certification as a class action will enable us to prove the facts in a single lawsuit rather than in numerous individual lawsuits. This has obvious benefits to the class members and to the courts.
There is no timeframe. We will move the case forward diligently but it can take a considerable period of time to reach trial.
Many class actions settle and thereby remove the need for a trial. However, we cannot predict with any certainty whether or not there will be a settlement in a given action.
The chances of “winning” can never be accurately predicted.
Class action lawsuits are typically brought on a contingency fee basis. This means that the lawyers will only be paid if the action is successful at trial or results in a settlement in favour of the plaintiffs. Legal fees would then be paid out of the settlement or judgment proceeds as approved by a judge.
Disbursements (i.e. out-of-pocket expenses, including expert reports) may be dealt with in one of two ways.
Most commonly, the lawyers will absorb the cost of disbursements. The lawyers may seek funding assistance from the Class Proceeding Fund, which may provide funding for disbursements if granted.
In some cases, disbursements may be funded by the class members, including the class representative. This typically occurs in smaller class actions brought on behalf of an organization or network of individuals where each member of the class is easily identifiable and known to the representative plaintiff. If the class action is successful, amounts advanced for disbursements are re-paid from the proceeds of any judgment or settlement to class members (and others).
Only the class representative may be liable for costs of the common issues portion of the action if it is unsuccessful.
A “payout” or an award for damages is never certain.
The action may settle or it may proceed to trial, at which time a judge will determine the amount of damages, if any, to which the class members are entitled to. Regardless, the amount of “payout” cannot be predicted, and we cannot predict when the action may settle or when the trial will conclude.
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 https://www.sotosclassactions.com.
We ask that you keep a copy of any documents, correspondences, records, invoices, receipts, etc. that you feel might be relevant to your individual claim in the class action. If there is a “payout,” this documentation may be required in order to support your claim for compensation.
It is not required that you send any documents to us at this time.