Association of franchisees formed for sole purpose of defeating class action

Ontario civil | Civil Procedure

CLASS ACTIONS

Association of franchisees formed for sole purpose of defeating class action

Plaintiff was franchisee of retail pet food and supply company. Common issue certified was that company had duty to share volume discounts and rebates from suppliers with franchisees. Communication with class members contentious and certain franchisees began campaign to defeat class action resulting in significant spike in opt-out notices. Plaintiff brought successful motion to set aside opt-out notices. Case management judge held that while franchisees had right of association, class members unfairly pressured, singled out and misinformed by actions of association, and opt-out process corrupted. Costs awarded to plaintiff. Motion important as it involved integrity of opt-out process. Association of franchisees formed for sole purpose of defeating class action and took active and inappropriate role in doing so. Company supported position of association of franchisees, and while company was not party to activities of association, company’s CEO clearly aware of what association was doing and let it continue unabated. Plaintiff awarded costs in amount of $60,000, payable by company and association of franchisees jointly and severally.
1250264 Ontario Inc. v. Pet Valu Canada Inc. (Sep. 11, 2012, Ont. S.C.J., Strathy J., File No. CV-09-392962-00CP) Additional reasons to 218 A.C.W.S. (3d) 762. 221 A.C.W.S. (3d) 524.

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