The appellants, representing a class of Ontario Shoppers Drug Mart franchisees, appealed a summary judgment decision regarding their entitlement to Professional Allowances paid by generic drug manufacturers.
The Court of Appeal upheld the motion judge's findings that Shoppers breached the 2002 franchise agreement by retaining the allowances, which constituted 'revenue', but did not breach the 2010 agreement, which explicitly allowed Shoppers to retain such concessions.
The Court also upheld the application of a rolling limitation period and the refusal to award aggregate damages due to the idiosyncratic nature of the profit-sharing model.
However, the Court allowed the appeal regarding the quantification of damages, finding that Shoppers breached its duty of good faith by arbitrarily allocating $129 million as out-of-province rebates to avoid sharing the funds with Ontario franchisees, bringing the total Professional Allowances received to $1.084 billion.